Document:

EXHIBIT 10.1

 

 

FIRST AMENDED AND RESTATED

CREDIT AGREEMENT

 

 

DATED AS
OF

FEBRUARY 14, 2008

 

AMONG

 

VANGUARD
NATURAL GAS, LLC,

AS BORROWER,

 

 

CITIBANK,
N.A.,

AS ADMINISTRATIVE AGENT,

 

AND

 

THE
LENDERS PARTY HERETO

 

 

CO-LEAD
ARRANGER, SOLE BOOKRUNNER AND CO-SYNDICATION AGENT

CITIBANK, N.A.

 

 

CO-LEAD
ARRANGER AND CO-SYNDICATION AGENT

BNP PARIBAS

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  I

  	
   

  	
   

  
	
  Definitions
  and Accounting Matters

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
   

  	
  Terms Defined Above

  	
   

  	
  1

  
	
  Section 1.02.

  	
   

  	
  Certain Defined Terms

  	
   

  	
  1

  
	
  Section 1.03.

  	
   

  	
  Types of Loans and Borrowings

  	
   

  	
  21

  
	
  Section 1.04.

  	
   

  	
  Terms Generally; Rules of Construction

  	
   

  	
  21

  
	
  Section 1.05.

  	
   

  	
  Accounting Terms and Determinations; GAAP

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
   

  
	
  The Credits

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  Commitments

  	
   

  	
  22

  
	
  Section 2.02.

  	
   

  	
  Loans and Borrowings

  	
   

  	
  22

  
	
  Section 2.03.

  	
   

  	
  Requests for Borrowings

  	
   

  	
  23

  
	
  Section 2.04.

  	
   

  	
  Interest Elections

  	
   

  	
  24

  
	
  Section 2.05.

  	
   

  	
  Funding of Borrowings

  	
   

  	
  26

  
	
  Section 2.06.

  	
   

  	
  Termination and Reduction of Aggregate Maximum
  Credit Amounts

  	
   

  	
  26

  
	
  Section 2.07.

  	
   

  	
  Borrowing Base

  	
   

  	
  27

  
	
  Section 2.08.

  	
   

  	
  Letters of Credit

  	
   

  	
  30

  
	
  Section 2.09.

  	
   

  	
  Collateral

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
   

  
	
  Payments of Principal and Interest; Prepayments; Fees

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Repayment of Loans

  	
   

  	
  35

  
	
  Section 3.02.

  	
   

  	
  Interest

  	
   

  	
  36

  
	
  Section 3.03.

  	
   

  	
  Alternate Rate of Interest

  	
   

  	
  37

  
	
  Section 3.04.

  	
   

  	
  Prepayments

  	
   

  	
  37

  
	
  Section 3.05.

  	
   

  	
  Fees

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
   

  
	
  Payments; Pro Rata Treatment; Sharing of Set-offs

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Payments Generally; Pro Rata Treatment; Sharing of
  Set-offs

  	
   

  	
  39

  
	
  Section 4.02.

  	
   

  	
  Presumption of Payment by the Borrower

  	
   

  	
  41

  
	
  Section 4.03.

  	
   

  	
  Certain Deductions by the Administrative Agent

  	
   

  	
  41

  
	
  Section 4.04.

  	
   

  	
  Disposition of Proceeds

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
   

  
	
  Increased Costs; Break Funding Payments; Taxes; Illegality

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  Increased Costs

  	
   

  	
  41

  

 

 

	
  Section 5.02.

  	
   

  	
  Break Funding Payments

  	
   

  	
  43

  
	
  Section 5.03.

  	
   

  	
  Taxes

  	
   

  	
  43

  
	
  Section 5.04.

  	
   

  	
  Mitigation Obligations; Replacement of Lenders

  	
   

  	
  45

  
	
  Section 5.05.

  	
   

  	
  Illegality

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
   

  
	
  Conditions Precedent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Effectiveness

  	
   

  	
  46

  
	
  Section 6.02.

  	
   

  	
  Each Credit Event

  	
   

  	
  48

  
	
  Section 6.03.

  	
   

  	
  Effectiveness of Borrowing Base Increase

  	
   

  	
  49

  
	
  Section 6.04.

  	
   

  	
  Certain Matters to be Completed After Closing

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
   

  
	
  Representations and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
   

  	
  Organization; Powers

  	
   

  	
  50

  
	
  Section 7.02.

  	
   

  	
  Authority; Enforceability

  	
   

  	
  50

  
	
  Section 7.03.

  	
   

  	
  Approvals; No Conflicts

  	
   

  	
  51

  
	
  Section 7.04.

  	
   

  	
  Financial Condition; No Material Adverse Change

  	
   

  	
  51

  
	
  Section 7.05.

  	
   

  	
  Litigation

  	
   

  	
  52

  
	
  Section 7.06.

  	
   

  	
  Environmental
  Matters

  	
   

  	
  52

  
	
  Section 7.07.

  	
   

  	
  Compliance with the Laws and Agreements; No Defaults

  	
   

  	
  53

  
	
  Section 7.08.

  	
   

  	
  Investment Company Act

  	
   

  	
  53

  
	
  Section 7.09.

  	
   

  	
  Taxes

  	
   

  	
  53

  
	
  Section 7.10.

  	
   

  	
  ERISA

  	
   

  	
  54

  
	
  Section 7.11.

  	
   

  	
  Disclosure; No Material Misstatements

  	
   

  	
  55

  
	
  Section 7.12.

  	
   

  	
  Insurance

  	
   

  	
  55

  
	
  Section 7.13.

  	
   

  	
  Restriction on
  Liens

  	
   

  	
  56

  
	
  Section 7.14.

  	
   

  	
  Subsidiaries

  	
   

  	
  56

  
	
  Section 7.15.

  	
   

  	
  Location of Business and Offices

  	
   

  	
  56

  
	
  Section 7.16.

  	
   

  	
  Properties;
  Titles, Etc.

  	
   

  	
  56

  
	
  Section 7.17.

  	
   

  	
  Maintenance of Properties

  	
   

  	
  57

  
	
  Section 7.18.

  	
   

  	
  Gas Imbalances, Prepayments

  	
   

  	
  58

  
	
  Section 7.19.

  	
   

  	
  Marketing of Production

  	
   

  	
  58

  
	
  Section 7.20.

  	
   

  	
  Swap Agreements

  	
   

  	
  58

  
	
  Section 7.21.

  	
   

  	
  Use of Loans and Letters of Credit

  	
   

  	
  58

  
	
  Section 7.22.

  	
   

  	
  Solvency

  	
   

  	
  59

  
	
  Section 7.23.

  	
   

  	
  Sanctioned Persons

  	
   

  	
  59

  
	
  Section 7.24.

  	
   

  	
  Security Instruments

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
   

  
	
  Affirmative Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
   

  	
  Financial Statements; Other Information

  	
   

  	
  60

  
	
  Section 8.02.

  	
   

  	
  Notices of Material Events

  	
   

  	
  63

  
	
  Section 8.03.

  	
   

  	
  Existence; Conduct of Business

  	
   

  	
  64

  

 

 

	
  Section 8.04.

  	
   

  	
  Payment of Obligations

  	
   

  	
  64

  
	
  Section 8.05.

  	
   

  	
  Performance of Obligations under Loan Documents

  	
   

  	
  64

  
	
  Section 8.06.

  	
   

  	
  Operation and Maintenance of Properties

  	
   

  	
  64

  
	
  Section 8.07.

  	
   

  	
  Insurance

  	
   

  	
  65

  
	
  Section 8.08.

  	
   

  	
  Books and Records; Inspection Rights

  	
   

  	
  66

  
	
  Section 8.09.

  	
   

  	
  Compliance with Laws

  	
   

  	
  66

  
	
  Section 8.10.

  	
   

  	
  Environmental Matters

  	
   

  	
  66

  
	
  Section 8.11.

  	
   

  	
  Further Assurances

  	
   

  	
  67

  
	
  Section 8.12.

  	
   

  	
  Reserve Reports

  	
   

  	
  67

  
	
  Section 8.13.

  	
   

  	
  Title Information

  	
   

  	
  68

  
	
  Section 8.14.

  	
   

  	
  Additional Collateral; Additional Guarantors

  	
   

  	
  69

  
	
  Section 8.15.

  	
   

  	
  ERISA Compliance

  	
   

  	
  70

  
	
  Section 8.16.

  	
   

  	
  Swap Agreements and Put Option Contracts

  	
   

  	
  71

  
	
  Section 8.17.

  	
   

  	
  Administrative Agent as Principal Depository

  	
   

  	
  71

  
	
  Section 8.18.

  	
   

  	
  Chief Financial Officer

  	
   

  	
  71

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
   

  
	
  Negative Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
   

  	
  Financial
  Covenants

  	
   

  	
  71

  
	
  Section 9.02.

  	
   

  	
  Debt

  	
   

  	
  72

  
	
  Section 9.03.

  	
   

  	
  Liens

  	
   

  	
  73

  
	
  Section 9.04.

  	
   

  	
  Dividends, Distributions and Redemptions

  	
   

  	
  73

  
	
  Section 9.05.

  	
   

  	
  Investments, Loans and Advances

  	
   

  	
  73

  
	
  Section 9.06.

  	
   

  	
  Nature of Business; International Operations

  	
   

  	
  75

  
	
  Section 9.07.

  	
   

  	
  Limitation on Leases

  	
   

  	
  75

  
	
  Section 9.08.

  	
   

  	
  Proceeds of Notes

  	
   

  	
  75

  
	
  Section 9.09.

  	
   

  	
  ERISA Compliance

  	
   

  	
  75

  
	
  Section 9.10.

  	
   

  	
  Sale or Discount of Receivables

  	
   

  	
  77

  
	
  Section 9.11.

  	
   

  	
  Mergers, Etc.

  	
   

  	
  77

  
	
  Section 9.12.

  	
   

  	
  Sale of Properties

  	
   

  	
  77

  
	
  Section 9.13.

  	
   

  	
  Environmental Matters

  	
   

  	
  77

  
	
  Section 9.14.

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  77

  
	
  Section 9.15.

  	
   

  	
  Subsidiaries

  	
   

  	
  78

  
	
  Section 9.16.

  	
   

  	
  Negative Pledge Agreements; Dividend Restrictions

  	
   

  	
  78

  
	
  Section 9.17.

  	
   

  	
  Gas Imbalances, Take-or-Pay or Other Prepayments

  	
   

  	
  78

  
	
  Section 9.18.

  	
   

  	
  Swap Agreements

  	
   

  	
  78

  
	
  Section 9.19.

  	
   

  	
  Marketing Activities

  	
   

  	
  78

  
	
  Section 9.20.

  	
   

  	
  Management Fees

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
   

  
	
  Events of Default; Remedies

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
   

  	
  Events of Default

  	
   

  	
  79

  
	
  Section 10.02.

  	
   

  	
  Remedies

  	
   

  	
  81

  

 

 

	
  ARTICLE XI

  	
   

  	
   

  
	
  The Agents

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
   

  	
  Appointment; Powers

  	
   

  	
  82

  
	
  Section 11.02.

  	
   

  	
  Duties and Obligations of Administrative Agent

  	
   

  	
  83

  
	
  Section 11.03.

  	
   

  	
  Action by Administrative Agent

  	
   

  	
  83

  
	
  Section 11.04.

  	
   

  	
  Reliance by Administrative Agent

  	
   

  	
  84

  
	
  Section 11.05.

  	
   

  	
  Subagents

  	
   

  	
  85

  
	
  Section 11.06.

  	
   

  	
  Resignation or Removal of Administrative Agent

  	
   

  	
  85

  
	
  Section 11.07.

  	
   

  	
  Agents as Lenders

  	
   

  	
  85

  
	
  Section 11.08.

  	
   

  	
  No Reliance

  	
   

  	
  86

  
	
  Section 11.09.

  	
   

  	
  Administrative Agent May File Proofs of Claim

  	
   

  	
  86

  
	
  Section 11.10.

  	
   

  	
  Authority of Administrative Agent to Release
  Collateral and Liens

  	
   

  	
  87

  
	
  Section 11.11.

  	
   

  	
  The Arranger, Bookrunner, Etc.

  	
   

  	
  87

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.01.

  	
   

  	
  Notices

  	
   

  	
  88

  
	
  Section 12.02.

  	
   

  	
  Waivers; Amendments

  	
   

  	
  89

  
	
  Section 12.03.

  	
   

  	
  Expenses, Indemnity; Damage Waiver

  	
   

  	
  91

  
	
  Section 12.04.

  	
   

  	
  Successors and Assigns

  	
   

  	
  93

  
	
  Section 12.05.

  	
   

  	
  Survival; Revival; Reinstatement

  	
   

  	
  96

  
	
  Section 12.06.

  	
   

  	
  Counterparts; Integration; Effectiveness

  	
   

  	
  96

  
	
  Section 12.07.

  	
   

  	
  Severability

  	
   

  	
  97

  
	
  Section 12.08.

  	
   

  	
  Right of Setoff

  	
   

  	
  97

  
	
  Section 12.09.

  	
   

  	
  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER OF
  JURY TRIAL

  	
   

  	
  98

  
	
  Section 12.10.

  	
   

  	
  Headings

  	
   

  	
  98

  
	
  Section 12.11.

  	
   

  	
  Confidentiality

  	
   

  	
  98

  
	
  Section 12.12.

  	
   

  	
  Interest Rate Limitation

  	
   

  	
  99

  
	
  Section 12.13.

  	
   

  	
  EXCULPATION PROVISIONS

  	
   

  	
  100

  
	
  Section 12.14.

  	
   

  	
  Collateral Matters; Swap Agreements

  	
   

  	
  100

  
	
  Section 12.15.

  	
   

  	
  No Third Party Beneficiaries

  	
   

  	
  101

  
	
  Section 12.16.

  	
   

  	
  USA Patriot Act Notice

  	
   

  	
  101

  
	
  Section 12.17.

  	
   

  	
  Amendment and Restatement; Release

  	
   

  	
  101

  

 

 

ANNEXES, EXHIBITS AND SCHEDULES

 

	
  Annex I

  	
   

  	
  List of Maximum Credit Amounts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Note

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Form of Borrowing Request

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Form of Interest Election Request

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Form of Compliance Certificate

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Security Instruments

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  Form of Assignment and Assumption

  	
   

  	
   

  
	
  Exhibit G

  	
   

  	
  Affidavit of Payment of Trade Bills

  	
   

  	
   

  
	
  Exhibit H

  	
   

  	
  Property Certificate

  	
   

  	
   

  
	
  Exhibit I

  	
   

  	
  Reconciliation Schedule

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 7.05

  	
   

  	
  Litigation

  	
   

  	
   

  
	
  Schedule 7.06

  	
   

  	
  Environmental

  	
   

  	
   

  
	
  Schedule 7.12

  	
   

  	
  Insurance

  	
   

  	
   

  
	
  Schedule 7.14

  	
   

  	
  Subsidiaries and Partnerships

  	
   

  	
   

  
	
  Schedule 7.18

  	
   

  	
  Gas Imbalances

  	
   

  	
   

  
	
  Schedule 7.19

  	
   

  	
  Marketing Contracts

  	
   

  	
   

  
	
  Schedule 7.20

  	
   

  	
  Current Swap Agreements

  	
   

  	
   

  
	
  Schedule 7.24

  	
   

  	
  Mortgage Filing Offices

  	
   

  	
   

  
	
  Schedule 8.16

  	
   

  	
  Minimum Swap Requirements and Minimum Put Option Requirements

  	
   

  	
   

  
	
  Schedule 9.03

  	
   

  	
  Existing Liens

  	
   

  	
   

  
	
  Schedule 9.05

  	
   

  	
  Investments

  	
   

  	
   

  

 

 

THIS FIRST AMENDED AND RESTATED CREDIT
AGREEMENT dated as of February 14, 2008, is among VANGUARD NATURAL GAS, LLC, a limited liability company duly
formed and existing under the laws of the Commonwealth of Kentucky (the “Borrower”);
each of the Lenders from time to time party hereto; and CITIBANK,
N.A. (in its individual capacity, “Citibank”),
as administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the “Administrative Agent”).

 

R E C I T A L S

 

A.            The Borrower
(formerly known as Nami Holding Company, LLC), Administrative Agent, and
certain lenders have previously entered into that certain Credit Agreement
dated as of January 3, 2007, as amended by that certain First Amendment to
Credit Agreement among the parties dated as of March 2, 2007, and as
amended by that certain Second Amendment to Credit Agreement among the parties
dated as of April 13, 2007, and as amended by that certain Third Amendment
to Credit Agreement among the parties dated as of May 4, 2007, and as
amended by that certain Fourth Amendment to Credit Agreement among the parties
dated as of August 30, 2007, and as amended by that certain Fifth
Amendment to Credit Agreement among the parties dated as of October 5,
2007, and as amended by that certain Sixth Amendment to Credit Agreement among
the parties dated as of November 15, 2007 (collectively, the “Original Credit Agreement”).

 

B.            The parties desire
to further amend the Original Credit Agreement. 
Because of the number of amendments previously entered into and the
changes required to effect the desired amendments, the parties deem it
advantageous to restate the terms and provisions of the Original Credit
Agreement as hereinafter set forth.

 

In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto hereby agree that the Original Credit Agreement
is amended and restated in its entirety as follows:

 

ARTICLE I

Definitions and Accounting Matters

 

Section 1.01.          Terms Defined Above. 
As used in this Agreement, each term defined above has the meaning
indicated above.

 

Section 1.02.          Certain Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

 

“ABR”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

“Adjusted
LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

 

1

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form
supplied from time to time by the Administrative Agent.

 

“Affected
Loans” has the meaning assigned such term in Section 5.05.

 

“Affidavit of Payment of Trade Bills”
means that certain Affidavit of Payment of Trade Bills executed by NRC, Ariana
and TEC to the Administrative Agent dated as of January 3, 2007.

 

“Affiliate”
means, with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.

 

“Agents”
means, collectively, the Administrative Agent and other agents subsequently
named; and “Agent” shall mean either the Administrative Agent or such other
agent, as the context requires.

 

“Aggregate
Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts of the respective Lenders, as the same may be reduced or
terminated pursuant to Section 2.06.

 

“Agreement”
means this First Amended and Restated Credit Agreement, as the same may from
time to time be amended, modified, supplemented or restated.

 

“Alternate
Base Rate” means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1%.  Any change in the Alternate Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.

 

“Apache
Acquisition Agreement” means that certain Purchase and Sale Agreement
between Apache Corporation, as seller, and Vanguard Permian, as buyer, dated as
of December 21, 2007, and all modifications and amendments thereof.

 

“Apache Acquisition
Documents” means the
Apache Acquisition Agreement and all agreements, assignments, deeds,
conveyances, certificates or other documents and instruments now or hereafter
executed and delivered by and between Vanguard Permian and/or any member of the
seller pursuant to the Apache Acquisition Agreement or in connection with the
transactions contemplated by the Apache Acquisition Agreement.

 

“Apache
Affidavit of Payment of Trade Bills” means an affidavit in the
form of Exhibit G attached hereto containing the information as
provided herein with respect to the Apache Properties.

 

“Apache
Property Certificate” means a certificate or certificates
(whether one or more) in the form of Exhibit H attached hereto with
respect to the Apache Properties.

 

2

 

“Apache
Properties” means the properties being acquired by Vanguard
Permian pursuant to the Apache Acquisition Documents.

 

“Apache
Reconciliation Schedule” means a schedule in the form of Exhibit I
attached hereto confirming that, except as otherwise shown thereon, (i) each
well or unit described on the exhibits to the Mortgages covering the Apache
Properties is also included in the reserve report  for such Apache Properties previously
delivered by the Borrower to the Administrative Agent, and (ii) the
respective net revenue interests and working interests for each well or unit
described on the exhibits to such Mortgages are also the net revenue interests
and working interests for the same well or unit included in such  initial reserve report.

 

“Apache
Title Indemnity Agreement” means a title indemnity agreement
from Vanguard Permian with respect to the Apache Properties which shall be in
form and substance satisfactory to Administrative Agent.

 

“Applicable Margin” means,
for any day, with respect to any ABR Loan or Eurodollar Loan, or with respect
to the Commitment Fee Rate, as the case may be, the rate per annum set forth in
the Borrowing Base Utilization Grid below based upon the Borrowing Base
Utilization Percentage then in effect:

 

Borrowing Base Utilization Grid

 

	
  Borrowing Base Utilization Percentage

  	
   

  	
  <25%

  	
   

  	
  0>25% <50%

  	
   

  	
  >50% <75%

  	
   

  	
  >75%

  	
   

  
	
  Eurodollar
  Loans

  	
   

  	
  1.00

  	
  %

  	
  1.25

  	
  %

  	
  1.50

  	
  %

  	
  1.75

  	
  %

  
	
  ABR Loans

  	
   

  	
  .00

  	
  %

  	
  .25

  	
  %

  	
  .50

  	
  %

  	
  .75

  	
  %

  
	
  Commitment
  Fee Rate

  	
   

  	
  .25

  	
  %

  	
  .30

  	
  %

  	
  .375

  	
  %

  	
  .375

  	
  %

  
	
  Letter of
  Credit Fee

  	
   

  	
  1.00

  	
  %

  	
  1.25

  	
  %

  	
  1.50

  	
  %

  	
  1.75

  	
  %

  

 

Each change in the Applicable Margin shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change, provided,
however, that if at any time the Borrower fails to deliver a Reserve Report
pursuant to Section 8.12(a), then the “Applicable Margin” means
the rate per annum set forth on the grid when the Borrowing Base Utilization
Percentage is at its highest level.

 

“Applicable
Percentage” means, with respect to any Lender, the percentage of
the Aggregate Maximum Credit Amounts represented by such Lender’s Maximum
Credit Amount as such percentage is set forth on Annex I.  If the Maximum Credit Amounts have terminated
or expired, the Applicable Percentages shall be determined based upon the
Maximum Credit Amounts most recently in effect, giving effect to any
assignments.

 

“Approved
Counterparty” means (a) any Lender or any Affiliate of a
Lender, or (b) any other Person engaged in the business of writing Swap
Agreements whose long term senior unsecured debt rating is A-/A3 by S&P or
Moody’s (or their equivalent) or higher and that is acceptable to the
Administrative Agent, or (c) any other Person from time to time approved
by the Majority Lenders.

 

3

 

“Approved
Fund” means 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 that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender
or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.

 

“Approved
Petroleum Engineers” means (a) Netherland, Sewell &
Associates, Inc., (b) Ryder Scott Company Petroleum Consultants,
L.P., and (c) any other independent petroleum engineers acceptable to the
Administrative Agent.

 

“Ariana”  means
Ariana Energy, LLC, a Tennessee limited liability company.

 

“Arranger”
means (a) Citibank, in its capacities as the co-lead arranger, sole
bookrunner and co-syndication agent hereunder, and (b) BNP Paribas, in its
capacities as co-lead arranger and co-syndication agent hereunder.

 

“Assignment
and Assumption” means an assignment and assumption entered into
by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by Section 12.04(b)), and accepted by the
Administrative Agent, in the form of Exhibit F or any other form
approved by the Administrative Agent.

 

“Availability
Period” means the period from and including the Effective Date
to but excluding the Termination Date.

 

“Board”
means the Board of Governors of the Federal Reserve System of the United States
of America or any successor Governmental Authority.

 

“Borrowing”
means Loans of the same Type, made, converted or continued on the same date
and, in the case of Eurodollar Loans, as to which a single Interest Period is
in effect.

 

“Borrowing
Base” means at any time an amount equal to the amount determined
in accordance with Section 2.07, as the same may be adjusted from time
to time pursuant to Section 8.13(c).

 

“Borrowing
Base Deficiency” occurs if at any time the total Revolving
Credit Exposures exceeds the Borrowing Base then in effect.

 

“Borrowing
Base Utilization Percentage” means, as of any day, the fraction
expressed as a percentage, the numerator of which is the sum of the Revolving
Credit Exposures of the Lenders on such day, and the denominator of which is
the Borrowing Base in effect on such day.

 

“Borrowing
Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

 

“Business
Day” means any day that is not a Saturday, Sunday or other day
on which commercial banks in New York City or Dallas, Texas are authorized or
required by law to remain closed; and if such day relates to a Borrowing or
continuation of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or the Interest Period for, a 

 

4

 

Eurodollar Loan or a notice by the Borrower with
respect to any such Borrowing or continuation, payment, prepayment, conversion
or Interest Period, any day which is also a day on which dealings in dollar
deposits are carried out in the London interbank market.

 

“Capital
Expenditures” means, in respect of any Person, for any period,
the aggregate (determined without duplication) of all exploration and
development expenditures and costs that are capital in nature and any other
expenditures that are capitalized on the balance sheet of such Person in
accordance with GAAP.

 

“Capital
Leases” means, in respect of any Person, all leases which shall
have been, or should have been, in accordance with GAAP, recorded as capital
leases on the balance sheet of the Person liable (whether contingent or
otherwise) for the payment of rent thereunder.

 

“Casualty
Event” means any loss, casualty or other insured damage to, or
any nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Subsidiaries
having a fair market value in excess of $2,000,000.

 

“Change
in Control” means
(a) the acquisition of ownership, directly or indirectly, beneficially or
of record, by any Person or group (within the meaning of the Securities
Exchange Act of 1934 and the rules of the SEC thereunder as in effect on
the date hereof) of Equity Interests representing more than 25% of the
aggregate ordinary voting power represented by the issued and outstanding
Equity Interests of the Borrower, or (b) occupation of a majority of those
seats (other than vacant seats) on the board of managers of Borrower by Persons
who were neither (i) nominated by the board of managers of the Borrower
nor (ii) appointed by managers so nominated.

 

“Change
in Law” means (a) the adoption of any law, rule, regulation
or treaty after the date of this Agreement, (b) any change in any law,
rule, regulation or treaty or in the interpretation or application thereof by
any Governmental Authority after the date of this Agreement or (c) compliance
by any Lender or the Issuing Bank (or, for purposes of Section 5.01(b)),
by any lending office of such Lender or by such Lender’s or the Issuing Bank’s
holding company, (if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and any
successor statute.

 

“Commitment”
means, with respect to each Lender, the commitment of such Lender to make Loans
and to acquire participations in Letters of Credit hereunder, expressed as an
amount representing the maximum aggregate amount of such Lender’s Revolving
Credit Exposure hereunder, as such commitment may be (a) modified from
time to time pursuant to Section 2.06 and (b) modified from
time to time pursuant to assignments by or to such Lender pursuant to Section 12.04(b),
and “Commitments” means the aggregate
amount of the Commitments of all of the Lenders.  The amount representing each Lender’s Commitment
shall at any time be the lesser of such Lender’s Maximum Credit Amount and such
Lender’s Applicable Percentage of the then effective Borrowing Base.

 

5

 

“Commitment
Fee Rate” has the meaning set forth in the definition of “Applicable Margin”.

 

“Consolidated
Leverage Ratio” means,
as of any date of determination, for the Borrower and its Subsidiaries on a
consolidated basis, the ratio of (a) Total Debt as of such date to (b) EBITDA
for each four consecutive fiscal quarter period ending on and after December 31,
2007.  For purposes of calculating the
Consolidated Leverage Ratio at any date, EBITDA shall be calculated on a pro
forma basis (as certified by the Borrower to the Administrative Agent and as
approved by the Administrative Agent) assuming that all acquisitions made, and
all dispositions completed, during the four consecutive fiscal quarters then
most recently ended have been made on the first day of such period (but without
any adjustment for projected cost savings or other synergies).

 

“Consolidated
Subsidiaries” means each Subsidiary of the Borrower (whether now
existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of
the Borrower in accordance with GAAP.

 

“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  For the purposes of this definition, and
without limiting the generality of the foregoing, any Person that owns directly
or indirectly 10% or more of the Equity Interests having ordinary voting power
for the election of the managers or other governing body of a Person will be
deemed to “control” such other Person.  “Controlling”
and “Controlled”
have meanings correlative thereto.

 

“Debt”
means, for any Person, the sum of the following (without duplication):  (a) all obligations of such Person for
borrowed money or evidenced by bonds, bankers’ acceptances, debentures, notes
or other similar instruments; (b) all obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, surety or other bonds
and similar instruments; (c) all accounts payable and all accrued
expenses, liabilities or other obligations of such Person to pay the deferred
purchase price of Property or services; (d) all obligations under Capital
Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as
defined in the other clauses of this definition) of others secured by (or for
which the holder of such Debt has an existing right, contingent or otherwise,
to be secured by) a Lien on any Property of such Person, whether or not such Debt
is assumed by such Person; (g) all Debt (as defined in the other clauses
of this definition) of others guaranteed by such Person or in which such Person
otherwise assures a creditor against loss of the Debt (howsoever such assurance
shall be made) to the extent of the lesser of the amount of such Debt and the
maximum stated amount of such guarantee or assurance against loss; (h) all
obligations or undertakings of such Person to maintain or cause to be
maintained the financial position or covenants of others or to purchase the
Debt or Property of others; (i) obligations to deliver commodities, goods
or services, including, without limitation, Hydrocarbons, in consideration of
one or more advance payments, other than gas balancing arrangements in the
ordinary course of business; (j) obligations to pay for goods or services
even if such goods or services are not actually received or utilized by such
Person; (k) any Debt of a partnership for which such Person is liable
either by agreement, by operation of law or by a Governmental Requirement but
only to the extent of such liability; (l) Disqualified Capital 

 

6

 

Stock; and (m) the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment. 
The Debt of any Person shall include all obligations of such Person of
the character described above to the extent such Person remains legally liable
in respect thereof notwithstanding that any such obligation is not included as
a liability of such Person under GAAP.

 

“Default”
means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an
Event of Default.

 

“Disqualified
Capital Stock” means any Equity Interest that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, or requires the payment of any cash dividend or any other
scheduled payment constituting a return of capital, in the case of each of the
foregoing, on or prior to the date that is after the earlier of (a) the
Maturity Date and (b) the date on which there are no Loans, LC Exposure or
other obligations hereunder outstanding and all of the Commitments are
terminated.

 

“Dissenting
Lender” has the meaning assigned such term in Section 2.07(c)(iv).

 

“dollars”
or “$”
refers to lawful money of the United States of America.

 

“Domestic
Subsidiary” means any Subsidiary that is organized under the
laws of the United States of America or any state thereof or the District of
Columbia.

 

“EBITDA” means, for any
twelve-month period (except as otherwise expressly provided) ending on the last
day of any fiscal quarter, consolidated net income, excluding any non-cash
revenue or expense associated with Swap Agreements resulting from FAS 133,
plus without
duplication and to the extent deducted from revenues in determining
consolidated net income, the sum of (a) the aggregate amount of
consolidated Interest Expense for such period, (b) the aggregate amount of
income tax expense for such period, (c) all amounts attributable to
depletion, depreciation and amortization for such period, and (d) all
other non-cash charges, all determined on a consolidated basis with respect to
Borrower and its Subsidiaries in accordance with GAAP, using the results of the
twelve-month period ending with that reporting period (except as otherwise
herein provided).

 

“Effective
Date” means the date on which the conditions specified in Section 6.01
of the Original Credit Agreement were satisfied (or waived in accordance with Section 12.02
of the Original Credit Agreement).

 

“Eligible Assignee”
means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent, (ii) in the case of any
assignment of a Commitment, the Issuing Bank, and (iii) unless an Event of
Default has occurred and is continuing, the Borrower (each such approval not to
be 

 

7

 

unreasonably withheld or
delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or
Subsidiaries.

 

“Engineering
Reports” has the meaning assigned such term in Section 2.07(c)(i).

 

“Environmental Laws”  means any and all Governmental Requirements relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.

 

“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”
means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute.

 

“ERISA
Affiliate” means each trade or business (whether or not
incorporated) which together with the Borrower or a Subsidiary would be deemed
to be a “single employer” within the meaning of section 4001(b)(1) of
ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.

 

“ERISA
Event” means (a) a “Reportable Event” described in section
4043 of ERISA and the regulations issued thereunder, (b) the withdrawal of
the Borrower, a Subsidiary or any ERISA Affiliate from a Plan during a plan
year in which it was a “substantial employer” as defined in section 4001(a)(2) of
ERISA, (c) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under section 4041 of ERISA, (d) the
institution of proceedings to terminate a Plan by the PBGC, (e) receipt of
a notice of withdrawal liability pursuant to Section 4202 of ERISA or (f) any
other event or condition which might constitute grounds under section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan.

 

“Eurodollar”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted LIBO Rate.

 

“Event
of Default” has the meaning assigned such term in Section 10.01.

 

“Excepted
Liens” means:  (a) Liens
for Taxes, assessments or other governmental charges or levies which are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been established and maintained in accordance
with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
established and maintained in accordance with GAAP; (c) statutory 

 

8

 

landlord’s liens, operators’, vendors’, carriers’,
warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s,
construction or other like Liens arising by operation of law in the ordinary
course of business or incident to the exploration, development, operation and
maintenance of Oil and Gas Properties each of which is in respect of
obligations that are not delinquent or which are being contested in good faith
by appropriate action and for which adequate reserves have been established and
maintained in accordance with GAAP; (d) contractual Liens which arise in
the ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which
are not delinquent or which are being contested in good faith by appropriate
action and for which adequate reserves have been established and maintained in
accordance with GAAP, provided that any such Lien referred to in this clause
does not materially impair the use of the Property covered by such Lien for the
purposes for which such Property is held by the Borrower or any Subsidiary or
materially impair the value of such Property subject thereto; (e) Liens
arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights and remedies and burdening
only deposit accounts or other funds maintained with a creditor depository
institution, provided that no such deposit account is a dedicated cash
collateral account or is subject to restrictions against access by the
depositor in excess of those set forth by regulations promulgated by the Board
and no such deposit account is intended by Borrower or any of its Subsidiaries
to provide collateral to the depository institution; (f) easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any Property of the Borrower or any Subsidiary for the purpose
of roads, pipelines, transmission lines, transportation lines, distribution
lines for the removal of gas, oil, coal or other minerals or timber, and other
like purposes, or for the joint or common use of real estate, rights of way,
facilities and equipment, which do not secure any monetary obligations and
which in the aggregate do not materially impair the use of such Property for
the purposes of which such Property is held by the Borrower or any Subsidiary
or materially impair the value of such Property subject thereto; (g) minor
defects and irregularities in title to any Property which do not secure any
monetary obligations and which in the aggregate do not materially impair use of
such Property for the purposes for which such Property is held by the Borrower
and any Subsidiary or materially impair the value of such Property subject
thereto; (h) Liens on cash or securities pledged to secure performance of
tenders, surety and appeal bonds, government contracts, performance and return
of money bonds, bids, trade contracts, leases, statutory obligations,
regulatory obligations and other obligations of a like nature incurred in the
ordinary course of business and (i) judgment and attachment Liens not
giving rise to an Event of Default, provided that any appropriate legal
proceedings which may have been duly initiated for the review of such judgment
shall not have been finally terminated or the period within which such
proceeding may be initiated shall not have expired and no action to enforce
such Lien has been commenced; provided, further that Liens described in clauses
(a) through (e) shall remain “Excepted Liens” only for so long as no
action to enforce such Lien has been commenced and no intention to subordinate
the first priority Lien granted in 

 

9

 

favor of the Administrative Agent and the Lenders is
to be hereby implied or expressed by the permitted existence of such Excepted
Liens.

 

“Excluded
Taxes” means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower or any Guarantor hereunder or
under any other Loan Document, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America or such other
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 any Guarantor is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 5.04(b)), 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 5.03(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment),
to receive additional amounts with respect to such withholding tax pursuant to Section 5.03(a) or
Section 5.03(c).

 

“FAS 133”
means Statement of Financial Accounting Standard 133 (and any statements
replacing, modifying or superseding such statement) adopted by the Financial
Accounting Standards Board.

 

“Federal
Funds Effective Rate” means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published 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 1/100 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.

 

“Financial
Officer” means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person.  Unless otherwise specified, all references
herein to a Financial Officer means a Financial Officer of the Borrower.

 

“Financial
Statements” means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).

 

“Foreign
Lender” means 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.

 

“Foreign
Subsidiary” means any Subsidiary that is not a Domestic
Subsidiary.

 

“GAAP”
means generally accepted accounting principles in the United States of America
as in effect from time to time subject to the terms and conditions set forth in
Section 1.05.

 

10

 

“Governmental
Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central
bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government
(including any supranational bodies such as the European Union or the European
Central Bank) over the Borrower, any Subsidiary, any of their Properties, any
Agent, the Issuing Bank or any Lender.

 

“Governmental
Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.

 

“Guarantors”
means (a) NRC until released as provided in Section  2.09(c), (b) all
Subsidiaries of the Borrower, and (c) each other Subsidiary that
guarantees the Indebtedness pursuant to Section 8.14(b).

 

“Guaranty
Agreement” means an agreement executed by the Guarantors in form
and substance satisfactory to the Administrative Agent, unconditionally
guarantying on a joint and several basis, payment of the Indebtedness, as the
same may be amended, modified or supplemented from time to time.

 

“Highest
Lawful Rate” means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws allow as of the date hereof.

 

“Hydrocarbon
Interests” means all rights, titles, interests and estates now
or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases
(excluding coal and timber), or other liquid or gaseous hydrocarbon leases,
mineral fee interests, overriding royalty and royalty interests, net profit
interests and production payment interests, including any reserved or residual
interests of whatever nature.  Unless
other indicated herein, each reference to the term “Hydrocarbon
Interests” shall mean Hydrocarbon Interests of the Borrower and
its Subsidiaries.

 

“Hydrocarbons”
means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
or separated therefrom.  Unless otherwise
indicated herein, each reference to the term “Hydrocarbons”
shall mean Hydrocarbons of the Borrower and its Subsidiaries.

 

“Indebtedness”
means any and all amounts owing or to be owing by the Borrower, any Subsidiary
or any Guarantor (whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising):  (a) to the
Administrative Agent, the Issuing Bank or any Lender under any Loan Document; (b) 

 

11

 

to any Swap Lender under any Swap Agreement between
the Borrower or any Subsidiary and such Swap Lender (which shall be deemed to
be the Swap Termination Value as of the date the amount of Indebtedness is
being determined) and (c) all renewals, extensions and/or rearrangements
of any of the above.

 

“Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

“Initial
Reserve Report” means the report of Netherland, Sewell &
Associates, Inc., with respect to certain Oil and Gas Properties of the
Borrower and its Subsidiaries as of July 1, 2006.

 

“Interest
Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.

 

“Interest
Expense” means, for any period, the sum (determined without duplication)
of the aggregate gross interest expense of the Borrower and the Consolidated
Subsidiaries for such period, including to the extent included in interest
expense under GAAP:  (a) amortization
of debt discount, (b) capitalized interest and (c) the portion of any
payments or accruals under Capital Leases allocable to interest expense, minus (i) the
portion of any payments or accruals under Synthetic Leases allocable to
interest expense, and (ii) and any imputed interest pursuant to asset
retirement obligations whether or not the same constitutes interest expense
under GAAP.

 

“Interest
Payment Date” means (a) with respect to any ABR Loan, the
last day of each March, June, September and December and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months’ duration after the first day of such Interest Period.

 

“Interest
Period” means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (a) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest
Period pertaining to a Eurodollar Borrowing that commences on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period.  Interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such Interest
Period.  For purposes hereof, the date of
a Borrowing initially shall be the date on which such Borrowing is made and thereafter
shall be the effective date of the most recent conversion or continuation of
such Borrowing.

 

“Interim
Redetermination” has the meaning assigned such term in Section 2.07(b).

 

12

 

“Interim
Redetermination Date” means the date on which a Borrowing Base
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).

 

“Investment”
means, for any Person:  (a) the
acquisition (whether for cash, Property, services or securities or otherwise)
of Equity Interests of any other Person or any agreement to make any such
acquisition (including, without limitation, any “short sale” or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale) or any capital contribution to any other Persons; (b) the
making of any deposit with, or advance, loan or capital contribution to,
assumption of Debt of, purchase or other acquisition of any other Debt or
equity participation or interest in, 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 representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business); (c) the
purchase or acquisition (in one or a series of transactions) of Property of
another Person that constitutes a business unit or (d) the entering into
of any guarantee of, or other contingent obligation (including the deposit of
any Equity Interests to be sold) with respect to, Debt or other liability of
any other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person.

 

“Issuing
Bank” means Citibank, in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity as provided in Section 2.08(i).  The Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term “Issuing Bank” shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.

 

“LC
Collection Account” has the meaning assigned such term in Section 2.08(j).

 

“LC
Commitment” at any time means twenty percent (20%) of the then
existing Borrowing Base.

 

“LC
Disbursement” means a payment made by the Issuing Bank pursuant
to a Letter of Credit.

 

“LC
Exposure” means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by
or on behalf of the Borrower at such time. 
The LC Exposure of any Lender at any time shall be its Applicable
Percentage of the total LC Exposure at such time.

 

“Lenders”
means the Persons listed on Annex I and any Person that shall have become a
party hereto pursuant to an Assignment and Assumption, other than any such
Person that ceases to be a party.

 

“Letter
of Credit” means any letter of credit issued pursuant to this
Agreement.

 

13

 

“Letter
of Credit Agreements” means all letter of credit applications
and other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower (whether
for itself or any Subsidiary as the account party), with the Issuing Bank
relating to any Letter of Credit.

 

“LIBO
Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market
Service (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, two
Business Days prior to the commencement of such Interest Period, as the rate
for dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available
at such time for any reason, then the “LIBO Rate” with respect
to such Eurodollar Borrowing for such Interest Period shall be the rate at
which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period.

 

“Lien”
means any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on
the common law, statute or contract, and whether such obligation or claim is
fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (b) production payments and the like
payable out of Oil and Gas Properties. 
The term “Lien” shall
include easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations. For the purposes of this Agreement, the Borrower
and its Subsidiaries, as applicable, shall be deemed to be the owner of any
Property which they have acquired or hold subject to a conditional sale
agreement, or leases under a financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
in a transaction intended to create a financing.

 

“Loan
Documents” means this Agreement, the Notes, the Letter of Credit
Agreements, the Title Indemnity Agreement, the Affidavit of Payment of Trade
Bills, the Property Certificate, the Reconciliation Schedule, the Apache Title
Indemnity Agreement, the Apache Affidavit of Payment of Trade Bills, the Apache
Property Certificate, the Apache Reconciliation Schedule, and the Security
Instruments.

 

“Loans”
means the loans made by the Lenders to the Borrower pursuant to this Agreement.

 

“Majority
Lenders” means, at any time, Lenders having Loans, LC Exposure
and unused Commitments representing more than 75% of the sum of all Loans
outstanding, LC Exposure and unused Commitments at such time (without regard to
any sale by a Lender of a participation in any Loan under Section 12.04(c)).

 

14

 

“Material
Adverse Effect” means a material adverse change in, or material
adverse effect on (a) the business, operations, Property, condition
(financial or otherwise) or prospects of the Borrower and the Subsidiaries
taken as a whole, (b) the ability of the Borrower, any Subsidiary or any
Guarantor to perform any of its obligations under any Loan Document, (c) the
validity or enforceability of any Loan Document or (d) the rights and
remedies of or benefits available to the Administrative Agent, any other Agent,
the Issuing Bank or any Lender under any Loan Document.

 

“Material Gas Imbalance” means,
with respect to all gas balancing agreements to which the Borrower or any
Subsidiary is a party or by which any mineral interest owned by the Borrower or
any Subsidiary is bound, a net gas imbalance to the Borrower or any Subsidiary,
individually or taken as a whole in excess of $2,000,000. 
Gas imbalances will be determined based on written agreements, if any,
specifying the method of calculation thereof, or, alternatively, if no such
agreements are in existence, gas imbalances will be calculated by multiplying (x) the
volume of gas imbalance as of the date of calculation (expressed in thousand
cubic feet) by (y) the heating value in btu’s per thousand cubic feet, times the Henry Hubb average daily spot price for the month
immediately preceding the date of calculation.

 

“Material
Indebtedness” means Debt (other than the Loans and Letters of
Credit but including obligations in respect of one or more Swap Agreements) of
any one or more of the Borrower and its Subsidiaries in an aggregate principal
amount exceeding $2,000,000.  For
purposes of determining Material Indebtedness, the “principal amount” of the
obligations of the Borrower or any Subsidiary in respect of any Swap Agreement
at any time shall be the Swap Termination Value.

 

“Maturity
Date” means March 31, 2011.

 

“Maximum
Credit Amount” means, as to each Lender, the amount set forth
opposite such Lender’s name on Annex I under the caption “Maximum Credit
Amounts”, as the same may be (a) reduced or terminated from time to time
in connection with a reduction or termination of the Aggregate Maximum Credit
Amounts pursuant to Section 2.06(b) or (b) modified from
time to time pursuant to any assignment permitted by Section 12.04(b).

 

“Moody’s”
means Moody’s Investors Service, Inc. and any successor thereto that is a
nationally recognized rating agency.

 

“Mortgaged
Property” means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms
of the Security Instruments.

 

“Mortgages”
means the mortgages, deeds of trust, leasehold mortgages, assignments of leases
and rents, assignments of proceeds of production, security documents and the
like (including all amendments, modifications and supplements thereto)
delivered pursuant to this Agreement in order to grant Liens in Oil and Gas
Properties of the Borrower and its Subsidiaries.

 

“Multiemployer
Plan” means a Plan which is a multiemployer plan as defined in Section 3(37)
or 4001 (a)(3) of ERISA.

 

“New
Borrowing Base Notice” has the meaning assigned such term in Section 2.07(d).

 

15

 

“Notes”
means the promissory notes of the Borrower described in Section 2.02(d) and
being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.

 

“NRC” means Nami Resources
Company L.L.C., a Kentucky limited liability company.

 

“Oil
and Gas Properties” means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all
presently existing or future unitization, pooling agreements and declarations
of pooled units and the units created thereby (including without limitation all
units created under orders, regulations and rules of any Governmental
Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all
operating agreements, contracts and other agreements, including production
sharing contracts and agreements, which relate to any of the Hydrocarbon
Interests or the production, sale, purchase, exchange or processing of
Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all
Hydrocarbons in and under and which may be produced and saved or attributable
to the Hydrocarbon Interests, including all oil in tanks, and all rents,
issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements,
hereditaments, appurtenances and Properties in any manner appertaining,
belonging, affixed or incidental to the Hydrocarbon Interests and (g) all
Properties, rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned or
hereinafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such
Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment, rental equipment or other personal Property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.  Unless otherwise indicated herein, each
reference to the term “Oil and Gas Properties”
shall mean Oil and Gas Properties of the Borrower and its Subsidiaries.

 

“Organizational
Documents” mean, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non US jurisdiction); (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

16

 

“Original Second Amendment to Credit Agreement”
means that
certain Second Amendment to Credit Agreement dated as of April 13, 2007,
among the Borrower and Citibank, N.A., as Administrative Agent, and Citibank,
N.A. and BNP Paribas as Lenders.

 

“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 hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement and any other Loan Document.

 

“Participant”
has the meaning set forth in Section 12.04(c)(i).

 

“PBGC”
means the Pension Benefit Guaranty Corporation, or any successor thereto.

 

“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.

 

“Plan”
means any employee pension benefit plan, as defined in section 3(2) of
ERISA, which (a) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was
at any time during the six calendar years preceding the date hereof, sponsored,
maintained or contributed to by the Borrower or a Subsidiary or an ERISA
Affiliate.

 

“Prime
Rate” means the rate of interest per annum publicly announced
from time to time by Citibank as its prime rate for loans in dollars; each
change in the Prime Rate shall be effective from and including the date such
change is publicly announced as being effective.  Such rate is set by Citibank as a general
reference rate of interest, taking into account such factors as Citibank may
deem appropriate; it being understood that many of Citibank’s commercial or
other loans are priced in relation to such rate, that it is not necessarily the
lowest or best rate actually charged to any customer and that Citibank may make
various commercial or other loans at rates of interest having no relationship
to such rate.

 

“Production Payment” has the
meaning assigned such term in Section 7.16(f).

 

“Property”
means any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible, including, without limitation, cash,
securities, accounts and contract rights.

 

“Property Certificate” means,
collectively, those certain Property Certificates executed by NRC, Ariana and
TEC, all dated as of January 3, 2007.

 

“Proposed
Borrowing Base” has the meaning assigned to such term in Section 2.07(c)(i).

 

“Proposed
Borrowing Base Notice” has the meaning assigned to such term in Section 2.07(c)(ii).

 

“Purchase Agreement” has the
meaning assigned such term in Section 7.16(f).

 

17

 

“Reconciliation Schedule” means
that certain Reconciliation Schedule executed by NRC, Ariana and TEC to the
Administrative Agent in connection with the Original Credit Agreement.

 

“Redemption”
means with respect to any Debt, the repurchase, redemption, prepayment,
repayment, defeasance or any other acquisition or retirement for value (or the
segregation of funds with respect to any of the foregoing) of such Debt.  “Redeem” has the
correlative meaning thereto.

 

“Redetermination
Date” means, with respect to any Scheduled Redetermination or
any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.07(d).

 

“Register”
has the meaning assigned such term in Section 12.04(b)(iv).

 

“Regulation
D” means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.

 

“Related
Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, managers, officers,
employees, agents and advisors (including attorneys, accountants and experts)
of such Person and such Person’s Affiliates.

 

“Remedial
Work” has the meaning assigned such term in Section 8.10(a).

 

“Reserve
Report” means the Initial Reserve Report and each other report,
in form and substance satisfactory to the Administrative Agent, setting forth,
as of each December 31st or June 30th (or such
other date in the event of an Interim Redetermination) the oil and gas reserves
attributable to the Oil and Gas Properties of the Borrower and the
Subsidiaries, together with a projection of the rate of production and future
net income, taxes, operating expenses and Capital Expenditures with respect
thereto as of such date, based upon the economic and pricing assumptions
consistent with the Administrative Agent’s lending requirements at the time.

 

“Responsible
Officer” means, as to any Person, the chief executive officer,
the president, any Financial Officer or any vice president of such Person.  Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Borrower.

 

“Restricted
Payment” means any dividend or other distribution (whether in
cash, securities or other Property) with respect to any Equity Interests in the
Borrower or any of its Subsidiaries, or any payment (whether in cash,
securities or other Property), including any sinking fund or similar deposit,
on account of the purchase, Redemption, retirement, acquisition, cancellation
or termination of any such Equity Interests in the Borrower or any of its
Subsidiaries or any option, warrant or other right to acquire any such Equity
Interests in the Borrower or any of its Subsidiaries.

 

“Revolving
Credit Exposure” means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender’s Loans and its LC
Exposure at such time.

 

18

 

“S&P”
means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.

 

“Scheduled
Redetermination” has the meaning assigned such term in Section 2.07(b).

 

“Scheduled
Redetermination Date” means the date on which a Borrowing Base
that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).

 

“SEC”
means the Securities and Exchange Commission or any successor Governmental
Authority.

 

“Security
Instruments” means the Guaranty Agreements, the Subsidiary
Pledge Agreements, the Mortgages, and other agreements, instruments or
certificates described or referred to in Exhibit E, and any and all
other agreements, instruments, consents or certificates now or hereafter
executed and delivered by the Borrower or any other Person (other than Swap
Agreements with the Lenders or any Affiliate of a Lender or participation or
similar agreements between any Lender and any other lender or creditor with
respect to any Indebtedness pursuant to this Agreement) in connection with, or
as security for or to guarantee the payment or performance of the Indebtedness,
the Notes, this Agreement, or reimbursement obligations under the Letters of
Credit, as such agreements may be amended, modified, supplemented or restated
from time to time.

 

“Smith Employment Agreement”
means that certain Employment Agreement between Scott W. Smith and the
Borrower dated as of October 9, 2006.

 

“Statutory
Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject, with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those
imposed pursuant to such Regulation D. 
Eurodollar Loans shall be deemed to constitute eurocurrency funding and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

 

“Subsidiary”
means:  (a) any Person of which at
least a majority of the outstanding Equity Interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors,
board of managers or other governing body of such Person (irrespective of
whether or not at the time Equity Interests of any other class or classes of such
Person 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 the
Borrower or one or more of its Subsidiaries or by the Borrower and one or more
of its Subsidiaries and (b) any partnership of which the 

 

19

 

Borrower or any of its Subsidiaries is a general
partner.  Unless otherwise indicated
herein, each reference to the term “Subsidiary” shall mean a Subsidiary
of the Borrower.

 

“Subsidiary Pledge Agreements”
means one or more pledge agreements in form and substance satisfactory to the
Administrative Agent pursuant to which the Equity Interests of a Subsidiary are
pledged to the Administrative Agent for the ratable benefit of the Lenders to
secure the payment of the Indebtedness and the reimbursement of obligations
under the Letters of Credit, as such agreements may be amended, modified or
supplemented from time to time.

 

“Swap
Agreement” means any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement,
whether exchange traded, “over-the-counter” or otherwise, 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; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, managers, officers, employees
or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.

 

“Swap Lender” means any Person
that is a counterparty to a Swap Agreement with the Borrower or any Subsidiary
that is a Lender or an Affiliate of a Lender or was a Lender or an Affiliate of
a Lender at the time such Swap Agreement was entered into.

 

“Swap
Termination Value” means, in respect of any one or more Swap
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Agreements, (a) for any date on or
after the date such Swap Agreements have been closed out and termination value(s) determined
in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined
as the mark-to-market value(s) for such Swap Agreements, as determined by
the counterparties to such Swap Agreements.

 

“Synthetic
Lease” means, as to any Person, any lease (including a lease
that may be terminated by the lessee at any time) of any Property (whether
real, personal or mixed) (a) that is accounted for as an operating lease
under GAAP and (b) in respect of which the lessee retains or obtains
ownership of the Property so leased for U.S. Federal income tax purposes, other
than any such lease under which such Person is the lessor.

 

“Taxes”
means any and all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest additions to tax or penalties applicable
thereto.

 

“TEC” means Trust Energy
Company, a Kentucky limited liability company.

 

“Termination
Date” means the earlier of the Maturity Date and the date of
termination of the Commitments.

 

“Title Indemnity Agreement”
means that certain Title Indemnity Agreement executed by NRC, Ariana and TEC
for the benefit of Administrative Agent dated as of January 3, 2007.

 

20

 

“Total
Debt” means, at any date, all Debt of the Borrower and the
Consolidated Subsidiaries on a consolidated basis, excluding (i) non-cash
obligations under FAS 133 and (ii) accounts payable and other accrued
liabilities (for the deferred purchase price of Property or services) from time
to time incurred in the ordinary course of business which are not greater than
sixty (60) days past the date of invoice or delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
are maintained in accordance with GAAP.

 

“Transactions”
means, with respect to (a) the Borrower, the execution, delivery and
performance by the Borrower of this Agreement, and each other Loan Document to
which it is a party, the borrowing of Loans, the use of the proceeds thereof
and the issuance of Letters of Credit hereunder, and the grant of Liens by the
Borrower on Mortgaged Properties and other Properties pursuant to the Security
Instruments and (b) each Guarantor, the execution, delivery and
performance by such Guarantor of each Loan Document to which it is a party, the
guaranteeing of the Indebtedness and the other obligations under the Guaranty
Agreement by such Guarantor and such Guarantor’s grant of the security
interests and provision of collateral under the Security Instruments, and the
grant of Liens by such Guarantor on Mortgaged Properties and other Properties
pursuant to the Security Instruments.

 

“Type”,
when used in reference to any Loan or Borrowing, refers to whether the rate of interest
on such Loan, or on the Loans comprising such Borrowing, is determined by
reference to the Alternate Base Rate or the Adjusted LIBO Rate.

 

“Vanguard Permian”  means Vanguard Permian, LLC, a Delaware limited liability
company.

 

“Wholly-Owned
Subsidiary” means (a) any Subsidiary of which all of the
outstanding Equity Interests, on a fully-diluted basis, are owned by the
Borrower or one or more of the Wholly-Owned Subsidiaries or are owned by the
Borrower and one or more of the Wholly-Owned Subsidiaries or (b) any
Subsidiary that is organized in a foreign jurisdiction and is required by the
applicable laws and regulations of such foreign jurisdiction to be partially
owned by the government of such foreign jurisdiction or individual or corporate
citizens of such foreign jurisdiction, provided that the Borrower, directly or
indirectly, owns the remaining Equity Interests in such Subsidiary and, by
contract or otherwise, controls the management and business of such Subsidiary
and derives economic benefits of ownership of such Subsidiary to substantially
the same extent as if such Subsidiary were a Wholly-Owned Subsidiary.

 

Section 1.03.                             Types of Loans and
Borrowings.  For
purposes of this Agreement, Loans and Borrowings, respectively, may be
classified and referred to by Type (e.g., a “Eurodollar Loan” or a “Eurodollar
Borrowing”).

 

Section 1.04.                             Terms Generally; Rules of
Construction.  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 

 

21

 

agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth in the Loan Documents), (b) any
reference herein to any law shall be construed as referring to such law as
amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be
construed to include such Person’s successors and assigns (subject to the
restrictions contained in the Loan Documents), (d) 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, (e) except
as otherwise specified herein, with respect to the determination of any time
period, the word “from” means “from and including” and the word “to” means “to
and including”, (f) any reference herein to Articles, Sections, Annexes,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Annexes, Exhibits and Schedules to, this Agreement and (g) 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. 
No provision of this Agreement or any other Loan Document shall be
interpreted or construed against any Person solely because such Person or its
legal representative drafted such provision.

 

Section 1.05.                             Accounting Terms and
Determinations; GAAP.  Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished to the Administrative Agent or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a
basis consistent with the Financial Statements except for changes in which the
Borrower’s independent certified public accountants concur and which are
disclosed to Administrative Agent on the next date on which financial
statements are required to be delivered to the Lenders pursuant to Section 8.01(a);
provided that, unless the Borrower and the Majority Lenders shall otherwise
agree in writing, no such change shall modify or affect the manner in which
compliance with the covenants contained herein is computed such that all such
computations shall be conducted utilizing financial information presented
consistently with prior periods.

 

ARTICLE II

The Credits

 

Section 2.01.                             Commitments.  Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees to make Loans to the Borrower during the Availability Period in an
aggregate principal amount that will not result in (a) such Lender’s
Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the
total Revolving Credit Exposures exceeding the total Commitments.  Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, repay and
reborrow the Loans.

 

Section 2.02.                             Loans and
Borrowings.

 

(a)                                  Borrowings;
Several Obligations.  Each Loan
shall be made as part of a Borrowing consisting of Loans made by the Lenders
ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan
required to be made by it shall not 

 

22

 

relieve any other Lender of its obligations
hereunder; provided that the Commitments are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.

 

(b)                                 Types of Loans.  Subject to Section 3.03, each
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith. 
Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of
the Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)                                  Minimum
Amounts; Limitation on Number of Borrowings.  At the commencement of each Interest Period
for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $500,000 and not less than $2,500,000.  At the time that each ABR Borrowing is made,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $1,000,000; provided that an ABR Borrowing may be in
an aggregate amount that is equal to the entire unused balance of the total
Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.08(e).  Borrowings of more than one Type may be
outstanding at the same time, provided that there shall not at any time be more
than a total of eight Eurodollar Borrowings outstanding.  Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to elect to
convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.

 

(d)                                 Notes.  The Loans made by each Lender shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit A, dated, in the case of (i) any Lender party
hereto as of the date of this Agreement, as of the date of this Agreement, or (ii) any
Lender that becomes a party hereto pursuant to an Assignment and Assumption, as
of the effective date of the Assignment and Assumption, payable to the order of
such Lender in a principal amount equal to its Maximum Credit Amount as in
effect on such date, and otherwise duly completed.  In the event that any Lender’s Maximum Credit
Amount increases or decreases for any reason (whether pursuant to Section 2.06,
Section 12.04(b) or otherwise), the Borrower shall deliver or cause
to be delivered on the effective date of such increase or decrease, a new Note
payable to the order of such Lender in a principal amount equal to its Maximum
Credit Amount after giving effect to such increase or decrease, and otherwise
duly completed.  The date, amount, Type,
interest rate and, if applicable, Interest Period of each Loan made by each
Lender, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Note, and, prior to any transfer,
may be endorsed by such Lender on a schedule attached to such Note or any
continuation thereof or on any separate record maintained by such Lender.  Failure to make any such notation or to
attach a schedule shall not affect any Lender’s or the Borrower’s rights or
obligations in respect of such Loans or affect the validity of such transfer by
any Lender of its Note.

 

Section 2.03.                             Requests for Borrowings.  To request a Borrowing, the Borrower shall
notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 11:00 a.m., Dallas, Texas
time, on the date of the proposed Borrowing; provided that no such notice shall
be 

 

23

 

required for any deemed request of an ABR Borrowing to finance the
reimbursement of an LC Disbursement as provided in Section 2.08(e).  Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or telecopy to
the Administrative Agent of a written Borrowing Request in substantially the
form of Exhibit B and signed by the Borrower.  Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:

 

(i)                                     the aggregate
amount of the requested Borrowing;

 

(ii)                                  the date of
such Borrowing, which shall be a Business Day;

 

(iii)                               whether such
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

 

(iv)                              in the case of
a Eurodollar Borrowing, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term “Interest
Period”;

 

(v)                                 the amount of
the then effective Borrowing Base, the current total Revolving Credit Exposures
(without regard to the requested Borrowing) and the pro forma total Revolving Credit Exposures (giving effect to the
requested Borrowing); and

 

(vi)                              the location
and number of the Borrower’s account to which funds are to be disbursed, which
shall comply with the requirements of Section 2.05.

 

If no election as to the Type of Borrowing is
specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be
deemed to have selected an Interest Period of one month’s duration.  Each Borrowing Request shall constitute a
representation that the amount of the requested Borrowing shall not cause the
total Revolving Credit Exposures to exceed the total Commitments (i.e., the
lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing
Base).

 

Promptly following receipt of a Borrowing Request in
accordance with this Section 2.03, the Administrative Agent shall
advise each Lender of the details thereof and of the amount of such Lender’s
Loan to be made as part of the requested Borrowing.

 

Section 2.04.                             Interest
Elections.

 

(a)                                  Conversion and
Continuance.  Each
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert
such Borrowing to a different Type or to continue such Borrowing and, in the
case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as
provided in this Section 2.04. 
The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

 

24

 

(b)                                 Interest
Election Requests.  To make an
election pursuant to this Section 2.04, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Borrowing of the Type resulting from such election
to be made on the effective date of such election.  Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery
or telecopy to the Administrative Agent of a written Interest Election Request
in substantially the form of Exhibit C and signed by the Borrower.

 

(c)                                  Information in
Interest Election Requests.  Each telephonic and written Interest Election
Request shall specify the following information in compliance with Section 2.02:

 

(i)                                     the Borrowing
to which such Interest Election Request applies and, if different options are
being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the information to
be specified pursuant to Section 2.04(c)(iii) and (iv) shall
be specified for each resulting Borrowing);

 

(ii)                                  the effective
date of the election made pursuant to such Interest Election Request, which
shall be a Business Day;

 

(iii)                               whether the
resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)                              if the
resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a
Eurodollar Borrowing but does not specify an Interest Period, then the Borrower
shall be deemed to have selected an Interest Period of one month’s
duration.  If such Interest Election
Request does not specify a Type, then the Borrower shall be deemed to have
selected a Type of ABR Borrowing.

 

(d)                                 Notice to
Lenders by the Administrative Agent.  Promptly following receipt of an Interest
Election Request, the Administrative Agent shall advise each Lender of the
details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)                                  Effect of
Failure to Deliver Timely Interest Election Request and Events of Default and
Borrowing Base Deficiencies on Interest Election.  If the Borrower fails to deliver a timely
Interest Election Request with respect to a Eurodollar Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. 
Notwithstanding any contrary provision hereof, if an Event of Default or
a Borrowing Base Deficiency has occurred and is continuing:  (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing (and any Interest Election
Request that requests the conversion of any Borrowing to, or continuation of
any Borrowing as, a Eurodollar Borrowing shall be ineffective) and (ii) unless
repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the
end of the Interest Period applicable thereto.

 

25

 

Section 2.05.                             Funding
of Borrowings.

 

(a)                                  Funding
by Lenders.  Each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 1:00 p.m., Dallas, Texas time,
to the account of the Administrative Agent most recently designated by it for
such purpose by notice to the Lenders. 
The Administrative Agent will make such Loans available to the Borrower
by promptly crediting the amounts so received, in like funds, to an account of
the Borrower maintained with the Administrative Agent and designated by the
Borrower in the applicable Borrowing Request; provided that ABR Loans made to
finance the reimbursement of an LC Disbursement as provided in Section 2.08(e) shall
be remitted by the Administrative Agent to the Issuing Bank.  Nothing herein shall be deemed to obligate
any Lender to obtain the funds for its Loan in any particular place or manner
or to constitute a representation by any Lender that it has obtained or will
obtain the funds for its Loan in any particular place or manner.

 

(b)                                 Presumption
of Funding by the Lenders.  Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.05(a) and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of
the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation
and (ii) in the case of the Borrower, the interest rate applicable to ABR
Loans.  If the Borrower and such Lender shall pay such interest to the
Administrative Agent for the same or an overlapping period, the Administrative
Agent shall promptly remit to the Borrower the amount of such interest paid by
the Borrower for such period.  If such
Lender pays its share of the applicable Borrowing to the Administrative Agent,
then the amount so paid shall constitute such Lender’s Loan included in such
Borrowing.  Any payment by the Borrower
shall be without prejudice to any claim the Borrower may have against a Lender
that shall have failed to make such payment to the Administrative Agent.

 

Section 2.06.                             Termination
and Reduction of Aggregate Maximum Credit Amounts.

 

(a)                                  Scheduled
Termination of Commitments.  Unless
previously terminated, the Commitments shall terminate on the Maturity
Date.  If at any time the Aggregate
Maximum Credit Amounts or the Borrowing Base is terminated or reduced to zero,
then the Commitments shall terminate on the effective date of such termination
or reduction.

 

(b)                                 Optional
Termination and Reduction of Aggregate Credit Amounts.

 

(i)                                     The
Borrower may at any time terminate, or from time to time reduce, the Aggregate
Maximum Credit Amounts; provided that (A) each reduction of the 

 

26

 

Aggregate Maximum Credit
Amounts shall be in an amount that is an integral multiple of $500,000 and not
less than $2,500,000 and (B) the Borrower shall not terminate or reduce
the Aggregate Maximum Credit Amounts if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 3.04(c), the
total Revolving Credit Exposures would exceed the total Commitments.

 

(ii)                                  The
Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Aggregate Maximum Credit Amounts under Section 2.06(b)(i) at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower
pursuant to this Section 2.06(b)(ii) shall be
irrevocable.  Any termination or
reduction of the Aggregate Maximum Credit Amounts shall be permanent and may
not be reinstated.  Each reduction of the
Aggregate Maximum Credit Amounts shall be made ratably among the Lenders in
accordance with each Lender’s Applicable Percentage.

 

Section 2.07.                             Borrowing
Base.

 

(a)                                  Borrowing
Base.  The term “Borrowing Base” means, as of the date
of the determination thereof, the designated loan value as calculated by the
Lenders in their sole discretion assigned to the discounted present value of
future net income accruing to the Mortgaged Property, based upon the Lenders’
in-house evaluation of the Mortgaged Property. 
The Lenders’ determination of the Borrowing Base will be made in
accordance with then-current practices, economic and pricing parameters,
methodology, assumptions, and customary procedures and standards established by
each Lender from time to time for its petroleum industry customers.  The Borrower acknowledges that the
determination of the Borrowing Base contains an equity cushion (market value in
excess of loan amount) which the Borrower acknowledges to be essential for the
adequate protection of the Lenders.  For
the period from and including the date hereof but excluding the next
Redetermination Date, the amount of the Borrowing Base shall be $110,500,000;
provided, however, that upon the satisfaction of the conditions set forth in Section 6.03,
the amount of the Borrowing Base shall be $150,000,000.  Notwithstanding the foregoing, the Borrowing
Base may be subject to further adjustments from time to time pursuant to Section 8.13(c).

 

(b)                                 Scheduled
and Interim Redeterminations.  The
Borrowing Base shall be redetermined semi-annually in accordance with this Section 2.07
(a “Scheduled
Redetermination”), and, subject to Section 2.07(d),
such redetermined Borrowing Base shall become effective and applicable to the
Borrower, the Agents, the Issuing Bank and the Lenders on April 1st and October 1st
of each year, commencing April 1, 2008. 
In addition, the Borrower may, by notifying the Administrative Agent
thereof, not more than two (2) times during any 12-month period, and the
Administrative Agent may at any time, at the direction of the Majority Lenders,
by notifying the Borrower thereof, each elect to cause the Borrowing Base to be
redetermined between Scheduled Redeterminations (an “Interim Redetermination”)
in accordance with this Section 2.07.

 

27

 

(c)                                  Scheduled
and Interim  Redetermination Procedure.

 

(i)                                     Each
Scheduled Redetermination and each Interim Redetermination shall be effectuated
as follows:  Upon receipt by the
Administrative Agent of (A) the Reserve Report and the certificate
required to be delivered by the Borrower to the Administrative Agent, in the
case of a Scheduled Redetermination, pursuant to Section 8.12(a) and
(c), and, in the case of an Interim Redetermination, pursuant to Section 8.12(b) and
(c), and (B) such other reports, data and supplemental information,
including, without limitation, the information provided pursuant to Section 8.12(c),
as may, from time to time, be reasonably requested by the Majority Lenders (the
Reserve Report, such certificate and such other reports, data and supplemental
information being the “Engineering Reports”), the Administrative Agent shall
evaluate the information contained in the Engineering Reports and shall, in
good faith, propose a new Borrowing Base (the “Proposed Borrowing Base”)
based upon such information and such other information (including, without
limitation, the status of title information with respect to the Oil and Gas
Properties as described in the Engineering Reports and the existence of any
other Debt) as the Administrative Agent deems appropriate in its sole
discretion and consistent with its normal oil and gas lending criteria as it
exists at the particular time.  In no
event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit
Amounts.

 

(ii)                                  The
Administrative Agent shall notify the Borrower and the Lenders of the Proposed
Borrowing Base (the “Proposed Borrowing Base Notice”):

 

(A)                              in
the case of a Scheduled Redetermination (1) if the Administrative Agent
shall have received the Engineering Reports required to be delivered by the
Borrower pursuant to Section 8.12(a) and (c) in a
timely and complete manner, then on or before the March 1st and September 1st
of such year following the date of delivery or (2) if the Administrative
Agent shall not have received the Engineering Reports required to be delivered
by the Borrower pursuant to Section 8.12(a) and (c) in a
timely and complete manner, then promptly after the Administrative Agent has
received complete Engineering Reports from the Borrower and has had a
reasonable opportunity to determine the Proposed Borrowing Base in accordance
with Section 2.07(c)(i), and in any event, with thirty (30) days
after the Administrative Agent has received the required Engineering Reports;
and

 

(B)                                in
the case of an Interim Redetermination, promptly, and in any event, within
fifteen (15) days after the Administrative Agent has received the required
Engineering Reports.

 

(iii)                               Any
Proposed Borrowing Base that would increase the Borrowing Base then in effect
must be approved by all of the Lenders as provided in this Section 2.07(c)(iii);
and any Proposed Borrowing Base that would decrease or maintain the Borrowing
Base then in effect must be approved by the Majority Lenders as provided in
this Section 2.07(c)(iii). 
Upon receipt of the Proposed Borrowing Base Notice, each Lender shall
have fifteen (15) days to agree with the Proposed Borrowing Base or disagree
with the Proposed Borrowing Base by proposing an alternate Borrowing Base.  If, at the end of such fifteen (15) days, any
Lender has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be disapproval of the
Proposed Borrowing Base.  If, at the end
of such 15-day period, all of the Lenders, in the case of a Proposed 

 

28

 

Borrowing Base that would
increase the Borrowing Base then in effect, or the Majority Lenders, in the
case of a Proposed Borrowing Base that would decrease or maintain the Borrowing
Base then in effect, have approved, as aforesaid, then the Proposed Borrowing
Base shall become the new Borrowing Base, effective on the date specified in Section 2.07(d).  If, however, at the end of such 15-day period,
all of the Lenders or the Majority Lenders, as applicable, have not approved,
as aforesaid, the Proposed Borrowing Base, then the Administrative Agent shall
poll the Lenders to ascertain the highest Borrowing Base then acceptable to all
of the Lenders or the Majority Lenders, as applicable, and, such amount shall
become the new Borrowing Base, effective on the date specified in Section 2.07(d).

 

(iv)                              If
any Lender disagrees with the Proposed Borrowing Base that would increase the
then existing Borrowing Base (each, a “Dissenting
Lender”), then, if a Borrowing Base is agreed to that is lower
than such Proposed Borrowing Base or no new Borrowing Base is agreed to, the
Borrower may, at its sole expense and effort, upon notice to a Dissenting
Lender and the Administrative Agent, require such Dissenting Lender to assign
and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 12.04(b)), all of its interests,
rights and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that, (A) the Borrower shall have received the
prior written consent of the Administrative Agent and the Issuing Bank, which
consent in each case shall not unreasonably be withheld or delayed and (B) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts).

 

(d)                                 Effectiveness
of a Redetermined Borrowing Base. 
After a redetermined Borrowing Base is approved by all of the Lenders or
the Majority Lenders, as applicable, pursuant to Section 2.07(c)(iii),
the Administrative Agent shall notify the Borrower and the Lenders of the
amount of the redetermined Borrowing Base (the “New Borrowing Base Notice”),
and such amount shall become the new Borrowing Base, effective and applicable
to the Borrower, the Administrative Agent, the Issuing Bank and the Lenders:

 

(i)                                     in
the case of a Scheduled Redetermination, (A) if the Administrative Agent
shall have received the Engineering Reports required to be delivered by the
Borrower pursuant to Section 8.12(a) and (c) in a
timely and complete manner, then on the April 1st or October 1st, as
applicable, following such notice, or (B) if the Administrative Agent
shall not have received the Engineering Reports required to be delivered by the
Borrower pursuant to Section 8.12(a) and (c) in a
timely and complete manner, then on the Business Day next succeeding delivery
of such notice; and

 

(ii)                                  in
the case of an Interim Redetermination, on the Business Day next succeeding
delivery of such notice.

 

Such amount shall then become the Borrowing Base until
the next Scheduled Redetermination Date, the next Interim Redetermination Date
or the next adjustment to the Borrowing Base under Section 8.13(c),
whichever occurs first.  Notwithstanding
the foregoing, no Scheduled 

 

29

 

Redetermination or Interim Redetermination shall
become effective until the New Borrowing Base Notice related thereto is
received by the Borrower.

 

Section 2.08.                             Letters
of Credit.

 

(a)                                  General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of dollar denominated Letters of
Credit for its own account or for the account of any of its Subsidiaries, in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the Availability Period; provided that
the Borrower may not request the issuance, amendment, renewal or extension of
Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time
or would exist as a result thereof.  In
the event of any inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control.

 

(b)                                 Notice
of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter of Credit),
the Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (not less than three (3) Business
Days in advance of the requested date of issuance, amendment, renewal or
extension) a notice:

 

(i)                                     requesting
the issuance of a Letter of Credit or identifying the Letter of Credit to be
amended, renewed or extended;

 

(ii)                                  specifying
the date of issuance, amendment, renewal or extension (which shall be a
Business Day);

 

(iii)                               specifying
the date on which such Letter of Credit is to expire (which shall comply with Section 2.08(c));

 

(iv)                              specifying
the amount of such Letter of Credit;

 

(v)                                 specifying
the name and address of the beneficiary thereof and such other information as
shall be necessary to prepare, amend, renew or extend such Letter of Credit;
and

 

(vi)                              specifying
the amount of the then effective Borrowing Base and whether a Borrowing Base
Deficiency exists at such time, the current total Revolving Credit Exposures
(without regard to the requested Letter of Credit or the requested amendment,
renewal or extension of an outstanding Letter of Credit) and the pro forma total Revolving Credit
Exposures (giving effect to the requested Letter of Credit or the requested
amendment, renewal or extension of an outstanding Letter of Credit).

 

Each notice shall constitute a representation that
after giving effect to the requested issuance, amendment, renewal or extension,
as applicable, (i) the LC Exposure shall not exceed the LC 

 

30

 

Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).

 

If requested by the Issuing Bank, the
Borrower also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit.

 

(c)                                  Expiration
Date.  Each Letter of Credit shall
expire at or prior to the close of business on the earlier of (i) the date
one year after the date of the issuance of such Letter of Credit (or, in the
case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) the date that is five Business Days prior to the Maturity
Date; provided, however, that a Letter of Credit may, upon the request of the
Borrower, include a provision whereby such Letter of Credit shall be renewed
automatically for additional consecutive periods of 12 months or less (but not
beyond the date that is five Business Days prior to the Maturity Date) unless
the Issuing Bank notifies the beneficiary thereof at least 30 days (or such
longer period as may be specified in such Letter of Credit) prior to the
then-applicable expiration date that such Letter of Credit will not be renewed.

 

(d)                                 Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender’s
Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit.  In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement
made by the Issuing Bank and not reimbursed by the Borrower on the date due as
provided in Section 2.08(e), or of any reimbursement payment
required to be refunded to the Borrower for any reason.  Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this Section 2.08(d) in
respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a
Default, the existence of a Borrowing Base Deficiency or reduction or
termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.

 

(e)                                  Reimbursement.  If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the date
that such LC Disbursement is made, if the Borrower shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York City time, on such
date, or, if such notice has not been received by the Borrower prior to such
time on such date, then not later than 12:00 noon, New York City time, on (i) the
Business Day that the Borrower receives such notice, if such notice is received
prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of
receipt; provided that if such LC Disbursement is not less than $1,000,000, the
Borrower shall, subject to the conditions to Borrowing set forth herein, be
deemed to have requested, and the Borrower does hereby request 

 

31

 

under such circumstances, that
such payment be financed with an ABR Borrowing in an equivalent amount and, to
the extent so financed, the Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting ABR Borrowing.  If the Borrower fails to make such payment
when due, the Administrative Agent shall notify each Lender of the applicable
LC Disbursement, the payment then due from the Borrower in respect thereof and
such Lender’s Applicable Percentage thereof. 
Promptly following receipt of such notice, each Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.05 with
respect to Loans made by such Lender (and Section 2.05 shall apply,
mutatis mutandis, to the
payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the
Lenders.  Promptly following receipt by
the Administrative Agent of any payment from the Borrower pursuant to this Section 2.08(e),
the Administrative Agent shall distribute such payment to the Issuing Bank or,
to the extent that Lenders have made payments pursuant to this Section 2.08(e) to
reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their
interests may appear.  Any payment made
by a Lender pursuant to this Section 2.08(e) to reimburse the
Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as
contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.

 

(f)                                    Obligations
Absolute.  The Borrower’s obligation
to reimburse LC Disbursements as provided in Section 2.08(e) shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability
of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or
any term or provision therein, (ii) any draft or other document presented
under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect, (iii) payment
by the Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section 2.08(f), constitute a legal or
equitable discharge of, or provide a right of setoff against, the Borrower’s
obligations hereunder.  Neither the
Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of
the Issuing Bank; provided that the foregoing shall not be construed to excuse
the Issuing Bank from liability to the Borrower to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Issuing Bank’s failure to
exercise care when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in
the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised all requisite care in each such
determination.  In furtherance of the 

 

32

 

foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.

 

(g)                                 Disbursement
Procedures.  The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay in
giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.

 

(h)                                 Interim
Interest.  If the Issuing Bank shall
make any LC Disbursement, then, until the Borrower shall have reimbursed the
Issuing Bank for such LC Disbursement (either with its own funds or a Borrowing
under Section 2.08(e)), the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Loans.  Interest accrued pursuant to this Section 2.08(h) shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(e) to
reimburse the Issuing Bank shall be for the account of such Lender to the
extent of such payment.

 

(i)                                     Replacement
of the Issuing Bank.  The Issuing
Bank may be replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing
Bank.  The Administrative Agent shall
notify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 3.05(b).  From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the replacement of the
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of the Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.

 

(j)                                     Cash
Collateralization.  If (i) any
Event of Default shall occur and be continuing and the Borrower receives notice
from the Administrative Agent or the Majority Lenders demanding the deposit of
cash collateral pursuant to this Section 2.08(j), or (ii) the
Borrower is required to pay to the Administrative Agent the excess attributable
to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c),
then the Borrower shall deposit, in an account with the Administrative Agent
(the “LC
Collection Account”), in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash equal 

 

33

 

to, in the case of an Event of
Default, the LC Exposure, and in the case of a payment required by Section 3.04(c),
the amount of such excess as provided in Section 3.04(c), as of
such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower or any Subsidiary described in Section 10.01(h) or
Section 10.01(i).  The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Bank and the Lenders, an exclusive first priority and continuing
perfected security interest in and Lien on the LC Collection Account and all
cash, checks, drafts, certificates and instruments, if any, from time to time
deposited or held in the LC Collection Account, all deposits or wire transfers
made thereto, any and all investments purchased with funds deposited in such
account, all interest, dividends, cash, instruments, financial assets and other
Property from time to time received, receivable or otherwise payable in respect
of, or in exchange for, any or all of the foregoing, and all proceeds,
products, accessions, rents, profits, income and benefits therefrom, and any
substitutions and replacements therefor. 
The Borrower’s obligation to deposit amounts pursuant to this Section 2.08(j) shall
be absolute and unconditional, without regard to whether any beneficiary of any
such Letter of Credit has attempted to draw down all or a portion of such
amount under the terms of a Letter of Credit, and, to the fullest extent
permitted by applicable law, shall not be subject to any defense or be affected
by a right of set-off, counterclaim or recoupment which the Borrower or any of
its Subsidiaries may now or hereafter have against any such beneficiary, the
Issuing Bank, the Administrative Agent, the Lenders or any other Person for any
reason whatsoever.  Such deposit shall be
held as collateral securing the payment and performance of the Borrower’s and
the Guarantors’ obligations under this Agreement and the other Loan
Documents.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over the LC Collection Account. 
Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the
Administrative Agent and at the Borrower’s risk and expense, such deposits
shall not bear interest.  Interest or
profits, if any, on such investments shall accumulate in the LC Collection
Account.  Moneys in the LC Collection
Account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the
maturity of the Loans has been accelerated, be applied to satisfy other
obligations of the Borrower and the Guarantors under this Agreement or the
other Loan Documents.  If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, and the Borrower is not otherwise required
to pay to the Administrative Agent the excess attributable to an LC Exposure in
connection with any prepayment pursuant to Section 3.04(c), then
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.  If the Borrower is required
to provide an amount in cash collateral hereunder as a result of any prepayment
pursuant to Section 3.04(c) and the Borrower is not otherwise
required to pay to the Administrative Agent an amount equal to the LC Exposure
as a result of the occurrence of an Event of Default, then if the total
Revolving Credit Exposure is reduced (whether pursuant to Section 3.04(a),
the expiration of Letters of Credit or otherwise) and/or the Borrowing Base is
increased in accordance with Section 2.07, as a result of which a
Borrowing Base Deficiency no longer exists and so long no Default has occurred
and is continuing, the Administrative Agent 

 

34

 

shall return to the Borrower
such amount but only to the extent that the then effective Borrowing Base
exceeds the total Revolving Credit Exposures by not less than $1,000,000.

 

Section 2.09.                             Collateral.

 

(a)                                  Mortgaged
Property.  The payment and
performance of the Notes and all of the other Indebtedness hereunder and under
the Loan Documents, and under the Swap Agreements, and the reimbursement
obligations under the Letters of Credit, shall be secured by a first and
superior Lien against the entire interest of the Borrower and each Subsidiary
and NRC in substantially all of their Oil and Gas Properties, pursuant to the
terms of one or more Mortgages in favor of the Administrative Agent for the
ratable benefit of the Lenders and the Swap Lenders, which Mortgages shall be
satisfactory in form and substance to the Administrative Agent.

 

(b)                                 Guarantees
and Pledges of Equity Interests.  The
payment and performance of the Notes and all of the other Indebtedness
hereunder, under the Loan Documents, and under the Swap Agreements, and the
reimbursement obligations under the Letters of Credit, (A) shall be
unconditionally guaranteed by each Subsidiary pursuant to one or more Guaranty
Agreements, and (B) shall be secured by a first priority Lien against the
Equity Interests of each Subsidiary pursuant to a Subsidiary Pledge
Agreement.  Reference is made to Section 8.14
of this Agreement for further provisions with respect to additional Guarantors
and additional collateral.

 

(c)                                  Release
of 60% Interest in Asher PUD Properties. 
The Administrative Agent shall release its lien against a 60% interest
in the Asher PUD Properties and shall release NRC from its Guaranty Agreement
upon the occurrence of all of the following: 
(i) receipt of consent from Asher Land and Mineral, Ltd. and the
recorded assignment of the Asher PD Properties and the Asher PUD Properties by
NRC to TEC; (ii) receipt of supplemental 
Mortgages or other documents executed by TEC as the Administrative Agent
may require to confirm that the Lien granted by NRC against the Asher PD
Properties and the remaining 40% interest in the Asher PUD Properties continues
to secure all of the Indebtedness of Borrower hereunder following transfer of
title to such properties to TEC; (iii) payment of all expenses of the
Administrative Agent in connection with such release, including without
limitation, the expenses and reasonable fees of counsel for the Administrative
Agent; and (iv) no Default shall then be continuing.  The terms “Asher PD Properties” and “Asher
PUD Properties” as used in the preceding sentence have the same meanings as
provided in the Original Second Amendment to Credit Agreement.

 

ARTICLE III

Payments of Principal and Interest; Prepayments; Fees

 

Section 3.01.                             Repayment
of Loans.  The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Loan on the Termination
Date.

 

35

 

Section 3.02.                             Interest.

 

(a)                                  ABR
Loans.  The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate plus the Applicable
Margin, but in no event to exceed the Highest Lawful Rate.

 

(b)                                 Eurodollar
Loans.  The Loans comprising each
Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Margin, but in
no event to exceed the Highest Lawful Rate.

 

(c)                                  Post-Default
Rate.  Notwithstanding the foregoing,
(i) if an Event of Default has occurred and is continuing, or if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower or any Guarantor hereunder or under any other Loan Document is not
paid when due, whether at stated maturity, upon acceleration or otherwise, and
including any payments in respect of a Borrowing Base Deficiency under Section 3.04(c),
then all Loans outstanding, in the case of an Event of Default, and such
overdue amount, in the case of a failure to pay amounts when due, shall bear
interest, after as well as before judgment, at a rate per annum equal to three
percent (3%) plus the rate applicable to ABR Loans as provided in Section 3.02(a),
but in no event to exceed the Highest Lawful Rate, and (ii)  during any
Borrowing Base Deficiency (after the expiration of the 30-day or 90-day period
provided in Section 3.04(c)(ii), as applicable), all Loans
outstanding at such time shall bear interest, after as well as before judgment,
at the rate then applicable to such Loans, plus the Applicable Margin, if any,
plus an additional three percent (3%), but in no event to exceed the Highest
Lawful Rate.

 

(d)                                 Interest
Payment Dates.  Accrued interest on
each Loan shall be payable in arrears on each Interest Payment Date for such
Loan and on the Termination Date; provided that (i) interest accrued
pursuant to Section 3.02(c) shall be payable on demand, (ii)  in
the event of any repayment or prepayment of any Loan (other than an optional
prepayment of an ABR Loan prior to the Termination Date), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

 

(e)                                  Interest
Rate Computations.  All interest
hereunder shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which case interest shall
be computed on the basis of a year of 365 days (or 366 days in a leap year),
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on
the basis of a year of 365 days (or 366 days in a leap year), and in each case
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).  The
applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.

 

36

 

Section 3.03.          Alternate
Rate of Interest.  If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

 

(a)           the Administrative
Agent determines (which determination shall be conclusive absent manifest
error) that adequate and reasonable means do not exist for ascertaining the
Adjusted LIBO Rate or the LIBO Rate for such Interest Period; or

 

(b)           the Administrative
Agent is advised by the Majority Lenders that the Adjusted LIBO Rate or LIBO
Rate, as applicable, for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;

 

then the Administrative Agent shall give notice
thereof to the Borrower and the Lenders by telephone or telecopy as promptly as
practicable thereafter and, until the Administrative Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective (and shall be deemed to be a request
for an ABR Borrowing), and (ii) if any Borrowing Request requests a
Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

 

Section 3.04.          Prepayments.

 

(a)           Optional Prepayments.  The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, subject to
prior notice in accordance with Section 3.04(b).

 

(b)           Notice and Terms of
Optional Prepayment.  The Borrower
shall notify the Administrative Agent by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m., Dallas, Texas time, three Business
Days before the date of prepayment, or (ii) in the case of prepayment of
an ABR Borrowing, not later than 11:00 a.m. Dallas, Texas time, one
Business Day before the date of prepayment. 
Each such notice shall be irrevocable and shall specify the prepayment
date and the principal amount of each Borrowing or portion thereof to be
prepaid.  Promptly following receipt of
any such notice relating to a Borrowing, the Administrative Agent shall advise
the Lenders of the contents thereof. 
Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02.  Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing.  Prepayments shall be
accompanied by accrued interest to the extent required by Section 3.02.

 

(c)           Mandatory
Prepayments.

 

(i)             If, after giving
effect to any termination or reduction of the Aggregate Maximum Credit Amounts
pursuant to Section 2.06(b), the total Revolving Credit Exposures
exceeds the total Commitments, then the Borrower shall (A) prepay the
Borrowings on the date of such termination or reduction in an aggregate
principal amount equal to such excess, and (B) if any excess remains after
prepaying all of the Borrowings as a result of an LC 

 

37

 

Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j).

 

(ii)            If, upon any
redetermination of or adjustment to the amount of the Borrowing Base in
accordance with Section 2.07 or pursuant to Section 8.13(c),
a Borrowing Base Deficiency exists, then the Borrower shall either prepay the Borrowings
in an aggregate principal amount equal to such deficiency, or provide
additional Mortgaged Property to secure Indebtedness having a fair market value
equal to or greater than the amount of such deficiency (or the remaining
balance of such deficiency after any prepayments), and if any deficiency
remains after prepaying all of the Borrowings or providing additional Mortgaged
Property as a result of any LC Exposure, the Borrower shall pay to the
Administrative Agent on behalf of the Lenders an amount equal to such
deficiency to be held as cash collateral as provided in Section 2.08(j).  The Borrower shall be obligated to make any
such principal prepayment or deposit of cash collateral in an amount equal to
such deficiency within 30 days, or in six monthly installments beginning within
30 days, following its receipt of the New Borrowing Base Notice in accordance
with Section 2.07(d) or the date the adjustment occurs, and/or
to provide additional Mortgaged Property within 90 days following its receipt
of such New Borrowing Base Notice or the date such adjustment occurs; provided
that all payments and/or deposits required to be made pursuant to this Section 3.04(c)(ii) must
be made on or prior to the Termination Date.

 

(iii)           Each prepayment of
Borrowings pursuant to this Section 3.04(c) shall be applied,
first, ratably to any ABR Borrowings then outstanding, and, second, to any
Eurodollar Borrowings then outstanding, and if more than one Eurodollar
Borrowing is then outstanding, to each such Eurodollar Borrowing in order of
priority beginning with the Eurodollar Borrowing with the least number of days
remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.

 

(iv)           Each prepayment of
Borrowings pursuant to this Section 3.04(c) shall be applied
ratably to the Loans included in the prepaid Borrowings.  Prepayments pursuant to this Section 3.04(c) shall
be accompanied by accrued interest to the extent required by Section 3.02.

 

(d)           No Premium or
Penalty.  Prepayments permitted or
required under this Section 3.04 shall be without premium or
penalty, except as required under Section 5.02.

 

(e)           No Effect on Swap
Agreements.  Prepayments permitted or
required under this Section 3.04 shall not affect the Borrower’s
obligation to continue making payments under any Swap Agreement, which shall
remain in full force and effect notwithstanding such prepayment, subject to the
terms of such Swap Agreement.

 

Section 3.05.          Fees.

 

(a)           Commitment Fees.  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the applicable Commitment Fee Rate on the average daily amount
of the unused amount of the Commitment of such Lender during the period from
and including the Effective Date to but excluding the 

 

38

 

Termination Date.  Accrued commitment fees shall be payable in
arrears on the last day of March, June, September and December of
each year and on the Termination Date, commencing on the first such date to
occur after the date hereof.  All
commitment fees shall be computed on the basis of a year of 360 days, unless
such computation would exceed the Highest Lawful Rate, in which case interest
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).

 

(b)           Letter of Credit Fees.  The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the
same Applicable Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date on which such Lender’s Commitment terminates and the date on
which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank
a fronting fee, which shall accrue at the rate of 0.125% per annum on the
average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, provided that in no event shall such fee be less than $500 during any
quarter, and (iii) to the Issuing Bank, for its own account, its standard
fees with respect to the issuance, amendment, renewal or extension of any
Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued
through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Effective Date; provided
that all such fees shall be payable on the Termination Date and any such fees
accruing after the Termination Date shall be payable on demand.  Any other fees payable to the Issuing Bank
pursuant to this Section 3.05(b) shall be payable within 10
days after demand.  All participation
fees and fronting fees shall be computed on the basis of a year of 360 days,
unless such computation would exceed the Highest Lawful Rate, in which case
interest shall be computed on the basis of a year of 365 days (or 366 days in a
leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

 

(c)           Administrative Agent
Fees.  The Borrower agrees to pay to
the Administrative Agent, for its own account, fees payable in the amounts and
at the times separately agreed upon between the Borrower and the Administrative
Agent.

 

ARTICLE IV

Payments; Pro Rata Treatment; Sharing of Set-offs

 

Section 4.01.          Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a)           Payments by the
Borrower.  The Borrower shall make
each payment required to be made by it hereunder (whether of principal,
interest, fees or reimbursement of LC Disbursements, or of amounts payable
under Section 5.01, Section 5.02, Section 5.03
or otherwise) prior to 12:00 noon, New York City time, on the date when due, in
immediately 

 

39

 

available funds, without
defense, deduction, recoupment, set-off or counterclaim.  Fees, once paid, shall be fully earned and
shall not be refundable under any circumstances.  Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon.  All such payments
shall be made to the Administrative Agent at its offices specified in Section 12.01,
except payments to be made directly to the Issuing Bank as expressly provided
herein and except that payments pursuant to Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 shall be made directly
to the Persons entitled thereto.  The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof.  If any payment
hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension.  All payments
hereunder shall be made in dollars.

 

(b)           Application of
Insufficient Payments.  If at any
time insufficient funds are received by and available to the Administrative Agent
to pay fully all amounts of principal, unreimbursed LC Disbursements, interest
and fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed
LC Disbursements then due to such parties.

 

(c)           Sharing of Payments
by Lenders.  If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations
in LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall notify
the Administrative Agent of such fact and purchase (for cash at face value)
participations in the Loans and participations in LC Disbursements of other
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Loans and participations
in LC Disbursements; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to
apply to any payment made by the Borrower pursuant to and in accordance with
the express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or Participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this Section 4.01(c) shall apply).  The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

 

40

 

Section 4.02.          Presumption of
Payment by the Borrower.  Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due.  In such event, if the Borrower has
not in fact made such payment, then each of the Lenders or the Issuing Bank, as
the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or Issuing Bank
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.

 

Section 4.03.          Certain Deductions by
the Administrative Agent.  If any
Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(a),
Section 2.08(d), Section 2.08(e) or Section 4.02
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are
fully paid.

 

Section 4.04.          Disposition of
Proceeds.  The Security Instruments
contain an assignment by the Borrower and/or the Guarantors unto and in favor
of the Administrative Agent for the benefit of the Lenders of all of the
Borrower’s or each Guarantor’s interest in and to production and all proceeds
attributable thereto which may be produced from or allocated to the Mortgaged
Property.  The Security Instruments
further provide in general for the application of such proceeds to the
satisfaction of the Indebtedness and other obligations described therein and
secured thereby.  Notwithstanding the
assignment contained in such Security Instruments, until the occurrence of an
Event of Default, (a) the Administrative Agent and the Lenders agree that
they will neither notify the purchaser or purchasers of such production nor
take any other action to cause such proceeds to be remitted to the Administrative
Agent or the Lenders, but the Lenders will instead permit such proceeds to be
paid to the Borrower and its Subsidiaries and (b) the Lenders hereby
authorize the Administrative Agent to take such actions as may be necessary to
cause such proceeds to be paid to the Borrower and/or such Subsidiaries.

ARTICLE V

Increased Costs; Break Funding Payments; Taxes; Illegality

 

Section 5.01.          Increased Costs.

 

(a)           Eurodollar Changes
in Law.  If any Change in Law shall:

 

(i)            impose, modify or deem
applicable any reserve, special deposit, compulsory loan, insurance charge or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender or the Issuing Bank (except  any such reserve requirement reflected in the
Adjusted LIBO Rate);

 

41

 

(ii)           subject any Lender or the Issuing Bank to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender or the Issuing Bank in
respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 5.03
and the imposition of, or any change in the rate of, any Excluded Tax payable
by such Lender or the Issuing Bank); or

 

(iii)          impose on any Lender or
the Issuing Bank or the London interbank market any other condition affecting
this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit
or participation therein;

 

and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan
(or of maintaining its obligation to make any such Loan) or to increase the
cost to such Lender or the Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender or the Issuing Bank (whether of principal, interest
or otherwise), then the Borrower will pay to such Lender or the Issuing Bank,
as applicable, such additional amount or amounts as will compensate such Lender
or Issuing Bank, as applicable, for such additional costs incurred or reduction
suffered.

 

(b)           Capital
Requirements.  If any Lender or the
Issuing Bank determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender’s or
the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing
Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender, or the
Letters of Credit issued by the Issuing Bank, to a level below that which such
Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the Issuing Bank’s policies and the policies of
such Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s
holding company for any such reduction suffered.

 

(c)           Certificates.  A certificate of a Lender or the Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or the
Issuing Bank or its holding company, as the case may be, as specified in Section 5.01(a) or
(b) shall be delivered to the Borrower and shall be conclusive
absent manifest error.  The Borrower
shall pay such Lender or the Issuing Bank, as the case may be, the amount shown
as due on any such certificate within 10 days after receipt thereof.

 

(d)           Effect
of Failure or Delay in Requesting Compensation.  Failure or delay on the part of any Lender or
the Issuing Bank to demand compensation pursuant to this Section 5.01
shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender or the Issuing Bank pursuant to this Section 5.01
for any increased costs or reductions incurred more than 270 days prior to the
date that such Lender or the Issuing Bank, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and 

 

42

 

of such Lender’s or the Issuing
Bank’s intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then such period of retroactivity shall be added to such 270 day period for the
purpose of determining the earliest such cost or reduction which may be compensated.

 

(e)           Protection Absolute.  The protection of this Section shall be
available to each Lender and the Issuing Bank regardless of any possible
contention of the invalidity or inapplicability of the Change in Law that shall
have occurred or been imposed.

 

Section 5.02.          Break
Funding Payments.  In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of
an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan into an ABR Loan other
than on the last day of the Interest Period applicable thereto, (c) the
failure to borrow, convert, continue or prepay any Eurodollar Loan on the date
specified in any notice delivered pursuant hereto, or (d) the assignment
of any Eurodollar Loan other than on the last day of the Interest Period
applicable thereto as a result of a request by the Borrower pursuant to Section 5.04(b),
then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss,
cost or expense to any Lender shall be deemed to include an amount determined
by such Lender to be the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount of such Loan had such event
not occurred, at the Adjusted LIBO Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market.

 

A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section 5.02 shall
be delivered to the Borrower and shall be conclusive absent manifest
error.  The Borrower shall pay such
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

 

Section 5.03.          Taxes.

 

(a)           Payments Free of
Taxes.  Any and all payments by or on
account of any obligation of the Borrower or any Guarantor under any Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower or any
Guarantor 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 5.03(a)), the
Administrative Agent, Lender or Issuing Bank (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 or such Guarantor shall make such deductions and (iii) the
Borrower or such Guarantor shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

 

43

 

(b)           Payment
of Other Taxes by the Borrower.  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, each Lender and the Issuing Bank, within 10
days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Administrative Agent, such Lender or the
Issuing Bank, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower or any Guarantor hereunder or any
other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 5.03)
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 of the
Administrative Agent, a Lender or the Issuing Bank as to the amount of such
payment or liability under this Section 5.03 shall be delivered to
the Borrower and shall be conclusive absent manifest error.

 

(d)           Evidence
of Payments.  As soon as practicable
after any payment of Indemnified Taxes or Other Taxes by the Borrower or a
Guarantor 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.

 

(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 or any
other Loan Document 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. 
In addition, any Lender, if
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.

 

Without limiting the
generality of the foregoing, in the event that the Borrower is resident for tax
purposes in the United States of America, any Foreign Lender shall deliver to
the Borrower and the Administrative Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the request of the Borrower or the Administrative Agent, but only if such
Foreign Lender is legally entitled to do so), whichever of the following is
applicable:

 

(i)            duly completed copies
of Internal Revenue Service Form W-8BEN claiming eligibility for benefits
of an income tax treaty to which the United States of America is a party,

 

44

 

(ii)           duly completed copies
of Internal Revenue Service Form W-8ECI,

 

(iii)          in the case of a Foreign
Lender claiming the benefits of the exemption for portfolio interest under
section 881(c) of the Code, (x) a certificate to the effect that such
Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of
the Code, (B) a “10 percent shareholder” of the Borrower within the
meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly
completed copies of  Internal Revenue
Service Form W-8BEN, or

 

(iv)          any other form
prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed together with
such supplementary documentation as may be prescribed by applicable law to
permit the Borrower to determine the withholding or deduction required to be
made.

 

(f)            Treatment
of Certain Refunds.  If the
Administrative Agent, a Lender or the Issuing Bank 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, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent, such
Lender or the Issuing Bank, as the case may be, 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, such Lender or the Issuing Bank, 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,
such Lender or the Issuing Bank in the event the Administrative Agent, such
Lender or the Issuing Bank is required to repay such refund to such
Governmental Authority.  This paragraph
shall not be construed to require the Administrative Agent, any Lender or the
Issuing Bank to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower or any other
Person.

 

Section 5.04.          Mitigation
Obligations; Replacement of Lenders.

 

(a)           Designation
of Different Lending Office.  If any
Lender requests compensation under Section 5.01, or gives a notice
pursuant to Section 5.05,  or
if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 5.03, then such Lender
shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

45

 

(b)           Replacement of Lenders.  If (i) any Lender requests compensation
under Section 5.01, (ii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 5.03, or (iii) any Lender
defaults in its obligation to fund Loans hereunder, then the Borrower may, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 12.04(b)),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrower shall have
received the prior written consent of the Administrative Agent, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) (iii) in the case
of any such assignment resulting from a claim for compensation under Section 5.01
or payments required to be made pursuant to Section 5.03, such
assignment will result in a reduction in such compensation or payments
thereafter, and (iv) such assignment does not conflict with the applicable
law.  A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such  assignment and delegation
cease to apply.

 

Section 5.05.          Illegality.  Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain
Eurodollar Loans either generally or having a particular Interest Period
hereunder, then (a) such Lender shall promptly notify the Borrower and the
Administrative Agent thereof and such Lender’s obligation to make such
Eurodollar Loans shall be suspended (the “Affected Loans”) until
such time as such Lender may again make and maintain such Eurodollar Loans and (b) all
Affected Loans which would otherwise be made by such Lender shall be made
instead as ABR Loans (and, if such Lender so requests by notice to the Borrower
and the Administrative Agent, all Affected Loans of such Lender then
outstanding shall be automatically converted into ABR Loans on the date
specified by such Lender in such notice) and, to the extent that Affected Loans
are so made as (or converted into) ABR Loans, all payments of principal which
would otherwise be applied to such Lender’s Affected Loans shall be applied
instead to its ABR Loans.

 

ARTICLE VI

Conditions Precedent

 

Section 6.01.          Effectiveness.  The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit under the Original Credit
Agreement became effective  upon the
Effective Date.  This Agreement shall
become effective on the date on which each of the following conditions is
satisfied (or waived in accordance with Section 12.02):

 

(a)           The Administrative
Agent shall have received to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder (including, without limitation, the fees and expenses of Winstead PC,
counsel to the Administrative Agent).

 

46

 

(b)                                 The
Administrative Agent shall have received a certificate of the Secretary, an
Assistant Secretary or other duly authorized officer satisfactory to the
Administrative Agent of the Borrower (or the managing member thereof)
and each Guarantor setting forth (i) resolutions of its board of directors
or board of managers (or equivalent body) or its managing member authorizing
the execution, delivery and performance of the Loan Documents to which each is
a party and, in the case of the Borrower, the borrowings hereunder, and that
such resolutions have not been modified, rescinded or amended and are in full
force and effect, (ii) the officers of the Borrower (or any managing
member thereof) or such Guarantor (y) who are authorized to sign the Loan
Documents to which the Borrower or such Guarantor is a party and (z) who
will, until replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement and
the transactions contemplated hereby, (iii) specimen signatures of such
authorized officers, and (iv) the articles or certificate of incorporation
and bylaws or certificate of formation and partnership agreement or certificate
of formation and limited liability company agreement (as the case may be) of
the Borrower, and each Guarantor, certified as being true and complete.  The Administrative Agent and the Lenders may
conclusively rely on such certificate until the Administrative Agent receives
notice in writing from the Borrower to the contrary.

 

(c)                                  The
Administrative Agent shall have received certificates of the appropriate State
agencies with respect to the existence, qualification and good standing of the
Borrower and each Guarantor.

 

(d)                                 The
Administrative Agent shall have received from each party hereto counterparts
(in such number as may be requested by the Administrative Agent) of this
Agreement signed on behalf of such party.

 

(e)                                  The
Administrative Agent shall have received duly executed Notes payable to the
order of each Lender in a principal amount equal to its Maximum Credit Amount
dated as of the date hereof.

 

(f)                                    The
Administrative Agent shall have received from Vanguard Permian duly executed
counterparts (in such number as may be requested by the Administrative Agent)
of Mortgages covering the Apache Properties, which Mortgages shall be in form
and substance satisfactory to the Administrative Agent.  In connection with the execution and delivery
of such Mortgages, the Administrative Agent shall be satisfied the such
Mortgages create first priority, perfected Liens on the Apaches Properties
(subject only to Excepted Liens identified in clauses (a), (b), (c) and (f) of
the definition thereof, but subject to the provisos at the end of such
definition.

 

(g)                                 The
Administrative Agent shall have received from Vanguard Permian duly executed
counterparts (in such number as may be requested by the Administrative Agent)
of the Apache Title Indemnity Agreement.

 

(h)                                 The
Administrative Agent shall have received from Vanguard Permian duly executed
counterparts (in such number as may be requested by the Administrative Agent)
of 

 

47

 

its Guaranty Agreement, which
Guaranty Agreement shall be in form and substance satisfactory to the
Administrative Agent.

 

(i)                                     The
Administrative Agent shall have received from the Borrower duly executed
counterparts (in such number as may be requested by the Administrative Agent)
of such amendments to and/or 
confirmations of the Security Instruments executed and delivered prior
to the date hereof as may be required by the Administrative Agent, which
amendments and/or confirmations shall be in form and substance satisfactory to
the Administrative Agent.

 

(j)                                     Each
of the Loan Documents shall be in full force and effect.

 

(k)                                  The
Borrower and the Guarantors shall have executed a notice in compliance with the
provisions of Section 26.02 of the Texas Business and Commerce Code.

 

(l)                                     The
Administrative Agent shall have received an opinion of Wyatt, Tarrant &
Combs, LLP, counsel to the Borrower and the Guarantors, acceptable to the
Administrative Agent covering such matters with respect to the Loan Documents
as the Administrative Agent may reasonably request, including without
limitation those matters described in Sections 7.01 and 7.02
(other than the second sentence of Section 7.02 which shall be
addressed in the opinion described in Section 6.04).

 

(m)                               The
Administrative Agent shall have received a certificate of insurance coverage of
the Borrower and/or Vanguard Permian evidencing that the Borrower and/or
Vanguard Permian is carrying insurance in accordance with Section 7.13
with respect to the Apache Properties.

 

(n)                                 The
Administrative Agent shall have received satisfactory evidence that no event,
development or circumstance has occurred or shall then exist that has resulted
in, or could reasonably be expected to have, a Material Adverse Effect.

 

(o)                                 The
representations and warranties of the Borrower and the Guarantors set forth in
this Agreement and in the other Loan Documents shall be true and correct,
except to the extent any such representations and warranties are expressly
limited to an earlier date, in which case, such representations and warranties
shall continue to be true and correct as of such specified earlier date.

 

Section 6.02.                             Each
Credit Event.  The obligation of each
Lender to make a Loan on the occasion of any Borrowing (including the initial
funding), and of the Issuing Bank to issue, amend, renew or extend any Letter
of Credit, is subject to the satisfaction of the following conditions:

 

(a)                                  At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.

 

(b)                                 At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no event, 

 

48

 

development or circumstance has
occurred or shall then exist that has resulted in, or could reasonably be
expected to have, a Material Adverse Effect.

 

(c)                                  The
representations and warranties of the Borrower and the Guarantors set forth in
this Agreement and in the other Loan Documents shall be true and correct on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, such
representations and warranties shall continue to be true and correct as of such
specified earlier date.

 

(d)                                 The
making of such Loan or the issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, would not conflict with, or cause any Lender
or the Issuing Bank to violate or exceed, any applicable Governmental
Requirement, and no Change in Law shall have occurred, and no litigation shall
be pending or threatened, which does or, with respect to any threatened
litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of
any Loan, the issuance, amendment, renewal, extension or repayment of any
Letter of Credit or any participations therein or the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

 

(e)                                  The
receipt by the Administrative Agent of a Borrowing Request in accordance with Section 2.03
or a request for a Letter of Credit in accordance with Section 2.08(b),
as applicable.

 

Each request for a Borrowing and each request for the issuance, amendment,
renewal or extension of any Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in Section 6.02(a) through (e).

 

Section 6.03.                             Effectiveness
of Borrowing Base Increase.  The
increase of the Borrowing Base to $150,000,000 contemplated by Section 2.07(a) shall
become effective on the date on which each of the following conditions is
satisfied (or waived in accordance with Section 12.02):

 

(a)                                  The
Administrative Agent shall have received a Borrowing Base increase fee in the
amount of $79,000 (for the benefit of Wachovia Bank, National Association and
The Bank of Nova Scotia).

 

(b)                                 Borrower
or Vanguard Premium shall have delivered to the Administrative Agent title information
and data acceptable to the Administrative Agent relating title to the Apache
Properties.  These title assurances shall
include such post closing title work as Administrative Agent may request.

 

(c)                                  The
Administrative Agent shall have received from Vanguard Permian duly executed
counterparts (in such number as may be requested by the Administrative Agent)
of the Apache Affidavit of Payment of Trade Bills.

 

Section 6.04.                             Certain
Matters to be Completed After Closing. 
The parties agree that the matters described below in this Section 6.04
shall be completed to the satisfaction of the 

 

49

 

Administrative Agent on the dates specified
below for each item, or else an Event of Default shall be deemed to have occurred
with respect to that particular item under Section 10.01(d) with
no further grace period being applicable:

 

(a)                                    On or before February 22, 2008, the
Borrower shall provide the Administrative Agent with an opinion of counsel of
Doherty & Doherty, special Texas counsel to the Borrower and the
Guarantors, acceptable to the Administrative Agent covering such matters with
respect to the Loan Documents as the Administrative Agent may reasonably
request, including without limitation those matters set forth in the second
sentence of Section 7.02.

 

(b)                                 On
or before February 22, 2008, Vanguard Permian shall have provided the
Administrative Agent duly executed counterparts (in such number as may be
requested by the Administrative Agent) of the Apache Property Certificate and
the Apache Reconciliation Schedule.

 

(c)                                  On
or before February 29, 2008, the Mortgages executed by TEC shall have been
amended, supplemented or restated, as the Administrative Agent shall determine,
to add thereto the properties conveyed to TEC by NRC pursuant to the collateral
restructure plan set forth in the Original Second Amendment to Credit Agreement
and to reflect the changes in the name of the Borrower, the amount of debt
secured and the address of TEC for notice and UCC purposes.

 

(d)                                 On
or before February 29, 2008, the Mortgages executed by Ariana shall have
been amended or supplemented, as the Administrative Agent shall determine, to
reflect changes in the name of the Borrower, the amount of debt secured and the
address of Ariana for notice and UCC purposes (such amendments or supplements
to be made after the release of the Wartburg Field pursuant to the collateral
restructure plan set forth in the Original Second Amendment to Credit
Agreement).

 

ARTICLE VII

Representations and Warranties

 

The Borrower represents and warrants to the
Administrative Agent, the Issuing Bank and the Lenders that:

 

Section 7.01.                             Organization;
Powers.  Each of the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required, except where failure
to have such power, authority, licenses, authorizations, consents, approvals
and qualifications could not reasonably be expected to have a Material Adverse
Effect.

 

Section 7.02.                             Authority;
Enforceability.  The Transactions are
within the Borrower’s and each Guarantor’s limited liability company,
partnership, and corporate powers (as applicable) and have been duly authorized
by all necessary limited liability company and, if required, member 

 

50

 

action (including, without limitation, any
action required to be taken by any class of managers,  directors or  partners (as applicable) of the
Borrower or any other Person, whether interested or disinterested, in order to
ensure the due authorization of the Transactions).  Each Loan Document to which the Borrower and
each Guarantor is a party has been duly executed and delivered by the Borrower
and such Guarantor and constitutes a legal, valid and binding obligation of the
Borrower and such Guarantor, as applicable, 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 considered in a proceeding in
equity or at law.

 

Section 7.03.                             Approvals;
No Conflicts.  The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority or any other third Person
(including members or any class of managers, whether interested or
disinterested, of the Borrower or any other Person), nor is any such consent,
approval, registration, filing or other action necessary for the validity or
enforceability of any Loan Document or the consummation of the transactions
contemplated thereby, except such as have been obtained or made and are in full
force and effect other than (i) the recording and filing of the Security
Instruments as required by this Agreement, (ii) those third party
approvals or consents which, if not made or obtained, would not cause a Default
hereunder, could not reasonably be expected to have a Material Adverse Effect
or do not have an adverse effect on the enforceability of the Loan Documents,
and (iii) consents by, required notices to, or other actions by state and
federal governmental entities in connection with the assignment of state and
federal oil and gas leases or other interests therein that are customarily
obtained subsequent to such assignments, (b) will not violate any
applicable law or Organizational Documents of the Borrower or any Subsidiary or
any order of any Governmental Authority, (c) will not violate or result in
a default under any indenture, agreement or other instrument binding upon the
Borrower or any Subsidiary or its Properties, or give rise to a right
thereunder to require any payment to be made by the Borrower or such Subsidiary
and (d) will not result in the creation or imposition of any Lien on any
Property of the Borrower or any Subsidiary (other than the Liens created by the
Loan Documents).

 

Section 7.04.                             Financial
Condition; No Material Adverse Change.

 

(a)                                  The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, members’ equity and cash flows (A) as of and for
the fiscal year ended December 31, 2006, reported on by UHY LLP,
independent public accountant and (B) as of and for the fiscal quarter and
the portion of the fiscal year ended September 30, 2007, certified by its
chief financial officer.  Such financial
statements present fairly, in all material respects, the financial condition
and results of operations and cash flows of the Borrower and its Consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case
of the unaudited quarterly financial statements.  Such balance sheets and the notes thereto
disclose all material liabilities, direct or contingent, of the Borrower and
its Consolidated Subsidiaries as of the dates thereof.

 

(b)                                 Since
September 30, 2007, (i) there has been no event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect and 

 

51

 

(ii) the business of the
Borrower and its Subsidiaries has been conducted only in the ordinary course
consistent with past business practices.

 

(c)                                  Neither
the Borrower nor any Subsidiary has on the date hereof any material Debt
(including Disqualified Capital Stock) or any contingent liabilities,
off-balance sheet liabilities or partnerships, 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
the Financial Statements.

 

Section 7.05.                             Litigation.

 

(a)                                  Except
as set forth on Schedule 7.05, there are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Subsidiary  (i) not fully covered by insurance
(except for normal deductibles) as to which there is a reasonable possibility
of an adverse determination that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect, (ii) that involve any Loan Document or the Transactions or (iii) that
could impair the consummation of the Acquisition on the time and in the manner
contemplated by the Acquisition Documents.

 

(b)                                 Since
the date of this Agreement, there has been no change in the status of the
matters disclosed in Schedule 7.05 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.

 

Section 7.06.                             Environmental
Matters.  Except as set forth in Schedule
7.06 and as could not be reasonably expected to have a Material Adverse
Effect (or with respect to (c), (d) and (e) below, where the failure
to take such actions could not be reasonably expected to have a Material
Adverse Effect):

 

(a)                                  neither
any Property of the Borrower or any Subsidiary nor the operations conducted
thereon violate any order or requirement of any court or Governmental Authority
or any Environmental Laws.

 

(b)                                 no
Property of the Borrower or any Subsidiary nor the operations currently
conducted thereon or, to the knowledge of the Borrower, by any prior owner or
operator of such Property or operation, are in violation of or subject to any
existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority or to any remedial
obligations under Environmental Laws.

 

(c)                                  all
notices, permits, licenses, exemptions, approvals or similar authorizations, if
any, required to be obtained or filed in connection with the operation or use
of any and all Property of the Borrower and each Subsidiary, including, without
limitation, past or present treatment, storage, disposal or release of a
hazardous substance, oil and gas waste or solid waste into the environment,
have been duly obtained or filed, and the Borrower and each Subsidiary are in
compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations.

 

52

 

(d)                                 all
hazardous substances, solid waste and oil and gas waste, if any, generated at
any and all Property of the Borrower or any Subsidiary have in the past been
transported, treated and disposed of in accordance with Environmental Laws and
so as not to pose an imminent and substantial endangerment to public health or
welfare or the environment, and, to the knowledge of the Borrower, all such
transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Authority in connection
with any Environmental Laws.

 

(e)                                  the
Borrower has taken all steps reasonably necessary to determine and has
determined that no oil, hazardous substances, solid waste or oil and gas waste,
have been disposed of or otherwise released and there has been no threatened
release of any oil, hazardous substances, solid waste or oil and gas waste on
or to any Property of the Borrower or any Subsidiary except in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment.

 

(f)                                    neither
the Borrower nor any Subsidiary has any known contingent liability or Remedial
Work in connection with any release or threatened release of any oil, hazardous
substance, solid waste or oil and gas waste into the environment.

 

Section 7.07.                             Compliance
with the Laws and Agreements; No Defaults.

 

(a)                                  Each
of the Borrower and each Subsidiary is in compliance with all Governmental
Requirements applicable to it or its Property and all agreements and other
instruments binding upon it or its Property, and possesses all licenses,
permits, franchises, exemptions, approvals and other governmental
authorizations necessary for the ownership of its Property and the conduct of
its business, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

 

(b)                                 Neither
the Borrower nor any Subsidiary is in default nor has any event or circumstance
occurred which, but for the expiration of any applicable grace period or the
giving of notice, or both, would constitute a default or would require the
Borrower or a Subsidiary to Redeem or make any offer to Redeem under any
indenture, note, credit agreement or instrument pursuant to which any Material
Indebtedness is outstanding or by which the Borrower or any Subsidiary or any
of their Properties is bound.

 

(c)                                  No
Default has occurred and is continuing.

 

Section 7.08.                             Investment
Company Act.  Neither the Borrower
nor any Subsidiary is an “investment company” or a company “controlled” by an “investment
company,” within the meaning of, or subject to regulation under, the Investment
Company Act of 1940, as amended.

 

Section 7.09.                             Taxes.  Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed 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 (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with
GAAP or (b) to the 

 

53

 

extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.  The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of Taxes and other
governmental charges are adequate.  No
Tax Lien has been filed and, to the knowledge of the Borrower, no claim is
being asserted with respect to any such Tax or other such governmental charge.

 

Section 7.10.                             ERISA.

 

(a)                                  The
Borrower, the Subsidiaries and each ERISA Affiliate have complied in all
material respects with ERISA and, where applicable, the Code regarding each
Plan.

 

(b)                                 Each
Plan is, and has been, maintained in substantial compliance with ERISA and,
where applicable, the Code.

 

(c)                                  No
act, omission or transaction has occurred which could result in imposition on
the Borrower, any Subsidiary or any ERISA Affiliate (whether directly or
indirectly) of (i) either a civil penalty assessed pursuant to subsections
(c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty
liability damages under section 409 of ERISA.

 

(d)                                 No
Plan (other than a defined contribution plan) or any trust created under any
such Plan has been terminated since September 2, 1974.  No liability to the PBGC (other than for the
payment of current premiums which are not past due) by the Borrower, any
Subsidiary or any ERISA Affiliate has been or is expected by the Borrower, any
Subsidiary or any ERISA Affiliate to be incurred with respect to any Plan.  No ERISA Event with respect to any Plan has
occurred.

 

(e)                                  Full
payment when due has been made of all amounts which the Borrower, the
Subsidiaries or any ERISA Affiliate is required under the terms of each Plan or
applicable law to have paid as contributions to such Plan as of the date
hereof, and no accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any Plan.

 

(f)                                    The
actuarial present value of the benefit liabilities under each Plan which is
subject to Title IV of ERISA does not, as of the end of the Borrower’s
most recently ended fiscal year, exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities.  The term “actuarial present value of the
benefit liabilities” shall have the meaning specified in section 4041 of ERISA.

 

(g)                                 Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains, or
contributes to an employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
the Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion at any
time without any material liability.

 

54

 

(h)                                 Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains or
contributes to, or has at any time in the six-year period preceding the date
hereof sponsored, maintained or contributed to, any Multiemployer Plan.

 

(i)                                     Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate is required to provide
security under section 401(a)(29) of the Code due to a Plan amendment that
results in an increase in current liability for the Plan.

 

Section 7.11.                             Disclosure;
No Material Misstatements.  The
Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.  None of the other
reports, financial statements, certificates or other information furnished by
or on behalf of the Borrower or any Subsidiary to the Administrative Agent or
any Lender or any of their Affiliates in connection with the negotiation of
this Agreement or any other Loan Document or delivered hereunder or under any
other Loan Document (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.  There is no
fact peculiar to the Borrower or any Subsidiary which could reasonably be
expected to have a Material Adverse Effect or in the future is reasonably
likely to have a Material Adverse Effect and which has not been set forth in
this Agreement or the Loan Documents or the other documents, certificates and
statements furnished to the Administrative Agent or the Lenders by or on behalf
of the Borrower or any Subsidiary prior to, or on, the date hereof in
connection with the transactions contemplated hereby.  There are no statements or conclusions in any
Reserve Report which are based upon or include misleading information or fail
to take into account material information regarding the matters reported
therein, it being understood that projections concerning volumes attributable
to the Oil and Gas Properties and production and cost estimates contained in
each Reserve Report are necessarily based upon professional opinions, estimates
and projections and that the Borrower and the Subsidiaries do not warrant that
such opinions, estimates and projections will ultimately prove to have been
accurate.

 

Section 7.12.                             Insurance.  Schedule 7.12 sets forth a true,
complete and correct description of all insurance maintained by the Borrower or
by the Borrower for its Subsidiaries or by each Subsidiary for itself, as the
case may be, as of the date hereof.  The
Borrower has, and has caused all of its Subsidiaries to have, (a) all
insurance policies sufficient for the compliance by each of them with all
material Governmental Requirements and all material agreements and (b) insurance
coverage in at least amounts and against such risk (including, without
limitation, public liability) that are commercially reasonable and usually
insured against by companies similarly situated and engaged in the same or a
similar business for the assets and operations of the Borrower and its Subsidiaries.  The Administrative Agent has been named as an
additional insured in respect of such liability insurance policies, and the
Administrative Agent has been named as loss payee with respect to Property loss
insurance.

 

55

 

Section 7.13.                             Restriction on Liens.  Neither the Borrower nor any of the
Subsidiaries is a party to any material agreement or arrangement (other than
Capital Leases creating Liens permitted by Section 9.03(c), but
then only on the Property subject of such Capital Lease), or subject to any
order, judgment, writ or decree, which either restricts or purports to restrict
its ability to grant Liens to the Administrative Agent and the Lenders on or in
respect of their Properties to secure the Indebtedness and the Loan Documents.

 

Section 7.14.                             Subsidiaries.  Except as set forth on Schedule 7.14
or as disclosed in writing to the Administrative Agent (which shall promptly
furnish a copy to the Lenders), which shall be a supplement to Schedule 7.14,
the Borrower has no Subsidiaries and the Borrower has no Foreign
Subsidiaries.  Each Subsidiary on such
schedule is a Wholly-Owned Subsidiary and a disregarded entity for federal
income tax purposes.

 

Section 7.15.                             Location of Business and
Offices.  The Borrower’s jurisdiction of
organization is Kentucky; the name of the Borrower as listed in the public
records of its jurisdiction of organization is Vanguard Natural Gas, LLC; and
the organizational identification number of the Borrower in its jurisdiction of
organization is 0601349 (or, in each case, as set forth in a notice delivered
to the Administrative Agent pursuant to Section 8.01(n) in
accordance with Section 12.01). 
The Borrower’s principal place of business is located at the address in
London, Kentucky specified in Section 12.01 (or as set forth in a
notice delivered pursuant to Section 8.01(n) and Section 12.01(c)),
and its chief executive offices is located at the San Felipe street address in
Houston, Texas specified in Section 12.01 (or as set forth in a
notice delivered pursuant to Section 8.01(n) and Section 12.01(c)).  Each Subsidiary’s jurisdiction of
organization, name as listed in the public records of its jurisdiction of
organization, organizational identification number in its jurisdiction of
organization, and the location of its principal place of business and chief
executive office is stated on Schedule 7.14 (or as set forth in a notice
delivered pursuant to Section 8.01(n)).

 

Section 7.16.                             Properties;
Titles, Etc.

 

(a)                                  Each of the
Borrower and the Subsidiaries has good and defensible title to the Oil and Gas
Properties evaluated in the most recently delivered Reserve Report and good
title to all its personal Properties, in each case, free and clear of all Liens
except Liens permitted by Section 9.03.  After giving full effect to the Excepted
Liens, the Borrower or the Subsidiary specified as the owner owns the net
interests in production attributable to the Hydrocarbon Interests as reflected
in the most recently delivered Reserve Report, and the ownership of such
Properties shall not in any material respect obligate the Borrower or such
Subsidiary to bear the costs and expenses relating to the maintenance,
development and operations of each such Property in an amount in excess of the
working interest of each Property set forth in the most recently delivered
Reserve Report that is not offset by a corresponding proportionate increase in
the Borrower’s or such Subsidiary’s net revenue interest in such Property.  The ownership by the Borrower or any
Subsidiary of the Hydrocarbons and the undivided interests therein specified on
the exhibits to the Mortgages are the same interests reflected in the most
recently delivered Reserve Report.

 

(b)                                 All material
leases and agreements necessary for the conduct of the business of the Borrower
and the Subsidiaries are valid and subsisting, in full force and effect, 

 

56

 

and there exists no default or event or
circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases, which could
reasonably be expected to have a Material Adverse Effect.

 

(c)                                  The rights and
Properties presently owned, leased or licensed by the Borrower and the
Subsidiaries including, without limitation, all easements and rights of way,
include all rights and Properties necessary to permit the Borrower and the
Subsidiaries to conduct their business in all material respects in the same
manner as its business has been conducted prior to the date hereof.

 

(d)                                 All of the
Properties of the Borrower and the Subsidiaries which are reasonably necessary
for the operation of their businesses are in good working condition and are
maintained in accordance with prudent business standards.

 

(e)                                  The Borrower
and each Subsidiary owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual Property material to its business,
and the use thereof by the Borrower and such Subsidiary does not infringe upon
the rights of any other Person, except for any such infringements that, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  The Borrower and its
Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons, with
such exceptions as could not reasonably be expected to have a Material Adverse
Effect.

 

(f)                                    With regard to
the Volumetric Production Payment (the “Production
Payment”) and the Natural Gas Purchase Agreement (the “Purchase Agreement”) (both as further
described in Exhibit A to the Mortgage and Security Agreement dated March 23,
2001 and recorded, inter alia, at
Mortgage Book 104, Page 228 in the Office of the McCreary County
Clerk):  (i) the Production Payment
and the Purchase Agreement have expired in accordance with their terms, (ii) neither
O.G. Investment, L.L.C., nor Joint Investment and Development, L.L.C. any
longer have any interest in the Production Payment and/or the Purchase
Agreement; and (iii) all of the rights of any party to receive gas, or the
payment therefor, pursuant to the Production Payment or the Purchase Agreement
have terminated and have reverted to the Borrower or to an Affiliate of the
Borrower which is giving security pursuant to this Agreement.

 

Section 7.17.                             Maintenance of Properties.  Except for such acts or failures to act as
could not be reasonably expected to have a Material Adverse Effect, and subject
to the prior rights and limitations of Borrower as an owner of non-operated
working interests, the Oil and Gas Properties (and Properties unitized
therewith) of the Borrower and its Subsidiaries have been maintained, operated
and developed in a good and workmanlike manner and in conformity with all
Governmental Requirements and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Interests and
other contracts and agreements forming a part of the Oil and Gas Properties of
the Borrower and its Subsidiaries. 
Specifically in connection with the foregoing, except for those as could
not be reasonably expected to have a Material Adverse Effect, (i) no Oil
and Gas Property of the Borrower or any 

 

57

 

Subsidiary is subject to having allowable production reduced below the
full and regular allowable (including the maximum permissible tolerance)
because of any overproduction (whether or not the same was permissible at the
time) and (ii) none of the wells comprising a part of the Oil and Gas
Properties (or Properties unitized therewith) of the Borrower or any Subsidiary
is deviated from the vertical more than the maximum permitted by Governmental
Requirements (except with respect to horizontal wells permitted by Governmental
Authority), and such wells are, in fact, bottomed under and are producing from,
and the well bores are wholly within, the Oil and Gas Properties (or in the
case of wells located on Properties unitized therewith, such unitized
Properties) of the Borrower or such Subsidiary. 
All pipelines, wells, gas processing plants, platforms and other
material improvements, fixtures and equipment owned in whole or in part by the
Borrower or any of its Subsidiaries that are necessary to conduct normal
operations are being maintained in a state adequate to conduct normal
operations, and with respect to such of the foregoing which are operated by the
Borrower or any of its Subsidiaries, in a manner consistent with the Borrower’s
or its Subsidiaries’ past practices (other than those the failure of which to
maintain in accordance with this Section 7.18 could not reasonably
be expected to have a Material Adverse Effect).

 

Section 7.18.                             Gas Imbalances, Prepayments.  Except as set forth on Schedule 7.18
or on the most recent certificate delivered pursuant to Section 8.12(c),
on a net basis there are no Material Gas Imbalances, take or pay or other
prepayments which would require the Borrower or any of its Subsidiaries to
deliver Hydrocarbons produced from the Oil and Gas Properties at some future
time without then or thereafter receiving full payment therefor.

 

Section 7.19.                             Marketing of Production.  Except for contracts listed and in effect on
the date hereof on Schedule 7.19, and thereafter either disclosed in
writing to the Administrative Agent or included in the most recently delivered
Reserve Report (with respect to all of which contracts the Borrower represents
that it or its Subsidiaries are receiving a price for all production sold
thereunder which is computed substantially in accordance with the terms of the
relevant contract and are not having deliveries curtailed substantially below
the subject Property’s delivery capacity), no material agreements exist which
are not cancelable on 60 days notice or less without penalty or detriment for
the sale of production from the Borrower’s or its Subsidiaries’ Hydrocarbons
(including, without limitation, calls on or other rights to purchase,
production, whether or not the same are currently being exercised) that (a) pertain
to the sale of production at a fixed price and (b) have a maturity or
expiry date of longer than six (6) months from the date hereof.

 

Section 7.20.                             Swap Agreements.  Schedule 7.20, as of the date hereof, and
after the date hereof, each report required to be delivered by the Borrower
pursuant to Section 8.01(f), sets forth, a true and complete list
of all Swap Agreements of the Borrower and each Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and
notional amounts or volumes), the net mark to market value thereof, all credit
support agreements relating thereto (including any margin required or supplied)
and the counterparty to each such agreement.

 

Section 7.21.                             Use of Loans and Letters of
Credit.  The proceeds of the Loans and
the Letters of Credit shall be used (a) to provide working capital for
exploration and production operations, (b) to pay fees and expenses
related to the Transaction, (c) for general corporate purposes, and (d) to
purchase assets from Apache Corporation pursuant to the provisions of
the 

 

58

 

Apache Acquisition Agreement.  In addition, the Borrower may use the
proceeds of Loans to make Restricted Payments to the holders of its Equity
Interests provided (i) the aggregate amount of the Restricted Payment does
not exceed the Borrower’s EBITDA for the immediately preceding fiscal quarter;
and (ii) the Restricted Payment is otherwise permitted by Section 9.04(e).

 

The Borrower and its Subsidiaries are not engaged
principally, or as one of its or their important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation T, U or X of
the Board).  No part of the proceeds of
any Loan or Letter of Credit will be used for any purpose which violates the
provisions of Regulations T, U or X of the Board.

 

Section 7.22.                             Solvency.  After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to
amounts that could reasonably be received by reason of indemnity, offset,
insurance or any similar arrangement), at a fair valuation, of the Borrower and
the Guarantors, taken as a whole, will exceed the aggregate Debt of the
Borrower and the Guarantors on a consolidated basis, as the Debt becomes
absolute and matures, (b) each of the Borrower and the Guarantors will not
have incurred or intended to incur, and will not believe that it will incur,
Debt beyond its ability to pay such Debt (after taking into account the timing
and amounts of cash to be received by each of the Borrower and the Guarantors
and the amounts to be payable on or in respect of its liabilities, and giving
effect to amounts that could reasonably be received by reason of indemnity,
offset, insurance or any similar arrangement) as such Debt becomes absolute and
matures and (c) each of the Borrower and the Guarantors will not have (and
will have no reason to believe that it will have thereafter) unreasonably small
capital for the conduct of its business.

 

Section 7.23.                             Sanctioned Persons.  Neither the Borrower or any Subsidiary nor,
to the knowledge of the Borrower, any director, officer, agent, employee or
Affiliate of the Borrower or any Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”);
and the Borrower will not directly or indirectly use the proceeds of the Loans
or the Letters of Credit or otherwise make available such proceeds to any
Person or entity, for the purpose of financing the activities of any Person
currently subject to any U.S. sanctions administered by OFAC.

 

Section 7.24.                             Security Instruments.  The Mortgages are effective to create in
favor of the Administrative Agent, for the ratable benefit of the Lenders, a
legal, valid and enforceable Lien on all of the Borrower’s and each Guarantor’s
right, title and interest in and to the Mortgaged Property thereunder and the
proceeds thereof.  The Mortgages (other
than the Mortgages covering the Apache Properties), having been filed in the
offices specified on Schedule 7.24, constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the
Borrower and each Guarantor in such Mortgaged Property and the proceeds
thereof, in each case prior and superior in right to any other Person, other
than with respect to the rights of persons pursuant to Liens expressly permitted
by Section 9.03.  When the
Mortgages covering the Apache Properties are filed in the offices specified on Schedule
7.24, such Mortgages shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Borrower and each
Guarantor in the Mortgaged Property thereunder and the proceeds thereof, in 

 

59

 

each case prior and superior in right to any other Person, other than
with respect to the rights of persons pursuant to Liens expressly permitted by Section 9.03.

 

ARTICLE VIII

Affirmative Covenants

 

Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder and all other
amounts payable under the Loan Documents shall have been paid in full and all
Letters of Credit shall have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:

 

Section 8.01.                             Financial
Statements; Other Information.  The Borrower will furnish to the
Administrative Agent and each Lender:

 

(a)                                  Annual
Financial Statements.  As soon as
available, but in any event in accordance with then applicable law and not
later than 90 days after the end of each fiscal year of the Borrower, its
audited consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all reported on by an independent public accountant of recognized
national standing (without a “going concern” or like qualification or exception
and without any qualification or exception as to the scope of such audit) to
the effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied.

 

(b)                                 Quarterly
Financial Statements.  As soon as
available, but in any event in accordance with then applicable law and not
later than 45 days after the end of each of the first three fiscal quarters of
each fiscal year of the Borrower (beginning with the first quarter of 2007),
its consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such fiscal
quarter and the then elapsed portion of the fiscal year, setting forth in each
case in comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheet, as of the end of) the previous fiscal
year, all certified by one of its Financial Officers as presenting fairly in
all material respects the financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes.

 

(c)                                  Certificate of
Financial Officer — Compliance.  Concurrently with any delivery of financial
statements under Section 8.01(a) or Section 8.01(b),
a certificate of a Financial Officer in substantially the form of Exhibit D
hereto (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 8.13(b) and
Section 9.01 and (iii) stating whether any change in GAAP or
in the application thereof has occurred since the date of the audited financial
statements referred to in Section 7.04 (or, if later, the most
recently delivered 

 

60

 

audited financial statements pursuant to Section 8.01(a))
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate.

 

(d)                                 Certificate of
Accounting Firm — Defaults.  Concurrently with any delivery of financial
statements under Section 8.01(a), a certificate of the accounting
firm that reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial statements
of any Default (which certificate may be limited to the extent required by
accounting rules or guidelines).

 

(e)                                  Certificate of
Financial Officer — Consolidating Information.  If, at any time, all of the Consolidated
Subsidiaries of the Borrower are not Consolidated Subsidiaries, then
concurrently with any delivery of financial statements under Section 8.01(a) or
Section 8.01(b), a certificate of a Financial Officer setting forth
consolidating spreadsheets that show all Consolidated Subsidiaries and the
eliminating entries, in such form as would be presentable to the auditors of
the Borrower.

 

(f)                                    Certificate of
Financial Officer — Swap Agreements.  Concurrently with any delivery of financial
statements under Section 8.01(a) and Section 8.01(b),
a certificate of a Financial Officer, in form and substance satisfactory to the
Administrative Agent, setting forth as of the last Business Day of such fiscal
quarter or fiscal year, a true and complete list of all Swap Agreements of the
Borrower and each Subsidiary, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the
net mark-to-market value therefor, any new credit support agreements relating
thereto, any margin required or supplied under any credit support document, and
the counterparty to each such agreement.

 

(g)                                 Certificate of
Insurer — Insurance Coverage.  Concurrently with any delivery of financial
statements under Section 8.01(a), a certificate of insurance
coverage from each insurer with respect to the insurance required by Section 8.07,
in form and substance satisfactory to the Administrative Agent, and, if
requested by the Administrative Agent or any Lender, all copies of the
applicable policies.

 

(h)                                 Other
Accounting Reports.  Promptly
upon receipt thereof, a copy of each other report or letter submitted to the
Borrower or any of its Subsidiaries by independent accountants in connection
with any annual, interim or special audit made by them of the books of the
Borrower or any such Subsidiary, and a copy of any response by the Borrower or
any such Subsidiary, or the board of managers of the Borrower or any such
Subsidiary, to such letter or report.

 

(i)                                     SEC and Other
Filings; Reports to Shareholders.  If the Borrower or one of its Subsidiaries or
Affiliates seeks to become a publicly traded company, a copy of its S-1
Registration Statement simultaneously with its filing with the SEC and
thereafter promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary or Affiliate with the SEC, or with any national
securities exchange, or distributed by the Borrower to its shareholders
generally, as the case may be.  Documents
required to be delivered pursuant to this clause (i) may be delivered
electronically and if so delivered shall be deemed to have been delivered on
the date (x) on which the Borrower posts such documents, or provides a
link thereto on the Borrower’s website 

 

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on the Internet; or (ii) on which such
documents are posted on the Borrower’s behalf on IntraLinks/SyndTrak or another
relevant website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that: 
(i) upon written request by the Administrative Agent, the Borrower
shall deliver paper copies of such documents to the Administrative Agent for
further distribution to each Lender until a written request to cease delivering
paper copies is given by the Administrative Agent and (ii) the Borrower
shall notify (which may be by facsimile or electronic mail) the Administrative
Agent of the posting of any such documents and provide to the Administrative
Agent by electronic mail electronic versions (i.e., soft copies) of such
documents.

 

(j)                                     Notices Under
Material Instruments.  Promptly
after the furnishing thereof, copies of any financial statement, report or
notice furnished to or by any Person pursuant to the terms of any preferred
stock designation, indenture, loan or credit or other similar agreement, other
than this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.

 

(k)                                  Lists of
Purchasers. 
Concurrently with the delivery of any Reserve Report to the
Administrative Agent pursuant to Section 8.12, a list of the names
and addresses of all Persons purchasing Hydrocarbons from the Borrower or any
Subsidiary.

 

(l)                                     Notice of Sales
of Oil and Gas Properties.  In
the event the Borrower or any Subsidiary intends to sell, transfer, assign or
otherwise dispose of any Oil or Gas Properties or any Equity Interests in any
Subsidiary in accordance with Section 9.12, prior written notice of
such disposition, the price thereof and the anticipated date of closing and any
other details thereof requested by the Administrative Agent or any Lender.

 

(m)                               Notice of
Casualty Events.  Prompt
written notice, and in any event within three Business Days, of the occurrence
of any Casualty Event or the commencement of any action or proceeding that
could reasonably be expected to result in a Casualty Event.

 

(n)                                 Information
Regarding Borrower and Guarantors.  Prompt written notice (and in any event within
thirty (30) days prior thereto) of any change (i) in the Borrower or any
Guarantor’s corporate name or in any trade name used to identify such Person in
the conduct of its business or in the ownership of its Properties, (ii) in
the location of the Borrower or any Guarantor’s chief executive office or
principal place of business, (iii) in the Borrower or any Guarantor’s
identity or corporate structure or in the jurisdiction in which such Person is
incorporated or formed, (iv) in the Borrower or any Guarantor’s
jurisdiction of organization or such Person’s organizational identification
number in such jurisdiction of organization, and (v) in the Borrower or
any Guarantor’s federal taxpayer identification number, if any.

 

(o)                                 Production
Reports and Lease Operating Statements.  Within 45 days after the end of each fiscal
quarter, a report setting forth, for each calendar month during the then
current fiscal year to date, (i) the volume of production and sales
attributable to production (and the prices at which such sales were made and
the revenues derived from such sales) for each such calendar month from the Oil
and Gas Properties, individually and in the aggregate, and (ii) 

 

62

 

the related ad valorem, severance and
production taxes and lease operating expenses attributable thereto and incurred
for each such calendar month.

 

(p)                                 Gas Balancing
Reports.  Within 45 days after the end
of each fiscal quarter, a report setting forth, for the quarter during the then
current fiscal year to date, the existence of any Material Gas Imbalances
listed on a property-by-property basis.

 

(q)                                 Notices of
Certain Changes.  Promptly,
but in any event within five (5) Business Days after the execution
thereof, copies of any amendment, modification or supplement to the
Organizational Documents of the Borrower or any Subsidiary.

 

(r)                                    Ratings Change.  If the Borrower or one of its Affiliates
becomes a publicly traded company, promptly after Moody’s or S&P shall have
announced a change in the rating of the Borrower or one of its Affiliates,
written notice of such rating change.

 

(s)                                  PATRIOT Act.  Promptly after the request by any Lender, all
documentation and other information that such Lender reasonably requests in
order to comply with its ongoing obligations under applicable “know your
customer” and anti-money laundering rules and regulations, including the
USA PATRIOT Act.

 

(t)                                    Other Requested
Information.  Promptly
following any request therefor, such other information regarding the operations,
business affairs and financial condition of the Borrower or any Subsidiary or
Affiliates (including, without limitation, any Plan or Multiemployer Plan and
any reports or other information required to be filed under ERISA), or
compliance with the terms of this Agreement or any other Loan Document, as the
Administrative Agent or any Lender may reasonably request.

 

Section 8.02.                             Notices of
Material Events.  The
Borrower will furnish to the Administrative Agent and each Lender prompt
written notice of the following:

 

(a)                                  the occurrence
of any Default;

 

(b)                                 the filing or
commencement of, or the threat in writing of, any action, suit, proceeding,
investigation or arbitration by or before any arbitrator or Governmental
Authority against or affecting the Borrower or any Affiliate thereof not
previously disclosed in writing to the Lenders or any material adverse
development in any action, suit, proceeding, investigation or arbitration
(whether or not previously disclosed to the Lenders) that, in either case, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect;

 

(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 and its Subsidiaries in an aggregate amount exceeding $500,000; and

 

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

 

63

 

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

 

Section 8.03.                             Existence; Conduct of
Business.  The
Borrower will, and will cause each Subsidiary to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business and maintain, if necessary, its qualification to
do business in each other jurisdiction in which its Oil and Gas Properties is
located or the ownership of its Properties requires such qualification, except
where the failure to so qualify could not reasonably be expected to have a
Material Adverse Effect; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 9.11.

 

Section 8.04.                             Payment of Obligations.  The Borrower will, and will cause each
Subsidiary to, pay its obligations, including Tax liabilities of the Borrower
and all of its Subsidiaries before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect or result in the seizure or levy of any Property of the Borrower
or any Subsidiary.

 

Section 8.05.                             Performance of Obligations
under Loan Documents.  The
Borrower will pay the Notes according to the reading, tenor and effect thereof,
and the Borrower will, and will cause each Subsidiary to, do and perform every
act and discharge all of the obligations to be performed and discharged by them
under the Loan Documents, including, without limitation, this Agreement, at the
time or times and in the manner specified.

 

Section 8.06.                             Operation and
Maintenance of Properties.  The
Borrower, at its own expense, will, and will cause each Subsidiary to:

 

(a)                                  operate its Oil
and Gas Properties and other material Properties or cause such Oil and Gas
Properties and other material Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance with
all Governmental Requirements, including, without limitation, applicable pro
ration requirements and Environmental Laws, and all applicable laws, rules and
regulations of every other Governmental Authority from time to time constituted
to regulate the development and operation of its Oil and Gas Properties and the
production and sale of Hydrocarbons and other minerals therefrom, except, in
each case, in those circumstances where a reasonably prudent operator under
similar circumstances and in accordance with customary industry practice would
be prudent not to do so, and the failure to comply could not reasonably be
expected to have a Material Adverse Effect.

 

(b)                                 operate and
maintain in a careful and efficient manner in accordance with the practices of
the industry and in compliance with all applicable contracts and agreements and
in compliance with all Governmental Requirements, including, without
limitation, all applicable laws, rules and regulations of every other
Governmental Authority from time to time constituted 

 

64

 

to regulate the gathering, transportation or
processing of Hydrocarbons and other minerals therefrom, except, in each case,
in those circumstances where a reasonably prudent operator under similar
circumstances and in accordance with customary industry practice would be
prudent not to do so, and the failure to comply could not reasonably be
expected to have a Material Adverse Effect, all pipelines, compressor stations,
wells, gas or crude oil processing facilities, field gathering systems, tanks,
tank batteries, pumps, pumping units, fixtures, valves, fittings, machinery,
parts, engines, boilers, meters, apparatus, appliances, tools, implements,
casing, tubing, rods, cables, wires, towers, surface and other material
improvements, fixtures and equipment owned in whole or in part by the Borrower
or any of its Subsidiaries that are useful or necessary to conduct normal
operations relating to gathering, transportation, processing or removal of
Hydrocarbons and other minerals or CO2 therefrom.

 

(c)                                  keep and
maintain all Property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted, and preserve, maintain
and keep in good repair, working order and efficiency (ordinary wear and tear
excepted) all of its material Oil and Gas Properties, all gas or crude oil
processing facilities and other material Properties, including, without
limitation, all equipment, machinery and facilities.

 

(d)                                 promptly pay
and discharge, or make reasonable and customary efforts to cause to be paid and
discharged, all delay rentals, royalties, expenses and indebtedness accruing
under the leases or other agreements affecting or pertaining to its Oil and Gas
Properties or gas or crude oil processing facilities and will do all other
things necessary to keep unimpaired their rights with respect thereto and
prevent any forfeiture thereof or default thereunder.

 

(e)                                  promptly
perform or make reasonable and customary efforts to cause to be performed, in
accordance with industry standards, the obligations required by each and all of
the assignments, deeds, leases, sub-leases, contracts and agreements affecting
its interests in its Oil and Gas Properties, all gas or crude oil processing
facilities and other material Properties.

 

(f)                                    operate its Oil
and Gas Properties, all gas or crude oil processing facilities and other
material Properties or cause or make reasonable and customary efforts to cause
such Oil and Gas Properties, gas or crude oil processing facilities and other
material Properties to be operated in accordance with the practices of the
industry and in material compliance with all applicable contracts and
agreements and in compliance in all material respects with all Governmental
Requirements.

 

To
the extent the Borrower is not the operator of any Property, the Borrower shall
use reasonable efforts to cause the operator to comply with this Section 8.06.

 

Section 8.07.                             Insurance.  The Borrower will, and will cause each
Subsidiary to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations.  The loss
payable clauses or provisions in said insurance policy or policies insuring any
of the collateral for the Loans shall be endorsed in favor of and made payable
to the Administrative Agent as its interests may appear and such policies shall
name the Administrative Agent and the Lenders as “additional insureds” 

 

65

 

and provide that the insurer will endeavor to give at least 30 days
prior notice of any cancellation to the Administrative Agent.

 

Section 8.08.                             Books and Records;
Inspection Rights.  The
Borrower will, and will cause each Subsidiary 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
Subsidiary to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
Properties, 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 and as often as reasonably requested.

 

Section 8.09.                             Compliance with Laws.  The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

 

Section 8.10.                             Environmental
Matters.

 

(a)                                  The Borrower
shall at its sole expense:  (i) comply,
and shall cause its Properties and operations and each Subsidiary and each
Subsidiary’s Properties and operations to comply, with all applicable
Environmental Laws, the breach of which could be reasonably expected to have a
Material Adverse Effect; (ii) not dispose of or otherwise release, and
shall cause each Subsidiary not to dispose of or otherwise release, any oil,
oil and gas waste, hazardous substance, or solid waste on, under, about or from
any of the Borrower’s or its Subsidiaries’ Properties or any other Property to
the extent caused by the Borrower’s or any of its Subsidiaries’ operations
except in compliance with applicable Environmental Laws, the disposal or
release of which could reasonably be expected to have a Material Adverse
Effect; (iii) timely obtain or file, and shall cause each Subsidiary to
timely obtain or file, all notices, permits, licenses, exemptions, approvals,
registrations or other authorizations, if any, required under applicable
Environmental Laws to be obtained or filed in connection with the operation or
use of the Borrower’s or its Subsidiaries’ Properties, which failure to obtain
or file could reasonably be expected to have a Material Adverse Effect; (iv) promptly
commence and diligently prosecute to completion, and shall cause each
Subsidiary to promptly commence and diligently prosecute to completion, any
assessment, evaluation, investigation, monitoring, containment, cleanup,
removal, repair, restoration, remediation or other remedial obligations
(collectively, the “Remedial Work”) in the event any Remedial Work is
required or reasonably necessary under applicable Environmental Laws because of
or in connection with the actual or suspected past, present or future disposal
or other release of any oil, oil and gas waste, hazardous substance or solid
waste on, under, about or from any of the Borrower’s or its Subsidiaries’
Properties, which failure to commence and diligently prosecute to completion
could reasonably be expected to have a Material Adverse Effect; and (v) establish
and implement, and shall cause each Subsidiary to establish and implement, such
procedures as may be necessary to continuously determine and assure that the
Borrower’s and its Subsidiaries’ obligations under this Section 8.10(a) are
timely and fully satisfied, which failure to establish and implement could
reasonably be expected to have a Material Adverse Effect.

 

66

 

(b)                                 The Borrower
will promptly, but in no event later than five days of the occurrence of a
triggering event, notify the Administrative Agent and the Lenders in writing of
any threatened action, investigation or inquiry by any Governmental Authority
or any threatened demand or lawsuit by any landowner or other third party
against the Borrower or its Subsidiaries or their Properties of which the
Borrower has knowledge in connection with any Environmental Laws (excluding routine
testing and corrective action) if the Borrower reasonably anticipates that such
action will result in liability (whether individually or in the aggregate) in
excess of $500,000, not fully covered by insurance, subject to normal
deductibles.

 

(c)                                  The Borrower
will, and will cause each Subsidiary to, provide environmental audits and tests
in accordance with American Society of Testing Materials standards upon request
by the Administrative Agent and the Lenders in connection with any future
acquisitions of Oil and Gas Properties or other Properties.

 

Section 8.11.                             Further
Assurances.

 

(a)                                  The Borrower at
its sole expense will, and will cause each Subsidiary to, promptly execute and
deliver to the Administrative Agent all such other documents, agreements and
instruments reasonably requested by the Administrative Agent to comply with,
cure any defects or accomplish the conditions precedent, covenants and
agreements of the Borrower or any Subsidiary, as the case may be, in the Loan
Documents, including the Notes, or to further evidence and more fully describe
the collateral intended as security for the Indebtedness, or to correct any
omissions in this Agreement or the Security Instruments, or to state more fully
the obligations secured therein, or to perfect, protect or preserve any Liens
created pursuant to this Agreement or any of the Security Instruments or the
priority thereof, or to make any recordings, file any notices or obtain any
consents, all as may be reasonably necessary or appropriate, in the sole discretion
of the Administrative Agent, in connection therewith.

 

(b)                                 The Borrower
hereby authorizes the Administrative Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Mortgaged Property or other Property covered by the Lien of the Security
Instruments without the signature of the Borrower or any other Guarantor where
permitted by law.  A carbon, photographic
or other reproduction of the Security Instruments or any financing statement
covering the Mortgaged Property such other Property or any part thereof shall
be sufficient as a financing statement where permitted by law.

 

Section 8.12.                             Reserve Reports.

 

(a)                                  On or before March 1st
and September 1st of each year, commencing March 1, 2008,
the Borrower shall furnish to the Administrative Agent and the Lenders a
Reserve Report evaluating the Oil and Gas Properties of the Borrower and its
Subsidiaries as of the immediately preceding December 31st and June 30th.  The Reserve Report as of December 31 of
each year shall be prepared by one or more Approved Petroleum Engineers, and
the June 30 Reserve Report of each year shall be prepared by or under the
supervision of the chief operating officer of the Borrower who shall certify
such Reserve Report to be true and accurate and to have been prepared in
accordance with the procedures used in the immediately preceding June 30
Reserve Report.

 

67

 

(b)                                 In the event of
an Interim Redetermination, the Borrower shall furnish to the Administrative
Agent and the Lenders a Reserve Report prepared by or under the supervision of
the chief operating officer of the Borrower who shall certify such Reserve Report
to be true and accurate and to have been prepared in accordance with the
procedures used in the immediately preceding December 31 Reserve
Report.  For any Interim Redetermination
requested by the Administrative Agent or the Borrower pursuant to Section 2.07(b),
the Borrower shall provide such Reserve Report with an “as of” date as required
by the Administrative Agent as soon as possible, but in any event no later than
thirty (30) days following the receipt of such request.

 

(c)                                  With the
delivery of each Reserve Report, the Borrower shall provide to the
Administrative Agent and the Lenders a certificate from a Responsible Officer
certifying that:  (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct in all material respects, (ii) the
Borrower or its Subsidiaries own good and defensible title to the Oil and Gas
Properties evaluated in such Reserve Report and such Properties are free of all
Liens except for Liens permitted by Section 9.03, (iii) except
as set forth on an exhibit to the certificate, on a net basis there are no
Material Gas Imbalances, take or pay or other prepayments in excess of the
volume specified in Section 7.19 with respect to its Oil and Gas
Properties evaluated in such Reserve Report which would require the Borrower or
any Subsidiary to deliver Hydrocarbons either generally or produced from such
Oil and Gas Properties at some future time without then or thereafter receiving
full payment therefor, (iv) none of their Oil and Gas Properties have been
sold since the date of the last Borrowing Base determination except as set
forth on an exhibit to the certificate, which certificate shall list all of its
Oil and Gas Properties sold and in such detail as reasonably required by the
Administrative Agent, (v) attached to the certificate is a list of all
marketing agreements entered into subsequent to the later of the date hereof or
the most recently delivered Reserve Report which the Borrower could reasonably
be expected to have been obligated to list on Schedule 7.20 had such
agreement been in effect on the date hereof and (vi) attached thereto is a
schedule of the Oil and Gas Properties evaluated by such Reserve Report that
are Mortgaged Properties and demonstrating the percentage of the total value of
the Oil and Gas Properties that the value of such Mortgaged Properties
represent in compliance with Section 8.14(a).

 

Section 8.13.                          Title
Information.

 

(a)                                  On or before
the delivery to the Administrative Agent and the Lenders of each Reserve Report
required by Section 8.12(a), the Borrower will deliver title
information in form and substance acceptable to the Administrative Agent
covering enough of the Oil and Gas Properties evaluated by such Reserve Report
that were not included in the immediately preceding Reserve Report, so that the
Administrative Agent shall have received together with title information
previously delivered to the Administrative Agent, satisfactory title
information on at least 80% of the total value of the Oil and Gas Properties
evaluated by such Reserve Report.

 

(b)                                 If the Borrower
has provided title information for additional Properties under Section 8.13(a),
the Borrower shall, within 60 days of notice from the Administrative Agent that
title defects or exceptions exist with respect to such additional Properties,
either 

 

68

 

(i) cure any such title defects or
exceptions (including defects or exceptions as to priority) which are not
permitted by Section 9.03 raised by such information, (ii) substitute
acceptable Mortgaged Properties with no title defects or exceptions except for
Excepted Liens (other than Excepted Liens described in clauses (e), (g) and
(h) of such definition) having an equivalent value or (iii) deliver
title information in form and substance acceptable to the Administrative Agent
so that the Administrative Agent shall have received, together with title
information previously delivered to the Administrative Agent, satisfactory
title information on at least 80% of the value of the Oil and Gas Properties
evaluated by such Reserve Report.

 

(c)                                  If the Borrower
is unable to cure any title defect requested by the Administrative Agent or the
Lenders to be cured within the 60-day period or the Borrower does not comply
with the requirements to provide acceptable title information covering 80% of
the value of the Oil and Gas Properties evaluated in the most recent Reserve
Report, such default shall not be a Default, but instead the Administrative Agent
and/or the Majority Lenders shall have the right to exercise the following
remedy in their sole discretion from time to time, and any failure to so
exercise this remedy at any time shall not be a waiver as to future exercise of
the remedy by the Administrative Agent or the Lenders.  To the extent that the Administrative Agent
or the Majority Lenders are not satisfied with title to any Mortgaged Property
after the 60-day period has elapsed, such unacceptable Mortgaged Property shall
not count towards the 80% requirement, and the Administrative Agent may send a
notice to the Borrower and the Lenders that the then outstanding Borrowing Base
shall be reduced by an amount as determined by the Majority Lenders to cause
the Borrower to be in compliance with the requirement to provide acceptable
title information on 80% of the value of the Oil and Gas Properties.  This new Borrowing Base shall become
effective immediately after receipt of such notice.

 

Section 8.14.                          Additional
Collateral; Additional Guarantors.

 

(a)                                  In connection
with each redetermination of the Borrowing Base, the Borrower shall review the
Reserve Report and the list of current Mortgaged Properties (as described in Section 8.12(c)(vi))
to ascertain whether the Mortgaged Properties represent at least 90% of the
total value of the Oil and Gas Properties evaluated in the most recently
completed Reserve Report after giving effect to exploration and production
activities, acquisitions, dispositions and production.  In the event that the Mortgaged Properties do
not represent at least 90% of such total value, then the Borrower shall, and
shall cause its Subsidiaries to, grant, within thirty (30) days of delivery of
the certificate required under Section 8.12(c), to the
Administrative Agent as security for the Indebtedness a first-priority Lien
interest (provided that Excepted Liens of the type described in clauses (a) to
(d) and (f) of the definition thereof may exist, but subject to the
provisos at the end of such definition) on additional Oil and Gas Properties
not already subject to a Lien of the Security Instruments such that after
giving effect thereto, the Mortgaged Properties will represent at least 90% of
such total value.  All such Liens will be
created and perfected by and in accordance with the provisions of Mortgages,
deeds of trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes.  In order to comply with the foregoing, if any
Subsidiary places a Lien on its Oil and Gas Properties and such Subsidiary is
not a Guarantor, then it shall become a Guarantor and comply with Section 8.14(b).

 

69

 

(b)                                 The Borrower
shall promptly cause each Subsidiary to guarantee the Indebtedness pursuant to
a Guaranty Agreement.  In connection with
any such guaranty, the Borrower shall, or shall cause such Subsidiary to, (A) pledge
all of the Equity Interests of such new Subsidiary pursuant to a Subsidiary
Pledge Agreement (including, without limitation, delivery of original stock
certificates, if any, evidencing the Equity Interests of such Subsidiary,
together with an appropriate undated stock powers for each certificate duly
executed in blank by the registered owner thereof) and (B) execute and
deliver such other additional closing documents, certificates and legal
opinions as shall reasonably be requested by the Administrative Agent.

 

(c)                                  If the Borrower
elects to provide additional Mortgaged Properties in lieu of making any
mandatory prepayment pursuant to Section 3.04(c), then the Borrower
shall, or shall cause its Subsidiaries to, grant to the Administrative Agent as
security for the Indebtedness a first-priority Lien interest (subject only to
Excepted Liens) on additional Oil and Gas Properties not already subject to a
Lien of the Security Instruments.  All
such Liens will be created and perfected by and in accordance with the
provisions of Mortgages, deeds of trust, security agreements and financing
statements or other Security Instruments, all in form and substance
satisfactory to the Administrative Agent and in sufficient executed (and
acknowledged where necessary or appropriate) counterparts for recording
purposes.  In order to comply with the
foregoing, if any Subsidiary places such a Lien on its Oil and Gas Properties
and such Subsidiary is not a Guarantor, then it shall become a Guarantor and
comply with Section 8.14(b).

 

(d)                                 In the
event  that the Borrower or any Domestic
Subsidiary becomes the owner of a Foreign Subsidiary which has total assets in
excess of $1,000,000, then the Borrower shall promptly, or shall cause such
Domestic Subsidiary to promptly, guarantee the Indebtedness pursuant to the
Guaranty Agreement.  In connection with
any such guaranty, the Borrower shall, or shall cause such Domestic Subsidiary
to, (i) execute and deliver a supplement to the Guaranty Agreement, (ii) pledge
65% of all the Equity Interests of such Foreign Subsidiary (including, without
limitation, delivery of original stock certificates evidencing such Equity
Interests of such Foreign Subsidiary, together with appropriate stock powers
for each certificate duly executed in blank by the registered owner thereof)
and (iii) execute and deliver such other additional closing documents,
certificates and legal opinions as shall reasonably be requested by the
Administrative Agent.

 

Section 8.15.                          ERISA
Compliance.  The
Borrower will promptly furnish and will cause the Subsidiaries and any ERISA
Affiliate to promptly furnish to the Administrative Agent (i) promptly
after the filing thereof with the United States Secretary of Labor, the
Internal Revenue Service or the PBGC, copies of each annual and other report
with respect to each Plan or any trust created thereunder, (ii) immediately
upon becoming aware of the occurrence of any ERISA Event or of any “prohibited
transaction,” as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by the President or the principal Financial Officer, the
Subsidiary or the ERISA Affiliate, as the case may be, specifying the nature
thereof, what action the Borrower, the Subsidiary or the ERISA Affiliate is
taking or proposes to take with respect thereto, and, when known, any action
taken or proposed by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto, and (iii) immediately upon receipt thereof,
copies of any notice of the PBGC’s intention to terminate or to have a trustee
appointed to administer any Plan.  With
respect to each 

 

70

 

Plan (other than a Multiemployer Plan), the Borrower will, and will
cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full and in a
timely manner, without incurring any late payment or underpayment charge or
penalty and without giving rise to any lien, all of the contribution and funding
requirements of section 412 of the Code (determined without regard to
subsections (d), (e), (f) and (k) thereof) and of section 302 of
ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.

 

Section 8.16.                          Swap Agreements
and Put Option Contracts.  The
Borrower shall maintain in effect, and shall cause its Subsidiaries to maintain
in effect, a commodity price hedge position establishing minimum fixed prices
acceptable to the Administrative Agent on a volume of Hydrocarbons set forth on
Schedule 8.16 which is equal to approximately 85% of the projected
production from proved, developed, producing Oil and Gas Properties of the
Borrower and its Subsidiaries for the years 2008, 2009, 2010 and 2011, through December 31,
2011, with one or more Approved Counterparties. 
The Borrower shall maintain in effect, and cause its Subsidiaries to
maintain in effect, a production put option contract for the years 2008 and
2009 at the production volumes or MMBtu equivalents and the minimum price set
forth on Schedule 8.16, with one or more Approved Counterparties.  The Majority Lenders may direct the
Administrative Agent to cause an Interim Redetermination of the Borrowing Base
in the event the Swap Agreements entered into pursuant to this Section 8.16
are not hedged at prices sufficient to support, in the opinion of the Majority
Lenders, the current Borrowing Base.

 

Section 8.17.                          Administrative
Agent as Principal Depository.  The Borrower shall maintain the
Administrative Agent as its principal depository bank, including for the
maintenance of business, cash management, operating and administrative deposit
accounts

 

Section 8.18.                          Chief Financial
Officer.  The Borrower shall keep the
position of chief financial officer filled through the Maturity Date.

 

ARTICLE IX

Negative Covenants

 

Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:

 

Section 9.01.                          Financial
Covenants.

 

(a)                                  Interest
Coverage Ratio.  The
Borrower will not, as of the last day of any fiscal quarter beginning with the
fiscal quarter ending December 31, 2007, permit its ratio of EBITDA to
Interest Expense for each four consecutive fiscal quarter period, to be less
than 2.5 to 1.0.

 

71

 

(b)                                 Consolidated
Leverage Ratio.  The
Borrower will not, as of the last day of any fiscal quarter beginning with the
fiscal quarter ending December 31, 2007, permit its Consolidated Leverage
Ratio to be greater than 4.0 to 1.0.

 

(c)                                  Current Ratio.  The Borrower will not permit, as of the last
day of any fiscal quarter, its ratio of (i) consolidated current assets
(including the unused amount of the total Commitments, but excluding non-cash
assets under FAS 133) to (ii) consolidated current liabilities (excluding
non-cash obligations under FAS 133 and current maturities under this Agreement)
to be less than 1.0 to 1.0.

 

(d)                                 Minimum
Liquidity.  The
Borrower shall maintain at all times unencumbered liquid assets having an
aggregate value of at least $2,000,000. 
The phrase ‘unencumbered liquid assets’ means the sum of (a) the
unused availability of the Borrowing Base, plus (b) cash which is not
subject to any Lien or right of set-off.

 

Section 9.02.                          Debt.  The Borrower will not, and will not permit
any Subsidiary to, incur, create, assume or suffer to exist any Debt, except:

 

(a)                                  the Notes or
other Indebtedness arising under the Loan Documents or any guaranty of or
suretyship arrangement for the Notes or other Indebtedness arising under the
Loan Documents.

 

(b)                                 accounts
payable and accrued expenses, liabilities or other obligations to pay the
deferred purchase price of Property or services, from time to time incurred in
the ordinary course of business which are not greater than sixty (60) days past
the date of invoice or delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP.

 

(c)                                  Debt under
Capital Leases not to exceed $1,000,000.

 

(d)                                 Debt associated
with bonds or surety obligations required by Governmental Requirements in
connection with the operation of the Oil and Gas Properties.

 

(e)                                  intercompany
Debt between the Borrower and any Subsidiary or between Subsidiaries to the
extent permitted by Section 9.05(g); provided that such Debt is not
held, assigned, transferred, negotiated or pledged to any Person other than the
Borrower or one of its Wholly-Owned Subsidiaries, and, provided further, that
any such Debt owed by either the Borrower or a Guarantor shall be subordinated
to the Indebtedness on terms satisfactory to the Administrative Agent.

 

(f)                                    endorsements of
negotiable instruments for collection in the ordinary course of business.

 

(g)                                 other Debt,
including purchase-money obligations, not to exceed $1,000,000 in the aggregate
at any one time outstanding.

 

(h)                                 Debt arising
under Swap Agreements permitted under Section 9.18 hereof.

 

72

 

Section 9.03.         Liens.  The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Lien on any of
its Properties (now owned or hereafter acquired), except:

 

(a)           Liens securing the payment
of any Indebtedness.

 

(b)           Excepted Liens.

 

(c)           Liens securing Capital
Leases permitted by Section 9.02(c) but only on the Property
under lease.

 

(d)           Liens on
any Property of the Borrower and its Subsidiaries existing on the date hereof
and set forth on Schedule 9.03; provided that such Liens shall secure
only those obligations which they secure on the date hereof.

 

(e)           Liens on Property not
constituting collateral for the Indebtedness and not otherwise permitted by the
foregoing clauses of this Section 9.03; provided that the aggregate
principal or face amount of all Debt secured under this Section 9.03(e) shall
not exceed $2,000,000 at any time.

 

Section 9.04.         Dividends, Distributions and
Redemptions.   The
Borrower will not, and will not permit any of its Subsidiaries to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment,
return any capital to its stockholders, members or partners or make any
distribution of its Property to its Equity Interest holders, except

 

(a)           the Borrower may declare and
pay cash distributions to its Equity Interest holders to permit such holders to
pay federal and state taxes due with respect to the income of the Borrower;

 

(b)           the Borrower may declare and
pay dividends with respect to its Equity Interests payable solely in additional
shares of its Equity Interests (other than Disqualified Capital Stock);

 

(c)           Subsidiaries may declare and
pay dividends ratably with respect to their Equity Interests;

 

(d)           the Borrower may make
Restricted Payments pursuant to and in accordance with stock option plans or
other benefit plans for management or employees of the Borrower and its
Subsidiaries; and

 

(e)           the Borrower may make
Restricted Payments to its Equity Interest holders provided that (i) no
Default has occurred and is continuing or would result from the making of such
Restricted Payment, and (ii) after giving effect to such Restricted
Payment, the Revolving Credit Exposure is less than 90% of the Borrowing Base
as of such date.

 

Section 9.05.         Investments, Loans and
Advances.  The
Borrower will not, and will not permit any Subsidiary to, make or permit to
remain outstanding any Investments in or to any Person, except that the
foregoing restriction shall not apply to:

 

73

 

(a)           Investments reflected in the
Financial Statements or which are disclosed to the Lenders in Schedule 9.05.

 

(b)           accounts receivable arising
in the ordinary course of business.

 

(c)           direct obligations of the
United States or any agency thereof, or obligations guaranteed by the United
States or any agency thereof, in each case maturing within one year from the
date of creation thereof.

 

(d)           commercial paper maturing
within one year from the date of creation thereof rated in the highest grade by
S&P or Moody’s.

 

(e)           deposits maturing within one
year from the date of creation thereof with, including certificates of deposit
issued by, any Lender or any office located in the United States of any other
bank or trust company which is organized under the laws of the United States or
any state thereof, has capital, surplus and undivided profits aggregating at
least $100,000,000 (as of the date of such bank or trust company’s most recent
financial reports) and has a short term deposit rating of no lower than A2 or
P2, as such rating is set forth from time to time, by S&P or Moody’s,
respectively or, in the case of any Foreign Subsidiary, a bank organized in a
jurisdiction in which the Foreign Subsidiary conducts operations having assets
in excess of $500,000,000 (or its equivalent in another currency).

 

(f)            deposits in money market
funds investing exclusively in Investments described in Section 9.05(c),
Section 9.05(d) or Section 9.05(e).

 

(g)           Investments (i) made by
the Borrower in or to the Guarantors, (ii) made by any Subsidiary in or to
the Borrower or any Guarantor and (iii) made by the Borrower or any
Subsidiary in or to all other Domestic Subsidiaries which are not Guarantors in
an aggregate amount at any one time outstanding not to exceed $1,000,000.

 

(h)           Investments (including,
without limitation, capital contributions) in general or limited partnerships
or other types of entities (each a “venture”) entered into by the
Borrower or a Subsidiary with others in the ordinary course of business;
provided that (i) any such venture is engaged exclusively in oil and gas
exploration, development, production, processing and related activities,
including transportation, (ii) the interest in such venture is acquired in
the ordinary course of business and on fair and reasonable terms and (iii) such
venture interests acquired and capital contributions made (valued as of the
date such interest was acquired or the contribution made) do not exceed, in the
aggregate at any time outstanding an amount equal to $1,000,000.

 

(i)            Investments made by the
Borrower or a Guarantor in direct ownership interests in additional Oil and Gas
Properties and gas gathering systems related thereto or related to farm-out,
farm-in, joint operating, joint venture or area of mutual interest agreements,
gathering systems, pipelines or other similar arrangements which are usual and
customary in the oil and gas exploration and production business located within
the geographic boundaries of the United States of America, provided that (A) the
Borrower shall be in compliance, on a pro forma basis after giving effect to
any such Investment, with the financial covenants set forth in Section 9.01 recomputed as at the last day
of the most recently ended fiscal quarter of the Borrower for 

 

74

 

which financial statements are available, and
(B) no Default shall have occurred and be continuing or would result
therefrom.

 

(j)            Investments in stock,
obligations or securities received in settlement of debts arising from
Investments permitted under this Section 9.05 owing to the Borrower
or any Subsidiary as a result of a bankruptcy or other insolvency proceeding of
the obligor in respect of such debts or upon the enforcement of any Lien in
favor of the Borrower or any of its Subsidiaries; provided that the Borrower
shall give the Administrative Agent prompt written notice in the event that the
aggregate amount of all Investments held at any one time under this Section 9.05(k) exceeds
$1,000,000.

 

(k)           other Investments not to
exceed $1,000,000 in the aggregate at any time.

 

Section 9.06.         Nature of Business;
International Operations.  The
Borrower will not, and will not permit any Subsidiary to, allow any material
change to be made in the character of its business as currently conducted by it
and business activities reasonably incidental thereto as an independent oil and
gas exploration and production company with operations in the continental
United States.  From and after the date
hereof, the Borrower and its Subsidiaries will not acquire or make any other
expenditure (whether such expenditure is capital, operating or otherwise) in or
related to, any Oil and Gas Properties not located within the geographical
boundaries of the United States.

 

Section 9.07.         Limitation on Leases.  The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or
personal but excluding Capital Leases and leases of Hydrocarbon Interests),
under leases or lease agreements which would cause the aggregate amount of all
payments made by the Borrower and the Subsidiaries pursuant to all such leases
or lease agreements, including, without limitation, any residual payments at
the end of any lease, to exceed $2,000,000 in any period of twelve consecutive
calendar months during the life of such leases.

 

Section 9.08.         Proceeds of Notes.  The Borrower will not permit the proceeds of
the Notes to be used for any purpose other than those permitted by Section 7.21.  Neither the Borrower nor any Person acting on
behalf of the Borrower has taken or will take any action which might cause any
of the Loan Documents to violate Regulations T, U or X or any other regulation
of the Board or to violate Section 7 of the Securities Exchange Act of
1934 or any rule or regulation thereunder, in each case as now in effect
or as the same may hereinafter be in effect. 
If requested by the Administrative Agent, the Borrower will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 or such other form
referred to in Regulation U, Regulation T or Regulation X of the Board, as the
case may be.

 

Section 9.09.         ERISA Compliance.  The Borrower will not, and will not permit
any Subsidiary to, at any time:

 

(a)           engage in, or permit any
ERISA Affiliate to engage in, any transaction in connection with which the
Borrower, a Subsidiary or any ERISA Affiliate could be subjected to 

 

75

 

either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed
by Chapter 43 of Subtitle D of the Code.

 

(b)           terminate, or permit any
ERISA Affiliate to terminate, any Plan in a manner, or take any other action
with respect to any Plan, which could result in any liability of the Borrower,
a Subsidiary or any ERISA Affiliate to the PBGC.

 

(c)           fail to make, or permit any
ERISA Affiliate to fail to make, full payment when due of all amounts which,
under the provisions of any Plan, agreement relating thereto or applicable law,
the Borrower, a Subsidiary or any ERISA Affiliate is required to pay as
contributions thereto.

 

(d)           permit to exist, or allow
any ERISA Affiliate to permit to exist, any accumulated funding deficiency
within the meaning of section 302 of ERISA or section 412 of the Code, whether
or not waived, with respect to any Plan.

 

(e)           permit, or allow any ERISA
Affiliate to permit, the actuarial present value of the benefit liabilities
under any Plan maintained by the Borrower, a Subsidiary or any ERISA Affiliate
which is regulated under Title IV of ERISA to exceed the current value of
the assets (computed on a plan termination basis in accordance with Title IV
of ERISA) of such Plan allocable to such benefit liabilities.  The term “actuarial present value of the
benefit liabilities” shall have the meaning specified in section 4041 of ERISA.

 

(f)            contribute to or assume an
obligation to contribute to, or permit any ERISA Affiliate to contribute to or
assume an obligation to contribute to, any Multiemployer Plan.

 

(g)           acquire, or permit any ERISA
Affiliate to acquire, an interest in any Person that causes such Person to
become an ERISA Affiliate with respect to the Borrower or a Subsidiary or with
respect to any ERISA Affiliate of the Borrower or a Subsidiary if such Person
sponsors, maintains or contributes to, or at any time in the six-year period
preceding such acquisition has sponsored, maintained, or contributed to, (1) any
Multiemployer Plan, or (2) any other Plan that is subject to Title IV
of ERISA under which the actuarial present value of the benefit liabilities
under such Plan exceeds the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities.

 

(h)           incur, or permit any ERISA
Affiliate to incur, a liability to or on account of a Plan under sections 515,
4062, 4063, 4064, 4201 or 4204 of ERISA.

 

(i)            contribute to or assume an
obligation to contribute to, or permit any ERISA Affiliate to contribute to or
assume an obligation to contribute to, any employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such
plan maintained to provide benefits to former employees of such entities, that
may not be terminated by such entities in their sole discretion at any time
without any material liability.

 

76

 

(j)            amend, or permit any ERISA
Affiliate to amend, a Plan resulting in an increase in current liability such
that the Borrower, a Subsidiary or any ERISA Affiliate is required to provide
security to such Plan under section 401(a)(29) of the Code.

 

Section 9.10.         Sale or Discount of Receivables.  Except for receivables obtained by the
Borrower or any Subsidiary out of the ordinary course of business or the
settlement of joint interest billing accounts in the ordinary course of
business or discounts granted to settle collection of accounts receivable or
the sale of defaulted accounts arising in the ordinary course of business in
connection with the compromise or collection thereof and not in connection with
any financing transaction, the Borrower will not, and will not permit any
Subsidiary to, discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.

 

Section 9.11.         Mergers, Etc.  Neither the Borrower not any of its
Subsidiaries will merge into or with or consolidate with any other Person, or
sell, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its Property to any other Person,
except that any Wholly-Owned Subsidiary may merge with any other Wholly-Owned
Subsidiary and the Borrower may merge with any Wholly-Owned Subsidiary so long
as the Borrower is the survivor.

 

Section 9.12.         Sale of Properties.  The Borrower will not, and will not permit
any Subsidiary to, sell, assign, farm-out, convey or otherwise transfer any
Property except for (a) the sale of Hydrocarbons in the ordinary course of
business; (b) farmouts of undeveloped acreage and assignments in
connection with such farmouts; (c) the sale or transfer of equipment that
is no longer necessary for the business of the Borrower or such Subsidiary or
is replaced by equipment of at least comparable value and use; and (d) sales
and other dispositions of Property not regulated by Sections 9.01(a) through
9.01(d) having a fair market value not in excess of 3% of the
Borrowing Base (as determined by the Administrative Agent), individually or in
the aggregate during any 12-month period.

 

Section 9.13.         Environmental Matters.  The Borrower will not, and will not permit
any Subsidiary to, cause or permit any of its Property which it or a Subsidiary
operates to be in violation of, or do anything or permit anything to be done
which will subject any such Property to any Remedial Work under any
Environmental Laws, assuming disclosure to the applicable Governmental
Authority of all relevant facts, conditions and circumstances, if any,
pertaining to such Property where such violations or remedial obligations could
reasonably be expected to have a Material Adverse Effect.  The Borrower will use its reasonable efforts
to cause the operator of Properties which the Borrower or any Subsidiary does
not operate to comply with the terms and provisions of this Section 9.13.

 

Section 9.14.         Transactions with Affiliates.  The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction, including, without limitation,
any purchase, sale, lease or exchange of Property or the rendering of any
service, with any Affiliate (other than the Guarantors and Wholly-Owned
Subsidiaries of the Borrower) unless such transactions are otherwise permitted
under this Agreement and are upon fair and reasonable terms no less favorable
to it than it would obtain in a comparable arm’s length transaction with a
Person not an Affiliate.

 

77

 

Section 9.15.          Subsidiaries.  The Borrower will not, and will not permit
any Subsidiary to, create or acquire any additional Subsidiary unless the
Borrower gives written notice to the Administrative Agent of such creation or
acquisition and complies with Section 8.14(b) and Section 8.14(c).  The Borrower shall not, and shall not permit
any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in
any Subsidiary except in compliance with Section 9.12(d).  Neither the Borrower nor any Subsidiary shall
have any Foreign Subsidiaries.

 

Section 9.16.          Negative
Pledge Agreements; Dividend Restrictions. 
The Borrower will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any contract, agreement or understanding (other
than this Agreement, the Security Instruments or Capital Leases creating Liens
permitted by Section 9.03(c)) which in any way prohibits or
restricts the granting, conveying, creation or imposition of any Lien on any of
its Property in favor of the Administrative Agent and the Lenders or restricts
any Subsidiary from paying dividends or making distributions to the Borrower or
any Guarantor, or which requires the consent of or notice to other Persons in
connection therewith.

 

Section 9.17.          Gas
Imbalances, Take-or-Pay or Other Prepayments.  The Borrower will not, and will not permit
any Subsidiary to, (a) incur, become or remain liable for, any Material
Gas Imbalance, or (b) allow take-or-pay or other prepayments with respect
to the Oil and Gas Properties of the Borrower or any Subsidiary that would
require the Borrower or such Subsidiary to deliver Hydrocarbons at some future
time without then or thereafter receiving full payment therefor.

 

Section 9.18.          Swap
Agreements.  The Borrower will not,
and will not permit any Subsidiary to, enter into any Swap Agreements with any
Person other than (a) Swap Agreements in respect of commodities (i) with
an Approved Counterparty and (ii) the notional volumes for which (when
aggregated with other commodity Swap Agreements then in effect other than basis
differential swaps on volumes already hedged pursuant to other Swap Agreements)
do not exceed, as of the date such Swap Agreement is executed, 95% of the
reasonably anticipated projected production from proved, developed, producing
Oil and Gas Properties for each month during the period during which such Swap
Agreement is in effect for each of crude oil and natural gas, calculated
separately and (b) Swap Agreements in respect of interest rates with an
Approved Counterparty with the purpose and effect of fixing interest rates on a
principal amount of indebtedness of the Borrower that is accruing interest at a
variable rate, provided that (i) the aggregate notional amount of such
contracts never exceeds 75% of the anticipated outstanding principal balance of
the indebtedness to be hedged by such contracts or an average of such principal
balances calculated by using a generally accepted method of matching interest
swap contracts to declining principal balances, and (ii) the floating rate
index of each such contract generally matches the index used to determine the
floating rates of interest on the corresponding indebtedness to be hedged by
such contract, and (c) Swap Agreements required by Section 8.16.  In no event shall any Swap Agreement contain
any requirement, agreement or covenant for the Borrower or any Subsidiary to
post collateral (other than Letters of Credit) or margin to secure their
obligations under such Swap Agreement or to cover market exposures.

 

Section 9.19.          Marketing
Activities.  The Borrower will not,
and will not permit any of its Subsidiaries to, engage in marketing activities
for any Hydrocarbons or enter into any contracts related thereto other than (i) contracts
for the sale of Hydrocarbons scheduled or

 

78

 

reasonably estimated to be produced from their proved Oil and Gas
Properties during the period of such contract, (ii) contracts for the sale
of Hydrocarbons scheduled or reasonably estimated to be produced from proved
Oil and Gas Properties of third parties during the period of such contract
associated with the Oil and Gas Properties of the Borrower and its Subsidiaries
that the Borrower or one of its Subsidiaries has the right to market pursuant
to joint operating agreements, unitization agreements or other similar
contracts that are usual and customary in the oil and gas business and (iii) other
contracts for the purchase and/or sale of Hydrocarbons of third parties (A) which
have generally offsetting provisions (i.e. corresponding pricing mechanics,
delivery dates and points and volumes) such that no “position” is taken and (B) for
which appropriate credit support has been taken to alleviate the material
credit risks of the counterparty thereto.

 

Section 9.20.          Management
Fees.  The Borrower will not, and
will not permit any Subsidiary to, enter into any agreement to pay a management
fee for the operation of its Properties without the prior approval of the
Administrative Agent.

 

ARTICLE X

Events of Default; Remedies

 

Section 10.01.        Events
of Default.  One or more of the
following events shall constitute an “Event of Default”:

 

(a)           the Borrower shall fail to pay any
principal of any Loan or any reimbursement obligation in respect of any LC
Disbursement when and as the same shall become due and payable (other than LC
Disbursements which are repaid through an ABR Borrowing as permitted by Section 2.8(e) hereof),
whether at the due date thereof or at a date fixed for prepayment thereof, by
acceleration or otherwise.

 

(b)           the Borrower shall fail to pay any
interest on any Loan or any fee or any other amount (other than an amount
referred to in Section 10.01(a)) payable under any Loan Document,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five (5) Business Days.

 

(c)           any representation or warranty made
or deemed made by or on behalf of the Borrower or any Subsidiary in or in
connection with any Loan Document or any amendment or modification of any Loan
Document or waiver under such Loan Document, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect when made or deemed made.

 

(d)           the Borrower or any Subsidiary shall
fail to observe or perform any covenant, condition or agreement contained in Section 8.01(j),
Section 8.01(n), Section 8.01(q), Section 8.02,
Section 8.03, Section 8.14, Section 8.15 or
in ARTICLE IX.

 

(e)           the Borrower or any Subsidiary shall
fail to observe or perform any covenant, condition or agreement contained in
this Agreement (other than those specified in Section 10.01(a), Section 10.01(b) or
Section 10.01(d)) or any other Loan Document, and such failure
shall continue unremedied for a period of 30 days after the earlier to occur of
(A) notice

 

79

 

thereof from the Administrative
Agent to the Borrower (which notice will be given at the request of any Lender)
or (B) a Responsible Officer of the Borrower or such Subsidiary otherwise
becoming aware of such default.

 

(f)            the Borrower or any Subsidiary shall
fail to make any payment (whether of principal or interest and regardless of
amount) in respect of any Material Indebtedness, when and as the same shall
become due and payable (after giving effect to any applicable notice and cure
period).

 

(g)           any event or condition occurs that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or
any trustee or agent on its or their behalf to cause any Material Indebtedness
to become due, or to require the Redemption thereof or any offer to Redeem to
be made in respect thereof, prior to its scheduled maturity or require the
Borrower or any Subsidiary to make an offer in respect thereof.

 

(h)           an involuntary proceeding shall be
commenced or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any Subsidiary 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 the Borrower or any
Subsidiary or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 30 days or an order or
decree approving or ordering any of the foregoing shall be entered.

 

(i)            the Borrower or any Subsidiary shall
(i) voluntarily commence 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 Section 10.01(h),
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or
any Subsidiary or for a substantial part 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.

 

(j)            the Borrower or any Subsidiary shall
become unable, admit in writing its inability or fail generally to pay its
debts as they become due.

 

(k)           (i) one or more judgments for
the payment of money in an aggregate amount in excess of $1,000,000  (to
the extent not covered by independent third party insurance provided by
insurers of the highest claims paying rating or financial strength as to which
the insurer does not dispute coverage and is not subject to an insolvency
proceeding) or (ii) any one or more non-monetary judgments that have, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, shall be rendered against the Borrower, any Subsidiary
or any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively stayed,
or any 

 

80

 

action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment.

 

(l)            the Loan Documents after delivery
thereof shall for any reason, except to the extent permitted by the terms
thereof, cease to be in full force and effect and valid, binding and enforceable
in accordance with their terms against the Borrower or a Guarantor party
thereto or shall be repudiated by any of them, or cease to create a valid and
perfected Lien of the priority required thereby on any of the collateral
purported to be covered thereby, except to the extent permitted by the terms of
this Agreement, or the Borrower or any Subsidiary or any of their Affiliates
shall so state in writing.

 

(m)          an ERISA Event shall have occurred
that, in the opinion of the Majority Lenders, when taken together with all
other ERISA Events that have occurred, could reasonably be expected to result
in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $1,000,000 in any year.

 

(n)           There occurs under any Swap Agreement
an early Termination Date (as defined in such Swap Agreement) resulting from (i) any
event of default under such Swap Agreement to which the Borrower or any
Subsidiary is the Defaulting Party (as defined in such Swap Agreement), or (ii) any
Termination Event (as so defined) under such Swap Agreement as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower or such Subsidiary as a
result thereof constitutes Material Indebtedness.

 

(o)           a Change in Control shall occur.

 

(p)           (i) Thomas H. Blake shall
cease for any reason to be a full time member of the board of managers of the
Borrower, and a successor to the Mr. Blake acceptable to the
Administrative Agent has not been appointed within 60 days thereof, or (ii) Scott W.
Smith shall cease for any reason to perform his duties pursuant to the terms
and provisions of the Smith Employment Agreement, and a successor to Mr. Smith
acceptable to the Administrative Agent has not been appointed within
60 days.

 

Section 10.02.        Remedies.

 

(a)           In the case of an Event of Default
other than one described in Section 10.01(h), Section 10.01(i) or
Section 10.01(j), at any time thereafter during the continuance of
such Event of Default, the Administrative Agent may, and at the request of the
Majority Lenders, shall, by notice to the Borrower, take either or both of the
following actions, at the same or different times:  (i) terminate the Commitments, and
thereupon the Commitments shall terminate immediately, and (ii) declare
the Notes and the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower and the Guarantors
accrued hereunder and under the Notes and the other Loan Documents (including,
without limitation, the payment of cash collateral to secure the LC Exposure as
provided in Section 2.08(j)), shall become due and payable

 

81

 

immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which
are hereby waived by the Borrower and each Guarantor; and in case of an Event
of Default described in Section 10.01(h), Section 10.01(i) or
Section 10.01(j), the Commitments shall automatically terminate and
the Notes and the principal of the Loans then outstanding, together with
accrued interest thereon and all fees and the other obligations of the Borrower
and the Guarantors accrued hereunder and under the Notes and the other Loan
Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(j)), shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower and
each Guarantor.

 

(b)           In the case of the occurrence of an
Event of Default, the Administrative Agent and the Lenders will have all other
rights and remedies available at law and equity.

 

(c)           All proceeds realized from the
liquidation or other disposition of collateral or otherwise received after
maturity of the Notes, whether by acceleration or otherwise, shall be applied:

 

(i)            first,
to payment or reimbursement of that portion of the Indebtedness constituting
fees, expenses and indemnities payable to the Administrative Agent in its
capacity as such;

 

(ii)           second,
pro rata to payment or reimbursement of that portion of the Indebtedness
constituting fees, expenses and indemnities payable to the Lenders;

 

(iii)          third,
pro rata to payment of accrued interest on the Loans;

 

(iv)          fourth,
pro rata to payment of principal outstanding on the Loans and Indebtedness owed
to any Swap Lender;

 

(v)           fifth,
pro rata to any other Indebtedness;

 

(vi)          sixth,
to serve as cash collateral to be held by the Administrative Agent to secure
the LC Exposure; and

 

(vii)         seventh,
any excess, after all of the Indebtedness shall have been indefeasibly paid in
full in cash, shall be paid to the Borrower or as otherwise required by any
Governmental Requirement.

 

ARTICLE XI

The Agents

 

Section 11.01.        Appointment;
Powers.  Each of the Lenders and the
Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent
and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the
terms hereof and the other Loan Documents, together with such actions and
powers as are reasonably incidental thereto. 
The provisions of this Article are
solely for the benefit of the Administrative Agent, the Lenders and the Issuing
Bank, and neither the 

 

82

 

Borrower nor any Subsidiary
shall have rights as a third party beneficiary of any of such provisions.

 

Section 11.02.        Duties
and Obligations of Administrative Agent. 
The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing (the use of the term “agent” herein and in the other Loan
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the
Administrative Agent shall have no duty to take any discretionary action or
exercise any discretionary powers, except as provided in Section 11.03,
and (c) except as expressly set forth herein, the Administrative Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. 
The Administrative Agent shall
not be liable for any action taken or not taken by it (i) with the consent
or at the request of the Majority Lenders (or such other number or percentage
of the Lenders as shall be necessary, or as the Administrative Agent shall
believe in good faith shall be necessary, under the circumstances as provided
in Sections 10.02 and 12.02) or (ii) in the absence of
its own gross negligence or willful misconduct. 
The Administrative Agent shall be deemed not to have knowledge of
any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement or any
other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or under any other Loan Document or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or in any
other Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, (v) the satisfaction of any condition set forth in
ARTICLE VI or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent or as to those
conditions precedent expressly required to be to the Administrative Agent’s
satisfaction, (vi) the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Borrower and its
Subsidiaries or any other obligor or guarantor, or (vii) any failure by
the Borrower or any other Person (other than itself) to perform any of its
obligations hereunder or under any other Loan Document or the performance or
observance of any covenants, agreements or other terms or conditions set forth
herein or therein.  For purposes of
determining compliance with the conditions specified in ARTICLE VI, each Lender
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless the Administrative
Agent shall have received written notice from such Lender prior to the proposed
closing date specifying its objection thereto.

 

Section 11.03.        Action
by Administrative Agent.  The Administrative
Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except discretionary

 

83

 

rights and powers expressly contemplated hereby or by the other Loan
Documents that the Administrative Agent is required to exercise in writing as
directed by the Majority Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 12.02)
and in all cases the Administrative Agent shall be fully justified in failing
or refusing to act hereunder or under any other Loan Documents unless it shall (a) receive
written instructions from the Majority Lenders or the Lenders, as applicable,
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 12.02) specifying the
action to be taken and (b) be indemnified to its satisfaction by the
Lenders against any and all liability and expenses which may be incurred by it
by reason of taking or continuing to take any such action.  The instructions as aforesaid and any action
taken or failure to act pursuant thereto by the Administrative Agent shall be
binding on all of the Lenders.  If a
Default has occurred and is continuing, then the Administrative Agent shall
take such action with respect to such Default as shall be directed by the
requisite Lenders in the written instructions (with indemnities) described in
this Section 11.03, provided that, unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall deem advisable in the best
interests of the Lenders.  In no event,
however, shall the Administrative Agent be required to take any action which
exposes the Administrative Agent to personal liability or which is contrary to
this Agreement, the Loan Documents or applicable law.  The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Majority Lenders or the Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 12.02),
and otherwise the Administrative Agent shall not be liable for any action taken
or not 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 INCLUDING ITS OWN ORDINARY NEGLIGENCE,
except to the extent such liability is determined by a court of competent
jurisdiction by final and non-appealable judgment to have resulted primarily
from its own gross negligence or willful misconduct.

 

Section 11.04.        Reliance
by Administrative Agent.  The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including electronic message,
Internet or intranet web posting or other distribution) believed by it to be
genuine and to have been signed, sent or otherwise authenticated by the proper
Person.  The Administrative Agent also
may rely upon any statement made to it orally or by telephone and believed by
it to be made by the proper Person, and shall not incur any liability for
relying thereon and each of the Borrower, the Lenders and the Issuing Bank
hereby waives the right to dispute the Administrative Agent’s record of such
statement, except in the case of gross negligence or willful misconduct by the
Administrative Agent.  In determining compliance with any condition
hereunder to the making of a Loan, or the issuance of a Letter of Credit, that
by its terms must be fulfilled to the satisfaction of a Lender or the Issuing
Bank, the Administrative Agent may presume that such condition is satisfactory
to such Lender or the Issuing Bank unless the Administrative Agent shall have
received notice to the contrary from such Lender or the Issuing Bank prior to
the making of such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or

 

84

 

experts.  The Administrative Agent may deem and treat
the payee of any Note as the holder thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Administrative Agent.

 

Section 11.05.        Subagents.  The Administrative Agent may perform any and
all its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding Sections of this
ARTICLE XI shall apply to any such sub-agent and to the Related Parties of
the Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

 

Section 11.06.        Resignation
or Removal of Administrative Agent. 
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this Section 11.06, the Administrative Agent
may resign at any time by notifying the Lenders, the Issuing Bank and the
Borrower.  Upon any such resignation or
removal, the Majority Lenders shall have the right, in consultation with the
Borrower, to appoint a successor; provided that, no consultation with the
Borrower shall be required if an Event of Default has occurred and is
continuing.  If no successor shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation or removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank,
appoint a successor Administrative
Agent meeting the qualifications set forth above; provided that if the retiring
Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents and (2) all
payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender and
the Issuing Bank directly, until such time as the Majority Lenders appoint a
successor Administrative Agent as provided for above in this paragraph.  Upon the acceptance of its appointment
as Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder (if not already discharged as
provided for above in this paragraph). 
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
the Administrative Agent’s resignation hereunder, the provisions of this
ARTICLE XI and Section 12.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

 

Section 11.07.        Agents
as Lenders.  The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent and the term “Lender”
or “Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Administrative Agent
hereunder in its individual capacity.

 

85

 

Such Person and its Affiliates
may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if such Person
were not the Administrative Agent hereunder and without any duty to account
therefor to the Lenders.

 

Section 11.08.        No
Reliance.

 

(a)           Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and each other Loan Document to which it is a party.  Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan Document,
any related agreement or any document furnished hereunder or thereunder.  The Agents shall not be required to keep
themselves informed as to the performance or observance by the Borrower or any
of its Subsidiaries of this Agreement, the Loan Documents or any other document
referred to or provided for herein or to inspect the Properties or books of the
Borrower or its Subsidiaries.  Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, no Agent or the
Arranger shall 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) which may come into the
possession of such Agent or any of its Affiliates.  In this regard, each Lender acknowledges that
Winstead PC is acting in this transaction as special counsel to the
Administrative Agent only, except to the extent otherwise expressly stated in
any legal opinion or any Loan Document. 
Each other party hereto will consult with its own legal counsel to the
extent that it deems necessary in connection with the Loan Documents and the
matters contemplated therein.

 

(b)           The Lenders acknowledge that the
Administrative Agent and the Arranger are acting solely in administrative
capacities with respect to the structuring and syndication of this facility and
have no duties, responsibilities or liabilities under this Agreement and the
other Loan Documents other than their administrative duties, responsibilities
and liabilities specifically as set forth in the Loan Documents and in their
capacity as Lenders hereunder.  In
structuring, arranging or syndicating this facility, each Lender acknowledges
that the Administrative Agent and/or Arranger may be an agent or lender under
these Notes, other loans or other securities and waives any existing or future
conflicts of interest associated with the their role in such other debt
instruments.  If in its administration of
this facility or any other debt instrument, the Administrative Agent determines
(or is given written notice by any Lender) that a conflict exists, then it
shall eliminate such conflict within 90 days or resign pursuant to Section 11.06
and shall have no liability for action taken or not taken while such conflict
existed.

 

Section 11.09.        Administrative
Agent May File Proofs of Claim. 
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall

 

86

 

then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)           to file and prove a claim for the
whole amount of the principal and interest owing and unpaid in respect of the
Loans and all other Indebtedness that are owing and unpaid and to file such
other documents as may be necessary or advisable in order to have the claims of
the Lenders and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders
and the Administrative Agent and their respective agents and counsel and all
other amounts due the Lenders and the Administrative Agent under Section 12.03)
allowed in such judicial proceeding; and

 

(b)           to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same;

 

and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall
consent to the making of such payments directly to the Lenders, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Section 12.03.

 

Nothing contained herein shall be deemed to authorize
the Administrative Agent to authorize or consent to or accept or adopt on
behalf of any Lender any plan of reorganization, arrangement, adjustment or
composition affecting the Indebtedness or the rights of any Lender or to
authorize the Administrative Agent to vote in respect of the claim of any
Lender in any such proceeding.

 

Section 11.10.        Authority
of Administrative Agent to Release Collateral and Liens.  Each Lender and the Issuing Bank hereby
authorizes the Administrative Agent to release any collateral that is permitted
to be sold or released pursuant to the terms of the Loan Documents.  Each Lender and the Issuing Bank hereby
authorizes the Administrative Agent to execute and deliver to the Borrower, at
the Borrower’s sole cost and expense, any and all releases of Liens,
termination statements, assignments or other documents reasonably requested by
the Borrower in connection with any sale or other disposition of Property to
the extent such sale or other disposition is permitted by the terms of Section 9.12
or is otherwise authorized by the terms of the Loan Documents.

 

Section 11.11.        The
Arranger, Bookrunner, Etc.  Anything
herein to the contrary notwithstanding, none of the Arrangers, shall have any
powers, duties, responsibilities or liabilities under this Agreement and the
other Loan Documents other than its powers, duties, responsibilities and
liabilities in its capacity, as applicable, as the Administrative Agent, a
Lender or the Issuing Bank hereunder.

 

87

 

ARTICLE XII

Miscellaneous

 

Section 12.01.        Notices.

 

(a)           Except in the case of
notices and other communications expressly permitted to be given by telephone
(and subject to Section 12.01(b)), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

 

(i)            if
to the Borrower, to it at

 

7700 San Felipe, Suite 485

Houston, TX 77063

Attention:  Mr. Richard Robert 

Telecopy:  832-327-2260

Telephone:  832-327-2258

 

(ii)           if
to the Administrative Agent or the Issuing Bank, to it at

 

Citibank, N.A.

8401 N. Central Expressway, Suite 500

Dallas, TX  75225

Attention:  Mr. Steve Black

Telecopy:  972-419-3334

Telephone:  972-419-3406

 

(iii)          if
to any other Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire.

 

Notices sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have
been given when received; notices sent by telecopier shall be deemed to have
been given when sent (except that, if not given during normal business hours
for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient).  Notices delivered through electronic
communications to the extent provided in paragraph (b) below, shall
be effective as provided in said paragraph (b).

 

(b)           Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices pursuant to ARTICLE II,
ARTICLE III, ARTICLE IV and ARTICLE V if such Lender or the
Issuing Bank, as applicable, has notified the Administrative Agent that it is
incapable of receiving notices under such Article by electronic
communication.  The Administrative
Agent or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

88

 

Unless the Administrative Agent
otherwise prescribes, (i) notices and other communications sent to an
e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or
communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.

 

(c)           Any party hereto may
change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.

 

Section 12.02.        Waivers;
Amendments.

 

(a)           No failure on the part
of the Administrative Agent, any other Agent, the Issuing Bank or any Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege, or any abandonment or discontinuance of steps to
enforce such right, power or privilege, under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies of
the Administrative Agent, any other Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement
or any other Loan Document or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
Section 12.02(b), and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which
given.  Without limiting the generality
of the foregoing, the making of a Loan or issuance of a Letter of Credit shall
not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any other Agent, any Lender or the Issuing Bank may have
had notice or knowledge of such Default at the time.

 

Notwithstanding anything to the contrary contained herein or in any
other Loan Document, the authority to enforce rights and remedies hereunder and
under the other Loan Documents against the Loan Parties or any of them shall be
vested exclusively in, and all actions and proceedings at law in connection
with such enforcement shall be instituted and maintained exclusively by, the
Administrative Agent in accordance with Section 10.02 for the
benefit of all the Lenders and the L/C Issuer; provided, however, that the
foregoing shall not prohibit (a) the Administrative Agent from exercising
on its own behalf the rights and remedies that inure to its benefit (solely in
its capacity as the Administrative Agent) hereunder and under the other Loan
Documents, (b) the L/C Issuer from exercising the rights and remedies that
inure to its benefit (solely in its capacity as L/C Issuer) hereunder and under
the other Loan Documents, (c) any Lender from exercising setoff rights in
accordance with Section 12.08 (subject to the terms of Section 4.01,
or (d) any Lender from filing proofs of claim or appearing and filing
pleadings on 

 

89

 

its own behalf during the
pendency of a proceeding relative to any Loan Party under any debtor relief
law; and provided, further, that if at any time there is no Person acting as
the Administrative Agent hereunder and under the other Loan Documents, then (i) the
Majority Lenders shall have the rights otherwise ascribed to the Administrative
Agent pursuant to Section 10.02 and (ii) in addition to the
matters set forth in clauses (b), (c) and (d) of the preceding
proviso and subject to Section 4.01, any Lender may, with the
consent of the Majority Lenders, enforce any rights and remedies available to
it and as authorized by the Majority Lenders.

 

(b)           Neither this Agreement
nor any provision hereof nor any Security Instrument nor any provision thereof
may be waived, amended or modified, except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Majority Lenders or
by the Borrower and the Administrative Agent with the consent of the Majority
Lenders; provided that no such agreement shall (i) increase the Commitment
or the Maximum Credit Amount of any Lender without the written consent of such
Lender, (ii) increase the Borrowing Base without the written consent of
each Lender, decrease or maintain the Borrowing Base without the consent of the
Majority Lenders, or modify Section 2.07 in any manner without the
consent of each Lender, (iii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, or reduce any other Indebtedness hereunder or under any
other Loan Document, without the written consent of each Lender affected
thereby, (iv) postpone the scheduled date of payment or prepayment of the
principal amount of any Loan or LC Disbursement, or any interest thereon, or
any fees payable hereunder, or any other Indebtedness hereunder or under any
other Loan Document, or reduce the amount of, waive or excuse any such payment,
or postpone or extend the Termination Date without the written consent of each
Lender affected thereby, (v) change Section 4.01(b) or Section 4.01(c) in
a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (vi) waive or amend Section 8.14,
without the written consent of each Lender, (vii) amend Section 10.02(c) or
Section 12.14 in such a manner that any repayment amounts owed by
Borrower, any Subsidiary or any Guarantor to any Swap Lender shall cease to be
ranked, secured and be guaranteed on a pari passu basis with respect to the
repayment of principal outstanding on the Loans due under this Agreement,
without the written consent of each Swap Lender affected thereby, (viii) release
any Guarantor (except as set forth herein or in the Guaranty Agreement),
release all or substantially all of the collateral (other than as provided in Section 11.10),
or reduce the percentage set forth in Section 8.14(a) to less
than 90%, without the written consent of each Lender, or (ix) change any
of the provisions of this Section 12.02(b) or the definition
of “Majority Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder
or under any other Loan Documents or make any determination or grant any
consent hereunder or any other Loan Documents, without the written consent of
each Lender; provided further that (A) no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent,
any other Agent, or the Issuing Bank hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent, such other Agent
or the Issuing Bank, as the case may be, and (B) nothing in this Section 12.02
shall cause any waiver, amendment, modification or consent to (I) any fee
letter between the Borrower and any Lender, Agent or the Administrative Agent
or Issuing Bank to require the consent of the Majority Lenders, (II) any
Letter of Credit Agreements between the Borrower or any Subsidiary of the
Borrower and the Issuing Bank to require the consent of the Majority Lenders, (III) any
Letter of Credit issued by the Issuing Bank pursuant to the terms of this
Agreement to require the 

 

90

 

consent of the Majority Lenders
except as specifically required by Section 2.08 and (IV) any
Swap Agreement between the Borrower or any of its Subsidiaries, and the Administrative
Agent, any Agent or any Lender, or any Affiliate of any thereof, to require the
consent of the Majority Lenders.

 

Section 12.03.        Expenses,
Indemnity; Damage Waiver.

 

(a)           The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, including, without limitation, the reasonable fees, charges and
disbursements of counsel and other outside consultants for the Administrative
Agent, the reasonable travel, photocopy, mailing, courier, telephone and other
similar expenses, and the cost of environmental audits and surveys and
appraisals, in connection with the syndication of the credit facilities
provided for herein, the preparation, negotiation, execution, delivery and
administration (both before and after the execution hereof and including advice
of counsel to the Administrative Agent as to the rights and duties of the
Administrative Agent and the Lenders with respect thereto) of this Agreement
and the other Loan Documents and any amendments, modifications or waivers of or
consents related to the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
costs, expenses, Taxes, assessments and other charges incurred by any Agent or
any Lender in connection with any filing, registration, recording or perfection
of any security interest contemplated by this Agreement or any Security
Instrument or any other document referred to therein, (iii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder, (iv) all out-of-pocket expenses incurred by any
Agent, the Issuing Bank or any Lender, including the fees, charges and
disbursements of any counsel for any Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement or any other Loan Document, including its rights under this Section 12.03,
or in connection with the Loans made or Letters of Credit issued hereunder,
including, without limitation, all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans or Letters
of Credit.

 

(b)           THE
BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF),
EACH LENDER AND THE ISSUING BANK, AND EACH RELATED PARTY OF ANY OF THE
FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST,
AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES, PENALTIES AND RELATED EXPENSES (INCLUDING THE FEES, CHARGES AND
DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE), AND SHALL INDEMNIFY AND HOLD
HARMLESS EACH INDEMNITEE FROM ALL FEES AND TIME CHARGES AND DISBURSEMENTS FOR
ATTORNEYS WHO MAY BE EMPLOYEES OF ANY INDEMNITEE, INCURRED BY ANY
INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY THIRD PARTY OR BY THE
BORROWER OR ANY SUBSIDIARY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT
OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE
PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR
THEREUNDER OR 

 

91

 

THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (II) ANY LOAN OR LETTER OF
CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY
REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF
CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT
STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY ACTUAL
OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY
OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS
SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY THE
BORROWER OR ANY SUBSIDIARY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY
THERETO, PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE,
BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES,
PENALTIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT
FROM A CLAIM BROUGHT BY THE BORROWER OR ANY OTHER LOAN PARTY AGAINST AN
INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER
OR UNDER ANY OTHER LOAN DOCUMENT, IF THE BORROWER OR SUCH LOAN PARTY HAS OBTAINED
A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY
A COURT OF COMPETENT JURISDICTION.

 

(c)           To the extent that the
Borrower fails to indefeasibly pay any amount required to be paid by it to any
Agent, the Arranger or the Issuing Bank under Section 12.03(a) or
(b), each Lender severally agrees to pay to such Agent (or any
sub-agent), the Issuing Bank, or such Related Party as the case may be, such
Lender’s Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability, penalty or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent (or any sub-agent) or the Issuing
Bank in its capacity as such, or against any Related Party of any of the
foregoing acting for the Administrative Agent (or any such sub-agent) or
Issuing Bank in connection with such capacity. 
The obligations of the Lenders under this paragraph (c) are
several and not joint.

 

(d)           To the fullest extent
permitted by applicable law, the Borrower shall not assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby or
thereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.  No Indemnitee referred to in paragraph (b) above
shall be liable for any damages arising from the use by unintended recipients
of any information or other materials distributed by it through
telecommunications, electronic or other 

 

92

 

information transmission
systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.

 

(e)           All amounts due under
this Section 12.03 shall be payable not later than three Business
Days after written demand therefor.

 

(f)            The provisions of this
Section 12.03 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, any Lender or the Issuing Bank.

 

Section 12.04.        Successors
and Assigns.

 

(a)           The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except (i) to
an assignee in accordance with the provisions of paragraph (b) of this
Section, (ii) by way of participation in accordance with the provisions of
paragraph (d) of this Section or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of paragraph (f) of
this Section (and any other attempted assignment or transfer by any party
hereto shall be null and void). 
Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), Participants (to the extent provided in
Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason
of this Agreement.

 

(b)           (i)   Subject
to the conditions set forth in Section 12.04(b)(ii), any Lender may
assign to one or more Eligible 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 (such
consent not to be unreasonably withheld or delayed) of:

 

(A)    the Borrower, provided that no
consent of the Borrower shall be required if such assignment is to a Lender, an
Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred
and is continuing, is to any other assignee; and

 

(B)    the Administrative Agent,
provided that no consent of the Administrative Agent shall be required for an
assignment to an assignee that is a Lender immediately prior to giving effect
to such assignment.

 

93

 

(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 Loans, the
amount of the Commitment or Loans 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 has occurred and is continuing;

 

(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 $3,500 (which
fee may be waived or reduced in the sole discretion of the Administrative Agent
and which fee shall not apply where the assignee is another Lender); and

 

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

 

(iii)          Subject to Section 12.04(b)(iv) and
the acceptance and recording thereof by the Administrative Agent, 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 Section 5.01, Section 5.02,
Section 5.03 and Section 12.03).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 12.04
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 Section 12.04(c).

 

(iv)          The Administrative
Agent, acting solely for this purpose as an agent of the Borrower, shall
maintain at one of its offices 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 Maximum Credit Amount of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). 
The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, the Issuing Bank 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 Register shall be available
for inspection by the Borrower, the Issuing Bank and any Lender, at any
reasonable time and from 

 

94

 

time to time upon reasonable
prior notice.  In connection with any
changes to the Register, if necessary, the Administrative Agent will reflect
the revisions on Annex I and forward a copy of such revised Annex I to the
Borrower, the Issuing Bank and each Lender.

 

(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 (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in Section 12.04(b) and any written consent to
such assignment required by Section 12.04(b), 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 Section 12.04(b).

 

(c)           (i)            Any Lender may, without the consent of the
Borrower, the Administrative Agent or the Issuing Bank, sell participations to
one or more banks or other entities other than the Borrower, any Guarantor and
their Affiliates (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement 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, the
Issuing Bank 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.  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 to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the proviso to Section 12.02
that affects such Participant.  In
addition such agreement must provide that the Participant be bound by the
provisions of Section 12.03. 
Subject to Section 12.04(c)(ii), the Borrower agrees that
each Participant shall be entitled to the benefits of Section 5.01,
Section 5.02 and Section 5.03 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to Section 12.04(b).  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 12.08
as though it were a Lender, provided such Participant agrees to be subject to Section 4.01(c) as
though it were a Lender.

 

(ii)           A Participant shall not
be entitled to receive any greater payment under Section 5.01 or Section 5.03
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 5.03
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 5.03(e) as
though it were a Lender.

 

(d)           Any Lender may at any
time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including, without
limitation, any pledge or assignment to secure obligations to a Federal Reserve
Bank, 

 

95

 

and this Section 12.04(d) shall
not apply to any such pledge or assignment of a security interest; provided
that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

 

(e)           Notwithstanding any
other provisions of this Section 12.04, no transfer or assignment
of the interests or obligations of any Lender or any grant of participations
therein shall be permitted if such transfer, assignment or grant would require
the Borrower and the Guarantors to file a registration statement with the SEC
or to qualify the Loans under the “Blue Sky” laws of any state.

 

Section 12.05.        Survival;
Revival; Reinstatement.

 

(a)           All covenants,
agreements, representations and warranties made by the Borrower herein and in
the certificates or other instruments delivered in connection with or pursuant
to this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any other
Agent, the Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or
terminated.  The provisions of Section 5.01,
Section 5.02, Section 5.03 and Section 12.03
and ARTICLE XI shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement, any other Loan
Document or any provision hereof or thereof.

 

(b)           To the extent that any
payments on the Indebtedness or proceeds of any collateral are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, debtor in possession, receiver or other Person under
any bankruptcy law, common law or equitable cause, then to such extent, the
Indebtedness so satisfied shall be revived and continue as if such payment or
proceeds had not been received and the Administrative Agent’s and the Lenders’
Liens, security interests, rights, powers and remedies under this Agreement and
each Loan Document shall continue in full force and effect.  In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.

 

Section 12.06.        Counterparts;
Integration; Effectiveness.

 

(a)           This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.

 

96

 

(b)           This Agreement, the other Loan Documents and any separate
letter agreements with respect to fees payable to the Administrative Agent
constitute the entire contract among the parties relating to the subject matter
hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

(c)           Except as provided in Section 6.01, this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.

 

(d)           Electronic
Execution of Assignments.  The words “execution,”
“signed,” “signature,” and words of like import in any Assignment and
Assumption shall be deemed to include electronic signatures or the keeping of
records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

 

Section 12.07.        Severability. 
Any provision of this Agreement or any other Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof or thereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.

 

Section 12.08.        Right of Setoff. 
If an Event of Default shall have occurred and be continuing, each
Lender, the Issuing Bank, and each of their respective Affiliates are hereby
authorized at any time and from time to time, 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, in whatever currency) at any time held and other
obligations (of whatsoever kind, including, without limitation, obligations
under Swap Agreements) at any time owing by such Lender or Affiliate to or for
the credit or the account of the Borrower or any Subsidiary against any of and
all the obligations of the Borrower or any Subsidiary owed to such Lender now
or hereafter existing under this Agreement or any other Loan Document,
irrespective of whether or not such Lender shall have made any demand under
this Agreement or any other Loan Document and although such obligations may be
unmatured.  The rights of each Lender
under this Section 12.08 are in addition to other rights and
remedies (including other rights of setoff) which such Lender or its Affiliates
may have.  Each Lender and the Issuing Bank agrees to
notify the Borrower and the 

 

97

 

Administrative Agent promptly
after any such setoff and application, provided that the failure to give
such notice shall not affect the validity of such setoff and application.

 

Section 12.09.        GOVERNING
LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER OF JURY TRIAL.

 

(a)           Governing Law. 
This Agreement shall be governed by, and construed in accordance with,
the law of the State of Texas.

 

(b)           Submission to Jurisdiction.  The Borrower irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
courts of the State of Texas sitting in Dallas County and of the United States
District Court of the Northern Division of Texas, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such Texas State court or, to the fullest extent permitted by
applicable law, in such Federal court. 
Each of the parties hereto agrees that a final, non-appealable judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Agreement or in any
other Loan Document shall affect any right that the Administrative Agent, any
Lender or the Issuing Bank may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against the Borrower or
any Subsidiary or its Properties in the courts of any jurisdiction.

(c)           Waiver of Venue. 
The Borrower irrevocably and unconditionally waives, to the fullest
extent permitted by applicable law, any objection that it may now or hereafter
have to the laying of venue of any action or proceeding arising out of or
relating to this Agreement or any other Loan Document in any court referred to
in paragraph (b) of this Section. 
Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

 

(d)           Service of Process. 
Each party hereto irrevocably consents to service of process in the
manner provided for notices in Section 12.01.  Nothing in this Agreement will affect the
right of any party hereto to serve process in any other manner permitted by
applicable law.

 

Section 12.10.        Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

Section 12.11.        Confidentiality.  Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
and its Affiliates’ respective partners, directors, managers, officers,
advisors, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be 

 

98

 

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 regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement or any
other Loan Document, (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 12.11,
to (i) any assignee of or Participant in, or any prospective assignee 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 Agreement
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 12.11
or (ii) becomes available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis from a source other than the
Borrower.  For the purposes of this Section 12.11,
“Information”
means all information received from the Borrower or any Subsidiary relating to
the Borrower or any Subsidiary and their businesses, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to disclosure by the Borrower or a
Subsidiary; provided that, in the case of information received from the
Borrower or any Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11
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 such Person would accord to its own confidential
information.

 

Section 12.12.        Interest
Rate Limitation.  It is the intention
of the parties hereto that each Lender shall conform strictly to usury laws
applicable to it.  Accordingly, if the
transactions contemplated hereby would be usurious as to any Lender under laws
applicable to it (including the laws of the United States of America and the
State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in
any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows:  (i) the aggregate of all consideration
which constitutes interest under law applicable to any Lender that is
contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of
the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower); and (ii) in the event that the maturity of the
Notes is accelerated by reason of an election of the holder thereof resulting
from any Event of Default under this Agreement or otherwise, or in the event of
any required or permitted prepayment, then such consideration that constitutes
interest under law applicable to any Lender may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically by
such Lender as of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited by such Lender on the principal amount of
the Indebtedness (or, to the extent that the principal amount of 

 

99

 

the Indebtedness shall have
been or would thereby be paid in full, refunded by such Lender to the
Borrower).  All sums paid or agreed to be
paid to any Lender for the use, forbearance or detention of sums due hereunder
shall, to the extent permitted by law applicable to such Lender, be amortized,
prorated, allocated and spread throughout the stated term of the Loans
evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law.  If at
any time and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.12 and (ii) in respect
of any subsequent interest computation period the amount of interest otherwise
payable to such Lender would be less than the amount of interest payable to
such Lender computed at the Highest Lawful Rate applicable to such Lender, then
the amount of interest payable to such Lender in respect of such subsequent
interest computation period shall continue to be computed at the Highest Lawful
Rate applicable to such Lender until the total amount of interest payable to
such Lender shall equal the total amount of interest which would have been
payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.12.  To the extent that Chapter 303 of the Texas
Finance Code is relevant for the purpose of determining the Highest Lawful Rate
applicable to a Lender, such Lender elects to determine the applicable rate
ceiling under such Chapter by the weekly ceiling from time to time in
effect.  Chapter 346 of the Texas Finance
Code does not apply to the Borrower’s obligations hereunder.

 

Section 12.13.        EXCULPATION
PROVISIONS.  EACH OF THE PARTIES
HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF
THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT
READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF
THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN
REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF
THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY
ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND
RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY.  EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

 

Section 12.14.        Collateral
Matters; Swap Agreements.  The
benefit of the Security Instruments and of the provisions of this Agreement
relating to any collateral securing the Indebtedness shall also extend to and
be available to any Swap Lender with respect to amounts payable by the
Borrower, any Subsidiary, and any Guarantor under any Swap Agreement on a pari
passu basis with respect to repayment of principal outstanding on Loans due
under this

 

100

 

Agreement.  Except as otherwise provided in Section 12.02(b)(vii),
no Swap Lender shall have any voting rights under any Loan Document as a result
of the existence of obligations owed to it under any such Swap Agreements.  All Swap Agreements between the Borrower or
any Subsidiary and any Swap Lender are independent agreements governed by the
terms thereof and will remain in full force and effect, unaffected by any
repayment, prepayment, acceleration, reduction, increase or change in the terms
of the Loans created under this Agreement except as otherwise provided in said
Swap Agreement.

 

Section 12.15.        No
Third Party Beneficiaries.  This
Agreement, the other Loan Documents, and the agreement of the Lenders to make
Loans and the Issuing Bank to issue, amend, renew or extend Letters of Credit
hereunder are solely for the benefit of the Borrower, and no other Person
(including, without limitation, any Subsidiary of the Borrower, any obligor,
contractor, subcontractor, supplier or materialman) shall have any rights,
claims, remedies or privileges hereunder or under any other Loan Document
against the Administrative Agent, any other Agent, the Issuing Bank or any
Lender for any reason whatsoever.  There
are no third party beneficiaries.

 

Section 12.16.        USA
Patriot Act Notice.  Each Lender
hereby notifies the Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”),
it is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender to identify the Borrower in
accordance with the Act.

 

Section 12.17.        Amendment
and Restatement; Release.  This
Agreement amends and restates in its entirety the Original Credit
Agreement.  The execution of this
Agreement and the other Loan Documents executed in connection herewith does not
extinguish the indebtedness outstanding in connection with the Original Credit
Agreement nor does it constitute a novation with respect to such
indebtedness.  THE BORROWER REPRESENTS
AND WARRANTS THAT AS OF THE DATE HEREOF THERE ARE NO CLAIMS OR OFFSETS AGAINST
OR DEFENSES OR COUNTERCLAIMS TO ITS OR ANY GUARANTORS OBLIGATIONS UNDER THE
ORIGINAL CREDIT AGREEMENT, THE OTHER LOAN DOCUMENTS.  TO INDUCE THE ADMINISTRATIVE AGENT AND THE
LENDERS TO ENTER INTO THIS AGREEMENT, THE BORROWER AND, BY THE EXECUTION OF THE
LOAN DOCUMENTS TO WHICH IT IS A PARTY, EACH GUARANTOR WAIVES ANY AND ALL
CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING
PRIOR TO THE DATE HEREOF AND HEREBY RELEASES THE ADMINISTRATIVE AGENT, THE
LENDERS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND
ATTORNEYS (COLLECTIVELY, THE “RELEASED PARTIES”) FROM ANY AND ALL OBLIGATIONS,
INDEBTEDNESS, LIABILITY, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS
WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED WHICH BORROWER
OR ANY GUARANTOR EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY
RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF OR FROM OR IN CONNECTION WITH
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.

 

101

 

The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.

 

	
  BORROWER:

  	
  VANGUARD NATURAL GAS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Richard Robert

  
	
   

  	
   

  	
     Richard Robert

  
	
   

  	
   

  	
     Executive Vice President

  
	
   

  	
   

  	
     and Chief Financial Officer

  

 

102

 

	
  ADMINISTRATIVE AGENT:

  	
  CITIBANK, N.A.

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
     /s/ Ryan Watson

  
	
   

  	
   

  	
     Ryan Watson

  
	
   

  	
   

  	
     Vice President

  

 

 

	
  LENDERS:

  	
  CITIBANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
     /s/ Ryan Watson

  
	
   

  	
   

  	
     Ryan Watson

  
	
   

  	
   

  	
     Vice President

  

 

103

 

	
  LENDERS:

  	
  BNP
  PARIBAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  

  	
       /s/
  David Dodd

  
	
   

  	
  Name:

  	
  David Dodd

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
       /s/
  Betsy Jocher

  
	
   

  	
  Name:

  	
  Betsy Jocher

  
	
   

  	
  Title:

  	
  Director

  
				

 

104

 

	
  LENDERS:

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  

  	
       /s/
  Shawn Young

  
	
   

  	
  Name:

  	
  Shawn Young

  
	
   

  	
  Title:

  	
  Director

  
				

 

105

 

	
  LENDERS:

  	
  THE BANK
  OF NOVA SCOTIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  

  	
      /s/
  David Mills

  
	
   

  	
  Name:

  	
  David Mills

  
	
   

  	
  Title:

  	
  Director

  
				

 

106Exhibit 10.88

 

CREDIT
AGREEMENT

 

DATED AS OF DECEMBER 11,
2007

 

by and among

 

BEHRINGER
HARVARD OPERATING PARTNERSHIP I LP,

 

AS BORROWER,

 

KEYBANK
NATIONAL ASSOCIATION,

 

THE OTHER
LENDERS WHICH ARE PARTIES TO THIS AGREEMENT

 

AND

 

OTHER LENDERS
THAT MAY BECOME

 

PARTIES TO
THIS AGREEMENT,

 

KEYBANK
NATIONAL ASSOCIATION,

 

AS AGENT,

 

KEYBANC
CAPITAL MARKETS,

AS SOLE BOOK MANAGER,

 

KEYBANK
CAPITAL MARKETS

 

AND

 

WACHOVIA BANK,
NATIONAL ASSOCIATION,

 

AS CO-LEAD
ARRANGERS,

 

AND

 

AAREAL BANK AG

 

AND

 

WESTDEUTSCHE
IMMOBILIENBANK AG,

 

AS
CO-DOCUMENTATION AGENTS

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  §1.

  	
   

  	
  DEFINITIONS AND RULES OF INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
  §1.1

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
  §1.2

  	
  Rules of Interpretation

  	
   

  	
  25

  
	
  §2.

  	
   

  	
  THE CREDIT FACILITY

  	
   

  	
  26

  
	
   

  	
   

  	
  §2.1

  	
  Revolving Credit Loans

  	
   

  	
  26

  
	
   

  	
   

  	
  §2.2

  	
  Commitment to Lend Term Loan

  	
   

  	
  27

  
	
   

  	
   

  	
  §2.3

  	
  Facility Unused Fee

  	
   

  	
  27

  
	
   

  	
   

  	
  §2.4

  	
  Reduction and Termination of the Revolving Credit Commitments

  	
   

  	
  27

  
	
   

  	
   

  	
  §2.5

  	
  Swing Loan Commitment

  	
   

  	
  28

  
	
   

  	
   

  	
  §2.6

  	
  Interest on Loans

  	
   

  	
  30

  
	
   

  	
   

  	
  §2.7

  	
  Requests for Revolving Credit Loans

  	
   

  	
  31

  
	
   

  	
   

  	
  §2.8

  	
  Funds for Loans

  	
   

  	
  31

  
	
   

  	
   

  	
  §2.9

  	
  Use of Proceeds

  	
   

  	
  32

  
	
   

  	
   

  	
  §2.10

  	
  Letters of Credit

  	
   

  	
  32

  
	
   

  	
   

  	
  §2.11

  	
  Increase in Total Revolving Credit Commitment

  	
   

  	
  36

  
	
   

  	
   

  	
  §2.12

  	
  Extension of Revolving Credit Maturity Date

  	
   

  	
  38

  
	
   

  	
   

  	
  §2.13

  	
  Extension of Term Loan Maturity Date

  	
   

  	
  39

  
	
  §3.

  	
   

  	
  REPAYMENT OF THE LOANS

  	
   

  	
  40

  
	
   

  	
   

  	
  §3.1

  	
  Stated Maturity

  	
   

  	
  40

  
	
   

  	
   

  	
  §3.2

  	
  Mandatory Prepayments

  	
   

  	
  40

  
	
   

  	
   

  	
  §3.3

  	
  Optional Prepayments

  	
   

  	
  40

  
	
   

  	
   

  	
  §3.4

  	
  Partial Prepayments

  	
   

  	
  41

  
	
   

  	
   

  	
  §3.5

  	
  Effect of Prepayments

  	
   

  	
  41

  
	
  §4.

  	
   

  	
  CERTAIN GENERAL PROVISIONS

  	
   

  	
  41

  
	
   

  	
   

  	
  §4.1

  	
  Conversion Options

  	
   

  	
  41

  
	
   

  	
   

  	
  §4.2

  	
  Fees

  	
   

  	
  42

  
	
   

  	
   

  	
  §4.3

  	
  Funds for Payments

  	
   

  	
  42

  
	
   

  	
   

  	
  §4.4

  	
  Computations

  	
   

  	
  44

  
	
   

  	
   

  	
  §4.5

  	
  Suspension of LIBOR Rate Loans

  	
   

  	
  44

  
	
   

  	
   

  	
  §4.6

  	
  Illegality

  	
   

  	
  44

  
	
   

  	
   

  	
  §4.7

  	
  Additional Interest

  	
   

  	
  45

  

 

i

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  §4.8

  	
  Additional Costs, Etc.

  	
   

  	
  45

  
	
   

  	
   

  	
  §4.9

  	
  Capital Adequacy

  	
   

  	
  46

  
	
   

  	
   

  	
  §4.10

  	
  Breakage Costs

  	
   

  	
  47

  
	
   

  	
   

  	
  §4.11

  	
  Default Interest; Late Charge

  	
   

  	
  47

  
	
   

  	
   

  	
  §4.12

  	
  Certificate

  	
   

  	
  47

  
	
   

  	
   

  	
  §4.13

  	
  Limitation on Interest

  	
   

  	
  47

  
	
   

  	
   

  	
  §4.14

  	
  Certain Provisions Relating to Increased Costs and Non-Funding
  Lenders

  	
   

  	
  48

  
	
  §5.

  	
   

  	
  COLLATERAL SECURITY; GUARANTORS

  	
   

  	
  49

  
	
   

  	
   

  	
  §5.1

  	
  Collateral

  	
   

  	
  49

  
	
   

  	
   

  	
  §5.2

  	
  Additional Guarantors

  	
   

  	
  49

  
	
   

  	
   

  	
  §5.3

  	
  Additional Collateral

  	
   

  	
  49

  
	
   

  	
   

  	
  §5.4

  	
  Release of Collateral; Release of Guarantor

  	
   

  	
  50

  
	
  §6.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  51

  
	
   

  	
   

  	
  §6.1

  	
  Corporate Authority, Etc.

  	
   

  	
  51

  
	
   

  	
   

  	
  §6.2

  	
  Governmental Approvals

  	
   

  	
  52

  
	
   

  	
   

  	
  §6.3

  	
  Title to Properties

  	
   

  	
  52

  
	
   

  	
   

  	
  §6.4

  	
  Financial Statements

  	
   

  	
  52

  
	
   

  	
   

  	
  §6.5

  	
  No Material Changes

  	
   

  	
  52

  
	
   

  	
   

  	
  §6.6

  	
  Franchises, Patents, Copyrights, Etc.

  	
   

  	
  53

  
	
   

  	
   

  	
  §6.7

  	
  Litigation

  	
   

  	
  53

  
	
   

  	
   

  	
  §6.8

  	
  No Material Adverse Contracts, Etc.

  	
   

  	
  53

  
	
   

  	
   

  	
  §6.9

  	
  Compliance with Other Instruments, Laws, Etc.

  	
   

  	
  53

  
	
   

  	
   

  	
  §6.10

  	
  Tax Status

  	
   

  	
  53

  
	
   

  	
   

  	
  §6.11

  	
  No Event of Default

  	
   

  	
  54

  
	
   

  	
   

  	
  §6.12

  	
  Investment Company Act

  	
   

  	
  54

  
	
   

  	
   

  	
  §6.13

  	
  Setoff, Etc.

  	
   

  	
  54

  
	
   

  	
   

  	
  §6.14

  	
  Certain Transactions

  	
   

  	
  54

  
	
   

  	
   

  	
  §6.15

  	
  Employee Benefit Plans

  	
   

  	
  54

  
	
   

  	
   

  	
  §6.16

  	
  Disclosure

  	
   

  	
  55

  
	
   

  	
   

  	
  §6.17

  	
  Place of Business

  	
   

  	
  55

  
	
   

  	
   

  	
  §6.18

  	
  Regulations T, U and X

  	
   

  	
  55

  

 

ii

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  §6.19

  	
  Environmental Compliance

  	
   

  	
  55

  
	
   

  	
   

  	
  §6.20

  	
  Subsidiaries; Organizational Structure

  	
   

  	
  57

  
	
   

  	
   

  	
  §6.21

  	
  Property

  	
   

  	
  57

  
	
   

  	
   

  	
  §6.22

  	
  Brokers

  	
   

  	
  58

  
	
   

  	
   

  	
  §6.23

  	
  Other Debt

  	
   

  	
  58

  
	
   

  	
   

  	
  §6.24

  	
  Solvency

  	
   

  	
  58

  
	
   

  	
   

  	
  §6.25

  	
  No Bankruptcy Filing

  	
   

  	
  58

  
	
   

  	
   

  	
  §6.26

  	
  No Fraudulent Intent

  	
   

  	
  58

  
	
   

  	
   

  	
  §6.27

  	
  Transaction in Best Interests of Borrower and Guarantors;
  Consideration

  	
   

  	
  59

  
	
   

  	
   

  	
  §6.28

  	
  Contribution Agreement

  	
   

  	
  59

  
	
   

  	
   

  	
  §6.29

  	
  OFAC

  	
   

  	
  59

  
	
  §7.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  59

  
	
   

  	
   

  	
  §7.1

  	
  Punctual Payment

  	
   

  	
  59

  
	
   

  	
   

  	
  §7.2

  	
  Maintenance of Office

  	
   

  	
  59

  
	
   

  	
   

  	
  §7.3

  	
  Records and Accounts

  	
   

  	
  60

  
	
   

  	
   

  	
  §7.4

  	
  Financial Statements, Certificates and Information

  	
   

  	
  60

  
	
   

  	
   

  	
  §7.5

  	
  Notices

  	
   

  	
  63

  
	
   

  	
   

  	
  §7.6

  	
  Existence; Maintenance of Properties

  	
   

  	
  64

  
	
   

  	
   

  	
  §7.7

  	
  Insurance

  	
   

  	
  64

  
	
   

  	
   

  	
  §7.8

  	
  Taxes; Liens

  	
   

  	
  64

  
	
   

  	
   

  	
  §7.9

  	
  Inspection of Properties and Books

  	
   

  	
  65

  
	
   

  	
   

  	
  §7.10

  	
  Compliance with Laws, Contracts, Licenses, and Permits

  	
   

  	
  65

  
	
   

  	
   

  	
  §7.11

  	
  Further Assurances

  	
   

  	
  66

  
	
   

  	
   

  	
  §7.12

  	
  Business Operations

  	
   

  	
  66

  
	
   

  	
   

  	
  §7.13

  	
  Subordination of Advisory Fees

  	
   

  	
  66

  
	
   

  	
   

  	
  §7.14

  	
  Ownership of Real Estate

  	
   

  	
  66

  
	
   

  	
   

  	
  §7.15

  	
  Distributions of Income to Borrower

  	
   

  	
  67

  
	
   

  	
   

  	
  §7.16

  	
  Plan Assets

  	
   

  	
  67

  
	
  §8.

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  	
  67

  
	
   

  	
   

  	
  §8.1

  	
  Restrictions on Indebtedness

  	
   

  	
  67

  
	
   

  	
   

  	
  §8.2

  	
  Restrictions on Liens, Etc.

  	
   

  	
  68

  

 

iii

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  §8.3

  	
  Restrictions on Investments

  	
   

  	
  70

  
	
   

  	
   

  	
  §8.4

  	
  Merger, Consolidation

  	
   

  	
  71

  
	
   

  	
   

  	
  §8.5

  	
  Sale and Leaseback

  	
   

  	
  72

  
	
   

  	
   

  	
  §8.6

  	
  Compliance with Environmental Laws

  	
   

  	
  72

  
	
   

  	
   

  	
  §8.7

  	
  Distributions

  	
   

  	
  74

  
	
   

  	
   

  	
  §8.8

  	
  Asset Sales

  	
   

  	
  74

  
	
   

  	
   

  	
  §8.9

  	
  Restriction on Prepayment of Indebtedness

  	
   

  	
  74

  
	
   

  	
   

  	
  §8.10

  	
  Derivatives Contracts

  	
   

  	
  75

  
	
   

  	
   

  	
  §8.11

  	
  Transactions with Affiliates

  	
   

  	
  75

  
	
   

  	
   

  	
  §8.12

  	
  Equity Pledges

  	
   

  	
  75

  
	
   

  	
   

  	
  §8.13

  	
  Advisory Fees

  	
   

  	
  75

  
	
  §9.

  	
   

  	
  FINANCIAL COVENANTS

  	
   

  	
  75

  
	
   

  	
   

  	
  §9.1

  	
  Consolidated Total Indebtedness to Gross Asset Value

  	
   

  	
  75

  
	
   

  	
   

  	
  §9.2

  	
  Adjusted Consolidated EBITDA to Consolidated Fixed Charges

  	
   

  	
  75

  
	
   

  	
   

  	
  §9.3

  	
  Minimum Consolidated Tangible Net Worth

  	
   

  	
  76

  
	
   

  	
   

  	
  §9.4

  	
  Unhedged Variable Rate Debt

  	
   

  	
  76

  
	
  §10.

  	
   

  	
  CLOSING CONDITIONS

  	
   

  	
  76

  
	
   

  	
   

  	
  §10.1

  	
  Loan Documents

  	
   

  	
  76

  
	
   

  	
   

  	
  §10.2

  	
  Certified Copies of Organizational Documents

  	
   

  	
  76

  
	
   

  	
   

  	
  §10.3

  	
  Resolutions

  	
   

  	
  76

  
	
   

  	
   

  	
  §10.4

  	
  Incumbency Certificate; Authorized Signers

  	
   

  	
  76

  
	
   

  	
   

  	
  §10.5

  	
  Opinion of Counsel

  	
   

  	
  76

  
	
   

  	
   

  	
  §10.6

  	
  Payment of Fees

  	
   

  	
  77

  
	
   

  	
   

  	
  §10.7

  	
  Performance; No Default

  	
   

  	
  77

  
	
   

  	
   

  	
  §10.8

  	
  Representations and Warranties

  	
   

  	
  77

  
	
   

  	
   

  	
  §10.9

  	
  Proceedings and Documents

  	
   

  	
  77

  
	
   

  	
   

  	
  §10.10

  	
  Compliance Certificate

  	
   

  	
  77

  
	
   

  	
   

  	
  §10.11

  	
  Consents

  	
   

  	
  77

  
	
   

  	
   

  	
  §10.12

  	
  Contribution Agreement

  	
   

  	
  77

  
	
   

  	
   

  	
  §10.13

  	
  Other

  	
   

  	
  77

  
	
  §11.

  	
   

  	
  CONDITIONS TO ALL BORROWINGS

  	
   

  	
  77

  

 

iv

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  §11.1

  	
  Prior Conditions Satisfied

  	
   

  	
  77

  
	
   

  	
   

  	
  §11.2

  	
  Representations True; No Default

  	
   

  	
  78

  
	
   

  	
   

  	
  §11.3

  	
  Borrowing Documents

  	
   

  	
  78

  
	
  §12.

  	
   

  	
  EVENTS OF DEFAULT; ACCELERATION; ETC.

  	
   

  	
  78

  
	
   

  	
   

  	
  §12.1

  	
  Events of Default and Acceleration

  	
   

  	
  78

  
	
   

  	
   

  	
  §12.2

  	
  Certain Cure Periods; Limitation of Cure Periods

  	
   

  	
  81

  
	
   

  	
   

  	
  §12.3

  	
  Termination of Commitments

  	
   

  	
  81

  
	
   

  	
   

  	
  §12.4

  	
  Remedies

  	
   

  	
  82

  
	
   

  	
   

  	
  §12.5

  	
  Distribution of Collateral Proceeds

  	
   

  	
  82

  
	
  §13.

  	
   

  	
  SETOFF

  	
   

  	
  83

  
	
  §14.

  	
   

  	
  THE AGENT

  	
   

  	
  84

  
	
   

  	
   

  	
  §14.1

  	
  Authorization

  	
   

  	
  84

  
	
   

  	
   

  	
  §14.2

  	
  Employees and Agents

  	
   

  	
  84

  
	
   

  	
   

  	
  §14.3

  	
  No Liability

  	
   

  	
  84

  
	
   

  	
   

  	
  §14.4

  	
  No Representations

  	
   

  	
  84

  
	
   

  	
   

  	
  §14.5

  	
  Payments

  	
   

  	
  85

  
	
   

  	
   

  	
  §14.6

  	
  Holders of Notes

  	
   

  	
  86

  
	
   

  	
   

  	
  §14.7

  	
  Indemnity

  	
   

  	
  87

  
	
   

  	
   

  	
  §14.8

  	
  Agent as Lender

  	
   

  	
  87

  
	
   

  	
   

  	
  §14.9

  	
  Resignation

  	
   

  	
  87

  
	
   

  	
   

  	
  §14.10

  	
  Duties in the Case of Enforcement

  	
   

  	
  88

  
	
   

  	
   

  	
  §14.11

  	
  Bankruptcy

  	
   

  	
  88

  
	
   

  	
   

  	
  §14.12

  	
  Reliance by Agent

  	
   

  	
  89

  
	
   

  	
   

  	
  §14.13

  	
  Approvals

  	
   

  	
  89

  
	
   

  	
   

  	
  §14.14

  	
  Borrower Not Beneficiary

  	
   

  	
  89

  
	
  §15.

  	
   

  	
  EXPENSES

  	
   

  	
  89

  
	
  §16.

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  90

  
	
  §17.

  	
   

  	
  SURVIVAL OF COVENANTS, ETC.

  	
   

  	
  91

  
	
  §18.

  	
   

  	
  ASSIGNMENT AND PARTICIPATION

  	
   

  	
  91

  
	
   

  	
   

  	
  §18.1

  	
  Conditions to Assignment by Lenders

  	
   

  	
  91

  
	
   

  	
   

  	
  §18.2

  	
  Register

  	
   

  	
  92

  

 

v

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  §18.3

  	
  New Notes

  	
   

  	
  93

  
	
   

  	
   

  	
  §18.4

  	
  Participations

  	
   

  	
  93

  
	
   

  	
   

  	
  §18.5

  	
  Pledge by Lender

  	
   

  	
  93

  
	
   

  	
   

  	
  §18.6

  	
  No Assignment by Borrower

  	
   

  	
  93

  
	
   

  	
   

  	
  §18.7

  	
  Disclosure

  	
   

  	
  94

  
	
   

  	
   

  	
  §18.8

  	
  Mandatory Assignment

  	
   

  	
  94

  
	
   

  	
   

  	
  §18.9

  	
  Amendments to Loan Documents

  	
   

  	
  95

  
	
   

  	
   

  	
  §18.10

  	
  Titled Agents

  	
   

  	
  95

  
	
  §19.

  	
   

  	
  NOTICES

  	
   

  	
  95

  
	
  §20.

  	
   

  	
  RELATIONSHIP

  	
   

  	
  97

  
	
  §21.

  	
   

  	
  GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE

  	
   

  	
  97

  
	
  §22.

  	
   

  	
  HEADINGS

  	
   

  	
  98

  
	
  §23.

  	
   

  	
  COUNTERPARTS

  	
   

  	
  98

  
	
  §24.

  	
   

  	
  ENTIRE AGREEMENT, ETC.

  	
   

  	
  98

  
	
  §25.

  	
   

  	
  WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS

  	
   

  	
  98

  
	
  §26.

  	
   

  	
  DEALINGS WITH THE BORROWER

  	
   

  	
  99

  
	
  §27.

  	
   

  	
  CONSENTS, AMENDMENTS, WAIVERS, ETC.

  	
   

  	
  99

  
	
  §28.

  	
   

  	
  SEVERABILITY

  	
   

  	
  100

  
	
  §29.

  	
   

  	
  TIME OF THE ESSENCE

  	
   

  	
  100

  
	
  §30.

  	
   

  	
  NO UNWRITTEN AGREEMENTS

  	
   

  	
  100

  
	
  §31.

  	
   

  	
  REPLACEMENT NOTES

  	
   

  	
  100

  
	
  §32.

  	
   

  	
  NO THIRD PARTIES BENEFITED

  	
   

  	
  100

  
	
  §33.

  	
   

  	
  PATRIOT ACT

  	
   

  	
  101

  

 

vi

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”) is
made as of the 11th day of December, 2007, by and among BEHRINGER HARVARD OPERATING PARTNERSHIP I LP, a Texas
limited partnership (the “Borrower”), KEYBANK NATIONAL
ASSOCIATION (“KeyBank”), the other lending institutions which are
parties to this Agreement as “Lenders”, and the other lending institutions that
may become parties hereto pursuant to §18 (together with KeyBank, the “Lenders”),
and KEYBANK NATIONAL ASSOCIATION, as Agent
for the Lenders (the “Agent”), and KEYBANC CAPITAL MARKETS,
as Sole Lead Arranger and Sole Book Manager.

 

R E C I T A
L S

 

WHEREAS, the
Borrower has requested that the Lenders provide a revolving credit and term
loan facility to the Borrower; and

 

WHEREAS, the Agent and the Lenders are willing
to provide such revolving credit and term loan facility to the Borrower on and
subject to the terms and conditions set forth herein;

 

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

 

§1.                                DEFINITIONS
AND RULES OF INTERPRETATION.

 

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

 

222 Riverside Plaza.
The Real Estate located at 222 Riverside Plaza, Chicago, Illinois.

 

1325 G Street. The
Real Estate located at 1325 G Street, Washington, D.C.

 

Acknowledgments. The
Acknowledgments executed by the applicable Companies in favor of the Agent,
acknowledging the pledge of Equity Interests in such Company to Agent, such
Acknowledgement to be in form and substance reasonably satisfactory to
Agent.

 

Additional Commitment Request Notice.
See §2.11(a).

 

Additional Guarantor.
Each additional Subsidiary of Borrower which becomes a Subsidiary Guarantor
pursuant to §5.2.

 

Additional Pledgor. Each
additional Pledgor which becomes a Pledgor pursuant to §5.3.

 

Adjusted Consolidated EBITDA.
On any date of determination, the sum of (a) the Consolidated EBITDA for
the prior four (4) fiscal quarters most recently ended, less (b) the
Capital Reserve.

 

[Credit Agreement]

 

 

Advisor. Behringer
Advisors, LLC, a Texas limited liability company and successor by merger to
Behringer Advisors LP, a Texas limited partnership, Behringer Harvard Real
Estate Services, LLC, or any other Affiliate of Behringer Advisors, LLC to whom
relevant duties under the Advisory Agreement are delegated (provided that any
such delegation is subject to, and the applicable Affiliate agrees to be bound
by, the Subordination of Advisory Agreement).

 

Advisory Agreement. The
Fifth Amended and Restated Advisory Management Agreement dated December 29,
2006, by and between REIT, Advisor and Behringer Harvard Real Estate Services,
LLC, a Texas limited liability company, as the same may be amended,
restated, supplemented or otherwise modified in accordance with the terms
hereof.

 

Affiliate. An
Affiliate, as applied to any Person, shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For purposes of this definition, “control” (including, with correlative
meanings, the terms “controlling”, “controlled by” and “under common control
with”), as applied to any Person, means (a) the possession, directly or
indirectly, of the power to vote twenty percent (20%) or more of the stock,
shares, voting trust certificates, beneficial interest, partnership interests,
member interests or other interests having voting power for the election of
directors of such Person or otherwise to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise, or (b) the ownership of (i) a
general partnership interest, (ii) a managing member’s or manager’s
interest in a limited liability company or (iii) a limited partnership
interest or preferred stock (or other ownership interest) representing twenty
percent (20%) or more of the outstanding limited partnership interests,
preferred stock or other ownership interests of such Person.

 

Agent. KeyBank
National Association, acting as administrative agent for the Lenders, and its
successors and assigns.

 

Agent’s Head Office.
The Agent’s head office located at 127 Public Square, Cleveland, Ohio
44114-1306, or at such other location as the Agent may designate from time
to time by notice to the Borrower and the Lenders.

 

Agent’s Special Counsel.
McKenna Long & Aldridge LLP or such other counsel as selected by
Agent.

 

Agreement. This
Credit Agreement, including the Schedules and Exhibits hereto.

 

Agreement Regarding Fees.
See §4.2.

 

Applicable Margin. On
any date, the Applicable Margin set forth below based on the ratio of the
Consolidated Total Indebtedness to the Gross Asset Value:

 

2

 

	
  Pricing Level

  	
   

  	
  Ratio

  	
   

  	
  Applicable

  Margin for

  LIBOR Rate

  Loans

  	
   

  	
  Applicable

  Margin for

  Base Rate

  Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pricing
  Level 1

  	
   

  	
  Less than or equal to 50%

  	
   

  	
  1.50

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pricing
  Level 2

  	
   

  	
  Greater than 50% but less than or equal to
  60%

  	
   

  	
  1.65

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pricing
  Level 3

  	
   

  	
  Greater than 60% but less than or equal to
  65%

  	
   

  	
  1.80

  	
  %

  	
  0.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pricing
  Level 4

  	
   

  	
  Greater than 65%

  	
   

  	
  2.00

  	
  %

  	
  0.50

  	
  %

  

 

The initial Applicable Margin shall be at Pricing Level 4. The
Applicable Margin shall not be adjusted based upon such ratio, if at all, until
the first (1st) day of the first (1st) month following
the delivery by Borrower to the Agent of the Compliance Certificate at the end
of a calendar quarter. In the event that Borrower shall fail to deliver to the
Agent a quarterly Compliance Certificate on or before the date required by
§7.4(c), then without limiting any other rights of the Agent and the Lenders
under this Agreement, the Applicable Margin for Loans shall be at Pricing
Level 4 until such failure is cured within any applicable cure period, in
which event the Applicable Margin shall adjust, if necessary, on the first (1st)
day of the first (1st) month following receipt of such Compliance
Certificate.

 

If the consolidated financial statements of REIT and its Subsidiaries
are revised, restated or otherwise adjusted, and any such adjustment
establishes that the Applicable Margin was calculated at a level which resulted
in lower (or higher) pricing than warranted for any period, the Borrower shall
within five (5) Business Days of such determination pay to Agent for the
account of the Lenders the amount of the excess that should have been paid for
such period (or, if it is determined as a result of such adjustment that such
Applicable Margin was originally miscalculated at a higher pricing level, the
Agent shall credit the amount of such overpayment towards any additional
amounts due pursuant to this paragraph).

 

Arranger. KeyBanc
Capital Markets or any successor.

 

Assignment and Acceptance Agreement.
See §18.1.

 

Authorized Officer. Any
of the following Persons:  Gary S.
Bresky, Cindy Cooper, Andrew Bruce, Gerald J. Reihsen, III and such other
Persons as Borrower shall designate in a written notice to Agent.

 

Balance Sheet Date.
September 30, 2007.

 

Bankruptcy Code. Title
11, U.S.C.A., as amended from time to time or any successor statute thereto.

 

3

 

Base Rate. The
greater of (a) the fluctuating annual rate of interest announced from time
to time by the Agent at the Agent’s Head Office as its “prime rate” or (b) one
half of one percent (0.5%) above the Federal Funds Effective Rate. The Base
Rate is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer. Any change in the rate of interest payable
hereunder resulting from a change in the Base Rate shall become effective as of
the opening of business on the day on which such change in the Base Rate
becomes effective, without notice or demand of any kind.

 

Base Rate Loans. Collectively,
the Revolving Credit Base Rate Loans, the Term Base Rate Loans and the Swing
Loans.

 

Borrower. Behringer
Harvard Operating Partnership I LP, a Texas limited partnership.

 

Breakage Costs. The
cost to any Lender of re-employing funds bearing interest at LIBOR incurred (or
reasonably expected to be incurred) in connection with (i) any payment of
any portion of the Loans bearing interest at LIBOR prior to the termination of
any applicable Interest Period, (ii) the conversion of a LIBOR Rate Loan
to any other applicable interest rate on a date other than the last day of the
relevant Interest Period, or (iii) the failure of the Borrower to draw
down, on the first day of the applicable Interest Period, any amount as to
which the Borrower has elected a LIBOR Rate Loan.

 

Building. With
respect to each parcel of Real Estate, all of the buildings, structures and
improvements now or hereafter located thereon.

 

Business Day. Any
day on which banking institutions located in the same city and State as the
Agent’s Head Office are located are open for the transaction of banking
business and, in the case of LIBOR Rate Loans, which also is a LIBOR Business
Day.

 

Capital Reserve. For
any period of four (4) consecutive fiscal quarters and with respect to any
improved Real Estate, an amount equal to $0.15 multiplied by the total square
footage of the Buildings in such Real Estate on a Consolidated basis. If the
term Capital Reserve is used without reference to any specific Real Estate,
then the amount shall be determined on an aggregate basis with respect to all
Real Estate of the Borrower and its Subsidiaries and a proportionate share of
all Real Estate of all Unconsolidated Affiliates. The Capital Reserve shall be
calculated based on the total square footage of the Buildings owned (or ground
leased) at the end of each fiscal quarter.

 

Capitalization Rate.
7.50%.

 

Capitalized Lease. A
lease under which the discounted future rental payment obligations of the
lessee or the obligor are required to be capitalized on the balance sheet of
such Person in accordance with GAAP.

 

Cash Equivalents. As
of any date, (i) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or instrumentality
thereof having maturities of not more than one year from such date, (ii) time
deposits and certificates of deposits having maturities of not more than one
year from such date and issued by any domestic

 

4

 

commercial bank having, (A) senior long
term unsecured debt rated at least A or the equivalent thereof by S&P or A2
or the equivalent thereof by Moody’s and (B) capital and surplus in excess
of $100,000,000.00; (iii) commercial paper or municipal bonds rated at
least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof
by Moody’s and in either case maturing within one hundred twenty (120) days
from such date, and (iv) shares of any money market mutual fund rated at
least AAA or the equivalent thereof by S&P or at least Aaa or the
equivalent thereof by Moody’s.

 

CERCLA. See §6.19.

 

Change of Control. A
Change of Control shall exist upon the occurrence of any of the following:

 

(a)                                  following
the IPO Event, any Person (including a Person’s Affiliates and associates) or
group (as that term is understood under Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and
regulations thereunder), shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of a percentage (based on
voting power, in the event different classes of stock or voting interests shall
have different voting powers) of the voting stock or voting interests of REIT
or the Borrower equal to at least twenty percent (20.0%);

 

(b)                                 as
of any date a majority of the Board of Directors or Trustees or similar body
(the “Board”)  of REIT or the Borrower consists
of individuals who were not either (i) directors or trustees of REIT or
the Borrower as of the corresponding date of the previous year, or (ii) selected
or nominated to become directors or trustees by the Board of REIT or the
Borrower of which a majority consisted of individuals described in clause (b)(i) above,
or (iii) selected or nominated to become directors or trustees by the
Board of REIT or the Borrower, of which a majority consisted of individuals
described in clause (b)(i) above and individuals described in clause (b)(ii) above
(excluding, in the case of both clause (ii) and (iii) above, any
individual whose initial nomination for, or assumption of office as, a member
of the Board occurs as a result of an actual or threatened solicitation of
proxies or consents for the election or removal of one or more directors or
trustees by any Person or group other than a solicitation for the election of
one or more directors or trustees by or on behalf of the Board); or

 

(c)                                  REIT
or the Borrower consolidates with, is acquired by, or merges into or with any
Person (other than a merger permitted by §8.4); or

 

(d)                                 the
Borrower shall no longer be directly or indirectly eighty percent (80%) owned
and controlled by REIT; or

 

(e)                                  the
Borrower fails to own, directly or indirectly, free of any lien, encumbrance or
other adverse claim, at least one hundred percent (100%) of the economic,
voting and beneficial interest of each Subsidiary Guarantor (subject to the
terms of §5.4 regarding the release of Subsidiary Guarantors); or

 

(f)                                    any
two (2) of Robert S. Aisner, Gerald J. Reihsen, III, Robert M.
Behringer and Gary S. Bresky shall die or become disabled or otherwise cease to
be active on a daily basis in the management of the Borrower and, prior to the
merger of the Advisor with and

 

5

 

into
the Borrower, the Advisor, provided that if any two (2) of such
individuals shall die or become disabled or otherwise cease to be active on a
daily basis in the management of the Borrower and, prior to the merger of the
Advisor with and into the Borrower, the Advisor, it shall not be a “Change of
Control” if a replacement executive of comparable experience and reasonably
satisfactory to the Agent shall have been retained within three (3) months
of such event; or

 

(g)                                 prior
to the merger of the Advisor with and into the Borrower or REIT, (i) the
Borrower shall no longer be managed and advised by Advisor, or (ii) the
Advisor shall no longer be directly or indirectly majority owned and controlled
by Behringer Harvard Holdings.

 

Closing Date. The
first date on which all of the conditions set forth in §10 and §11 have been
satisfied.

 

Code. The Internal
Revenue Code of 1986, as amended.

 

Collateral. All of
the property, rights and interests of the Borrower and its Subsidiaries which
are subject to the security interests and liens created by the Security
Documents.

 

Commitment. With
respect to each Lender, the aggregate of (a) the Revolving Credit
Commitment of such Lender and (b) the Term Loan Commitment of such Lender.

 

Commitment Increase.
An increase in the Total Revolving Credit Commitment to not more than
$600,000,000.00 pursuant to §2.11.

 

Commitment Increase Date.
See §2.11(a).

 

Commitment Percentage.
With respect to each Lender, the percentage set forth on Schedule 1.1
hereto as such Lender’s percentage of the aggregate Commitments of all of the
Lenders, as the same may be changed from time to time in accordance with
the terms of this Agreement.

 

Company. Any Person
which directly owns Real Estate in which the Borrower or an Additional Pledgor
directly owns an Equity Interest and through which the Borrower or such
Additional Pledgor receives or is entitled to receive Distributions with
respect to such Real Estate, including, without limitation, each “Company” as
defined in the Pledge of Distributions and the Pledge Agreement.

 

Compliance Certificate.
See §7.4(c).

 

Consolidated. With
reference to any term defined herein, that term as applied to the accounts of a
Person and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.

 

Consolidated EBITDA.
With respect to any period, an amount equal to the EBITDA of REIT, the Borrower
and their respective Subsidiaries for such period determined on a Consolidated
basis.

 

6

 

Consolidated Fixed Charges.
On any date of determination, the sum of (a) Consolidated Interest Expense
for the period of four (4) fiscal quarters most recently ended (both
expensed and capitalized), plus (b) all regularly scheduled principal
payments made with respect to Indebtedness of REIT, the Borrower and their
respective Subsidiaries during such period, other than any balloon, bullet or
similar principal payment which repays such Indebtedness in full, plus (c) all
Preferred Distributions paid during such period. Such Person’s Equity
Percentage in the fixed charges referred to above of its Unconsolidated
Affiliates shall be included in the determination of Consolidated Fixed Charges.
Consolidated Fixed Charges of a Person and its Subsidiaries relating to
Indebtedness that has been Defeased shall not be deemed part of
Consolidated Fixed Charges.

 

Consolidated Interest Expense.
On any date of determination, without duplication, (a) total Interest
Expense of REIT, the Borrower and their respective Subsidiaries determined on a
Consolidated basis in accordance with GAAP for the period of four (4) fiscal
quarters most recently ended, plus (b) such Person’s Equity
Percentage of Interest Expense of its Unconsolidated Affiliates for such period.

 

Consolidated Tangible Net Worth.
The amount by which Gross Asset Value exceeds Consolidated Total Indebtedness.

 

Consolidated Total Indebtedness.
All Indebtedness of REIT, the Borrower and their respective Subsidiaries
determined on a Consolidated basis and shall include (without duplication),
such Person’s Equity Percentage of the Indebtedness of its Unconsolidated
Affiliates. Indebtedness or other liabilities of a Person and its Subsidiaries
that would otherwise be included in Consolidated Total Indebtedness that has
been Defeased or paid shall not be deemed part of Consolidated Total
Indebtedness.

 

Construction in Progress.
On a Consolidated basis for REIT, the Borrower and their respective
Subsidiaries, the sum of all cash expenditures for land and improvements
(including indirect costs internally allocated and development costs) in
accordance with GAAP on properties that are under construction or with respect
to which construction is reasonably scheduled to commence within twelve (12)
months of the relevant determination. For the purposes of calculating
Construction in Progress of REIT, the Borrower and their respective
Subsidiaries with respect to properties under construction of Unconsolidated
Affiliates, the Construction in Progress of REIT, the Borrower and their
respective Subsidiaries shall be the lesser of (a) the Investment of REIT,
the Borrower or such Subsidiary in the applicable Unconsolidated Affiliate or (b) REIT’s,
the Borrower’s or such Subsidiary’s pro rata share (based upon the Equity Percentage
of such Person in such Unconsolidated Affiliate) of such Unconsolidated
Affiliate’s Construction in Progress.

 

Contribution Agreement.
That certain Contribution Agreement dated of even date herewith among REIT, the
Borrower, the Guarantors and each Additional Guarantor which may hereafter
become a party thereto, as the same may be modified, amended or ratified
from time to time.

 

Conversion/Continuation Request.
A notice given by the Borrower to the Agent of its election to convert or
continue a Loan in accordance with §4.1.

 

7

 

Default. See §12.1.

 

Default Rate. See
§4.12.

 

Defeased. Indebtedness
is deemed “Defeased” when it has been defeased in accordance with its terms. In
addition, the $40,000,000 of 6.00% convertible debentures issued by IPC US Real
Estate Investment Trust in the aggregate outstanding principal amount of
$11,294,000.00 as of the date hereof and the $60,000,000 of 5.75% convertible
debentures issued by IPC US Real Estate Investment Trust in the aggregate
outstanding principal amount of $56,320,000.00 as of the date hereof shall for
the purposes of this Agreement be deemed “Defeased” so long as Borrower has
irrevocably deposited with the applicable trustee as security cash or other liquid
securities in an amount sufficient to pay all interest and principal on such
obligations through maturity.

 

Delinquent Lender. See
§14.5(c).

 

Derivatives Contract.
Any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price
or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement. Not in limitation of the
foregoing, the term “Derivatives Contract” includes any and all transactions of
any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by
the International Swaps and Derivatives Association, Inc., any International
Foreign Exchange Master Agreement, or any other master agreement of similar
type, including any such obligations or liabilities under any such master
agreement.

 

Derivatives Termination Value.
In respect of any one or more Derivatives Contracts, after taking into account
the effect of any legally enforceable netting agreement relating to such
Derivatives Contracts, (a) for any date on or after the date such
Derivatives Contracts have been closed out and termination value(s) determined
in accordance therewith, such termination value(s), and (b) for any date
prior to the date referenced in clause (a) the amount(s) determined
as the mark-to-market value(s) for such Derivatives Contracts, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Derivatives Contracts
(which may include Chatham Financial, the Agent or any Lender).

 

Development Property.
Real Estate currently under development that has not become a Stabilized
Property or on which the improvements related to the development have not been
completed, provided that such a Development Property on which all improvements
related to the development of such Real Estate have been substantially
completed (excluding tenants improvements) for at least twelve (12) months
shall cease to constitute a Development Property

 

8

 

notwithstanding the fact that such Property
has not become a Stabilized Property, and shall be considered a Stabilized Property
for the purposes of the calculation of Gross Asset Value.

 

Distribution. Any (a) dividend
or other distribution, direct or indirect, on account of any Equity Interest of
REIT, the Borrower or any of their respective Subsidiaries now or hereafter outstanding,
except a dividend payable solely in Equity Interests of identical class to
the holders of that class; (b) redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any Equity Interest of REIT, the Borrower or any
of their respective Subsidiaries now or hereafter outstanding; and (c) payment
made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire any Equity Interests of REIT, the Borrower
or any of their respective Subsidiaries now or hereafter outstanding.

 

Distribution Interests.
Collectively, one hundred percent (100%) of the Borrower’s or a Pledgor’s
right, title and interest in and to any “Distributions” (as such term is
generally used in the Pledge of Distributions and the Pledge Agreement)
directly from a Company.

 

Dividend Reinvestment Proceeds.
All dividends or other distributions, direct or indirect, on account of any
Equity Interest of any Person which any holder(s) of such Equity Interests
direct to be used, concurrently with the making of such dividend or
distribution, for the purposes of purchasing for the account of such holder(s) additional
Equity Interests in such Person or any of its Subsidiaries.

 

Dollars or $.
Dollars in lawful currency of the United States of America.

 

Domestic Lending Office.
Initially, the office of each Lender designated as such on Schedule 1.1
hereto; thereafter, such other office of such Lender, if any, located within
the United States that will be making or maintaining Base Rate Loans.

 

Drawdown Date. The
date on which any Loan is made or is to be made, and the date on which any Loan
which is made prior to the Revolving Credit Maturity Date or the Term Loan
Maturity Date, as applicable, is converted in accordance with §4.1.

 

EBITDA. With respect to a Person for any period
(without duplication): (a) net income (or loss) of such Person for such
period determined on a Consolidated basis in accordance with GAAP, exclusive of
the following (but only to the extent included in the determination of such net
income (loss)):  (i) depreciation
and amortization expense; (ii) Interest Expense; (iii) income tax
expense; and (iv) extraordinary or non-recurring gains and losses; plus (b) such
Person’s pro rata share of EBITDA determined in accordance with clause (a) above
of its Unconsolidated Affiliates. “EBITDA” shall be adjusted to remove
any impact of straight lining of rents and amortization of intangibles pursuant
to FAS 141, as issued by the Financial Accounting Standards Board in June of
2001. EBITDA shall not include any income or other items from assets which are
pledged for Indebtedness that has been Defeased.

 

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

 

9

 

Environmental Engineer.
Any firm of independent professional engineers or other scientists generally
recognized as expert in the detection, analysis and remediation of Hazardous
Substances and related environmental matters and acceptable to the Agent in its
reasonable discretion.

 

Environmental Laws. As
defined in the Indemnity Agreement.

 

Equity Interests. With
respect to any Person, (i) any share of capital stock of (or other
ownership or profit interests in) such Person; (ii) any warrant, option or
other right for the purchase or other acquisition from such Person of (a) any
share of capital stock of (or other ownership or profit interests in) such
Person, or (b) any security convertible into or exchangeable for any share
of capital stock of (or other ownership or profit interests in) such Person or
warrant, right or option for the purchase or other acquisition from such Person
of such shares (or such other interests) and whether or not such share,
warrant, option, right or other interest is authorized or otherwise existing on
any date of determination; and (iii) any other ownership or profit
interest in such Person (including, without limitation, partnership, member or
trust interests therein), whether voting or nonvoting.

 

Equity Offering. The
issuance and sale after the Closing Date by the Borrower or any of its
Subsidiaries or REIT of any equity securities of such Person (other than equity
securities issued to Borrower, REIT or any one or more of their Subsidiaries in
their respective Subsidiaries).

 

Equity Percentage. The
aggregate ownership percentage of REIT, the Borrower or their respective Subsidiaries
in each Unconsolidated Affiliate, as reasonably approved by the Agent.

 

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

 

ERISA Affiliate. Any
Person which is treated as a single employer with REIT or its Subsidiaries
under §414 of the Code.

 

ERISA Reportable Event.
A reportable event with respect to a Guaranteed Pension Plan within the meaning
of §4043 of ERISA and the regulations promulgated thereunder as to which the
requirement of notice has not been waived.

 

Event of Default. See
§12.1.

 

Federal Funds Effective Rate.
For any day, the rate per annum (rounded upward to the nearest one-hundredth of
one percent (1/100 of 1%)) announced by the Federal Reserve Bank of Cleveland
on such day as being the weighted average of the rates on overnight federal
funds transactions arranged by federal funds brokers on the previous trading
day, as computed and announced by such Federal Reserve Bank in substantially
the same manner as such Federal Reserve Bank computes and announces the
weighted average it refers to as the “Federal Funds Effective Rate.”

 

10

 

Funds from Operations.
With respect to any Person for any period, an amount equal to the Net Income
(or Loss) of such Person for such period, computed in accordance with GAAP,
excluding gains (or losses) from extraordinary items or non-recurring gains or
losses (but including gains or losses on sales of Real Estate in the ordinary
course of business, e.g. build to suits), plus depreciation and amortization,
plus asset management fees that are subordinate to the Obligations, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be recalculated to reflect
funds from operations on the same basis.

 

GAAP. Principles
that are (a) consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors, as in effect from
time to time and (b) consistently applied with past financial statements
of the Person adopting the same principles; provided that a certified
public accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting principles) as
to financial statements in which such principles have been properly applied.

 

Gross Asset Value. On
a Consolidated basis for REIT, the Borrower and their respective Subsidiaries,
Gross Asset Value shall mean at any time the sum of (without duplication with
respect to any Real Estate):

 

(i)                                     with
respect to each Stabilized Property owned by REIT, the Borrower or any of their
respective Subsidiaries for the prior six (6) fiscal quarters (other than
222 Riverside Plaza and 1325 G Street) (x) the sum of (A) the Net
Operating Income attributable to such Real Estate for the period of the four (4) consecutive
fiscal quarters just ended prior to the date of determination, minus (B) the
Capital Reserve for such Real Estate for such period, divided by (y) the
Capitalization Rate; plus

 

(ii)                                  with
respect to Real Estate acquired during the prior six (6) fiscal quarter
period (other than 222 Riverside Plaza and 1325 G Street), the acquisition cost
of such Real Estate; plus

 

(iii)                               with
respect to Development Properties, the Construction in Progress of such
Development Property until the earlier of (A) the one (1) year
anniversary of project completion of such Real Estate (as evidenced by the
issuance of a temporary or shell certificate of occupancy or similar permit) or
(B) the first day of the first fiscal quarter following the date such Real
Estate achieves a Lease Rate of at least eighty-five percent (85%); plus

 

(iv)                              with
respect to 222 Riverside Plaza and 1325 G Street, the acquisition cost of such
Real Estate; plus

 

(v)                                 the
aggregate amount of all Unrestricted Cash and Cash Equivalents of REIT, the
Borrower and their respective Subsidiaries as of the date of determination;
plus

 

(vi)                              the
book value determined in accordance with GAAP of Land Assets of REIT, the
Borrower and their respective Subsidiaries; plus

 

11

 

(vii)                           the
lesser of the book value or outstanding principal balance of Mortgage
Receivables secured by office properties and the Multifamily Facility.

 

Gross Asset Value will be adjusted, as appropriate, for acquisitions,
dispositions and other changes to the portfolio during the calendar quarter
most recently ended prior to a date of determination. All income, expense and
value associated with assets included in Gross Asset Value disposed of during
the four (4) calendar quarter period most recently ended prior to a date
of determination will be eliminated from calculations. Gross Asset Value will
be adjusted to include an amount equal to REIT’s or any of its Subsidiaries’
pro rata share (based upon such Person’s Equity Percentage in such
Unconsolidated Affiliate) of the Gross Asset Value attributable to any of the
items listed above in this definition owned by such Unconsolidated Affiliate. Assets
which are pledged for Indebtedness that has been Defeased will be excluded from
Gross Asset Value.

 

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

 

Guarantor. Collectively,
REIT, the Subsidiary Guarantors and each Additional Guarantor, and individually
any one of them.

 

Guaranty. The
Unconditional Guaranty of Payment and Performance dated of even date herewith
made by REIT, the Subsidiary Guarantors and each Additional Guarantor in favor
of the Agent and the Lenders, as the same may be modified, amended or
ratified, such Guaranty to be in form and substance satisfactory to the
Agent.

 

Hazardous Substances.
As defined in the Indemnity Agreement.

 

Increase Notice. See
§2.11(a).

 

Indebtedness. With
respect to a Person, at the time of computation thereof, all of the following
(without duplication): (a) all obligations of such Person in respect of
money borrowed (other than trade debt incurred in the ordinary course of
business which is not more than one hundred eighty (180) days past due); (b) all
obligations of such Person, whether or not for money borrowed (i) represented
by notes payable, or drafts accepted, in each case representing extensions of
credit, (ii) evidenced by bonds, debentures, notes or similar instruments,
or (iii) constituting purchase money indebtedness, conditional sales
contracts, title retention debt instruments or other similar instruments, upon
which interest charges are customarily paid or that are issued or assumed as
full or partial payment for property or services rendered; (c) obligation
of such Person as a lessee or obligor under a Capitalized Lease; (d) all
reimbursement obligations of such Person under any letters of credit or
acceptances (whether or not the same have been presented for payment); (e) all
Off-Balance Sheet Obligations of such Person; (f) all obligations of such
Person in respect of any purchase obligation, repurchase obligation, takeout
commitment or forward equity commitment, in each case evidenced by a binding
agreement (excluding any such obligation to the extent the obligation can be
satisfied by the issuance of Equity Interests), (g) net obligations under
any Derivatives Contract not entered

 

12

 

into as a hedge against existing
Indebtedness, in an amount equal to the Derivatives Termination Value thereof; (h) all
Indebtedness of other Persons which such Person has guaranteed or is otherwise
recourse to such Person (except for guaranties of customary exceptions for
fraud, misapplication of funds, environmental indemnities, violation of “special
purpose entity” covenants, and other similar exceptions to recourse liability
until a claim is made with respect thereto, and then shall be included only to
the extent of the amount of such claim ), including liability of a general
partner in respect of liabilities of a partnership in which it is a general
partner which would constitute “Indebtedness” hereunder, any obligation to
supply funds to or in any manner to invest directly or indirectly in a Person,
to maintain working capital or equity capital of a Person or otherwise to
maintain net worth, solvency or other financial condition of a Person, to
purchase indebtedness, or to assure the owner of indebtedness against loss,
including, without limitation, through an agreement to purchase property,
securities, goods, supplies or services for the purpose of enabling the debtor
to make payment of the indebtedness held by such owner or otherwise; (i) all
Indebtedness of another Person 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 or assets owned by such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness or other
payment obligation; and (j) such Person’s pro rata share of the
Indebtedness (based upon its Equity Percentage in such Unconsolidated
Affiliates) of any Unconsolidated Affiliate of such Person; provided that
Indebtedness that would otherwise meet one of the requirements above that has
been Defeased shall not be deemed Indebtedness. “Indebtedness” shall be
adjusted to remove any impact of intangibles pursuant to FAS 141, as issued by
the Financial Accounting Standards Board in June of 2001.

 

Indemnity Agreement.
The Indemnity Agreement Regarding Hazardous Materials made by the Borrower and
Guarantors in favor of the Agent and the Lenders, as the same may be
modified, amended or ratified, pursuant to which the Borrower and each
Guarantor agrees to indemnify the Agent and the Lenders with respect to
Hazardous Substances and Environmental Laws.

 

Interest Expense. On
any date of determination, with respect to REIT, the Borrower and their
respective Subsidiaries, without duplication, (a) interest incurred (in
accordance with GAAP) for the period of four (4) fiscal quarters most
recently ended, including capitalized interest not funded under a construction
loan, plus (b) REIT’s, the Borrower’s and their respective
Subsidiaries’ Equity Percentage of Interest Expense of their Unconsolidated
Affiliates for such period. Interest Expense shall exclude the effect of any
mark to market of assumed debt pursuant to FAS 157 or FAS 141.

 

Interest Payment Date.
As to each Loan, the first (1st) day of each calendar month during
the term of such Loan.

 

Interest Period. With
respect to each LIBOR Rate Loan (a) initially, the period commencing on
the Drawdown Date of such LIBOR Rate Loan and ending one, two, three or six
months thereafter (provided, however, until the completion of the
syndication of the Loan as determined by Agent, the interest period for any
LIBOR Rate Loan shall be one month), and (b) thereafter, each period
commencing on the day following the last day of the next preceding Interest
Period applicable to such Loan and ending on the last day of one of the periods
set forth above, as selected by the Borrower in a Loan Request or
Conversion/Continuation Request;

 

13

 

provided that all of
the foregoing provisions relating to Interest Periods are subject to the
following:

 

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

 

(ii)                                  if
the Borrower shall fail to give notice as provided in §4.1, the Borrower shall
be deemed to have requested a continuation of the affected LIBOR Rate Loan as a
Base Rate Loan on the last day of the then current Interest Period with respect
thereto;

 

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

 

(iv)                              no
Interest Period relating to any LIBOR Rate Loan shall extend beyond the
Revolving Credit Maturity Date or Term Loan Maturity Date, as applicable.

 

Investments. With
respect to any Person, all shares of capital stock, evidences of Indebtedness
and other securities issued by any other Person and owned by such Person, all
loans, advances, or extensions of credit to, or contributions to the capital
of, any other Person, all purchases of the securities or business or integral part of
the business of any other Person and commitments and options to make such
purchases, all interests in real property, and all other investments; provided,
however, that the term “Investment” shall not include (i) equipment,
inventory and other tangible personal property acquired in the ordinary course
of business, or (ii) current trade and customer accounts receivable for
services rendered in the ordinary course of business and payable in accordance
with customary trade terms. In determining the aggregate amount of Investments
outstanding at any particular time:  (a) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(b) there shall be deducted in respect of each Investment any amount
received as a return of capital; (c) there shall not be deducted in
respect of any Investment any amounts received as earnings on such Investment,
whether as dividends, interest or otherwise, except that accrued interest
included as provided in the foregoing clause (a) shall be deducted when
paid; and (d) there shall not be deducted in respect of any Investment any
decrease in the value thereof.

 

IPO Event. A public
Equity Offering of equity interests of REIT, the shares of such offering being
listed on the New York Stock Exchange or such other national exchange approved
by the Agent, such approval not to be unreasonably withheld.

 

Issuing Lender. KeyBank,
in its capacity as the Lender issuing the Letters of Credit and any successor
thereto.

 

14

 

Joinder Agreement. The
Joinder Agreement with respect to the Guaranty, the Contribution Agreement and
the Indemnity Agreement to be executed and delivered pursuant to §5.2 by any
Additional Guarantor, such Joinder Agreement to be substantially in the form of
Exhibit D hereto.

 

KeyBank. As defined
in the preamble hereto.

 

Land Assets. Land
with respect to which the commencement of grading, construction of improvements
(other than improvements that are not material and are temporary in nature) or
infrastructure has not yet commenced and for which no such work is reasonably
scheduled to commence within the following six (6) months. A Land Asset
shall cease to be a Land Asset when it becomes a Development Property.

 

Leased Rate. With
respect to Real Estate at any time, the ratio, expressed as a percentage, of (a) the
Net Rentable Area of such Real Estate actually leased by tenants that are not
affiliated with the Borrower and paying rent at rates not materially less than
rates generally prevailing at the time the applicable lease was entered into,
pursuant to binding leases as to which no default has occurred and has
continued unremedied for 30 or more days to (b) the aggregate Net Rentable
Area of such Real Estate.

 

Leases. Leases,
licenses and agreements, whether written or oral, relating to the use or
occupation of space in any Building or of any Real Estate.

 

Lenders. KeyBank,
the other lending institutions which are party hereto and any other Person
which becomes an assignee of any rights of a Lender pursuant to §18 (but not
including any participant as described in §18); and collectively, the Revolving
Credit Lenders, the Term Loan Lenders and the Swing Line Lender. The Issuing
Lender shall be a Revolving Credit Lender, as applicable.

 

Letter of Credit. Any
standby letter of credit issued at the request of the Borrower and  for the account of the Borrower in accordance
with §2.10.

 

Letter of Credit Liabilities.
At any time and in respect of any Letter of Credit, the sum of (a) the
maximum undrawn face amount of such Letter of Credit plus (b) the
aggregate unpaid principal amount of all drawings made under such Letter of
Credit which have not been repaid (including repayment by a Revolving Credit
Loan). For purposes of this Agreement, a Revolving Credit Lender (other than
the Revolving Credit Lender acting as the Issuing Lender) shall be deemed to hold
a Letter of Credit Liability in an amount equal to its participation interest
in the related Letter of Credit under §2.10, and the Revolving Credit Lender
acting as the Issuing Lender shall be deemed to hold a Letter of Credit
Liability in an amount equal to its retained interest in the related Letter of
Credit after giving effect to the acquisition by the Revolving Credit Lenders
other than the Revolving Credit Lender acting as the Issuing Lender of their
participation interests under such Section.

 

Letter of Credit Request.
See §2.10(a).

 

LIBOR. For any LIBOR
Rate Loan for any Interest Period, the average rate as shown in Reuters Screen
LIBOR01 Page at which deposits in U.S. dollars are offered by first

 

15

 

class banks in the London Interbank
Market at approximately 11:00 a.m. (London time) on the day that is two (2) LIBOR
Business Days prior to the first day of such Interest Period with a maturity
approximately equal to such Interest Period and in an amount approximately
equal to the amount to which such Interest Period relates, adjusted for
reserves and taxes if required by future regulations. If such service no longer
reports such rate or Agent determines in good faith that the rate so reported
no longer accurately reflects the rate available to Agent in the London
Interbank Market, Loans shall accrue interest at the Base Rate plus the
Applicable Margin for such Loan. For any period during which a Reserve
Percentage shall apply, LIBOR with respect to LIBOR Rate Loans shall be equal
to the amount determined above divided by an amount equal to 1 minus the
Reserve Percentage.

 

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

 

LIBOR Lending Office.
Initially, the office of each Lender designated as such on Schedule 1.1
hereto; thereafter, such other office of such Lender, if any, that shall be
making or maintaining LIBOR Rate Loans.

 

LIBOR Rate Loans. Collectively,
the Revolving Credit LIBOR Rate Loans and the Term LIBOR Rate Loans.

 

Lien. See §8.2.

 

Loan Documents. This
Agreement, the Notes, the Letter of Credit Request, the Security Documents, the
Subordination of Management Fee Agreements and all other documents, instruments
or agreements now or hereafter executed or delivered by or on behalf of the
Borrower or any Guarantor in connection with the Loans.

 

Loan Request. See
§2.7.

 

Loan and Loans.
An individual loan or the aggregate loans (including a Revolving Credit Loan
(or Loans), Term Loan (or Loans)  and a
Swing Loan (or Loans)), as the case may be, to be made by the Lenders
hereunder. All Loans shall be made in Dollars. Amounts drawn under a Letter of
Credit shall also be considered Revolving Credit Loans as provided in §2.10(a).

 

Majority Revolving Credit Lenders.
As of any date, any Revolving Credit Lender or collection of Revolving Credit
Lenders whose aggregate Revolving Credit Commitment Percentage is greater than
sixty-six and 7/10 percent (66.7%); provided that in determining said
percentage at any given time, all the existing Revolving Credit Lenders that
are Delinquent Lenders will be disregarded and excluded and the Revolving
Credit Commitment Percentages of the Revolving Credit Lenders shall be redetermined
for voting purposes only to exclude the Revolving Credit Commitment Percentages
of such Delinquent Lenders.

 

Material Adverse Effect.
A material adverse effect on (a) the business, properties, assets,
condition (financial or otherwise) or results of operations of REIT, the
Borrower and their respective Subsidiaries considered as a whole; (b) the
ability of REIT, the Borrower or any Subsidiary Guarantor to perform any
of its material obligations under the Loan Documents; or

 

16

 

(c) the validity or enforceability of
any of the Loan Documents or the creation, perfection and priority of any Liens
of Agent in the Collateral; or (d) or the rights or remedies of Agent or
the Lenders thereunder.

 

Material Subsidiary.
Any existing or future Wholly Owned Subsidiary of the Borrower which at any
time (a) has assets that constitute five percent (5%) or more of the Gross
Asset Value, (b) owns a Real Estate asset, or (c) any Subsidiary of
Borrower which is required by Agent to grant Collateral pursuant to §5.3.

 

Moody’s. Moody’s
Investor Service, Inc.

 

Mortgage Receivable.
A mortgage loan on one or more income-producing properties which is being paid
on a current basis and performing in accordance with its terms, which is
originated by Borrower or a Guarantor, and which Mortgage Receivable includes,
without limitation, the indebtedness evidenced by a note and secured by a
related first mortgage.

 

Multiemployer Plan. Any
multiemployer plan within the meaning of §3(37) of ERISA maintained or
contributed to by REIT or any ERISA Affiliate.

 

Multifamily Facility.
The $100,000,000 (increasable to $400,000,000) revolving credit facility dated April 2,
2007 provided by Borrower to Behringer Harvard Multifamily OP I LP.

 

Net Income (or Loss).
With respect to any Person (or any asset of any Person) for any period, the net
income (or loss) of such Person (or attributable to such asset), determined in
accordance with GAAP.

 

Net Offering Proceeds.
The gross cash proceeds received by the Borrower or any of its Subsidiaries or
REIT as a result of an Equity Offering less the customary and reasonable
costs, expenses and discounts paid by the Borrower or such Subsidiary or REIT
in connection therewith. Net Offering Proceeds shall not include cash proceeds
received by a Subsidiary as a result of an investment by a joint venture
partner.

 

Net Operating Income.
For any Real Estate and for a given period, an amount equal to the sum of (a) the
rents, common area and other tenant reimbursements and other revenue (including
interest income) for such Real Estate for such period received in the ordinary
course of business from tenants in occupancy (excluding pre-paid rents and
revenues and security deposits except to the extent applied in satisfaction of
tenants’ obligations for rent) minus (b) all expenses paid or
accrued and related to the ownership, operation or maintenance of such Real
Estate for such period, including, but not limited to, taxes, assessments and
the like, insurance, utilities, payroll costs, maintenance, repair and
landscaping expenses, marketing expenses, and general and administrative
expenses (including an appropriate allocation for legal, accounting,
advertising, marketing and other expenses incurred in connection with such Real
Estate, but specifically excluding general overhead expenses of REIT, the
Borrower and their respective Subsidiaries and any property management fees), minus
(c)  the greater of (i) actual property management expenses of such
Real Estate or (ii) an amount equal to three percent (3.0%) of the gross
revenues from such Real Estate. “Net Operating Income” shall be adjusted

 

17

 

to remove any impact of straight lining of
rents and amortization of intangibles pursuant to FAS 141, as issued by the
Financial Accounting Standards Board in June of 2001.

 

Net Rentable Area. With
respect to any Real Estate, the floor area of any buildings, structures or
other improvements available for leasing to tenants determined in accordance
with the Rent Roll for such Real Estate, the manner of such determination to be
reasonably consistent for all Real Estate of the same type unless otherwise
approved by the Agent.

 

Non-Recourse Exclusions.
With respect to any Non-Recourse Indebtedness of any Person, any usual and
customary exclusions from the non-recourse limitations governing such
Indebtedness, including, without limitation, exclusions for claims that (i) are
based on fraud, intentional or material misrepresentation, misapplication of
funds, gross negligence or willful misconduct, (ii) result from
intentional mismanagement of or waste at the Real Property securing such
Non-Recourse Indebtedness, (iii) arise from the presence of Hazardous
Substances on the Real Property securing such Non-Recourse Indebtedness; (iv) are
the result of any unpaid real estate taxes and assessments (whether contained
in a loan agreement, promissory note, indemnity agreement or other document);
or (v) result from the borrowing Subsidiary and/or its assets becoming the
subject of a voluntary or involuntary bankruptcy, insolvency or similar
proceeding.

 

Non-Recourse Indebtedness.
With respect to a Person, (a) Indebtedness in respect of which recourse
for payment (except for Non-Recourse Exclusions until a claim is made with
respect thereto, and then such Indebtedness shall not constitute Non-Recourse
Indebtedness only to the extent of the amount of such claim) is contractually
limited to specific assets of such Person encumbered by a Lien securing such
Indebtedness or (b) if such Person is a Single Asset Entity, any
Indebtedness of such Person. A loan secured by multiple properties owned by
Single Asset Entities shall be considered Non-Recourse Indebtedness of such
Single Asset Entities even if such Indebtedness is cross-defaulted and
cross-collateralized with the loans to such other Single Asset Entities.

 

Notes.    Collectively, the Revolving Credit Notes,
the Term Loan Notes and the Swing Loan Note.

 

Notice.   See §19.

 

Obligations. All
indebtedness, obligations and liabilities of the Borrower or any Guarantor to
any of the Lenders or the Agent, individually or collectively, under this
Agreement or any of the other Loan Documents or in respect of any of the Loans,
the Notes or the Letters of Credit, or other instruments at any time evidencing
any of the foregoing, whether existing on the date of this Agreement or arising
or incurred hereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.

 

OFAC. Office of
Foreign Asset Control of the Department of the Treasury of the United States of
America.

 

18

 

Off-Balance Sheet Obligations.
Liabilities and obligations of REIT, the Borrower or any of their respective
Subsidiaries or any other Person in respect of “off-balance sheet arrangements”
(as defined in the SEC Off-Balance Sheet Rules) which REIT would be required to
disclose in the “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” section of REIT’s report on Form 10-Q or Form 10-K
(or their equivalents) which REIT is required to file with the SEC or would be
required to file if it were subject to the jurisdiction of the SEC (or any
Governmental Authority substituted therefore). As used in this definition, the
term “SEC Off-Balance Sheet Rules” means the Disclosure in Management’s
Discussion and Analysis About Off-Balance Sheet Arrangements, Securities Act
Release No. 33-8182, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17
CFR pts. 228, 229 and 249).

 

Outstanding. With
respect to the Loans, the aggregate unpaid principal thereof as of any date of
determination. With respect to Letters of Credit, the aggregate undrawn face
amount of issued Letters of Credit.

 

Patriot Act. The
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, as the same may be amended
from time to time, and corresponding provisions of future laws.

 

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

 

Permitted Liens. Liens,
security interests and other encumbrances permitted by §8.2.

 

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

 

Plan Assets. Assets
of any employee benefit plan subject to Part 4, Subtitle B, Title I of
ERISA.

 

Pledge Agreement. The
Pledge Agreement dated of even date herewith made by Borrower in favor of Agent
for the benefit of the Lenders.

 

Pledge of Distributions.
The Pledge of Distributions dated as of even date herewith by which the
Pledgors will collaterally assign to Agent the Distribution Interests from all
of the partnership, shareholder and/or membership interests owned by such
Persons in the Companies, as the same may be amended, restated,
supplemented or otherwise modified in accordance with the terms hereof.

 

Pledgors. Collectively,
the Borrower and each Additional Pledgor, and individually any one of them.

 

Preferred Distributions. For
any period and without duplication, all Distributions paid, declared but not
yet paid or otherwise due and payable during such period on Preferred
Securities issued by the Borrower or any of its Subsidiaries or REIT. Preferred
Distributions shall not include dividends or distributions: (a) paid or
payable solely in Equity Interests of

 

19

 

identical class payable to holders of
such class of Equity Interests; (b) paid or payable to the Borrower
or any of its Subsidiaries; or (c) constituting or resulting in the
redemption of Preferred Securities, other than scheduled redemptions not
constituting balloon, bullet or similar redemptions in full.

 

Preferred Securities.
With respect to any Person, Equity Interests in such Person, which are entitled
to preference or priority over any other Equity Interest in such Person in
respect of the payment of dividends or distribution of assets upon liquidation,
or both.

 

Prepayment Period. The
period from the date of this Agreement through and including December 11, 2008.

 

Pricing Level. Such
term shall have the meaning established within the definition of Applicable
Margin.

 

Real Estate. All
real property at any time owned or leased (as lessee or sublessee) in whole or
in part or operated by REIT, the Borrower or any of their respective
Subsidiaries, or an Unconsolidated Affiliate of the Borrower and which is
located in the United States of America or the District of Columbia.

 

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

 

Recourse Indebtedness.
As of any date of determination, any Indebtedness (whether secured or
unsecured) which is recourse to REIT, the Borrower or any of their respective
Subsidiaries. Recourse Indebtedness shall not include Non-Recourse
Indebtedness.

 

Register. See §18.2.

 

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

 

REIT Status. With
respect to a Person, its status as a real estate investment trust as defined in
§856(a) of the Code.

 

Release. Any
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping (other than the storing
of materials in reasonable quantities to the extent necessary for the operation
of property in the ordinary course of business, and in any event in compliance
with all Environmental Laws) of Hazardous Substances.

 

Rent Roll. A report
prepared by the Borrower showing for all Real Estate owned or leased by the
Borrower or its Subsidiaries, its occupancy, lease expiration dates, lease rent
and other information in substantially the form presented to Agent prior
to the date hereof or in such other form as may be reasonably
acceptable to the Agent.

 

Required Lenders. As
of any date, the Lender or Lenders whose aggregate Commitment Percentage is
equal to or greater than sixty-six and 7/10 percent (66.7%) of the

 

20

 

Total Commitment; provided that in determining
said percentage at any given time, all then existing Delinquent Lenders will be
disregarded and excluded and the Commitment Percentages of the Lenders shall be
redetermined for voting purposes only to exclude the Commitment Percentages of
such Delinquent Lenders.

 

Reserve Percentage. For
any Interest Period, that percentage which is specified three (3) Business
Days before the first day of such Interest Period by the Board of Governors of
the Federal Reserve System (or any successor) or any other governmental or
quasi-governmental authority with jurisdiction over Agent or any Lender for
determining the maximum reserve requirement (including, but not limited to, any
marginal reserve requirement) for Agent or any Lender with respect to
liabilities constituting of or including (among other liabilities) Eurocurrency
liabilities in an amount equal to that portion of the Loan affected by such
Interest Period and with a maturity equal to such Interest Period.

 

Revolving Credit Base Rate Loans.
Revolving Credit Loans bearing interest calculated by reference to the Base
Rate.

 

Revolving Credit Commitment.
With respect to each Revolving Credit Lender, the amount set forth on Schedule 1.1
hereto as the amount of such Revolving Credit Lender’s Revolving Credit
Commitment to make or maintain Revolving Credit Loans (other than Swing Loans)
to the Borrower, to participate in Letters of Credit for the account of the
Borrower and to participate in Swing Loans to the Borrower, as the same may be
changed from time to time in accordance with the terms of this Agreement.

 

Revolving Credit Commitment Percentage.
With respect to each Revolving Credit Lender, the percentage set forth on Schedule 1.1
hereto as such Revolving Credit Lender’s percentage of the Total Revolving Credit
Commitment, as the same may be changed from time to time in accordance
with the terms of this Agreement; provided that if the Revolving Credit
Commitments of the Revolving Credit Lenders have been terminated as provided in
this Agreement, then the Revolving Credit Commitment of each Revolving Credit
Lender shall be determined based on the Revolving Credit Commitment Percentage
of such Revolving Credit Lender immediately prior to such termination and after
giving effect to any subsequent assignments made pursuant to the terms hereof.

 

Revolving Credit Extension Request.
See §2.12.

 

Revolving Credit Lenders.
Collectively, the Lenders which have a Revolving Credit Commitment, the initial
Revolving Credit Lenders being identified on Schedule 1.1 hereto.

 

Revolving Credit LIBOR Rate Loans.
Revolving Credit Loans bearing interest calculated by reference to LIBOR.

 

Revolving Credit Loan or Loans.
An individual Revolving Credit Loan or the aggregate Revolving Credit Loans, as
the case may be, in the maximum principal amount of $300,000,000.00
(subject to increase as provided in §2.11) to be made by the Revolving Credit
Lenders hereunder as more particularly described in §2. Without limiting the
foregoing, Revolving Credit Loans shall also include Revolving Credit Loans
made pursuant to §2.10(f).

 

21

 

Revolving Credit Maturity Date.
December 11, 2010, as such date may be extended as provided in §2.12,
or such earlier date on which the Revolving Credit Loans shall become due and
payable pursuant to the terms hereof.

 

Revolving Credit Notes.
See §2.1(b).

 

SEC. The federal
Securities and Exchange Commission.

 

Secured Debt. With
respect to REIT, the Borrower or any of their respective Subsidiaries as of any
given date, the aggregate principal amount of all Indebtedness of such Persons
on a Consolidated basis outstanding at such date and that is secured in any
manner by any Lien.

 

Security Documents. Collectively,
the Acknowledgements, the Joinder Agreements, the Pledge Agreement, the Pledge
of Distributions, the Indemnity Agreement, the Guaranty, and any further
collateral assignments to the Agent for the benefit of the Lenders.

 

Single Asset Entity.
A bankruptcy remote, single purpose entity which is a Subsidiary of the Borrower
and which is not a Subsidiary Guarantor which owns real property and related
assets which are security for Indebtedness of such entity, and which
Indebtedness does not constitute Indebtedness of any other Person except as
provided in the definition of Non-Recourse Indebtedness (except for
Non-Recourse Exclusions).

 

S&P. Standard &
Poor’s Ratings Group.

 

Stabilized Property.
A completed project that has achieved a Leased Rate of at least eighty-five
percent (85%) for a period of not less than thirty (30) consecutive days,
provided that a Development Property on which all improvements related to the
development of such Real Estate have been substantially completed (excluding
tenants improvements) for at least twelve (12) months shall constitute a Stabilized
Property. Once a project becomes a Stabilized Property under this Agreement, it
shall remain a Stabilized Property.

 

State. A state of
the United States of America and the District of Columbia.

 

Subordination of Advisory Agreement.
The Subordination of Advisory Agreement dated as of the date hereof and entered
into between REIT, the Advisor and 
Behringer Harvard Real Estate Services, LLC, a Texas limited liability
company evidencing the subordination of the advisory fees payable by REIT
pursuant to the Advisory Agreement to the Obligations, as the same may be
amended, restated, supplemented or otherwise modified in accordance with the
terms hereof.

 

Subsidiary. For any
Person, any corporation, partnership, limited liability company 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, partnership, limited liability company or other entity (without
regard to the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such

 

22

 

Person or by such Person and one or more
Subsidiaries of such Person, and shall include all Persons the accounts of
which are consolidated with those of such Person pursuant to GAAP.

 

Subsidiary Guarantors.
Initially, those Persons described on Schedule 1.2 hereto and each
Additional Guarantor. Upon any Additional Guarantor becoming a Subsidiary
Guarantor or upon the release of a Subsidiary Guarantor in accordance with the
terms of this Agreement, Agent may unilaterally amend Schedule 1.2.

 

Swing Loan. See
§2.5(a).

 

Swing Loan Lender. KeyBank,
in its capacity as Swing Loan Lender and any successor thereof.

 

Swing Loan Commitment.
The sum of $50,000,000.00, as the same may be changed from time to time in
accordance with the terms of this Agreement.

 

Swing Loan Note. See
§2.5(b).

 

Tenant In Common Asset.
Real Estate jointly owned by more than one Person, the ownership of which is in
the form of undivided interests as tenants in common in such Real Estate,
other than Real Estate wholly owned by REIT, the Borrower and any of their
respective Subsidiaries individually or collectively as tenants in common.

 

Term Base Rate Loans.
The Term Loans bearing interest by reference to the Base Rate.

 

Term LIBOR Rate Loans.
The Term Loans bearing interest by reference to LIBOR.

 

Term Loan or Term Loans.
An individual Term Loan or the aggregate Term Loans, as the case may be,
in the maximum principal amount of $200,000,000.00 made by the Term Loan
Lenders hereunder.

 

Term Loan Commitment.
As to each Term Loan Lender, the amount equal to such Term Loan Lender’s Term
Loan Commitment Percentage of the aggregate principal amount of the Term Loans
from time to time outstanding to the Borrower.

 

Term Loan Commitment Percentage.
With respect to each Term Loan Lender, the percentage set forth on Schedule 1.1
hereto as such Term Loan Lender’s percentage of the aggregate Term Loan to the
Borrower, as the same may be changed from time to time in accordance with
the terms of this Agreement.

 

Term Loan Extension Request.
See §2.13(a).

 

Term Loan Lenders. Collectively,
the Lenders which have a Term Loan Commitment, the initial Term Loan Lenders
being identified on Schedule 1.1 hereto.

 

23

 

Term Loan Maturity Date.
December 11, 2010, as such date may be extended as provided in §2.13,
or such earlier date on which the Term Loans shall become due and payable
pursuant to the terms hereof.

 

Term Loan Note. A
promissory note made by the Borrower in favor of a Term Loan Lender in the
principal face amount equal to such Term Loan Lender’s Term Loan Commitment, in
substantially the form of Exhibit C hereto.

 

Titled Agents. The
Arranger, and any co-syndication agents or documentation agent.

 

Total Commitment. The
sum of the Commitments of the Lenders, as in effect from time to time. As of
the date of this Agreement, the Total Commitment is Five Hundred Million and
No/100 Dollars ($500,000,000.00). The Total Commitment may increase in
accordance with §2.11.

 

Total Revolving Credit Commitment.
The sum of the Revolving Credit Commitments of the Revolving Credit Lenders, as
in effect from time to time. As of the date of this Agreement, the Total
Revolving Credit Commitment is Three Hundred Million and No/100 Dollars
($300,000,000.00). The Total Revolving Credit Commitment may increase in
accordance with §2.11.

 

Type. As to any
Loan, its nature as a Base Rate Loan or a LIBOR Rate Loan.

 

Unconsolidated Affiliate.
In respect of any Person, any other Person in whom such Person holds an
Investment, (a) which Investment is accounted for in the financial
statements of such Person on an equity basis of accounting and whose financial
results would not be consolidated under GAAP with the financial results of such
first Person on the consolidated financial statements of such first Person, or (b) which
is not a Subsidiary of such first Person.

 

Unhedged Variable Rate Debt.
Any Indebtedness with respect to which the interest is not fixed (or hedged to
a fixed rate) for the entire term of such Indebtedness to maturity.

 

Unrestricted Cash and Cash Equivalents.
As of any date of determination, the sum of (a) the aggregate amount of
Unrestricted cash and (b) the aggregate amount of Unrestricted Cash
Equivalents (valued at fair market value). As used in this definition, “Unrestricted”
means the specified asset is readily available for the satisfaction of any and
all obligations of such Person.

 

Unsecured Debt. Indebtedness
of REIT, the Borrower and their respective Subsidiaries outstanding at any time
which is not Secured Indebtedness.

 

Wholly Owned Subsidiary.
As to the Borrower, any Subsidiary of Borrower that is directly or indirectly
owned 100% by the Borrower.

 

24

 

§1.2                          Rules of
Interpretation.

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)                                 The
words “approval” and “approved”, as the context requires, means an approval in
writing given to the party seeking approval after full and fair disclosure to
the party giving approval of all material facts necessary in order to determine
whether approval should be granted.

 

(h)                                 All
terms not specifically defined herein or by GAAP, which terms are defined in
the Uniform Commercial Code as in effect in the State of New York, have
the meanings assigned to them therein.

 

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

 

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

 

(k)                                  In
the event of any change in GAAP after the date hereof or any other change in
accounting procedures pursuant to §7.3 which would affect the computation of
any financial covenant, ratio or other requirement set forth in any Loan
Document, then upon the request of the Borrower or Agent, the Borrower, the
Guarantors, the Agent and the Lenders shall negotiate promptly, diligently and
in good faith in order to amend the provisions of the Loan Documents such that
such financial covenant, ratio or other requirement shall continue to provide
substantially the same financial tests or restrictions of the Borrower and the
Guarantors as in effect prior to such accounting change, as determined by the
Required Lenders in their good faith judgment. Until such time as such
amendment shall have been executed and delivered by the Borrower, the
Guarantors, the Agent and the Required Lenders, such financial covenants, ratio
and other requirements, and all financial statements and other documents
required to be

 

25

 

delivered
under the Loan Documents, shall be calculated and reported as if such change had
not occurred.

 

(l)                                     Notwithstanding
anything to the contrary in this Agreement, except for the purposes of the
financial statements required to be delivered under §§7.4(a) and (b),
wherever a reference is made in this Agreement to a matter being Consolidated
in accordance with GAAP or a similar phrase, in lieu of being Consolidated in
accordance with GAAP such matter (including any requirement that a calculation
of any limitation or covenant be made in accordance with GAAP) shall be
presented or calculated, as applicable, based on the pro rata share of the
ownership interests of any Person held by REIT, the Borrower and their
respective Subsidiaries, such pro rata share of such ownership interests to be
based on the right of REIT, the Borrower and their respective Subsidiaries, as
applicable, to receive cash flow and other distributions, as reasonably
approved by the Agent.

 

§2.                                THE
CREDIT FACILITY.

 

§2.1                          Revolving
Credit Loans.

 

(a)                                  Subject
to the terms and conditions set forth in this Agreement, each of the Revolving
Credit Lenders severally agrees to lend to the Borrower, and the Borrower may borrow
(and repay and reborrow) from time to time between the Closing Date and the
Revolving Credit Maturity Date upon notice by the Borrower to the Agent given
in accordance with §2.7, such sums as are requested by the Borrower for the
purposes set forth in §2.9 up to a maximum aggregate principal amount
outstanding (after giving effect to all amounts requested) at any one time
equal to the lesser of (i) such Revolving Credit Lender’s Revolving Credit
Commitment and (ii) such Revolving Credit Lender’s Revolving Credit
Commitment Percentage of the sum of (1) the amount of all outstanding
Revolving Credit Loans and Swing Loans, and (2) the aggregate amount of
Letter of Credit Liabilities; provided, that, in all events no Default
or Event of Default shall have occurred and be continuing; and provided,
further, that the outstanding principal amount of the Revolving Credit
Loans (after giving effect to all amounts requested), Swing Loans and Letter of
Credit Liabilities shall not at any time exceed the Total Revolving Credit
Commitment and the outstanding principal amount of the Revolving Credit Loans
(after giving effect to all amounts requested), Swing Loans, Term Loans and
Letter of Credit Liabilities shall not at any time exceed the Total Commitment.
The Revolving Credit Loans shall be made pro  rata in accordance
with each Revolving Credit Lender’s Revolving Credit Commitment Percentage. Each
request for a Revolving Credit Loan hereunder shall constitute a representation
and warranty by the Borrower that all of the conditions required of the
Borrower set forth in §10 and §11 have been satisfied on the date of such
request. The Agent may assume that the conditions in §10 and §11 have been
satisfied unless it receives prior written notice from a Revolving Credit
Lender that such conditions have not been satisfied. No Revolving Credit Lender
shall have any obligation to make Revolving Credit Loans to the Borrower in the
maximum aggregate principal outstanding balance of more than the principal face
amount of its Revolving Credit Note.

 

(b)                                 The
Revolving Credit Loans shall be evidenced by separate promissory notes of the
Borrower in substantially the form of Exhibit A hereto (collectively,
the “Revolving Credit Notes”), dated of even date with this Agreement (except
as otherwise provided in §18.3)

 

26

 

and
completed with appropriate insertions. One Revolving Credit Note shall be payable
to the order of each Revolving Credit Lender in the principal amount equal to
such Revolving Credit Lender’s Revolving Credit Commitment or, if less, the
outstanding amount of all Revolving Credit Loans made by such Revolving Credit
Lender, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes Agent to make or cause to be made, at or about the time
of the Drawdown Date of any Revolving Credit Loan or the time of receipt of any
payment of principal thereof, an appropriate notation on Agent’s Record
reflecting the making of such Revolving Credit Loan or (as the case may be)
the receipt of such payment. The outstanding amount of the Revolving Credit
Loans set forth on Agent’s Record shall be prima  facie evidence
of the principal amount thereof owing and unpaid to each Revolving Credit
Lender, but the failure to record, or any error in so recording, any such
amount on Agent’s Record shall not limit or otherwise affect the obligations of
the Borrower hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.

 

§2.2                          Commitment
to Lend Term Loan. Subject to the terms and conditions set forth in this
Agreement, each of the Term Loan Lenders severally agrees to lend to the
Borrower on the Closing Date such Term Loan Lender’s Term Loan Commitment,
which Term Loans shall be evidenced by the Term Loan Notes.

 

§2.3                          Facility
Unused Fee. The Borrower agrees to pay to the Agent for the account of the
Revolving Credit Lenders in accordance with their respective Revolving Credit
Commitment Percentages a facility unused fee calculated in accordance with §4.4
at the rate per annum as set forth below on the average daily amount by which
the Total Revolving Credit Commitment exceeds the outstanding principal amount
of Revolving Credit Loans, Swing Loans and the face amount of Letters of Credit
Outstanding during each calendar quarter or portion thereof commencing on the
date hereof and ending on the Revolving Credit Maturity Date. The facility
unused fee shall be calculated for each day based on the ratio (expressed as a
percentage) of (a) the average daily amount of the outstanding principal
amount of the Revolving Credit Loans and Swing Loans and the face amount of
Letters of Credit Outstanding during such quarter to (b) the Total
Revolving Credit Commitment, and if such ratio is less than or equal to fifty
percent (50%), the facility unused fee shall be payable at the rate of 0.20%,
and if such ratio is greater than fifty percent (50%), the facility unused fee
shall be payable at the rate of 0.15%. The facility unused fee shall be payable
quarterly in arrears on the first (1st) day of each calendar quarter
for the immediately preceding calendar quarter or portion thereof, and on any
earlier date on which the Revolving Credit Commitments shall be reduced or
shall terminate as provided in §2.4, with a final payment on the Revolving
Credit Maturity Date.

 

§2.4                          Reduction
and Termination of the Revolving Credit Commitments. The Borrower shall
have the right at any time and from time to time upon five (5) Business
Days’ prior written notice to the Agent to reduce by $5,000,000.00 or an
integral multiple of $1,000,000.00 in excess thereof (provided that in
no event shall the Total Revolving Credit Commitment be reduced in such manner
to an amount less than $100,000,000.00) or to terminate entirely the Revolving
Credit Commitments, whereupon the Revolving Credit Commitments of the Revolving
Credit Lenders shall be reduced pro rata in accordance with their respective
Revolving Credit Commitment Percentages of the amount specified in such notice
or, as the case may be, terminated, any such termination or reduction to
be without penalty except as otherwise set forth in §4.8; provided, however,
that no such termination or reduction shall be permitted if,

 

27

 

after
giving effect thereto, the sum of Outstanding Revolving Credit Loans, the
Outstanding Swing Loans and the Letter of Credit Liabilities would exceed the
Revolving Credit Commitments of the Revolving Credit Lenders as so terminated
or reduced. Promptly after receiving any notice from the Borrower delivered
pursuant to this §2.4, the Agent will notify the Revolving Credit Lenders of
the substance thereof. Any reduction of the Revolving Credit Commitments shall
also result in a proportionate reduction (rounded to the next lowest integral
multiple of $100,000.00) in the maximum amount of Swing Loans and Letters of
Credit. Upon the effective date of any such reduction or termination, the
Borrower shall pay to the Agent for the respective accounts of the Revolving
Credit Lenders the full amount of any facility fee under §2.3 then accrued on
the amount of the reduction. No reduction or termination of the Revolving
Credit Commitments may be reinstated.

 

§2.5                          Swing
Loan Commitment.

 

(a)                                  Subject
to the terms and conditions set forth in this Agreement, Swing Loan Lender
agrees to lend to the Borrower (the “Swing Loans”), and the Borrower may borrow
(and repay and reborrow) from time to time between the Closing Date and the
date which is five (5) Business Days prior to the Revolving Credit
Maturity Date upon notice by the Borrower to the Swing Loan Lender given in
accordance with this §2.5, such sums as are requested by the Borrower for the
purposes set forth in §2.9 in an aggregate principal amount at any one time outstanding
not exceeding the Swing Loan Commitment; provided that in all events (i) no
Default or Event of Default shall have occurred and be continuing; (ii) no
Revolving Credit Lender shall be a Delinquent Lender (provided Swing Loan
Lender may, in its sole discretion, be entitled to waive this condition); (iii) the
outstanding principal amount of the Revolving Credit Loans and Swing Loans
(after giving effect to all amounts requested) plus Letter of Credit
Liabilities shall not at any time exceed the Total Revolving Credit Commitment;
and (iv) the outstanding principal amount of the Revolving Credit Loans,
Term Loans and Swing Loans (after giving effect to all amounts requested), plus
Letter of Credit Liabilities shall not at any time exceed the Total Commitment.
Swing Loans shall constitute “Revolving Credit Loans” for all purposes
hereunder. The funding of a Swing Loan hereunder shall constitute a
representation and warranty by the Borrower that all of the conditions set
forth in §10 and §11 have been satisfied on the date of such funding. The Swing
Loan Lender may assume that the conditions in §10 and §11 have been
satisfied unless Swing Loan Lender has received written notice from a Revolving
Credit Lender that such conditions have not been satisfied. Each Swing Loan
shall be due and payable within five (5) Business Days of the date such
Swing Loan was provided and the Borrower hereby agrees (to the extent not
repaid as contemplated by §2.5(d) below) to repay each Swing Loan on or
before the date that is five (5) Business Days from the date such Swing
Loan was provided.

 

(b)                                 The
Swing Loans shall be evidenced by a separate promissory note of the Borrower in
substantially the form of Exhibit B hereto (the “Swing Note”),
dated the date of this Agreement and completed with appropriate insertions. The
Swing Loan Note shall be payable to the order of the Swing Loan Lender in the
principal face amount equal to the Swing Loan Commitment and shall be payable
as set forth below. The Borrower irrevocably authorizes the Swing Loan Lender
to make or cause to be made, at or about the time of the Drawdown Date of any
Swing Loan or at the time of receipt of any payment of principal thereof, an
appropriate notation on the Swing Loan Lender’s Record reflecting the making of
such Swing Loan or (as

 

28

 

the
case may be) the receipt of such payment. The outstanding amount of the
Swing Loans set forth on the Swing Loan Lender’s Record shall be prima  facie
evidence of the principal amount thereof owing and unpaid to the Swing Loan
Lender, but the failure to record, or any error in so recording, any such
amount on the Swing Loan Lender’s Record shall not limit or otherwise affect
the obligations of the Borrower hereunder or under the Swing Loan Note to make
payments of principal of or interest on any Swing Loan Note when due.

 

(c)                                  The
Borrower shall request a Swing Loan by delivering to the Swing Loan Lender a
Loan Request executed by an Authorized Officer no later than 11:00 a.m. (Cleveland
time) on the requested Drawdown Date specifying the amount of the requested
Swing Loan (which shall be in the minimum amount of $1,000,000.00) and
providing the wire instructions for the delivery of the Swing Loan proceeds. The
Loan Request shall also contain the statements and certifications required by
§2.7(i) and (ii). Each such Loan Request shall be irrevocable and binding
on the Borrower and shall obligate the Borrower to accept such Swing Loan on
the Drawdown Date. Notwithstanding anything herein to the contrary, a Swing
Loan shall be a Base Rate Loan and shall bear interest at the Base Rate plus
the Applicable Margin for Revolving Credit Base Rate Loans. The proceeds of the
Swing Loan will be disbursed by wire by the Swing Loan Lender to the Borrower
no later than 1:00 p.m. (Cleveland time).

 

(d)                                 The
Swing Loan Lender shall, within two (2) Business Days after the
Drawdown Date with respect to such Swing Loan, request each Revolving Credit
Lender, including the Swing Loan Lender, to make a Revolving Credit Loan
pursuant to §2.1 in an amount equal to such Revolving Credit Lender’s Revolving
Credit Commitment Percentage of the amount of the Swing Loan outstanding on the
date such notice is given. In the event that the Borrower does not notify the
Agent in writing otherwise on or before noon (Cleveland Time) on the second (2nd)
Business Day after the Drawdown Date with respect to such Swing Loan, Agent
shall notify the Revolving Credit Lenders that such Revolving Credit Loan shall
be a Revolving Credit LIBOR Rate Loan with an Interest Period of one (1) month,
provided that the making of such Revolving Credit LIBOR Rate Loan will not be
in contravention of any other provision of this Agreement, or if the making of
a Revolving Credit LIBOR Rate Loan would be in contravention of this Agreement,
then such notice shall indicate that such loan shall be a Revolving Credit Base
Rate Loan. The Borrower hereby irrevocably authorizes and directs the Swing
Loan Lender to so act on its behalf, and agrees that any amount advanced to the
Agent for the benefit of the Swing Loan Lender pursuant to this §2.5(d) shall
be considered a Revolving Credit Loan pursuant to §2.1. Unless any of the
events described in paragraph (h), (i) or (j) of §12.1 shall have
occurred (in which event the procedures of §2.5(e) shall apply), each
Revolving Credit Lender shall make the proceeds of its Revolving Credit Loan
available to the Swing Loan Lender for the account of the Swing Loan Lender at
the Agent’s Head Office prior to 12:00 noon (Cleveland time) in funds
immediately available no later than the third (3rd) Business Day after the date
such notice is given just as if the Revolving Credit Lenders were funding
directly to the Borrower, so that thereafter such Obligations shall be evidenced
by the Revolving Credit Notes. The proceeds of such Revolving Credit Loan shall
be immediately applied to repay the Swing Loans.

 

(e)                                  If
for any reason a Swing Loan cannot be refinanced by a Revolving Credit Loan
pursuant to §2.5(d), each Revolving Credit Lender will, on the date such
Revolving Credit Loan pursuant to §2.5(d) was to have been made, purchase
an undivided participation

 

29

 

interest
in the Swing Loan in an amount equal to its Revolving Credit Commitment
Percentage of such Swing Loan. Each Revolving Credit Lender will immediately
transfer to the Swing Loan Lender in immediately available funds the amount of
its participation and upon receipt thereof the Swing Loan Lender will deliver
to such Revolving Credit Lender a Swing Loan participation certificate dated
the date of receipt of such funds and in such amount.

 

(f)                                    Whenever
at any time after the Swing Loan Lender has received from any Revolving Credit
Lender such Revolving Credit Lender’s participation interest in a Swing Loan,
the Swing Loan Lender receives any payment on account thereof, the Swing Loan
Lender will distribute to such Revolving Credit Lender its participation
interest in such amount (appropriately adjusted in the case of interest
payments to reflect the period of time during which such Revolving Credit
Lender’s participating interest was outstanding and funded); provided, however,
that in the event that such payment received by the Swing Loan Lender is
required to be returned, such Revolving Credit Lender will return to the Swing
Loan Lender any portion thereof previously distributed by the Swing Loan Lender
to it.

 

(g)                                 Each
Revolving Credit Lender’s obligation to fund a Revolving Credit Loan as
provided in §2.5(d) or to purchase participation interests pursuant to
§2.5(e) shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit Lender
or the Borrower may have against the Swing Loan Lender, the Borrower or
anyone else for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default; (iii) any adverse change in the
condition (financial or otherwise) of REIT, the Borrower or any of their
respective Subsidiaries; (iv) any breach of this Agreement or any of the
other Loan Documents by the Borrower or any Guarantor or any Lender; or (v) any
other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing. Any portions of a Swing Loan not so purchased or
converted may be treated by the Agent and Swing Loan Lender as against
such Revolving Credit Lender as a Revolving Credit Loan which was not funded by
the non-purchasing Revolving Credit Lender as contemplated by §2.8 and §12.5,
and shall have such rights and remedies against such Revolving Credit Lender as
are set forth in §§2.8, 12.5 and 14.5. Each Swing Loan, once so sold or
converted, shall cease to be a Swing Loan for the purposes of this Agreement,
but shall be a Revolving Credit Loan made by each Revolving Credit Lender under
its Revolving Credit Commitment.

 

§2.6                          Interest
on Loans.

 

(a)                                  Each
Revolving Credit Base Rate Loan shall bear interest for the period commencing with
the Drawdown Date thereof and ending on, but excluding, the date on which such
Revolving Credit Base Rate Loan is repaid or converted to a Revolving Credit
LIBOR Rate Loan at the rate per annum equal to the sum of the Base Rate plus
the Applicable Margin for Base Rate Loans.

 

(b)                                 Each
Revolving Credit LIBOR Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of each Interest
Period with respect thereto at the rate per annum equal to the sum of LIBOR
determined for such Interest Period plus the Applicable Margin for LIBOR Rate
Loans.

 

30

 

(c)                                  Each
Term Base Rate Loan shall bear interest for the period commencing with the
Drawdown Date thereof and ending on, but excluding, the date on which such Term
Base Rate Loan is repaid or is converted to a Term LIBOR Rate Loan at a rate
per annum equal to the sum of the Applicable Margin for Base Rate Loans plus
the Base Rate.

 

(d)                                 Each
Term LIBOR Rate Loan shall bear interest for the period commencing with the
Drawdown Date thereof and ending on the last day of each Interest Period with
respect thereto at the rate per annum equal to the sum of LIBOR determined for
such Interest Period plus the Applicable Margin for LIBOR Rate Loans.

 

(e)                                  The
Borrower promises to pay interest on each Loan in arrears on each Interest
Payment Date with respect thereto.

 

(f)                                    Base
Rate Loans and LIBOR Rate Loans may be converted to Loans of the other
Type as provided in §4.1.

 

§2.7                          Requests
for Revolving Credit Loans. Except with respect to the initial Revolving
Credit Loan on the Closing Date, the Borrower shall give to the Agent written
notice executed by an Authorized Officer in the form of Exhibit E
hereto (or telephonic notice confirmed in writing in the form of Exhibit E
hereto) of each Revolving Credit Loan requested hereunder (a “Loan Request”) by
11:00 a.m. (Cleveland time) one (1) Business Day prior to the
proposed Drawdown Date with respect to Revolving Credit Base Rate Loans and
three (3) Business Days prior to the proposed Drawdown Date with
respect to Revolving Credit LIBOR Rate Loans. Each such notice shall specify
with respect to the requested Revolving Credit Loan the proposed principal
amount of such Revolving Credit Loan, the Type of Revolving Credit Loan, the
initial Interest Period (if applicable) for such Revolving Credit Loan and the
Drawdown Date. Each such notice shall also contain (i) a general statement
as to the purpose for which such advance shall be used (which purpose shall be
in accordance with the terms of §2.9) and (ii) a certification by the
chief financial officer or chief accounting officer of the Borrower that the
Borrower and Guarantors are and will be in compliance with all covenants under
the Loan Documents after giving effect to the making of such Revolving Credit
Loan. Promptly upon receipt of any such notice, the Agent shall notify each of
the Revolving Credit Lenders thereof. Each such Loan Request shall be
irrevocable and binding on the Borrower and shall obligate the Borrower to
accept the Revolving Credit Loan requested from the Revolving Credit Lenders on
the proposed Drawdown Date. Nothing herein shall prevent the Borrower from
seeking recourse against any Revolving Credit Lender that fails to advance its
proportionate share of a requested Revolving Credit Loan as required by this
Agreement. Each Loan Request shall be (a) for a Revolving Credit Base Rate
Loan in a minimum aggregate amount of $1,000,000.00  or
an integral multiple of $100,000.00  in excess
thereof; or (b) for a Revolving Credit LIBOR Rate Loan in a minimum
aggregate amount of $1,000,000.00 or an integral multiple of $250,000.00 in
excess thereof; provided, however, that there shall be no more
than six (6) Revolving Credit LIBOR Rate Loans outstanding at any one
time.

 

§2.8                          Funds
for Loans.

 

(a)                                  Not
later than 1:00 p.m. (Cleveland time) on the proposed Drawdown Date of any
Revolving Credit Loans or Term Loans, each of the Revolving Credit Lenders or

 

31

 

Term
Loan Lenders, as applicable, will make available to the Agent, at the Agent’s
Head Office, in immediately available funds, the amount of such Lender’s
Commitment Percentage of the amount of the requested Loans which may be
disbursed pursuant to §2.1 or §2.2. Upon receipt from each such Revolving
Credit Lender or Term Loan Lender, as applicable, of such amount, and upon
receipt of the documents required by §10 and §11 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the Agent will
make available to the Borrower the aggregate amount of such Revolving Credit
Loans or Term Loans made available to the Agent by the Revolving Credit Lenders
or Term Loan Lenders, as applicable, by crediting such amount to the account of
the Borrower maintained at the Agent’s Head Office. The failure or refusal of
any Revolving Credit Lender or Term Loan Lender to make available to the Agent
at the aforesaid time and place on any Drawdown Date the amount of its Commitment
Percentage of the requested Loans shall not relieve any other Revolving Credit
Lender or Term Loan Lender from its several obligation hereunder to make
available to the Agent the amount of such other Lender’s Commitment Percentage
of any requested Loans, including any additional Revolving Credit Loans that may be
requested subject to the terms and conditions hereof to provide funds to
replace those not advanced by the Lender so failing or refusing. In the event
of any such failure or refusal, the Lenders not so failing or refusing shall be
entitled to a priority secured position as against the Lender or Lenders so
failing or refusing to make available to the Borrower the amount of its or
their Commitment Percentage for such Loans as provided in §12.5.

 

(b)                                 Unless
the Agent shall have been notified by any Lender prior to the applicable
Drawdown Date that such Lender will not make available to Agent such Lender’s
Commitment Percentage of a proposed Loan, Agent may in its discretion
assume that such Lender has made such Loan available to Agent in accordance
with the provisions of this Agreement and the Agent may, if it chooses, in
reliance upon such assumption make such Loan available to the Borrower, and
such Lender shall be liable to the Agent for the amount of such advance. If
such Lender does not pay such corresponding amount upon the Agent’s demand
therefor, the Agent will promptly notify the Borrower, and the Borrower shall
promptly pay such corresponding amount to the Agent. The Agent shall also be entitled
to recover from the Lender or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the
date such corresponding amount is recovered by the Agent at a per annum rate
equal to (i) from the Borrower at the applicable rate for such Loan or (ii) from
a Lender at the Federal Funds Effective Rate.

 

§2.9                          Use
of Proceeds. The Borrower will use the proceeds of the Loans and the Letters
of Credit solely for general corporate and working capital purposes.

 

§2.10                    Letters
of Credit.

 

(a)                                  Subject
to the terms and conditions set forth in this Agreement, at any time and from
time to time from the Closing Date through the day that is ninety (90) days
prior to the Revolving Credit Maturity Date, the Issuing Lender shall issue
such Letters of Credit as the Borrower may request upon the delivery of a
written request in the form of Exhibit F hereto (a “Letter of
Credit Request”) to the Issuing Lender, provided that (i) no
Default or Event of Default shall have occurred and be continuing, (ii) upon
issuance of such Letter of Credit, the

 

32

 

Letter
of Credit Liabilities shall not exceed Fifty Million Dollars ($50,000,000.00), (iii) in
no event shall the sum of (A) the Revolving Credit Loans Outstanding, (B) the
Swing Loans Outstanding and (C) the amount of Letter of Credit Liabilities
(after giving effect to all Letters of Credit requested) exceed the Total
Revolving Credit Commitment, (iv) in no event shall the outstanding
principal amount of the Revolving Credit Loans, Swing Loans, Letters of Credit
Liabilities and Term Loans (after giving effect to any requested Letters of
Credit) exceed the Total Commitment, (v) the conditions set forth in §§10
and 11 shall have been satisfied, (vi) no Revolving Credit Lender is a
Delinquent Lender (provided Issuing Lender may, in its sole discretion, be
entitled to waive this condition), and (vii) in no event shall any amount
drawn under a Letter of Credit be available for reinstatement or a subsequent
drawing under such Letter of Credit. The Issuing Lender may assume that
the conditions in §10 and §11 have been satisfied unless it receives written
notice from a Revolving Credit Lender that such conditions have not been
satisfied. Each Letter of Credit Request shall be executed by an Authorized
Officer of the Borrower. The Issuing Lender shall be entitled to conclusively
rely on such Person’s authority to request a Letter of Credit on behalf of the
Borrower. The Issuing Lender shall have no duty to verify the authenticity of
any signature appearing on a Letter of Credit Request. The Borrower assumes all
risks with respect to the use of the Letters of Credit. Unless the Issuing
Lender and the Majority Revolving Credit Lenders otherwise consent, the term of
any Letter of Credit shall not exceed a period of time commencing on the
issuance of the Letter of Credit and ending one year after the date of issuance
thereof, subject to extension pursuant to an “evergreen” clause acceptable to
Agent and Issuing Lender (but in any event the term shall not extend beyond the
Revolving Credit Maturity Date). The amount available to be drawn under any
Letter of Credit shall reduce on a dollar-for-dollar basis the amount available
to be drawn under the Total Revolving Credit Commitment as a Revolving Credit
Loan.

 

(b)                                 Each
Letter of Credit Request shall be submitted to the Issuing Lender at least five
(5) Business Days (or such shorter period as the Issuing Lender may approve)
prior to the date upon which the requested Letter of Credit is to be issued. Each
such Letter of Credit Request shall contain (i) a statement as to the
purpose for which such Letter of Credit shall be used (which purpose shall be
in accordance with the terms of this Agreement), and (ii) a certification
by the chief financial or chief accounting officer of the Borrower that the
Borrower and Guarantors are and will be in compliance with all covenants under
the Loan Documents after giving effect to the issuance of such Letter of Credit.
The Borrower shall further deliver to the Issuing Lender such additional
applications (which application as of the date hereof is in the form of Exhibit I
attached hereto) and documents as the Issuing Lender may require, in
conformity with the then standard practices of its letter of credit department,
in connection with the issuance of such Letter of Credit; provided that
in the event of any conflict, the terms of this Agreement shall control.

 

(c)                                  The
Issuing Lender shall, subject to the conditions set forth in this Agreement,
issue the Letter of Credit on or before five (5) Business Days following
receipt of the documents last due pursuant to §2.10(b). Each Letter of Credit
shall be in form and substance reasonably satisfactory to the Issuing
Lender in its reasonable discretion.

 

(d)                                 Upon
the issuance of a Letter of Credit, each Revolving Credit Lender shall be
deemed to have purchased a participation therein from Issuing Lender in an amount
equal to its respective Commitment Percentage of the amount of such Letter of
Credit. No

 

33

 

Revolving
Credit Lender’s obligation to participate in a Letter of Credit shall be
affected by any other Revolving Credit Lender’s failure to perform as
required herein with respect to such Letter of Credit or any other Letter of
Credit.

 

(e)                                  Upon
the issuance of each Letter of Credit, the Borrower shall pay to the Issuing
Lender (i) for its own account, a Letter of Credit fronting fee calculated
at the rate set forth in the Agreement Regarding Fees, and (ii) for the
accounts of the Revolving Credit Lenders (including the Issuing Lender) in
accordance with their respective percentage shares of participation in such
Letter of Credit, a Letter of Credit fee calculated at the rate per annum equal
to the Applicable Margin then applicable to LIBOR Rate Loans on the amount
available to be drawn under such Letter of Credit. Such fees shall be payable
in quarterly installments in arrears with respect to each Letter of Credit on
the first day of each calendar quarter following the date of issuance and
continuing on each quarter or portion thereof thereafter, as applicable, or on
any earlier date on which the Commitments shall terminate and on the expiration
or return of any Letter of Credit. In addition, the Borrower shall pay to
Issuing Lender for its own account within five (5) days of demand of
Issuing Lender the standard issuance, documentation and service charges for
Letters of Credit issued from time to time by Issuing Lender.

 

(f)                                    In
the event that any amount is drawn under a Letter of Credit by the beneficiary
thereof, the Borrower shall reimburse the Issuing Lender by having such amount
drawn treated as an outstanding Revolving Credit Base Rate Loan under this
Agreement (the Borrower being deemed to have requested a Revolving Credit Base
Rate Loan on such date in an amount equal to the amount of such drawing and
such amount drawn shall be treated as an outstanding Revolving Credit Base Rate
Loan under this Agreement) and the Agent shall promptly notify each Revolving
Credit Lender by telex, telecopy, telegram, telephone (confirmed in writing) or
other similar means of transmission, and each Revolving Credit Lender shall promptly
and unconditionally pay to the Agent, for the Issuing Lender’s own account, an
amount equal to such Revolving Credit Lender’s Revolving Credit Commitment
Percentage of such Letter of Credit (to the extent of the amount drawn). The
Borrower further hereby irrevocably authorizes and directs Agent to notify the
Revolving Credit Lenders of the Borrower’s intent to convert such Revolving
Credit Base Rate Loan to a Revolving Credit LIBOR Rate Loan with an Interest
Period of one (1) month on the third (3rd) Business Day
following the funding by the Revolving Credit Lenders of their advance under
this §2.10(f), provided that the making of such Revolving Credit LIBOR Rate
Loan shall not be a contravention of any provision of this Agreement. If and to
the extent any Revolving Credit Lender shall not make such amount available on
the Business Day on which such draw is funded, such Revolving Credit Lender
agrees to pay such amount to the Agent forthwith on demand, together with
interest thereon, for each day from the date on which such draw was funded
until the date on which such amount is paid to the Agent, at the Federal Funds
Effective Rate until three (3) days after the date on which the Agent
gives notice of such draw and at the Federal Funds Effective Rate plus one
percent (1.0%) for each day thereafter. Further, such Revolving Credit Lender
shall be deemed to have assigned any and all payments made of principal and
interest on its Revolving Credit Loans, amounts due with respect to its
participations in Letters of Credit and any other amounts due to it hereunder
to the Agent to fund the amount of any drawn Letter of Credit which such
Revolving Credit Lender was required to fund pursuant to this §2.10(f) until
such amount has been funded (as a result of such assignment or otherwise). In
the event of any such failure or refusal, the Revolving Credit Lenders not so

 

34

 

failing
or refusing shall be entitled to a priority secured position for such amounts
as provided in §12.5. The failure of any Revolving Credit Lender to make funds
available to the Agent in such amount shall not relieve any other Revolving
Credit Lender of its obligation hereunder to make funds available to the Agent
pursuant to this §2.10(f).

 

(g)                                 If
after the issuance of a Letter of Credit pursuant to §2.10(c) by the
Issuing Lender, but prior to the funding of any portion thereof by a Revolving
Credit Lender, for any reason a drawing under a Letter of Credit cannot be
refinanced as a Revolving Credit Loan, each Revolving Credit Lender will, on
the date such Revolving Credit Loan pursuant to §2.10(f) was to have been
made, purchase an undivided participation interest in the Letter of Credit in
an amount equal to its Revolving Credit Commitment Percentage of the amount of
such Letter of Credit. Each Revolving Credit Lender will immediately transfer
to the Issuing Lender in immediately available funds the amount of its
participation and upon receipt thereof the Issuing Lender will deliver to such
Revolving Credit Lender a Letter of Credit participation certificate dated the
date of receipt of such funds and in such amount.

 

(h)                                 Whenever
at any time after the Issuing Lender has received from any Revolving Credit
Lender any such Revolving Credit Lender’s payment of funds under a Letter of
Credit and thereafter the Issuing Lender receives any payment on account
thereof, then the Issuing Lender will distribute to such Revolving Credit
Lender its participation interest in such amount (appropriately adjusted in the
case of interest payments to reflect the period of time during which such
Revolving Credit Lender’s participation interest was outstanding and funded); provided,
however, that in the event that such payment received by the Issuing
Lender is required to be returned, such Revolving Credit Lender will return to
the Issuing Lender any portion thereof previously distributed by the Issuing
Lender to it.

 

(i)                                     The
issuance of any supplement, modification, amendment, renewal or extension to or
of any Letter of Credit shall be treated in all respects the same as the
issuance of a new Letter of Credit.

 

(j)                                     The
Borrower assumes all risks of the acts, omissions, or misuse of any Letter of
Credit by the beneficiary thereof. Neither Agent, Issuing Lender nor any Lender
will be responsible for (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any Letter of Credit or any document submitted
by any party in connection with the issuance of any Letter of Credit, even if
such document should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) failure
of any beneficiary of any Letter of Credit to comply fully with the conditions
required in order to demand payment under a Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document or draft required by or from a
beneficiary in order to make a disbursement under a Letter of Credit or the
proceeds thereof; (vii) for the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter of Credit;
and (viii) for any consequences arising from causes beyond the control of
Agent or any Lender. None of the foregoing will affect,

 

35

 

impair
or prevent the vesting of any of the rights or powers granted to Agent, Issuing
Lender or the Lenders hereunder. In furtherance and extension and not in
limitation or derogation of any of the foregoing, any act taken or omitted to
be taken by Agent, Issuing Lender or the other Lenders in good faith will be
binding on the Borrower and will not put Agent, Issuing Lender or the other
Lenders under any resulting liability to the Borrower; provided nothing
contained herein shall relieve Issuing Lender for liability to the Borrower
arising as a result of the gross negligence or willful misconduct of Issuing
Lender as determined by a court of competent jurisdiction after the exhaustion
of all applicable appeal periods.

 

§2.11                    Increase
in Total Revolving Credit Commitment.

 

(a)                                  Provided
that no Default or Event of Default has occurred and is continuing, subject to
the terms and conditions set forth in this §2.11, the Borrower shall have the
option at any time and from time to time before the date that is ninety (90)
days prior to the Revolving Credit Maturity Date (or the extended maturity date
if the Borrower exercises its extension option pursuant to §2.12) to request an
increase in the Total Revolving Credit Commitment to not more than
$600,000,000.00 by giving written notice to the Agent (an “Increase Notice”;
and the amount of such requested increase is the “Commitment Increase”), provided
that any such individual increase must be in a minimum amount of $25,000,000.00.
Upon receipt of any Increase Notice, the Agent shall consult with Arranger and
shall notify the Borrower of the amount of facility fees to be paid to any
Revolving Credit Lenders who provide an additional Revolving Credit Commitment
in connection with such increase in the Total Revolving Credit Commitment (which
shall be in addition to the fees to be paid to Agent or Arranger pursuant to
the Agreement Regarding Fees). If the Borrower agrees to pay the facility fees
so determined, then the Agent shall send a notice to all Revolving Credit
Lenders (the “Additional Commitment Request Notice”) informing them of the
Borrower’s request to increase the Total Revolving Credit Commitment and of the
facility fees to be paid with respect thereto. Each Revolving Credit Lender who
desires to provide an additional Revolving Credit Commitment upon such terms
shall provide Agent with a written commitment letter specifying the amount of
the additional Revolving Credit Commitment by which it is willing to provide
prior to such deadline as may be specified in the Additional Commitment
Request Notice. If the requested increase is oversubscribed then the Agent and
the Arranger shall allocate the Commitment Increase among the Revolving Credit
Lenders who provide such commitment letters on such basis as the Agent and the
Arranger shall determine in their sole discretion. If the additional Revolving
Credit Commitments so provided are not sufficient to provide the full amount of
the Commitment Increase requested by the Borrower, then the Agent, Arranger or
the Borrower may, but shall not be obligated to, invite one or more banks or
lending institutions (which banks or lending institutions shall be acceptable
to Agent, Arranger and the Borrower) to become a Revolving Credit Lender and
provide an additional Revolving Credit Commitment. The Agent shall provide all
Revolving Credit Lenders with a notice setting forth the amount, if any, of the
additional Revolving Credit Commitment to be provided by each Revolving Credit
Lender and the revised Revolving Credit Commitment Percentages which shall be
applicable after the effective date of the Commitment Increase specified
therein (the “Commitment Increase Date”). In no event shall any Revolving
Credit Lender be obligated to provide an additional Revolving Credit
Commitment.

 

36

 

(b)                                 On
any Commitment Increase Date the outstanding principal balance of the Revolving
Credit Loans shall be reallocated among the Revolving Credit Lenders such that
after the applicable Commitment Increase Date the outstanding principal amount
of Revolving Credit Loans owed to each Revolving Credit Lender shall be equal
to such Revolving Credit Lender’s Revolving Credit Commitment Percentage (as in
effect after the applicable Commitment Increase Date) of the outstanding principal
amount of all Revolving Credit Loans. The participation interests of the
Revolving Credit Lenders in Swing Loans and Letters of Credit shall be
similarly adjusted. On any Commitment Increase Date those Revolving Credit
Lenders whose Revolving Credit Commitment Percentage is increasing shall
advance the funds to the Agent and the funds so advanced shall be distributed
among the Revolving Credit Lenders whose Revolving Credit Commitment Percentage
is decreasing as necessary to accomplish the required reallocation of the
outstanding Revolving Credit Loans. The funds so advanced shall be Revolving
Credit Base Rate Loans until converted to Revolving Credit LIBOR Rate Loans
which are allocated among all Revolving Credit Lenders based on their Revolving
Credit Commitment Percentages.

 

(c)                                  Upon
the effective date of each increase in the Total Revolving Credit Commitment
pursuant to this §2.11 the Agent may unilaterally revise Schedule 1.1
and the Borrower shall execute and deliver to the Agent new Revolving Credit
Notes for each Revolving Credit Lender whose Revolving Credit Commitment has
changed so that the principal amount of such Revolving Credit Lender’s
Revolving Credit Note shall equal its Revolving Credit Commitment. The Agent
shall deliver such replacement Revolving Credit Notes to the respective
Revolving Credit Lenders in exchange for the Revolving Credit Notes replaced
thereby which shall be surrendered by such Revolving Credit Lenders. Such new
Revolving Credit Notes shall provide that they are replacements for the
surrendered Revolving Credit Notes and that they do not constitute a novation,
shall be dated as of the Commitment Increase Date and shall otherwise be in
substantially the form of the replaced Revolving Credit Notes. Within five
(5) days of issuance of any new Revolving Credit Notes pursuant to this
§2.11(c), the Borrower shall deliver an opinion of counsel, addressed to the
Revolving Credit Lenders and the Agent, relating to the due authorization,
execution and delivery of such new Revolving Credit Notes and the
enforceability thereof, in form and substance substantially similar to the
opinion delivered in connection with the first disbursement under this
Agreement. The surrendered Revolving Credit Notes shall be canceled and
returned to the Borrower.

 

(d)                                 Notwithstanding
anything to the contrary contained herein, the obligation of the Agent and the
Revolving Credit Lenders to increase the Total Revolving Credit Commitment
pursuant to this §2.11 shall be conditioned upon satisfaction of the following
conditions precedent which must be satisfied prior to the effectiveness of any
increase of the Total Commitment:

 

(i)                                     Payment
of Activation Fee. The Borrower shall pay (A) to the Agent those fees
described in and contemplated by the Agreement Regarding Fees with respect to
the applicable Commitment Increase, and (B) to the Arranger such facility
fees as the Revolving Credit Lenders who are providing an additional Revolving
Credit Commitment may require to increase the aggregate Revolving Credit
Commitment, which fees shall, when paid, be fully earned and non-refundable
under any circumstances. The Arranger shall pay to the

 

37

 

Revolving
Credit Lenders acquiring the increased Revolving Credit Commitment certain fees
pursuant to their separate agreement; and

 

(ii)                                  No
Default. On the date any Increase Notice is given and on the date such
increase becomes effective, both immediately before and after the Total
Revolving Credit Commitment is increased, there shall exist no Default or Event
of Default; and

 

(iii)                               Representations
True. The representations and warranties made by the Borrower and
Guarantors in the Loan Documents or otherwise made by or on behalf of the
Borrower or the Guarantors in connection therewith or after the date thereof
shall have been true and correct in all material respects when made and shall
also be true and correct in all material respects on the date of such Increase
Notice and on the date the Total Revolving Credit Commitment is increased, both
immediately before and after the Total Revolving Credit Commitment is
increased, except to the extent of changes resulting from transactions
permitted by the Loan Documents and except as previously disclosed in writing
by the Borrower to Agent and approved by the Agent in writing (which
disclosures shall be deemed to amend the Schedules and other disclosures
delivered as contemplated in this Agreement) (it being understood and agreed
that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct only as of such
specified date); and

 

(iv)                              Additional
Documents and Expenses. The Borrower shall execute and deliver to Agent and
the Revolving Credit Lenders such additional documents (including, without
limitation, amendments to the Security Documents), instruments, certifications
and opinions as the Agent may reasonably require in its sole and absolute
discretion, including, without limitation, a Compliance Certificate,
demonstrating compliance with all covenants, representations and warranties set
forth in the Loan Documents after giving effect to the increase; and

 

(v)                                 Other.
The Borrower shall satisfy such other conditions to such increase as Agent may require
in its reasonable discretion.

 

§2.12                    Extension
of Revolving Credit Maturity Date. The Borrower shall have the one-time
right and option to extend the Revolving Credit Maturity Date to December 11,
2011, upon satisfaction of the following conditions precedent, which must be
satisfied prior to the effectiveness of any extension of the Revolving Credit
Maturity Date:

 

(a)                                  Extension
Request. The Borrower shall deliver written notice of such request (the “Revolving
Credit Extension Request”) to the Agent not earlier than the date which is one
hundred twenty (120) days and not later than the date which is sixty (60) days
prior to the Revolving Credit Maturity Date (as determined without regard to
such extension). Any such Extension Request shall be irrevocable and binding on
the Borrower.

 

(b)                                 Payment
of Extension Fee. The Borrower shall pay to the Agent for the pro  rata
accounts of the Revolving Credit Lenders in accordance with their respective
Revolving Credit Commitments an extension fee in an amount equal to fifteen
(15) basis points on the Total Revolving Credit Commitment in effect on the
Revolving Credit Maturity Date (as determined

 

38

 

without
regard to such extension), which fee shall, when paid, be fully earned and
non-refundable under any circumstances.

 

(c)                                  No
Default. On the date the Revolving Credit Extension Request is given and on
the Revolving Credit Maturity Date (as determined without regard to such
extension) there shall exist no Default or Event of Default.

 

(d)                                 Representations
and Warranties. The representations and warranties made by the Borrower and
the Guarantors in the Loan Documents or otherwise made by or on behalf of the
Borrower and the Guarantors in connection therewith or after the date thereof
shall have been true and correct in all material respects when made and shall
also be true and correct in all material respects on the date the Revolving
Credit Extension Request is given and on the Revolving Credit Maturity Date (as
determined without regard to such extension), except to the extent of changes
resulting from transactions permitted by the Loan Documents and except as
previously disclosed in writing by the Borrower to Agent and approved by the
Agent in writing (which disclosures shall be deemed to amend the Schedules and
other disclosures delivered as contemplated in this Agreement) (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct only as of
such specified date).

 

§2.13                    Extension
of Term Loan Maturity Date. The Borrower shall have the one-time right and
option to extend the Term Loan Maturity Date to December 11, 2011, upon
satisfaction of the following conditions precedent, which must be satisfied
prior to the effectiveness of any extension of the Term Loan Maturity Date:

 

(a)                                  Extension
Request. The Borrower shall deliver written notice of such request (the “Term
Loan Extension Request”) to the Agent not earlier than the date which is one
hundred twenty (120) days and not later than the date which is sixty (60) days
prior to the Term Loan Maturity Date (as determined without regard to such
extension). Any such Term Loan Extension Request shall be irrevocable and
binding on the Borrower.

 

(b)                                 Payment
of Extension Fee. The Borrower shall pay to the Agent for the pro  rata
accounts of the Term Loan Lenders in accordance with their respective Term Loan
Commitment Percentages an extension fee in an amount equal to ten (10) basis
points on the Term Loans Outstanding as of the Term Loan Maturity Date (as
determined without regard to such extension), which fee shall, when paid, be
fully earned and non-refundable under any circumstances.

 

(c)                                  No
Default. On the date the Term Loan Extension Request is given and on the
Term Loan Maturity Date (as determined without regard to such extension) there
shall exist no Default or Event of Default.

 

(d)                                 Representations
and Warranties. The representations and warranties made by the Borrower and
the Guarantors in the Loan Documents or otherwise made by or on behalf of the
Borrower and the Guarantors in connection therewith or after the date thereof
shall have been true and correct in all material respects when made and shall
also be true and correct in all material respects on the date the Term Loan
Extension Request is given and on the Term Loan

 

39

 

 

Maturity
Date (as determined without regard to such extension), except to the extent of
changes resulting from transactions permitted by the Loan Documents and except
as previously disclosed in writing by the Borrower to Agent and approved by the
Agent in writing (which disclosures shall be deemed to amend the Schedules and
other disclosures delivered as contemplated in this Agreement) (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct only as of
such specified date).

 

§3.                                REPAYMENT
OF THE LOANS.

 

§3.1                          Stated
Maturity. The Borrower promises to pay on the Revolving Credit Maturity
Date and there shall become absolutely due and payable on the Revolving Credit
Maturity Date all of the Revolving Credit Loans, Swing Loans and other Letter
of Credit Liabilities outstanding on such date, together with any and all
accrued and unpaid interest thereon. The Borrower promises to pay on the Term
Loan Maturity Date and there shall become absolutely due and payable on the
Term Loan Maturity Date all of the Term Loans outstanding on such date,
together with any and all accrued and unpaid interest thereon.

 

§3.2                          Mandatory
Prepayments. If at any time the sum of the aggregate outstanding principal
amount of the Revolving Credit Loans, the Swing Loans and the Letter of Credit
Liabilities exceeds the Total Revolving Credit Commitment, then the
Borrower shall, within five (5) Business Days of such occurrence pay the
amount of such excess to the Agent for the respective accounts of the Revolving
Credit Lenders, as applicable, for application to the Revolving Credit Loans as
provided in §3.4, together with any additional amounts payable pursuant to
§4.8, except that the amount of any Swing Loans shall be paid solely to the
Swing Loan Lender.

 

§3.3                          Optional
Prepayments.

 

(a)                                  The
Borrower shall have the right, at its election, to prepay the outstanding
amount of the Revolving Credit Loans and Swing Loans, as a whole or in part, at
any time without penalty or premium; provided, that if any prepayment of
the outstanding amount of any Revolving Credit LIBOR Rate Loans pursuant to
this §3.3 is made on a date that is not the last day of the Interest Period
relating thereto, such prepayment shall be accompanied by the payment of any
amounts due pursuant to §4.8.

 

(b)                                 The
Borrower shall have the right, at its election, to prepay the outstanding
amount of the Term Loans, as a whole or in part, at any time without penalty or
premium except as otherwise provided herein. In connection with any prepayment
of the Term Loan permitted hereunder (or accepted with the approval of the Term
Loan Lenders) during the Prepayment Period, the Borrower shall pay Agent for
the account of the Term Loan Lenders any sums that may be due under §4.8
and a prepayment fee in an amount equal to one half of one percent (0.5%) of
the amount of the Term Loans prepaid if prepayment occurs prior to the
expiration of the Prepayment Period. No prepayment fees shall be due on prepayments
made after the expiration of the Prepayment Period. Under any and all
circumstances where all or any portion of the Term Loans is paid prior to the
expiration of the Prepayment Period, whether such prepayment is voluntary or
involuntary, even if such prepayment results from Agent’s or the

 

40

 

Lenders’
exercise of its rights upon the occurrence of an Event of Default and
acceleration of the Revolving Credit Maturity Date or the Term Loan Maturity
Date (irrespective of whether foreclosure proceedings have been commenced), the
Borrower shall to the extent permitted by applicable law pay to the Lenders the
prepayment fee calculated as provided above, which prepayment fee shall be in
addition to any other sums due hereunder or under any of the other Loan
Documents. No tender of a prepayment of the Term Loans with respect to which a
prepayment fee is due shall be effective unless such prepayment is accompanied
by the prepayment fee.

 

(c)                                  The
Borrower shall give the Agent, no later than 10:00 a.m. (Cleveland time)
at least three (3) days prior written notice of any prepayment pursuant to
this §3.3, in each case specifying the proposed date of prepayment of the Loans
and the principal amount to be prepaid (provided that any such notice may be
revoked or modified upon one (1) day’s prior notice to the Agent). Notwithstanding
the foregoing, no prior notice shall be required for the prepayment of any
Swing Loan.

 

§3.4                          Partial
Prepayments. Each partial prepayment of the Loans under §3.3 shall be in a
minimum amount of $1,000,000.00 or an integral multiple of $100,000.00 in
excess thereof, shall be accompanied by the payment of accrued interest on the
principal prepaid to the date of payment. Each partial payment under §3.2 and
§3.3 shall be applied first to the principal of any Outstanding Swing Loans,
then, in the absence of instruction by the Borrower, to the principal of
Revolving Credit Loans and then to the principal of Term Loans (and with
respect to each category of Loans, first to the principal of Base Rate Loans,
and then to the principal of LIBOR Rate Loans).

 

§3.5                          Effect
of Prepayments. Amounts of the Revolving Credit Loans prepaid under §3.2
and §3.3 prior to the Revolving Credit Maturity Date may be reborrowed as
provided in §2. Any portion of the Term Loans that is prepaid may not be
reborrowed.

 

§4.                                CERTAIN
GENERAL PROVISIONS.

 

§4.1                          Conversion
Options.

 

(a)                                  The
Borrower may elect from time to time to convert any of its outstanding
Revolving Credit Loans or Term Loans to a Revolving Credit Loan or Term Loan of
another Type and such Revolving Credit Loans or Term Loans shall thereafter
bear interest as a Base Rate Loan or a LIBOR Rate Loan, as applicable; provided
that (i) with respect to any such conversion of a LIBOR Rate Loan to a
Base Rate Loan, the Borrower shall give the Agent at least one (1) Business
Day’s prior written notice of such election, and such conversion shall only be
made on the last day of the Interest Period with respect to such LIBOR Rate
Loan; (ii) with respect to any such conversion of a Base Rate Loan to a
LIBOR Rate Loan, the Borrower shall give the Agent at least three (3) LIBOR
Business Days’ prior written notice of such election and the Interest Period
requested for such Loan, the principal amount of the Loan so converted shall be
in a minimum aggregate amount of $1,000,000.00 or an integral multiple of
$250,000.00 in excess thereof and, after giving effect to the making of such
Loan, there shall be no more than six (6) Revolving Credit LIBOR Rate
Loans and two (2) Term LIBOR Rate Loans outstanding at any one time; and (iii) no
Loan may be converted into a LIBOR Rate Loan when any Default or

 

41

 

Event
of Default has occurred and is continuing. All or any part of the
outstanding Revolving Credit Loans or Term Loans of any Type may be
converted as provided herein, provided that no partial conversion shall
result in a Revolving Credit Base Rate Loan or Term Base Rate Loan in a principal
amount of less than $1,000,000.00 or a Revolving Credit LIBOR Rate Loan or a
Term LIBOR Rate Loan in a principal amount of less than $1,000,000.00 or an
integral multiple of $250,000.00. On the date on which such conversion is being
made, each Lender shall take such action as is necessary to transfer its
Commitment Percentage of such Loans to its Domestic Lending Office or its LIBOR
Lending Office, as the case may be. Each Conversion/Continuation Request
relating to the conversion of a Base Rate Loan to a LIBOR Rate Loan shall be
irrevocable by the Borrower.

 

(b)                                 Any
LIBOR Rate Loan may be continued as such Type upon the expiration of an
Interest Period with respect thereto by compliance by the Borrower with the
terms of §4.1; provided that no LIBOR Rate Loan may be continued as
such when any Default or Event of Default has occurred and is continuing, but
shall be automatically converted to a Base Rate Loan on the last day of the
Interest Period relating thereto ending during the continuance of any Default
or Event of Default.

 

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

 

§4.2                          Fees.
The Borrower agrees to pay to KeyBank and Agent for their own account certain
fees for services rendered or to be rendered in connection with the Loans as
provided pursuant to a fee letter dated September 19, 2007 between the
Borrower and KeyBank (the “Agreement Regarding Fees”). All such fees shall be
fully earned when paid and nonrefundable under any circumstances.

 

§4.3                          Funds
for Payments.

 

(a)                                  All
payments of principal, interest, facility fees, Letter of Credit fees, closing
fees and any other amounts due hereunder or under any of the other Loan
Documents shall be made to the Agent, for the respective accounts of the
Lenders and the Agent, as the case may be, at the Agent’s Head Office, not
later than 2:00 p.m. (Cleveland time) on the day when due, in each case in
lawful money of the United States in immediately available funds. The Agent is
hereby authorized to charge the accounts of the Borrower with KeyBank set forth
on Schedule 4.3, on the dates when the amount thereof shall become due and
payable, with the amounts of the principal of and interest on the Loans and all
fees, charges, expenses and other amounts owing to the Agent and/or the Lenders
(including the Swing Loan Lender) under the Loan Documents. Subject to the
foregoing, all payments made to Agent on behalf of the Lenders, and actually
received by Agent, shall be deemed received by the Lenders on the date actually
received by Agent.

 

(b)                                 All
payments by the Borrower hereunder and under any of the other Loan Documents
shall be made without setoff or counterclaim and free and clear of and without
deduction for any taxes (other than income or franchise taxes imposed on any
Lender), levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or

 

42

 

conditions
of any nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless the
Borrower is compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrower with respect to any amount payable by
it hereunder or under any of the other Loan Documents, the Borrower will pay to
the Agent, for the account of the Lenders (including the Swing Loan Lender) or
(as the case may be) the Agent, on the date on which such amount is due
and payable hereunder or under such other Loan Document, such additional amount
in Dollars as shall be necessary to enable the Lenders or the Agent to receive
the same net amount which the Lenders or the Agent would have received on such
due date had no such obligation been imposed upon the Borrower. The Borrower
will deliver promptly to the Agent certificates or other valid vouchers for all
taxes or other charges deducted from or paid with respect to payments made by
the Borrower hereunder or under any other Loan Document.

 

(c)                                  Each
Lender organized under the laws of a jurisdiction outside the United States
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrower with such duly executed form(s) or statement(s) which
may, from time to time, be prescribed by law and, which, pursuant to applicable
provisions of  (i) an income tax
treaty between the United States and the country of residence of such Lender, (ii) the
Code, or (iii) any applicable rules or regulations in effect under (i) or
(ii) above, indicates the withholding status of such Lender; provided
that nothing herein (including without limitation the failure or inability to
provide such form or statement) shall relieve the Borrower of its
obligations under §4.3(b). In the event that the Borrower shall have delivered
the certificates or vouchers described above for any payments made by the
Borrower and such Lender receives a refund of any taxes paid by the Borrower
pursuant to §4.3(b), such Lender will pay to the Borrower the amount of such
refund promptly upon receipt thereof; provided that if at any time
thereafter such Lender is required to return such refund, the Borrower shall
promptly repay to such Lender the amount of such refund.

 

(d)                                 The
obligations of the Borrower to the Lenders under this Agreement with respect to
Letters of Credit (and of the Revolving Credit Lenders to make payments to the
Issuing Lender with respect to Letters of Credit and to the Swing Loan Lender
with respect to Swing Loans) shall be absolute, unconditional and irrevocable,
and shall be paid and performed strictly in accordance with the terms of this
Agreement, under all circumstances whatsoever, including, without limitation,
the following circumstances:  (i) any
lack of validity or enforceability of this Agreement, any Letter of Credit or
any of the other Loan Documents; (ii) any improper use which may be
made of any Letter of Credit or any improper acts or omissions of any
beneficiary or transferee of any Letter of Credit in connection therewith; (iii) the
existence of any claim, set-off, defense or any right which the Borrower or any
of its Subsidiaries or Affiliates may have at any time against any
beneficiary or any transferee of any Letter of Credit (or persons or entities
for whom any such beneficiary or any such transferee may be acting) or the
Lenders (other than the defense of payment to the Lenders in accordance with
the terms of this Agreement) or any other person, whether in connection with
any Letter of Credit, this Agreement, any other Loan Document, or any unrelated
transaction; (iv) any draft, demand, certificate, statement or any other
documents presented under any Letter of Credit proving to be insufficient,
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever; (v) any breach of any
agreement between the Borrower or any of its Subsidiaries or Affiliates and any
beneficiary or transferee of any Letter of Credit; (vi) any irregularity
in the transaction with respect to which any Letter of Credit

 

43

 

is
issued, including any fraud by the beneficiary or any transferee of such Letter
of Credit; (vii) payment by the Issuing Lender under any Letter of Credit
against presentation of a sight draft, demand, certificate or other document
which does not comply with the terms of such Letter of Credit, provided
that such payment shall not have constituted gross negligence or willful
misconduct on the part of the Issuing Lender as determined by a court of
competent jurisdiction after the exhaustion of all applicable appeal periods; (viii) any
non-application or misapplication by the beneficiary of a Letter of Credit of
the proceeds of such Letter of Credit; (ix) the legality, validity, form,
regularity or enforceability of the Letter of Credit; (x) the failure of
any payment by Issuing Lender to conform to the terms of a Letter of
Credit (if, in Issuing Lender’s good faith judgment, such payment is determined
to be appropriate); (xi) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the Loan Documents;
(xii) the occurrence of any Default or Event of Default; and
(xiii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, provided that such other circumstances
or happenings shall not have been the result of gross negligence or willful
misconduct on the part of the Issuing Lender or the Swing Loan Lender, as
applicable as determined by a court of competent jurisdiction after the
exhaustion of all applicable appeal periods.

 

§4.4                          Computations.
All computations of interest on the Loans and of other fees to the extent
applicable shall be based on a 360-day year (or a 365 day year in the case of
Base Rate Loans) and paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term “Interest Period” with respect
to LIBOR Rate Loans, whenever a payment hereunder or under any of the other
Loan Documents becomes due on a day that is not a Business Day, the due date
for such payment shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension. The Outstanding Loans and Letter
of Credit Liabilities as reflected on the records of the Agent from time to
time shall be considered prima facie evidence of such amount absent manifest
error.

 

§4.5                          Suspension
of LIBOR Rate Loans. In the event that, prior to the commencement of any
Interest Period relating to any LIBOR Rate Loan, the Agent shall determine that
adequate and reasonable methods do not exist for ascertaining LIBOR for such
Interest Period, or the Agent shall reasonably determine that LIBOR will not
accurately and fairly reflect the cost of the Lenders making or maintaining
LIBOR Rate Loans for such Interest Period, the Agent shall forthwith give
notice of such determination (which shall be conclusive and binding on the
Borrower and the Lenders absent manifest error) to the Borrower and the Lenders.
In such event (a) any Loan Request with respect to a LIBOR Rate Loan shall
be automatically withdrawn and shall be deemed a request for a Base Rate Loan
and (b) each LIBOR Rate Loan will automatically, on the last day of the
then current Interest Period applicable thereto, become a Base Rate Loan, and
the obligations of the Lenders to make LIBOR Rate Loans shall be suspended
until the Agent determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Agent shall so notify the Borrower
and the Lenders.

 

§4.6                          Illegality.
Notwithstanding any other provisions herein, if any present or future law,
regulation, treaty or directive or the interpretation or application thereof
shall make it unlawful, or any central bank or other governmental authority
having jurisdiction over a Lender or its LIBOR Lending Office shall assert that
it is unlawful, for any Lender to make or maintain LIBOR Rate Loans, such
Lender shall forthwith give notice of such circumstances to the Agent

 

44

 

and
the Borrower and thereupon (a) the commitment of the Lenders to make LIBOR
Rate Loans shall forthwith be suspended and (b) the LIBOR Rate Loans then
outstanding shall be converted automatically to Base Rate Loans on the last day
of each Interest Period applicable to such LIBOR Rate Loans or within such
earlier period as may be required by law. Notwithstanding the foregoing,
before giving such notice, the applicable Lender shall designate a different
lending office if such designation will void the need for giving such notice
and will not, in the judgment of such Lender, be otherwise materially
disadvantageous to such Lender or increase any costs payable by the Borrower
hereunder.

 

§4.7                          Additional
Interest. If any LIBOR Rate Loan or any portion thereof is repaid or is
converted to a Base Rate Loan for any reason on a date which is prior to the
last day of the Interest Period applicable to such LIBOR Rate Loan, or if
repayment of the Loans has been accelerated as provided in §12.1, or if the
Borrower fails to draw down on the first day of the applicable Interest Period
any amount as to which Borrower has elected a LIBOR Rate Loan, the Borrower will
pay to the Agent upon demand for the account of the applicable Lenders in
accordance with their respective Commitment Percentages (or to the Swing Loan
Lender with respect to a Swing Loan), in addition to any amounts of interest
otherwise payable hereunder, the Breakage Costs. The Borrower understands,
agrees and acknowledges the following:  (i) no
Lender has any obligation to purchase, sell and/or match funds in connection
with the use of LIBOR as a basis for calculating the rate of interest on a
LIBOR Rate Loan; (ii) LIBOR is used merely as a reference in determining
such rate; and (iii) the Borrower has accepted LIBOR as a reasonable and
fair basis for calculating such rate and any Breakage Costs. The Borrower
further agrees to pay the Breakage Costs, if any, whether or not a Lender
elects to purchase, sell and/or match funds.

 

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

 

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

 

(b)                                 materially
change the basis of taxation (except for changes in taxes on gross receipts,
income or profits or its franchise tax) of payments to any Lender of the
principal of or the interest on any Loans or any other amounts payable to any
Lender under this Agreement or the other Loan Documents, or

 

(c)                                  impose
or increase or render applicable any special deposit, reserve, assessment,
liquidity, capital adequacy or other similar requirements (whether or not
having the force of law and which are not already reflected in any amounts
payable by the Borrower

 

45

 

hereunder)
against assets held by, or deposits in or for the account of, or loans by, or
commitments of an office of any Lender, or

 

(d)                                 impose
on any Lender or the Agent any other conditions or requirements with respect to
this Agreement, the other Loan Documents, the Loans, such Lender’s Commitment,
a Letter of Credit or any class of loans or commitments of which any of
the Loans or such Lender’s Commitment forms a part; and the result of any of
the foregoing is:

 

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

 

(ii)                                  to
reduce the amount of principal, interest or other amount payable to any Lender
or the Agent hereunder on account of such Lender’s Commitment or any of the
Loans or the Letters of Credit, or

 

(iii)                               to
require any Lender or the Agent to make any payment or to forego any interest
or other sum payable hereunder, the amount of which payment or foregone
interest or other sum is calculated by reference to the gross amount of any sum
receivable or deemed received by such Lender or the Agent from the Borrower
hereunder, then, and in each such case, the Borrower will, within fifteen (15)
days of demand made by such Lender or (as the case may be) the Agent at
any time and from time to time and as often as the occasion therefor may arise,
pay to such Lender or the Agent such additional amounts as such Lender or the
Agent shall determine in good faith to be sufficient to compensate such Lender
or the Agent for such additional cost, reduction, payment or foregone interest
or other sum. Each Lender and the Agent in determining such amounts may use
any reasonable averaging and attribution methods generally applied by such
Lender or the Agent.

 

§4.9                          Capital
Adequacy. If after the date hereof any Lender determines that (a) the
adoption of or change in any law, rule, regulation or guideline regarding
capital requirements for banks or bank holding companies or any change in the
interpretation or application thereof by any governmental authority charged
with the administration thereof, or (b) compliance by such Lender or its
parent bank holding company with any guideline, request or directive of any
such entity regarding capital adequacy (whether or not having the force of
law), has the effect of reducing the return on such Lender’s or such holding
company’s capital as a consequence of such Lender’s commitment to make Loans or
participate in Letters of Credit hereunder to a level below that which such
Lender or holding company could have achieved but for such adoption, change or
compliance (taking into consideration such Lender’s or such holding company’s
then existing policies with respect to capital adequacy and assuming the full
utilization of such entity’s capital) by any amount deemed by such Lender to be
material, then such Lender may notify the Borrower thereof. The Borrower
agrees to pay to such Lender the amount of such reduction in the return on
capital as and when such reduction is determined, upon presentation by such
Lender of a statement of the amount setting forth the Lender’s calculation
thereof. In determining such amount, such Lender may use any reasonable
averaging and attribution methods generally applied by such Lender.

 

46

 

§4.10                    Breakage
Costs. The Borrower shall pay all Breakage Costs required to be paid by it
pursuant to this Agreement and incurred from time to time by any Lender upon
demand within fifteen (15) days from receipt of written notice from Agent, or
such earlier date as may be required by this Agreement.

 

§4.11                    Default
Interest; Late Charge. Following the occurrence and during the continuance
of any Event of Default, and regardless of whether or not the Agent or the
Lenders shall have accelerated the maturity of the Loans, all Loans shall bear
interest payable on demand at a rate per annum equal to three percent (3.0%)
above the Base Rate (the “Default Rate”), until such amount shall be paid in
full (after as well as before judgment), and the fee payable with respect to
Letters of Credit shall be increased to a rate equal to three percent (3.0%)
above the Letter of Credit fee that would otherwise be applicable to such time,
or if any of such amounts shall exceed the maximum rate permitted by law, then
at the maximum rate permitted by law. In addition, the Borrower shall pay a
late charge equal to four percent (4.0%) of any amount of interest and/or
principal payable on the Loans or any other amounts payable hereunder or under
the other Loan Documents, which is not paid by the Borrower within five (5) Business
Days of the date when due (or, in the case of amounts due at the Revolving
Credit Maturity Date or the Term Loan Maturity Date, as applicable, within
fifteen (15) Business Days of such date).

 

§4.12                    Certificate.
A certificate setting forth any amounts payable pursuant to §4.7, §4.8, §4.9,
§4.10 or §4.11 and a reasonably detailed explanation of such amounts which are
due, submitted by any Lender or the Agent to the Borrower, shall be prima facie evidence of the amount owed. Any such
Certificate setting forth any amounts payable pursuant to §4.8 or §4.9 must be
delivered to the Agent and the Borrower within one hundred eighty (180) days
after the affected Bank becomes aware of the basis for any such claim; provided
that if such Certificate is not delivered to the Agent and the Borrower within
one hundred eighty (180) days after the affected Bank becomes aware of the
basis for any such claim, such Bank shall only be entitled to receive payment
pursuant to §4.8 or §4.9, as applicable, with respect to amounts which arose
during the one hundred eighty (180) day period prior to the date such Bank
delivered such Certificate to the Agent and the Borrower.

 

§4.13                    Limitation
on Interest. Notwithstanding anything in this Agreement or the other Loan
Documents to the contrary, all agreements between or among the Borrower, the
Lenders and the Agent, whether now existing or hereafter arising and whether
written or oral, are hereby limited so that in no contingency, whether by
reason of acceleration of the maturity of any of the Obligations or otherwise,
shall the interest contracted for, charged or received by the Lenders exceed
the maximum amount permissible under applicable law. If, from any circumstance
whatsoever, interest would otherwise be payable to the Lenders in excess of the
maximum lawful amount, the interest payable to the Lenders shall be reduced to
the maximum amount permitted under applicable law; and if from any circumstance
the Lenders shall ever receive anything of value deemed interest by applicable
law in excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess shall
be refunded to the Borrower. All interest paid or agreed to be paid to the
Lenders shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until payment in full
of the principal of the Obligations (including the period of any renewal or
extension thereof) so that

 

47

 

the
interest thereon for such full period shall not exceed the maximum amount
permitted by applicable law. This Section shall control all agreements
between or among the Borrower, the Lenders and the Agent.

 

§4.14                    Certain
Provisions Relating to Increased Costs and Non-Funding Lenders. If a Lender
gives notice of the existence of the circumstances set forth in §4.8 or any
Lender requests compensation for any losses or costs to be reimbursed pursuant
to any one or more of the provisions of §4.3(b) (as a result of the
imposition of U.S. withholding taxes on amounts paid to such Lender under this
Agreement), §4.8 or §4.9, then, upon request of the Borrower, such Lender, as
applicable, shall use reasonable efforts in a manner consistent with such
institution’s practice in connection with loans like the Loan of such Lender to
eliminate, mitigate or reduce amounts that would otherwise be payable by the
Borrower under the foregoing provisions, provided that such action would
not be otherwise prejudicial to such Lender, including, without limitation, by
designating another of such Lender’s offices, branches or affiliates; the
Borrower agreeing to pay all reasonably incurred costs and expenses incurred by
such Lender in connection with any such action. Notwithstanding anything to the
contrary contained herein, if no Default or Event of Default shall have
occurred and be continuing, and if any Lender (a) has given notice of the
existence of the circumstances set forth in §4.8 or has requested payment or
compensation for any losses or costs to be reimbursed pursuant to any one or
more of the provisions of §4.3(b) (as a result of the imposition of U.S.
withholding taxes on amounts paid to such Lender under this Agreement), §4.8 or
§4.9 and following the request of the Borrower has been unable to take the
steps described above to mitigate such amounts (each, an “Affected Lender”) or (b) has
failed to make available to Agent its pro rata share of any Loan or
participation in a Letter of Credit or Swing Loan and such failure has not been
cured (a “Non-Funding Lender”), then, within thirty (30) days after such notice
or request for payment or compensation or failure to fund, as applicable, the
Borrower shall have the one-time right as to such Affected Lender or
Non-Funding Lender, as applicable, to be exercised by delivery of written
notice delivered to the Agent and the Affected Lender or Non-Funding Lender, as
applicable, within thirty (30) days of receipt of such notice or failure to
fund, as applicable, to elect to cause the Affected Lender or Non-Funding
Lender, as applicable, to transfer its Commitment. The Agent shall promptly
notify the remaining Lenders that each of such Lenders shall have the right,
but not the obligation, to acquire a portion of the Commitment, pro rata based
upon their relevant Commitment Percentages, of the Affected Lender or Non-Funding
Lender, as applicable (or if any of such Lenders does not elect to purchase its
pro rata share, then to such remaining Lenders in such proportion as approved
by the Agent). In the event that the Lenders do not elect to acquire all of the
Affected Lender’s or Non-Funding Lender’s Commitment, then the Agent shall
endeavor to obtain a new Lender to acquire such remaining Commitment. Upon any
such purchase of the Commitment of the Affected Lender or Non-Funding Lender,
as applicable, the Affected Lender’s or Non-Funding Lender’s interest in the
Obligations and its rights hereunder and under the Loan Documents shall
terminate at the date of purchase, and the Affected Lender or Non-Funding
Lender, as applicable, shall promptly execute all documents reasonably
requested to surrender and transfer such interest. The purchase price for the
Affected Lender’s or Non-Funding Lender’s Commitment shall equal any and all
amounts outstanding and owed by the Borrower to the Affected Lender or
Non-Funding Lender, as applicable, including principal, prepayment premium or
fee, and all accrued and unpaid interest or fees.

 

48

 

§5.                                COLLATERAL
SECURITY; GUARANTORS.

 

§5.1                          Collateral.
The Obligations shall be secured by a perfected first priority lien and
security interest to be held by the Agent for the benefit of the Lenders on the
Collateral, pursuant to the terms of the Security Documents.

 

§5.2                          Additional
Guarantors. In the event any Subsidiary of the Borrower shall satisfy the
definition of “Material Subsidiary” after the date hereof (other than any
Subsidiary which is prohibited from guarantying indebtedness by the express
terms of its organizational documents or any mortgage loan document to which
such Subsidiary is party), the Borrower shall cause each such Subsidiary to
promptly, but in any event within fifteen (15) Business Days (as such date may be
extended by Agent in its discretion), execute and deliver to Agent a Joinder
Agreement, and such Subsidiary shall become a Guarantor hereunder and
thereunder. Each such Subsidiary shall be specifically authorized, in
accordance with its respective organizational documents, to be a Guarantor
hereunder and thereunder and to execute the Contribution Agreement and such
Security Documents as Agent may require. The Borrower shall further cause
all representations, covenants and agreements in the Loan Documents with
respect to Guarantors to be true and correct with respect to each such
Subsidiary. In connection with the delivery of such Joinder Agreement, the
Borrower shall deliver to the Agent such organizational agreements,
resolutions, consents, opinions and other documents and instruments as the
Agent may reasonably require.

 

§5.3                          Additional
Collateral. Promptly, but in any event within fifteen (15) Business Days
(as such date may be extended by Agent in its discretion), following the
occurrence of:

 

(a)                                  the
acquisition of an asset,

 

(b)                                 any
acquisition or creation of a Subsidiary by REIT or the Borrower (provided that
such fifteen (15) Business Day  (as such
date may be extended by Agent in its discretion) period shall not commence
unless and until such Subsidiary owns or acquires an asset), or

 

(c)                                  the
refinancing, prepayment or repayment of any indebtedness of any Subsidiary of
REIT or the Borrower, whether or not secured by any Real Estate, which permits,
or removes or terminates (without replacing) any prohibition on, the granting
of any pledge of Equity Interests or Distribution Interests (or any portion
thereof) in any such Subsidiary,

 

the
Borrower shall, and shall cause each of its Subsidiaries to, execute and
deliver such documents, instruments, agreements and certificates as the Agent may reasonably
request, including any amendments to or additional Security Documents, in order
to grant to the Agent, for the benefit of the Lenders, the best possible first
priority lien and security interest in as much of such Equity Interests and/or
Distribution Interests (or such portion thereof) as may be granted by the
Borrower and any such Subsidiary (and the Borrower covenants and agrees to, on
a commercially reasonable best efforts basis, enter into loan documentation in
connection with any such refinancing that permits the best possible first
priority lien and security interest in as much of such Equity Interests and/or
Distribution Interests (or such portion thereof) in favor of the Agent and the
Lenders). In connection with the delivery of such documents, instruments,

 

49

 

agreements and certificates, the Borrower
shall also deliver to the Agent such loan documents, organizational agreements,
UCC search results, resolutions, consents, opinions and other documents and
instruments as the Agent may reasonably require.

 

§5.4                          Release
of Collateral; Release of Guarantor.

 

(a)                                  Upon
the refinancing or repayment of the Obligations in full and termination of the
obligation to provide additional Loans or Letters of Credit to the Borrower,
then the Agent shall release the Collateral from the lien and security interest
of the Security Documents and to release the Borrower.

 

(b)                                 Upon
(i) the sale, transfer or other disposition of all or substantially all of
the assets of (or interests in) a Subsidiary of the Borrower in accordance with
the terms of §8.8 or (ii) the incurrence or refinancing of any
Indebtedness of a Subsidiary of the Borrower, the Agent shall, if requested in
writing by the Borrower and provided no Default or Event of Default shall then
be in existence or would occur as a result thereof, release the Collateral
applicable to such Subsidiary from the lien and security interest of the
Security Documents so long as the Agent shall have received (A) documentation
reasonably requested by Agent evidencing such disposition or refinancing, (B) in
connection with any such disposition, evidence that the net cash proceeds from
such disposition are being distributed to the Borrower and (C) a
Compliance Certificate demonstrating that the Borrower is in compliance with
the covenants set forth in §9 immediately before and after giving effect to
such release. The Agent shall, within ten (10) Business Days of receipt of
such documentation and Compliance Certificate, execute and deliver such
documents, instruments and other agreements as may be reasonably required
to evidence and effect such release.

 

(c)                                  The
Borrower may request in writing that the Agent release, and upon receipt
of such request the Agent shall release (subject to the terms hereof), a
Guarantor from the Guaranty and the other Loan Documents to which such
Guarantor is a party so long as:  (i) no
Default or Event of Default shall then be in existence or would occur as a
result of such release; (ii) the Agent shall have received such written
request at least ten (10) Business Days prior to the requested date of
release; (iii) the Borrower shall deliver to Agent evidence reasonably
satisfactory to Agent either that (A) such Guarantor and/or the Borrower
has disposed of or simultaneously with such release will dispose of its entire
interest in such Guarantor or that all or substantially all of the assets of
such Guarantor will be disposed of in compliance with the terms of this
Agreement, and if such transaction involves the disposition by such Guarantor
of all or substantially all of its assets, the net cash proceeds from such
disposition are being distributed to the Borrower in connection with such
disposition, or (B) such Guarantor will be the borrower with respect to
Secured Debt permitted under this Agreement, which Indebtedness will be secured
by a Lien on the assets of such Guarantor. Delivery by the Borrower to the
Agent of any such request for a release shall constitute a representation by
the Borrower that the matters set forth in the preceding sentence (both as of
the date of the giving of such request and as of the date of the effectiveness
of such request) are true and correct with respect to such request. Notwithstanding
the foregoing, the provisions of this §5.4(c) shall not apply to REIT,
which may not be released as a Guarantor.

 

50

 

§6.                                REPRESENTATIONS
AND WARRANTIES.

 

The Borrower represents and warrants to the Agent and the Lenders as
follows.

 

§6.1                          Corporate
Authority, Etc.

 

(a)                                  Incorporation;
Good Standing. REIT is a Maryland corporation duly organized pursuant to
articles of incorporation filed with the Maryland Secretary of State, and is
validly existing and in good standing under the laws of Maryland. REIT conducts
its business in a manner which enables it to qualify as a real estate investment
trust under, and to be entitled to the benefits of, §856 of the Code, and has
elected to be treated as and is entitled to the benefits of a real estate
investment trust thereunder. The Borrower is a Texas limited partnership duly
organized pursuant to its certificate of limited partnership filed with the
Texas Secretary of State, and is validly existing and in good standing under
the laws of Texas. The Borrower (i) has all requisite power to own its
property and conduct its business as now conducted and as presently
contemplated, and (ii) is in good standing and is duly authorized to do
business in the jurisdiction of its organization and in each other jurisdiction
where a failure to be so qualified in such other jurisdiction could have a
Material Adverse Effect.

 

(b)                                 Subsidiaries.
Each of the Guarantors and each of the Subsidiaries of the Borrower and the
Guarantors (i) is a corporation, limited partnership, general partnership,
limited liability company or trust duly organized under the laws of its State
of organization and is validly existing and in good standing under the laws
thereof, (ii) has all requisite power to own its property and conduct its
business as now conducted and as presently contemplated and (iii) is in
good standing and is duly authorized to do business in each jurisdiction where
it is organized and in each other jurisdiction where a failure to be so
qualified could have a Material Adverse Effect.

 

(c)                                  Authorization.
The execution, delivery and performance of this Agreement and the other Loan
Documents to which any of the Borrower or any Guarantor is a party and the
transactions contemplated hereby and thereby (i) are within the authority
of such Person, (ii) have been duly authorized by all necessary
proceedings on the part of such Person, (iii) do not and will not
conflict with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which such Person is subject or any
judgment, order, writ, injunction, license or permit applicable to such Person,
(iv) do not and will not conflict with or constitute a default (whether
with the passage of time or the giving of notice, or both) under any provision
of the partnership agreement, articles of incorporation or other charter
documents or bylaws of, or any agreement or other instrument binding upon, such
Person or any of its properties, (v) do not and will not result in or
require the imposition of any lien or other encumbrance on any of the
properties, assets or rights of such Person other than the liens and
encumbrances in favor of Agent contemplated by this Agreement and the other
Loan Documents, and (vi) do not, as of the date of execution and delivery
thereof, require the approval or consent of any Person other than those already
obtained and delivered to Agent.

 

(d)                                 Enforceability.
The execution and delivery of this Agreement and the other Loan Documents to
which any of the Borrower or any Guarantor is a party are valid and legally
binding obligations of such Person enforceable in accordance with the
respective terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency,

 

51

 

reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors’  rights and general principles
of equity.

 

§6.2                          Governmental
Approvals. The execution, delivery and performance of this Agreement and
the other Loan Documents to which the Borrower or any Guarantor is a party and
the transactions contemplated hereby and thereby do not require the approval or
consent of, or filing or registration with, or the giving of any notice to, any
court, department, board, governmental agency or authority other than those
already obtained, the filing of the Security Documents in the appropriate
records office with respect thereto, and filings after the date hereof of
disclosures with the SEC.

 

§6.3                          Title
to Properties. Except as indicated on Schedule 6.3 hereto or
other adjustments that are not material in amount, REIT, the Borrower and their
respective Subsidiaries own or lease all of the assets reflected in the
consolidated balance sheet of REIT as of the Balance Sheet Date or acquired or
leased since that date (except property and assets sold or otherwise disposed
of in the ordinary course since that date) subject to no rights of others,
including any mortgages, leases pursuant to which REIT, the Borrower or any of
their respective Subsidiaries or any of their respective Affiliates is the
lessee, conditional sales agreements, title retention agreements, liens or
other encumbrances except Permitted Liens.

 

§6.4                          Financial
Statements. The Borrower has furnished to Agent:  (a) the consolidated balance sheet of
REIT and its Subsidiaries as of the Balance Sheet Date and the related
consolidated statement of income and cash flow for the calendar year then ended
certified by the chief financial or accounting officer of REIT, (b) as of
the Closing Date, an unaudited statement of Consolidated Net Operating Income
for the period ending September 30, 2007 reasonably satisfactory in form to
the Agent and certified by the chief financial or accounting officer of REIT as
fairly presenting the Consolidated Net Operating Income for such periods, and (c) certain
other financial information relating to the Borrower, the Guarantors and the
Collateral. Such balance sheet and statements have been prepared in accordance
with generally accepted accounting principles and fairly present the
consolidated financial condition of REIT and its Subsidiaries as of such dates
and the consolidated results of the operations of REIT and its Subsidiaries  for such periods. There are no liabilities, contingent or
otherwise, of REIT or any of its Subsidiaries involving material amounts not
disclosed in said financial statements and the related notes thereto.

 

§6.5                          No
Material Changes. Since the Balance Sheet Date or the date of the most
recent financial statements delivered pursuant to §7.4, as applicable, there
has occurred no materially adverse change in the financial condition, prospects
or business of REIT, the Borrower, and their respective Subsidiaries taken as a
whole as shown on or reflected in the consolidated balance sheet of REIT as of
the Balance Sheet Date, or its consolidated statement of income or cash flows
for the calendar year then ended, other than changes in the ordinary course of
business that have not and could not reasonably be expected to have a Material
Adverse Effect. As of the date hereof, except as set forth on Schedule 6.5
hereto, there has occurred no materially adverse change in the financial
condition, prospects, operations or business activities of REIT, the Borrower,
or their respective Subsidiaries from the condition shown on the statements of
income delivered to the Agent pursuant to §6.4 other than changes in the
ordinary course of business that have not had any materially adverse effect
either individually or in the aggregate on the business,

 

52

 

prospects,
operation or financial condition of REIT, the Borrower, and their respective
Subsidiaries, considered as a whole.

 

§6.6                          Franchises,
Patents, Copyrights, Etc. The Borrower, the Guarantors and their respective
Subsidiaries possess all franchises, patents, copyrights, trademarks, trade
names, service marks, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of their business substantially as now
conducted without known conflict with any rights of others, except where such
failure individually or in the aggregate has not had and could not reasonably
be expected to have a Material Adverse Effect.

 

§6.7                          Litigation.
Except as stated on Schedule 6.7, there are no actions, suits,
proceedings or investigations of any kind pending or to the knowledge of the
Borrower threatened against the Borrower, any Guarantor, any of their
respective Subsidiaries before any court, tribunal, arbitrator, mediator or
administrative agency or board which question the validity of this Agreement or
any of the other Loan Documents, any action taken or to be taken pursuant
hereto or thereto, the Collateral or any lien, security title or security
interest created or intended to be created pursuant hereto or thereto, or which
if adversely determined could reasonably be expected to have a Material Adverse
Effect. Except as set forth on Schedule 6.7, there are no
judgments, final orders or awards outstanding against or affecting the
Borrower, any Guarantor, any of their respective Subsidiaries or any
Collateral, individually or in the aggregate, in excess of $1,000,000.00.

 

§6.8                          No
Material Adverse Contracts, Etc. None of the Borrower, any Guarantor or any
of their respective Subsidiaries is subject to any charter, corporate or other
legal restriction, or any judgment, decree, order, rule or regulation that
has or is expected in the future to have a Material Adverse Effect. None of the
Borrower, any Guarantor or any of their respective Subsidiaries is a party to
any contract or agreement that has or could reasonably be expected to have a
Material Adverse Effect.

 

§6.9                          Compliance
with Other Instruments, Laws, Etc. None of the Borrower, any Guarantor or
any of their respective Subsidiaries is in violation of any provision of its
charter or other organizational documents, bylaws, or any agreement or
instrument to which it is subject or by which it or any of its properties is
bound or any decree, order, judgment, statute, license, rule or
regulation, in any of the foregoing cases in a manner that has had or could
reasonably be expected to have a Material Adverse Effect.

 

§6.10                    Tax
Status. Each of the Borrower, the Guarantors and their respective
Subsidiaries (a) has made or filed all federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject or has obtained an extension for filing, (b) has paid
prior to delinquency all taxes and other governmental assessments and charges
shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and by appropriate proceedings and (c) has
set aside on its books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. Except as set forth on Schedule 6.10, there are
no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers or partners of such Person know
of no basis for any such claim. There are no audits pending or to the knowledge
of the Borrower threatened with respect to any

 

53

 

tax
returns filed by the Borrower, any Guarantor or their respective Subsidiaries. The
taxpayer identification number for REIT is 68-0509956 and for the Borrower is
14-183660.

 

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

 

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

 

§6.13                    Setoff,
Etc. The Collateral and the rights of the Agent and the Lenders with
respect to the Collateral are not subject to any setoff, claims, withholdings
or other defenses by the Borrower or any of their Subsidiaries or Affiliates
or, to the best knowledge of the Borrower, any other Person other than
Permitted Liens described in §8.2(i)(A), (v) and (vi).

 

§6.14                    Certain
Transactions. Except as disclosed on Schedule 6.14 hereto, none
of the partners, officers, trustees, managers, members, directors, or employees
of the Borrower, any Guarantor or any of their respective Subsidiaries is, nor
shall any such Person become, a party to any transaction with the Borrower, any
Guarantor or any of their respective Subsidiaries or Affiliates (other than for
services as partners, managers, members, employees, officers and directors),
including any agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any partner, officer, trustee,
director or such employee or, to the knowledge of the Borrower, any
corporation, partnership, trust or other entity in which any partner, officer,
trustee, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner, which are on terms less favorable to the
Borrower, a Guarantor or any of their respective Subsidiaries than those that
would be obtained in a comparable arms-length transaction.

 

§6.15                    Employee
Benefit Plans. The Borrower, each Guarantor and each ERISA Affiliate has
fulfilled its obligation, if any, under the minimum funding standards of ERISA
and the Code with respect to each Employee Benefit Plan, Multiemployer Plan or
Guaranteed Pension Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code with respect to each
Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan. Neither
the Borrower, any Guarantor nor any ERISA Affiliate has (a) sought a
waiver of the minimum funding standard under §412 of the Code in respect of any
Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan, (b) failed
to make any contribution or payment to any Employee Benefit Plan, Multiemployer
Plan or Guaranteed Pension Plan, or made any amendment to any Employee Benefit
Plan, Multiemployer Plan or Guaranteed Pension Plan, which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security under ERISA or the Code, or (c) incurred any liability under
Title IV of ERISA other than a liability to the PBGC for premiums under §4007
of ERISA. None of the assets of REIT, the Borrower or any of their respective
Subsidiaries constitutes a “plan asset” of any Employee Plan, Multiemployer
Plan or Guaranteed Pension Plan.

 

54

 

§6.16                    Disclosure.
All of the representations and warranties made by or on behalf of the Borrower,
the Guarantors and their respective Subsidiaries in this Agreement and the
other Loan Documents or any document or instrument delivered to the Agent or
the Lenders pursuant to or in connection with any of such Loan Documents are
true and correct in all material respects, and neither the Borrower nor any
Guarantor has failed to disclose such information as is necessary to make such
representations and warranties not misleading. All information contained in
this Agreement, the other Loan Documents or otherwise furnished to or made
available to the Agent or the Lenders by or on behalf of the Borrower, any
Subsidiary or any Guarantor, as supplemented to date, is and, when delivered,
will be true and correct in all material respects and, as supplemented to date,
does not, and when delivered will not, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein not misleading. The written information, reports and other
papers and data with respect to the Borrower, any Subsidiary, any Guarantor or
the Collateral (other than projections and estimates) furnished to the Agent or
the Lenders in connection with this Agreement or the obtaining of the
Commitments of the Lenders hereunder was, at the time so furnished, complete
and correct in all material respects, or has been subsequently supplemented by
other written information, reports or other papers or data, to the extent
necessary to give in all material respects a true and accurate knowledge of the
subject matter in all material respects; provided that such
representation shall not apply to (a) the accuracy of any appraisal, title
commitment, survey, or engineering and environmental reports prepared by third
parties or legal conclusions or analysis provided by the Borrower’s or
Guarantor’s counsel (although the Borrower and the Guarantors have no reason to
believe that the Agent and the Lenders may not rely on the accuracy
thereof) or (b) budgets, projections and other forward-looking speculative
information prepared in good faith by the Borrower (except to the extent the
related assumptions were when made manifestly unreasonable).

 

§6.17                    Place
of Business. The principal place of business of the Borrower is 15601
Dallas Parkway, Suite 600, Addison, Texas 
75001-6206.

 

§6.18                    Regulations
T, U and X. No portion of any Loan is to be used for the purpose of
purchasing or carrying any “margin security” or “margin stock” as such terms
are used in Regulations T, U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 220, 221 and 224. Neither the Borrower nor any
Guarantor is engaged, nor will it engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any “margin security” or “margin stock” as such terms
are used in Regulations T, U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 220, 221 and 224.

 

§6.19                    Environmental
Compliance. The Borrower has taken all commercially reasonable steps to
investigate the past and present conditions and usage of the Real Estate and
the operations conducted thereon and, to the best of Borrower’s knowledge and
belief, except as specifically set forth (i) in the written environmental
site assessment reports of an Environmental Engineer provided to the Agent on
or before the date hereof, or in the case of Real Estate acquired after the
date hereof, the environmental site assessment reports with respect thereto
provided to the Agent, or (ii) on Schedule 6.19(c) or
(d), makes the following representations and warranties:

 

55

 

(a)                                  None
of the Borrower, the Guarantors or their respective Subsidiaries nor any
operator of the Real Estate, nor any tenant or operations thereon, is in
violation, or alleged violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation,
those arising under any Environmental Law, which violation involves Real
Estate and has had or could reasonably be expected to have a Material Adverse
Effect.

 

(b)                                 None
of the Borrower, the Guarantors nor any of their respective Subsidiaries has
received written notice from any third party including, without limitation, any
federal, state or local governmental authority, (i) that it has been
identified by the United States Environmental Protection Agency (“EPA”) as a
potentially responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that
any Hazardous Substance(s) which it has generated, transported or disposed
of have been found at any site at which a federal, state or local agency or
other third party has conducted or has ordered that the Borrower, any Guarantor
or any of their respective Subsidiaries conduct a remedial investigation,
removal or other response action pursuant to any Environmental Law; or (iii) that
it is or shall be a named party to any claim, action, cause of action,
complaint, or legal or administrative proceeding (in each case, contingent or
otherwise) arising out of any third party’s incurrence of costs, expenses,
losses or damages of any kind whatsoever in connection with the release of
Hazardous Substances, which in any case involves Real Estate and has had or
could reasonably be expected to have a Material Adverse Effect.

 

(c)                                  (i) no
portion of the Real Estate has been used for the handling, processing, storage
or disposal of Hazardous Substances except in accordance with applicable
Environmental Laws, and no underground tank or other underground storage receptacle
for Hazardous Substances is located on any portion of the Real Estate except
those which are being operated and maintained in compliance with Environmental
Laws; (ii) in the course of any activities conducted by the Borrower, the
Guarantors, their respective Subsidiaries or the tenants and operators of their
properties, no Hazardous Substances have been generated or are being used on
the Real Estate except in the ordinary course of Borrower’s, the Guarantors’
and their respective Subsidiaries’ respective businesses and in accordance with
applicable Environmental Laws; (iii) there has been no past or present
Release or threatened Release of Hazardous Substances on, upon, into or from
the Real Estate, which Release would have a material adverse effect on the
value of such Real Estate or adjacent properties, which Release has had or
could reasonably be expected to have a Material Adverse Effect; (iv) there
have been no Releases on, upon, from or into any real property in the vicinity
of any of the Real Estate which, through soil or groundwater contamination, may have
come to be located on, and which could be reasonably anticipated to have a
material adverse effect on the value of, the Real Estate; and (v) any
Hazardous Substances that have been generated on any of the Real Estate have
been transported off-site in accordance with all applicable Environmental Laws
(except with respect to the foregoing in this §6.19(c) as to any Real
Estate where the foregoing has not had or could not reasonably be expected to
have a Material Adverse Effect).

 

(d)                                 none
of the Borrower, the Guarantors, their respective Subsidiaries nor the Real
Estate is subject to any applicable Environmental Law requiring the performance
of Hazardous Substances site assessments, or the removal or remediation of
Hazardous Substances, or the giving of notice to any governmental agency or the
recording or delivery to other Persons

 

56

 

of an
environmental disclosure document or statement in each case by virtue of the
transactions set forth herein and contemplated hereby, or as a condition to the
effectiveness of any other transactions contemplated hereby except for such
matters that shall be complied with as of the Closing Date.

 

(e)                                  There
are no existing or closed sanitary landfills, solid waste disposal sites, or
hazardous waste treatment, storage or disposal facilities on or affecting the
Real Estate except where such existence has not had or could not be reasonably
be expected to have a Material Adverse Effect.

 

(f)                                    The
Borrower has not received any written notice of any claim by any party that any
use, operation, or condition of the Real Estate has caused any nuisance or any
other liability or adverse condition on any other property which as to any Real
Estate has had or could reasonably be expected to have a Material Adverse
Effect, nor is there any basis for such a claim.

 

§6.20                    Subsidiaries;
Organizational Structure. Schedule 6.20(a) sets forth, as
of the date hereof, all of the Subsidiaries of REIT, the form and
jurisdiction of organization of each of the Subsidiaries, and REIT’s direct and
indirect ownership interests therein. Schedule 6.20(b) sets
forth, as of the date hereof, all of the Unconsolidated Affiliates of REIT and
its Subsidiaries, the form and jurisdiction of organization of each of the
Unconsolidated Affiliates, REIT’s or its Subsidiary’s ownership interest
therein and the other owners of the applicable Unconsolidated Affiliate. No
Person owns any legal, equitable or beneficial interest in any of the Persons
set forth on Schedules 6.20(a) and 6.20(b) except
as set forth on such Schedules.

 

§6.21                    Property.
Subject to Schedule 6.21, (i) all of the Real Estate of the
Borrower, the Guarantors and their respective Subsidiaries is structurally
sound, in good condition and working order, subject to ordinary wear and tear,
except for such portion of such Real Estate which is not occupied by any tenant
and where such defects have not had and could not reasonably be expected to
have a Material Adverse Effect, (ii) the Real Estate, and the use and
operation thereof, is in material compliance with all applicable federal and
state law and governmental regulations and any local ordinances, orders or
regulations, including without limitation, laws, regulations and ordinances
relating to zoning, building codes, subdivision, fire protection, health,
safety, handicapped access, historic preservation and protection, wetlands and
tidelands (but excluding for purposes of this §6.21, Environmental Laws) except
where a failure to so comply has not and could not reasonably be expected to
have a Material Adverse Effect, (iii) there are no unpaid or outstanding
real estate or other taxes or assessments on or against any of the Real Estate
which are payable by the Borrower, any Guarantor or any of their respective
Subsidiaries (except only real estate or other taxes or assessments, that are
not yet delinquent or are being protested as permitted by this Agreement), (iv) each
Real Estate asset is separately assessed for purposes of real estate tax
assessment and payment, (v) there are no unpaid or outstanding real estate
or other taxes or assessments on or against any other property of the Borrower,
the Guarantors or any of their respective Subsidiaries which are payable by any
of such Persons in any material amount (except only real estate or other taxes
or assessments, that are not yet delinquent or are being protested as permitted
by this Agreement), (vi) there are no pending, or to the knowledge of the
Borrower, threatened or contemplated, eminent domain proceedings against any
Real Estate, (vii) none of the Real Estate is now damaged as a result of
any fire,

 

57

 

explosion,
accident, flood or other casualty, (viii) none of the Borrower, the
Guarantors or any of their respective Subsidiaries has received any outstanding
notice from any insurer or its agent requiring performance of any work with
respect to any of the Real Estate or canceling or threatening to cancel any
policy of insurance, and each of the Real Estate complies with the material
requirements of all of the Borrower’s, Guarantors’ and their respective
Subsidiaries’ insurance carriers and (ix) no person or entity has any
right or option to acquire any Real Estate or any Building thereon or any
portion thereof or interest therein, except for certain tenants of such Real
Estate pursuant to the terms of their Leases and tenants in common under
applicable tenant in common agreements.

 

§6.22                    Brokers.
None of REIT, the Borrower nor any of their respective Subsidiaries has engaged
or otherwise dealt with any broker, finder or similar entity in connection with
this Agreement or the Loans contemplated hereunder.

 

§6.23                    Other
Debt. As of the date hereof, none of the Borrower, any Guarantor nor any of
their respective Subsidiaries is in default of the payment of any Indebtedness
or the performance of any material obligation under any related agreement,
mortgage, deed of trust, security agreement, financing agreement or indenture
to which any of them is a party. Neither the Borrower nor any Guarantor is a
party to or bound by any agreement, instrument or indenture that may require
the subordination in right or time or payment of any of the Obligations to any
other indebtedness or obligation of the Borrower or any Guarantor. Schedule 6.23
hereto sets forth all agreements, mortgages, deeds of trust, financing
agreements or other material agreements binding upon the Borrower and each
Guarantor or their respective properties and entered into by the Borrower
and/or such Guarantor as of the date of this Agreement with respect to any
Indebtedness of the Borrower or any Guarantor in an amount greater than
$1,000,000.00, and the Borrower has provided the Agent with such true, correct
and complete copies thereof as Agent has requested.

 

§6.24                    Solvency.
As of the Closing Date and after giving effect to the transactions contemplated
by this Agreement and the other Loan Documents, including all Loans made or to
be made hereunder, neither the Borrower nor any Guarantor is insolvent on a
balance sheet basis such that the sum of such Person’s assets exceeds the sum
of such Person’s liabilities, the Borrower and each Guarantor is able to pay
its debts as they become due, and the Borrower and each Guarantor has
sufficient capital to carry on its business.

 

§6.25                    No
Bankruptcy Filing. Neither the Borrower nor any Guarantor is contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of its assets or property, and the Borrower
has no knowledge of any Person contemplating the filing of any such petition
against it.

 

§6.26                    No
Fraudulent Intent. Neither the execution and delivery of this Agreement or
any of the other Loan Documents nor the performance of any actions required
hereunder or thereunder is being undertaken by the Borrower, any Guarantor or
any of their respective Subsidiaries with or as a result of any actual intent
by any of such Persons to hinder, delay or defraud any entity to which any of
such Persons is now or will hereafter become indebted.

 

58

 

§6.27                    Transaction
in Best Interests of Borrower and Guarantors; Consideration. The
transaction evidenced by this Agreement and the other Loan Documents is in the
best interests of the Borrower, each Guarantor and their respective
Subsidiaries. The direct and indirect benefits to inure to the Borrower, each
Guarantor and their respective Subsidiaries pursuant to this Agreement and the
other Loan Documents constitute more than “reasonably equivalent value” (as
such term is used in §548 of the Bankruptcy Code) and “valuable consideration,”
“fair value,” and “fair consideration,” (as such terms are used in any
applicable state fraudulent conveyance law), in exchange for the benefits to be
provided by the Borrower, the Guarantors and their respective Subsidiaries
pursuant to this Agreement and the other Loan Documents, and but for the
willingness of each Guarantor to guaranty the Loan, the Borrower would be
unable to obtain the financing contemplated hereunder which financing will
enable the Borrower, each Guarantor and their respective Subsidiaries to have
available financing to conduct and expand their business.

 

§6.28                    Contribution
Agreement. The Borrower and the Guarantors have executed and delivered the
Contribution Agreement, and the Contribution Agreement constitutes the valid
and legally binding obligations of such parties enforceable against them in
accordance with the terms and provisions thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors’ rights and
except to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.

 

§6.29                    OFAC.
None of the Borrower or the Guarantors (i) is (or will be) a person with
whom any Lender is restricted from doing business under OFAC (including, those
Persons named on OFAC’s Specially Designated and Blocked Persons list) or under
any statute, executive order (including the September 24, 2001 Executive
Order Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism), or other governmental action or (ii) is
engaged (or will engage) in any dealings or transactions or otherwise be
associated with such persons. In addition, the Borrower hereby agrees to provide
to the Lenders any additional information that a Lender reasonably deems
necessary from time to time in order to ensure compliance with all applicable
laws concerning money laundering and similar activities.

 

§7.                                AFFIRMATIVE
COVENANTS.

 

The Borrower covenants and agrees that, so long as any Loan, Note or
Letter of Credit is outstanding or any Lender has any obligation to make any
Loans or issue Letters of Credit:

 

§7.1                          Punctual
Payment. The Borrower will duly and punctually pay or cause to be paid the
principal and interest on the Loans and all interest and fees provided for in
this Agreement, all in accordance with the terms of this Agreement and the
Notes, as well as all other sums owing pursuant to the Loan Documents.

 

§7.2                          Maintenance
of Office. The Borrower and each Guarantor will maintain their respective
chief executive office at 15601 Dallas Parkway, Suite 600, Addison,
Texas  75001-6206, or at such other place
in the United States of America as the Borrower or any

 

59

 

Guarantor
shall designate upon thirty (30) days prior written notice to the Agent and the
Lenders, where notices, presentations and demands to or upon the Borrower or
such Guarantor in respect of the Loan Documents may be given or made.

 

§7.3                          Records
and Accounts. The Borrower and each Guarantor will (a) keep, and cause
each of their respective Subsidiaries to keep true and accurate records and
books of account in which full, true and correct entries will be made in
accordance with GAAP and (b) maintain adequate accounts and reserves for
all taxes (including income taxes), depreciation and amortization of its
properties and the properties of their respective Subsidiaries, contingencies
and other reserves. Neither the Borrower, any Guarantor nor any of their
respective Subsidiaries shall, without the prior written consent of the Agent, (x) except
as may be required by GAAP or by law, make any material change to the
accounting policies/principles used by such Person in preparing the financial
statements and other information described in §6.4 or §7.4, or (y) change
its fiscal year. Agent and the Lenders acknowledge that REIT’s fiscal year is a
calendar year.

 

§7.4                          Financial
Statements, Certificates and Information. The Borrower will deliver or
cause to be delivered to the Agent with sufficient copies for each of the
Lenders:

 

(a)                                  (i) within
fifteen (15) days of the filing of REIT’s Form 10-K with the SEC, but in
any event not later than one hundred twenty (120) days after the end of each
calendar year, the audited Consolidated balance sheet of REIT and its Subsidiaries
at the end of such year, and the related audited consolidated statements of
income, changes in capital and cash flows for such year, setting forth in
comparative form the figures for the previous fiscal year and all such
statements to be in reasonable detail, prepared in accordance with GAAP,
together with a certification by the chief financial officer or accounting
officer of REIT, on its behalf, that the information contained in such
financial statements fairly presents the financial position of REIT and its
Subsidiaries, and accompanied by an auditor’s report prepared without
qualification as to the scope of the audit by a nationally recognized
accounting firm reasonably approved by Agent, and (ii) within a reasonable
period of time following request therefor, any other information the Lenders may reasonably
request to complete a financial analysis of REIT and its Subsidiaries;

 

(b)                                 within
fifteen (15) days of the filing of REIT’s Form 10-Q with the SEC, if
applicable, but in any event not later than sixty (60) days after the end of
each calendar quarter of each year, copies of the unaudited consolidated
balance sheet of REIT and its Subsidiaries, as at the end of such quarter, and
the related unaudited consolidated statements of income and cash flows for the
portion of REIT’s fiscal year then elapsed, all in reasonable detail and
prepared in accordance with GAAP, together with a certification by the chief
financial officer or accounting officer of REIT, on its behalf, that the
information contained in such financial statements fairly presents the
financial position of REIT and its Subsidiaries on the date thereof (subject to
year-end adjustments);

 

(c)                                  simultaneously
with the delivery of the financial statements referred to in subsections (a) and
(b) above, a statement (a “Compliance Certificate”) certified by the chief
financial officer or chief accounting officer of REIT, on its behalf, in the form of
Exhibit G hereto (or in such other form as the Agent may approve
from time to time) setting forth in reasonable detail computations evidencing
compliance or non-compliance (as the case may be)

 

60

 

with
the covenants contained in §9 and the other covenants described in such
certificate and (if applicable) setting forth reconciliations to reflect
changes in GAAP since the Balance Sheet Date. All income, expense and value
associated with Real Estate or other Investments disposed of during any quarter
will be eliminated from calculations, where applicable. The Compliance
Certificate shall be accompanied by copies of the statements of Funds from
Operations and Net Operating Income for such calendar quarter, prepared on a
basis consistent with the statements furnished to the Agent prior to the date
hereof and otherwise in form and substance reasonably satisfactory to the
Agent, together with a certification by the chief financial officer or chief
accounting officer of REIT, on its behalf, that the information contained in
such statement fairly presents the Funds from Operations and Net Operating
Income for such periods;

 

(d)                                 simultaneously
with the delivery of the financial statements referred to in clause (a) above,
the statement of all contingent liabilities involving amounts of $1,000,000.00
or more of the REIT and its Subsidiaries which are not reflected in such
financial statements or referred to in the notes thereto (including, without
limitation, all guaranties and other contingent obligations in respect of the
indebtedness of others, and obligations to reimburse the issuer in respect of
any letters of credit);

 

(e)                                  promptly
following a request by the Agent, as of such date or for such period or periods
of time as Agent may reasonably request, (i) a Rent Roll for each
Real Estate asset and a summary thereof in form satisfactory to Agent,
together with a listing of each tenant that has taken occupancy of such Real
Estate, (ii) an operating statement for each Real Estate asset and a
consolidated operating statement for the Real Estate assets (such statements
and reports to be in form reasonably satisfactory to Agent), and (iii) a
copy of each Lease or amendment to any Lease entered into with respect to a
Real Estate asset;

 

(f)                                    simultaneously
with the delivery of the financial statements referred to in subsections (a) and
(b) above, a statement (i) listing the Real Estate owned by REIT, the
Borrower and their respective Subsidiaries (or in which REIT, the Borrower or
any of their respective Subsidiaries owns an interest) and stating the location
thereof, the date acquired and the acquisition cost, (ii) listing the
Indebtedness of REIT, the Borrower and their respective Subsidiaries (excluding
Indebtedness of the type described in §8.1(b)-(e)), which statement shall
include, without limitation, a statement of the original principal amount of
such Indebtedness and the current amount outstanding, the holder thereof, the
maturity date and any extension options, the interest rate, the collateral
provided for such Indebtedness and whether such Indebtedness is Recourse
Indebtedness or Non-Recourse Indebtedness, (iii) listing the properties of
REIT, the Borrower and their Subsidiaries which are Development Properties and
providing a brief summary of the status of such development, and (iv) attaching
copies of any new material mortgage loan documents and amendments to existing
mortgage loan documents entered into by any Company subsequent to the date of
this Agreement or the last statement delivered pursuant to this §7.4(f),
whichever is later;

 

(g)                                 contemporaneously
with the filing or mailing thereof, copies of all material of a financial
nature, reports or proxy statements sent to the owners of the Borrower or REIT;

 

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(h)                                 promptly
after they are filed with the Internal Revenue Service, copies of all annual
federal income tax returns and amendments thereto of the Borrower and REIT;

 

(i)                                     promptly
upon the filing hereof, copies of any registration statements (other than the
exhibits thereto and any registration statements on Form S-8 or its
equivalent) and any annual, quarterly or monthly reports and other statements
and reports which the Borrower or REIT shall file with the SEC;

 

(j)                                     notice
of any audits pending or threatened in writing with respect to any tax returns
filed by the Borrower or REIT promptly following notice of such audit;

 

(k)                                  within
seven (7) Business Days of notice or receipt, copies of any and all
notices of default under any of the organizational agreements of any Company in
which the Borrower or a Pledgor is a member, shareholder or partner or of any
failure by the Borrower or such Pledgor to perform any obligation under
any of such organizational agreements;

 

(l)                                     promptly
upon receipt thereof, copies of any and all notices of default under any loan
document securing or evidencing a mortgage loan made to the Borrower or any of
its Subsidiaries secured by a Lien on Real Estate;

 

(m)                               within
five (5) Business Days of becoming aware of the occurrence thereof, notice
of and a description of any material reduction, dilution or diminution of any
interest of the Borrower or a Pledgor in any of the Companies;

 

(n)                                 not
later than January 31 of each year, a budget and business plan for the
Borrower and its Subsidiaries for the then-current calendar year; and

 

(o)                                 from
time to time such other financial data and information in the possession of
REIT, the Borrower or their respective Subsidiaries (including without
limitation auditors’ management letters, status of litigation or investigations
against REIT, the Borrower or any of their respective Subsidiaries and any
settlement discussions relating thereto (to the extent that disclosure of any
such letters, litigation or investigation status or settlement discussions
would not waive any applicable privilege), property inspection and
environmental reports and information as to zoning and other legal and
regulatory changes affecting the Borrower or any of its Subsidiaries) as the
Agent may reasonably request.

 

Any material to be delivered pursuant to this §7.4 may be
delivered electronically directly to Agent and the Lenders provided that such
material is in a format reasonably acceptable to Agent, and such material shall
be deemed to have been delivered to Agent and the Lenders upon Agent’s receipt
thereof. Upon the request of Agent, the Borrower shall deliver paper copies
thereof to Agent and the Lenders. The Borrower authorizes Agent and Arranger to
disseminate any such materials through the use of Intralinks, SyndTrak or any
other electronic information dissemination system, and the Borrower releases
Agent and the Lenders from any liability in connection therewith. Unless
otherwise requested by Agent, any materials to be delivered pursuant to §7.4(g) or
(i) may be delivered to Agent by posting such materials to the
Borrower’s website (at www.berhingerharvard.com) or on EDGAR
(www.sec.gov/edgar) and

 

62

 

simultaneously notifying the Agent of the availability of such materials
at such website (or such other website as the Borrower may designate in writing
to the Agent).

 

§7.5                          Notices.

 

(a)                                  Defaults.
The Borrower will promptly upon becoming aware of same notify the Agent in
writing of the occurrence of any Default or Event of Default, which notice
shall describe such occurrence with reasonable specificity and shall state that
such notice is a “notice of default”. If any Person shall give any notice of
the existence of a claimed default or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under this
Agreement or under any note, evidence of indebtedness, indenture or other
obligation to which or with respect to which the Borrower, any Guarantor or any
of their respective Subsidiaries is a party or obligor, whether as principal or
surety, and such default would permit the holder of such note or obligation or
other evidence of indebtedness to accelerate the maturity thereof, which
acceleration would either cause a Default or have a Material Adverse Effect,
the Borrower shall forthwith give written notice thereof to the Agent and each
of the Lenders, describing the notice or action and the nature of the claimed
default.

 

(b)                                 Environmental
Events. The Borrower will give notice to the Agent within five (5) Business
Days of becoming aware of (i) any potential or known Release, or threat of
Release, of any Hazardous Substances in violation of any applicable
Environmental Law; (ii) any violation of any Environmental Law that the
Borrower, any Guarantor or any of their respective Subsidiaries reports in
writing or is reportable by such Person in writing (or for which any written
report supplemental to any oral report is made) to any federal, state or local
environmental agency or (iii) any inquiry, proceeding, investigation, or
other action, including a written notice from any agency of potential
environmental liability, of any federal, state or local environmental agency or
board, that in any case involves (A)  any Real Estate and could reasonably
be expected to have a Material Adverse Effect, or (B) or the Agent’s liens
or security title on the Collateral pursuant to the Security Documents.

 

(c)                                  Notification
of Claims Against Collateral. The Borrower will give notice to the Agent in
writing within seven (7) Business Days of becoming aware of any material
setoff, claims, withholdings or other defenses to which any of the Collateral,
or the rights of the Agent or the Lenders with respect to the Collateral, are
subject.

 

(d)                                 Notice
of Litigation and Judgments. The Borrower will give notice to the Agent in
writing within five (5) Business Days of becoming aware of any litigation
or proceedings threatened in writing or any pending litigation and proceedings
affecting the Borrower, any Guarantor or any of their respective Subsidiaries
or to which the Borrower, any Guarantor or any of their respective Subsidiaries
is or is to become a party involving an uninsured claim against the Borrower,
any Guarantor or any of their respective Subsidiaries that could either
reasonably be expected to cause a Default or could reasonably be expected to
have a Material Adverse Effect and stating the nature and status of such
litigation or proceedings. The Borrower will give notice to the Agent, in
writing, in form and detail reasonably satisfactory to the Agent and each of
the Lenders, within ten (10) days of any judgment not covered by
insurance, whether final or otherwise, against the Borrower or any of their
respective Subsidiaries in an amount in excess of $10,000,000.00.

 

63

 

 

(e)           ERISA.  The Borrower will give notice to the Agent
within five (5) Business Days after the Borrower or any ERISA Affiliate (i) gives
or is required to give notice to the PBGC of any “reportable event” (as defined
in §4043 of ERISA) with respect to any Guaranteed Pension Plan, Multiemployer
Plan or Employee Benefit Plan, or knows that the plan administrator of any such
plan has given or is required to give notice of any such reportable event; (ii) gives
a copy of any notice of complete or partial withdrawal liability under Title IV
of ERISA; or (iii) receives any notice from the PBGC under Title IV or
ERISA of an intent to terminate or appoint a trustee to administer any such
plan.

 

(f)            Notification of
Lenders.  Within five (5) Business
Days after receiving any notice under this §7.5, the Agent will forward a copy
thereof to each of the Lenders, together with copies of any certificates or
other written information that accompanied such notice.

 

§7.6         Existence;
Maintenance of Properties.

 

(a)           Except as permitted
under §8.4 and §8.8, the Borrower and each Guarantor will and will cause each
of their respective Subsidiaries to preserve and keep in full force and effect
their legal existence in the jurisdiction of its incorporation or formation.  The Borrower and each Guarantor will preserve
and keep in full force all of their rights and franchises and those of their
Subsidiaries, the preservation of which is necessary to the conduct of their
business and the failure to have which could reasonably be expected to have a
Material Adverse Effect.  REIT shall at
all times comply with all requirements and applicable laws and regulations
necessary to maintain REIT Status and shall continue to receive REIT Status.  From and after the IPO Event, the common
stock of REIT shall at all times be listed for trading and be traded on the New
York Stock Exchange or another national exchange approved by Agent, unless
otherwise consented to by the Required Lenders.

 

(b)           The Borrower and each
Guarantor (i) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and
working order (ordinary wear and tear excepted) and supplied with all necessary
equipment, and (ii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof in all cases in which the
failure so to do would have a material adverse effect on the condition of any
Real Estate or would cause a Material Adverse Effect.  Without limitation of the obligations of the
Borrower and the Guarantors under this Agreement with respect to the
maintenance of the Real Estate, the Borrower and the Guarantors shall promptly
and diligently comply with the recommendations of the Environmental Engineer
retained by Agent or Borrower, Guarantors or their respective Subsidiaries
concerning the maintenance, operation or upkeep of the Real Estate contained in
the building inspection and environmental reports delivered to the Agent or
otherwise obtained by the Borrower or any Guarantor with respect to the Real
Estate.

 

64

 

§7.7         Insurance.  The Borrower, the Guarantors and their
respective Subsidiaries (as applicable) will, at their expense, procure and
maintain insurance covering such Person and its properties and assets in such
amounts and against such risks and casualties as are customary for properties
and assets of similar character and location, due regard being given to the
type of improvements thereon, their construction, location, use and occupancy.

 

§7.8         Taxes; Liens.  The Borrower and the Guarantors will, and
will cause their respective Subsidiaries to, duly pay and discharge, or cause
to be paid and discharged, before the same shall become delinquent, all taxes,
assessments and other governmental charges imposed upon them or upon their
properties, sales and activities, or any part thereof, or upon the income or
profits therefrom as well as all claims for labor, materials or supplies that
if unpaid might by law become a lien or charge upon any of its property or
other Liens affecting any of the Collateral or other property of the Borrower,
the Guarantors or their respective Subsidiaries, provided that any such
tax, assessment, charge or levy or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by appropriate
proceedings which shall suspend the collection thereof with respect to such
property, neither such property nor any portion thereof or interest therein
would be in any danger of sale, forfeiture or loss by reason of such proceeding
and the Borrower, such Guarantor or any such Subsidiary shall have set aside on
its books adequate reserves in accordance with GAAP; and provided, further,
that forthwith upon the commencement of proceedings to foreclose any lien that
may have attached as security therefor, the Borrower, such Guarantor or any
such Subsidiary either (i) will provide a bond issued by a surety
reasonably acceptable to the Agent and sufficient to stay all such proceedings
or (ii) if no such bond is provided, will pay each such tax, assessment,
charge or levy.

 

§7.9         Inspection of
Properties and Books.  The Borrower
and the Guarantors will, and will cause their respective Subsidiaries to,
permit the Agent and the Lenders, at the Borrower’s expense (to the extent
provided for below) and upon reasonable prior notice, to visit and inspect any
of the properties of the Borrower, each Guarantor or any of their respective
Subsidiaries (subject to the rights of tenants under their Leases), to examine
the books of account of the Borrower, any Guarantor and their respective
Subsidiaries (and to make copies thereof and extracts therefrom) and to discuss
the affairs, finances and accounts of the Borrower, any Guarantor and their
respective Subsidiaries with, and to be advised as to the same by, their
respective officers, partners or members, all at such reasonable times and
intervals as the Agent or any Lender may reasonably request, provided
that so long as no Event of Default shall have occurred and be continuing, the
Borrower shall not be required to pay for such visits and inspections.  The Lenders shall use good faith efforts to
coordinate such visits and inspections so as to minimize the interference with
and disruption to the normal business operations of such Persons.

 

§7.10       Compliance with Laws,
Contracts, Licenses, and Permits. 
The Borrower and the Guarantors will, and will cause each of their
respective Subsidiaries to, comply in all respects with (i) all applicable
laws and regulations now or hereafter in effect wherever its business is
conducted, including all Environmental Laws, (ii) the provisions of its
corporate charter, partnership agreement, limited liability company agreement
or declaration of trust, as the case may be, and other charter documents and
bylaws, (iii) all agreements and instruments to which it is a party or by
which it or any of its properties may be bound, (iv) all applicable
decrees, orders, and judgments, and (v) all licenses and permits required
by applicable laws and regulations for

 

65

 

the conduct of its
business or the ownership, use or operation of its properties, except where a
failure to so comply with any of clauses (i) through (v) could not
reasonably be expected to have a Material Adverse Effect.  If any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any government
shall become necessary or required in order that the Borrower, any Guarantor or
their respective Subsidiaries may fulfill any of its obligations hereunder, the
Borrower, such Guarantor or such Subsidiary will promptly take or cause to be
taken all steps necessary to obtain such authorization, consent, approval,
permit or license and furnish the Agent and the Lenders with evidence
thereof.  The Borrower shall develop and
implement such programs, policies and procedures as are necessary to comply
with the Patriot Act and shall promptly advise Agent in writing in the event
that the Borrower shall determine that any investors in the Borrower are in
violation of such act.

 

§7.11       Further Assurances.  The Borrower and each Guarantor will and will
cause each of their respective Subsidiaries to, cooperate with the Agent and
the Lenders and execute such further instruments and documents as the Lenders
or the Agent shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Agreement and the other Loan Documents.

 

§7.12       Business Operations.  REIT, the Borrower and their respective
Subsidiaries shall operate their respective businesses in substantially the
same manner and in substantially the same fields and lines of business as such
business is now conducted and in compliance with the terms and conditions of
this Agreement and the Loan Documents. 
Neither REIT nor the Borrowers will, and will not permit any Subsidiary
to, directly or indirectly, engage in any line of business other than the
ownership, operation and development of office properties, non-office
properties and other activities and businesses to the extent permitted under
§8.3, or businesses incidental thereto.

 

§7.13       Subordination of
Advisory Fees.  The Borrower shall
cause the advisory fees payable to the Advisor under the Advisory Agreement and
any and all other similar agreements, whether written or oral, to be
subordinated to the prior payment in full of the Obligations on terms and
conditions reasonably satisfactory to the Agent.   Neither Borrower nor REIT shall (i) amend,
supplement or otherwise modify in any material respect the Advisory Agreement
to impose additional obligations on the REIT without the prior written consent
of the Agent (which consent shall not be unreasonably withheld) or (ii) enter
into any agreement in replacement of the Advisory Agreement with an advisor
without the prior written consent of the Agent (which consent shall not be
unreasonably withheld), and after such approval, no such replacement management
agreement shall be amended, supplemented or otherwise modified in any material
respect without Agent’s prior written approval, such approval not to be
unreasonably withheld.  Agent may
condition any approval of a new advisor upon the execution and delivery to Agent
of a subordination of the advisor’s rights thereunder to the rights of the
Agent and the Lenders under the Loan Documents in substantially the form of the
Subordination of Advisory Fees executed in connection with the closing.  The Advisor shall be permitted to delegate
any of its responsibilities under the Advisory Agreement to other Affiliates of
Advisor (who shall also be the “Advisor” under this Agreement), provided that
such other Person acknowledges and agrees that its rights to compensation under
the Advisory Agreement are subject to, and agrees to be bound by, the
Subordination of Advisory Agreement.  The
Borrower shall provide prompt

 

66

 

written notice to Agent
of each such delegation together with evidence that such delegation was in
compliance with the preceding sentence.

 

§7.14       Ownership of Real Estate.  Without the prior written consent of Agent,
all Real Estate and all interests (whether direct or indirect) of REIT or the
Borrower in any Real Estate assets now owned or leased or acquired or leased
after the date hereof shall be owned or leased directly by REIT, the Borrower
or a Wholly Owned Subsidiary of the Borrower; provided, however
that REIT and the Borrower shall be permitted to own or lease interests in Real
Estate through non-Wholly Owned Subsidiaries and Unconsolidated Affiliates as
permitted by §8.3.

 

§7.15       Distributions of Income
to Borrower.  The Borrower shall
cause all of its Subsidiaries (subject to applicable law, the terms of any loan
documents under which such Subsidiary is the borrower, and the terms of any
organizational documents of a joint venture with a Person that is not an
Affiliate of REIT or Borrower entered into in the ordinary course of business)
to promptly distribute to the Borrower (but not less frequently than once each
calendar quarter, unless otherwise approved by the Agent), whether in the form
of dividends, distributions or otherwise, all profits, proceeds or other income
relating to or arising from its Subsidiaries’ use, operation, financing,
refinancing, sale or other disposition of their respective assets and
properties after (a) the payment by each Subsidiary of its debt service,
operating expenses, capital improvements and leasing commissions for such quarter
and (b) the establishment of reasonable reserves for the payment of
operating expenses not paid on at least a quarterly basis and capital
improvements and tenant improvements to be made to such Subsidiary’s assets and
properties approved by such Subsidiary in the course of its business consistent
with its past practices.

 

§7.16       Plan Assets.  The Borrower, the Guarantors and each of
their respective Subsidiaries will do, or cause to be done, all things
necessary to ensure that none of its Real Estate will be deemed to be Plan
Assets at any time.

 

§8.           NEGATIVE COVENANTS.

 

The Borrower
covenants and agrees that, so long as any Loan, Note or Letter of Credit is
outstanding or any of the Lenders has any obligation to make any Loans or issue
any Letter of Credit:

 

§8.1         Restrictions on
Indebtedness.  The Borrower will not,
and will not permit any Guarantor or their respective Subsidiaries to, create,
incur, assume, guarantee or be or remain liable, contingently or otherwise,
with respect to any Indebtedness other than:

 

(a)           Indebtedness to the
Lenders arising under any of the Loan Documents;

 

(b)           current liabilities of
the Borrower, the Guarantor or their respective Subsidiaries incurred in the
ordinary course of business but not incurred through (i) the borrowing of
money, or (ii) the obtaining of credit except for credit on an open
account basis customarily extended and in fact extended in connection with
normal purchases of goods and services;

 

67

 

(c)           Indebtedness in respect
of taxes, assessments, governmental charges or levies and claims for labor,
materials and supplies to the extent that payment therefor shall not at the
time be required to be made in accordance with the provisions of §7.8;

 

(d)           Indebtedness in respect
of judgments only to the extent, for the period and for an amount not resulting
in an Event of Default;

 

(e)           endorsements for
collection, deposit or negotiation and warranties of products or services, in
each case incurred in the ordinary course of business; and

 

(f)            subject to the
provisions of §9, Indebtedness in respect of Derivatives Contracts that are
entered into in the ordinary course of business and not for speculative
purposes;

 

(g)           subject to the
provisions of §9, Indebtedness in respect of Capitalized Leases and claims
under environmental indemnities or with respect to Non-Recourse Exclusions not
to exceed $15,000,000.00 (excluding environmental claims covered by insurance)
in the aggregate at any one time;

 

(h)           subject to the
provisions of §9, Non-Recourse Indebtedness that is secured by Real Estate and
related assets;

 

(i)            subject to the
provisions of §9, Secured Debt that is Recourse Indebtedness, provided
that the aggregate amount of such Indebtedness (excluding the Obligations)
shall not exceed ten percent (10%) of Gross Asset Value; and

 

(j)            unsecured Indebtedness
of Subsidiaries of Borrower to Borrower; provided that any such Indebtedness of
a Subsidiary of Borrower that is a Guarantor shall be subordinate to the
repayment of the Obligations on terms reasonably acceptable to Agent.

 

Notwithstanding
anything in this Agreement to the contrary, none of the Borrower, the
Guarantors or their respective Subsidiaries shall create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect to (x) any
Indebtedness (other than Indebtedness to the Lenders arising under the Loan
Documents) with respect to which there is a Lien on any Equity Interests, right
to receive Distributions or similar right in any Subsidiary or Unconsolidated
Affiliate of such Person  or (y) any
Unsecured Debt other than Indebtedness permitted under clauses (b)-(g) of
this §8.1.

 

§8.2         Restrictions on Liens,
Etc.  The Borrower will not, and will
not permit any Guarantor or their respective Subsidiaries to (a) create or
incur or suffer to be created or incurred or to exist any lien, security title,
encumbrance, mortgage, pledge, negative pledge, charge, restriction or other
security interest of any kind upon any of their respective property or assets
of any character whether now owned or hereafter acquired, or upon the income or
profits therefrom; (b) transfer any of their property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option
to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement; (d) suffer
to exist for a period of more than thirty (30) days

 

68

 

after the same shall have
been incurred any Indebtedness or claim or demand against any of them that if
unpaid could by law or upon bankruptcy or insolvency, or otherwise, be given
any priority whatsoever over any of their general creditors; (e) sell,
assign, pledge or otherwise transfer any accounts, contract rights, general
intangibles, chattel paper or instruments, with or without recourse; or (f) incur
or maintain any obligation to any holder of Indebtedness of any of such Persons
which prohibits the creation or maintenance of any lien securing the
Obligations (collectively, “Liens”); provided that notwithstanding
anything to the contrary contained herein, the Borrower, any Guarantor or any
such Subsidiary may create or incur or suffer to be created or incurred or to
exist:

 

(i)            (A) Liens on
properties to secure taxes, assessments and other governmental charges
(excluding any Lien imposed pursuant to any of the provisions of ERISA or
pursuant to any Environmental Laws) or claims for labor, material or supplies
incurred in the ordinary course of business in respect of obligations not then
delinquent or not otherwise required to be paid or discharged under the terms
of this Agreement or any of the other Loan Documents and (B) Liens on
assets other than (I) the Collateral and (II) any direct or indirect
interest of the Borrower and any Subsidiary of the Borrower in any Guarantor or
any Company in respect of judgments permitted by §8.1(d);

 

(ii)           deposits or pledges
made in connection with, or to secure payment of, workers’ compensation,
unemployment insurance, old age pensions or other social security obligations;

 

(iii)          Liens consisting of
mortgage liens on Real Estate (including the rents, issues and profits
therefrom), or any interest therein (including the rents, issues and profits
therefrom), and related personal property securing Indebtedness which is
permitted by §8.1(h) or (i);

 

(iv)          encumbrances on
properties consisting of easements, tenant leases, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord’s or lessor’s liens under leases
to which the Borrower or any such Subsidiary is a party, and other non-monetary
liens or encumbrances, which do not individually or in the aggregate have a
Material Adverse Effect;

 

(v)           cash deposits to secure
the performance of bids, trade contracts (other than for Indebtedness),
purchase contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

 

(vi)          rights of setoff or
bankers’ liens upon deposits of cash in favor of banks or other depository
institutions, solely to the extent incurred in connection with the maintenance
of such deposit accounts in the ordinary course of business;

 

(vii)         Liens of Capitalized
Leases; and

 

(viii)        Liens in favor of the
Agent and the Lenders under the Loan Documents to secure the Obligations.

 

69

 

Notwithstanding
anything in this Agreement to the contrary, (x) no Subsidiary Guarantor
shall create or incur or suffer to be created or incurred or to exist any Lien
other than Liens contemplated in §§8.2(i), (iv), (v), (vi) and (vii) and
(y) REIT shall not create or suffer to be created or incurred or to exist
any Lien on any of its properties or assets or those of the general partner of
the Borrower, other than Liens contemplated in §8.2(i)(A), (v) and (vi),
and any assignment of claims which REIT may have against Borrower or any
Subsidiary or Unconsolidated Affiliate in a bankruptcy proceeding of Borrower,
such Subsidiary or Unconsolidated Affiliate to a lender contained in a
guaranty.

 

§8.3         Restrictions on
Investments.  Neither the Borrower
nor any Guarantor will, nor will it permit any of its Subsidiaries to, make or
permit to exist or to remain outstanding any Investment except Investments in:

 

(a)           marketable direct or
guaranteed obligations of the United States of America that mature within one (1) year
from the date of purchase by Borrower or its Subsidiary;

 

(b)           marketable direct
obligations of any of the following: Federal Home Loan Mortgage Corporation,
Student Loan Marketing Association, Federal Home Loan Banks, Federal National
Mortgage Association, Government National Mortgage Association, Bank for
Cooperatives, Federal Intermediate Credit Banks, Federal Financing Banks,
Export-Import Bank of the United States, Federal Land Banks, or any other
agency or instrumentality of the United States of America;

 

(c)           demand deposits,
certificates of deposit, bankers acceptances and time deposits of United States
banks having total assets in excess of $100,000,000.00; provided, however,
that the aggregate amount at any time so invested with any single bank having
total assets of less than $1,000,000,000.00 will not exceed $500,000.00;

 

(d)           securities commonly
known as “commercial paper” issued by a corporation organized and existing
under the laws of the United States of America or any State which at the time
of purchase are rated by Moody’s Investors Service, Inc. or by Standard &
Poor’s Corporation at not less than “P 1” if then rated by Moody’s Investors
Service, Inc., and not less than “A 1”, if then rated by Standard &
Poor’s Corporation;

 

(e)           mortgage-backed
securities guaranteed by the Government National Mortgage Association, the
Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation and other mortgage-backed bonds (excluding those backed by single
family residential mortgages) which at the time of purchase are rated by Moody’s
Investors Service, Inc. or by Standard & Poor’s Corporation at
not less than “Aa” if then rated by Moody’s Investors Service, Inc. and
not less than “AA” if then rated by Standard & Poor’s Corporation;

 

(f)            repurchase agreements
having a term not greater than ninety (90) days and fully secured by securities
described in the foregoing subsection (a), (b) or (e) with banks
described in the foregoing subsection (c) or with financial institutions
or other corporations having total assets in excess of $500,000,000.00;

 

(g)           shares of so-called “money
market funds” registered with the SEC under the Investment Company Act of 1940
which maintain a level per-share value, invest principally

 

70

 

in investments described
in the foregoing subsections (a) through (f) and have total assets in
excess of $50,000,000.00;

 

(h)           the acquisition of fee
interests or long-term ground lease interests by the Borrower or its
Subsidiaries in (i) Real Estate which is utilized for income-producing
office properties located in the United States or the District of Columbia and businesses
and investments incidental thereto, and (ii) subject to the restrictions
set forth in §8.3(j), the acquisition of Land Assets to be developed for the
foregoing purposes and Development Properties to be used for the purposes set
forth in §8.3(h)(i);

 

(i)            Investments by the
Borrower or Wholly Owned Subsidiaries of the Borrower in Wholly Owned
Subsidiaries of the Borrower;

 

(j)            Investments in Land
Assets, provided that the aggregate Investment therein shall not exceed five
percent (5%) of Gross Asset Value;

 

(k)           Investments in Mortgage
Receivables and mezzanine loans secured by properties (or equity interests in
Persons owning properties) of the types described in §§8.3(h)(i), (m) or
(o), and in the Multifamily Facility, provided that the aggregate Investment
therein shall not exceed five percent (5%) of Gross Asset Value;

 

(l)            Investments in
non-wholly owned Subsidiaries and Unconsolidated Affiliates, provided that the
aggregate Investment therein shall not exceed ten percent (10%) of Gross Asset
Value;

 

(m)          Investments in
Development Properties in respect of Construction in Progress for properties of
the type described in §8.3(h)(i), provided that the aggregate construction and
development budget for Construction in Progress (including land), together with
any Investments in Mortgage Receivables secured by real estate in respect of
Construction in Progress (which amount shall include any amounts to be advanced
under such Mortgage Receivable), shall not exceed ten percent (10%) of Gross
Asset Value;

 

(n)           Investments in Tenant
In Common Assets, provided that the aggregate Investment therein shall not
exceed seven and one-half percent (7.5%) of Gross Asset Value; and

 

(o)           Investments in
income-producing Real Estate (other than office properties) located in the
United States or the District of Columbia and businesses and investments
incidental thereto, provided that the aggregate Investment therein shall not
exceed five percent (5%) of Gross Asset Value.

 

Notwithstanding
the foregoing, in no event shall the aggregate value of the holdings of the
Borrower, the Guarantors and their respective Subsidiaries in the Investments
described in §8.3(j)-(o) exceed twenty-five percent (25%) of Gross Asset
Value at any time.

 

For the
purposes of this §8.3, the Investment of the Borrower, any Guarantor or its
Subsidiaries in any non-Wholly Owned Subsidiaries and Unconsolidated Affiliates
will equal (without duplication) the sum of (i) such Person’s pro rata
share of Investment in Land Assets;

 

71

 

plus
(ii) such Person’s pro rata share of any other Investments valued at the
GAAP book value; plus (iii) such Person’s pro-rata share of
Construction in Progress.

 

§8.4         Merger, Consolidation.  Other than with respect to or in connection
with any disposition permitted under §8.8, the Borrower will not, nor will it
permit the Guarantors or any of their respective Subsidiaries to, become a
party to any dissolution, liquidation, disposition of all or substantially all
of its assets or business, merger, reorganization, consolidation or other
business combination or agree to effect any asset acquisition, stock
acquisition or other acquisition individually or in a series of transactions
which may have a similar effect as any of the foregoing, in each case without
the prior written consent of the Required Lenders.  Notwithstanding the foregoing, so long as no
Default or Event of Default has occurred and is continuing immediately before
and after giving effect thereto, the following shall be permitted: (i) the
merger or consolidation of one or more of the Subsidiaries of the Borrower with
and into the Borrower (it being understood and agreed that in any such event
the Borrower will be the surviving Person), (ii) the merger or
consolidation of two or more Subsidiaries of the Borrower; provided that
no such merger or consolidation shall involve any Subsidiary that is a
Guarantor unless such Guarantor will be the surviving Person or (iii) the
acquisition of all or substantially all of the assets of another Person in a
bona fide arm’s length transaction that otherwise satisfies the requirements of
§7.12 and §8.3 and which does not create or result in a Default or Event of
Default.

 

§8.5         Sale and Leaseback.  The Borrower will not, and will not permit its
Subsidiaries, to enter into any arrangement, directly or indirectly, whereby
the Borrower or any such Subsidiary shall sell or transfer any Real Estate
owned by it in order that then or thereafter the Borrower or any such
Subsidiary shall lease back such Real Estate without the prior written consent
of Agent, such consent not to be unreasonably withheld.

 

§8.6         Compliance with
Environmental Laws.  None of the
Borrower nor any Guarantor will, nor will any of them permit any of their
respective Subsidiaries or any other Person to, do any of the following: (a) use
any of the Real Estate or any portion thereof as a facility for the handling,
processing, storage or disposal of Hazardous Substances, except for quantities
of Hazardous Substances used in the ordinary course of operating office
properties and non-office properties as permitted under this Agreement and in
material compliance with all applicable Environmental Laws, (b) cause or
permit to be located on any of the Real Estate any underground tank or other
underground storage receptacle for Hazardous Substances except in full
compliance with Environmental Laws, (c) generate any Hazardous Substances
on any of the Real Estate except in full compliance with Environmental Laws, (d) conduct
any activity at any Real Estate or use any Real Estate in any manner that could
reasonably be contemplated to cause a Release of Hazardous Substances on, upon
or into the Real Estate or any surrounding properties or any threatened Release
of Hazardous Substances which might give rise to liability under CERCLA or any
other Environmental Law, or (e) directly or indirectly transport or
arrange for the transport of any Hazardous Substances (except in compliance
with all Environmental Laws), except where any such use, generation, conduct or
other activity has not had and could not reasonably be expected to have a
Material Adverse Effect.

 

72

 

The Borrower and the Guarantors shall, and shall cause their respective
Subsidiaries to:

 

(i)            in the event of any
change in Environmental Laws governing the assessment, release or removal of
Hazardous Substances, which change either adds any Hazardous Substances to its
applicability, decreases any threshold at which any action must be taken with respect
to remediation of any Hazardous Substances, or institutes more burdensome
requirements with respect to testing for or storage or containment of any
Hazardous Substances (or has the effect of any of the foregoing), take all
reasonable action (including, without limitation, the conducting of engineering
tests at the sole expense of the Borrower) determine whether such Hazardous
Substances are or ever were Released or disposed of on any Real Estate in
violation of applicable Environmental Laws; and

 

(ii)           if any Release or
disposal of Hazardous Substances which any Person may be legally obligated to
contain, correct or otherwise remediate or which may otherwise expose it to
liability shall occur or shall have occurred on any Real Estate (including
without limitation any such Release or disposal occurring prior to the
acquisition or leasing of such Real Estate by the Borrower, any such Guarantor
or any such Subsidiary), the Borrower shall, after obtaining knowledge thereof,
cause the prompt containment and removal of such Hazardous Substances and
remediation of the Real Estate in full compliance with all applicable
Environmental Laws; provided, that the Borrower, the Guarantors and
their respective Subsidiaries shall be deemed to be in compliance with Environmental
Laws for the purpose of this clause (ii) so long as it or a responsible
third party with sufficient financial resources is taking reasonable action to
remediate or manage any event of noncompliance in accordance with applicable
law to the reasonable satisfaction of the Agent and no legal or administrative
action shall have been commenced or filed by any enforcement agency to require
remediation, containment, mitigation or other action.  The Agent may engage its own Environmental
Engineer to review the environmental assessments and the compliance with the
covenants contained herein.

 

(iii)          At any time during the
continuance of an Event of Default hereunder the Agent may at its election (and
will at the request of the Required Lenders) obtain such environmental
assessments of any or all of the Real Estate prepared by an Environmental
Engineer as may be necessary or advisable for the purpose of evaluating or
confirming (i) whether any Hazardous Substances are present in the soil or
water at or adjacent to any such Real Estate and (ii) whether the use and
operation of any such Real Estate complies with all Environmental Laws to the
extent required by the Loan Documents. 
Additionally, at any time that the Agent or the Required Lenders shall
have reasonable and objective grounds to believe that a Release or threatened
Release of Hazardous Substances which any Person may be legally obligated to
contain, correct or otherwise remediate or which otherwise may expose such
Person to liability may have occurred, relating to any Real Estate, or that any
of the Real Estate is not in compliance with Environmental Laws to the extent
required by the Loan Documents, and such Release or threatened Release or
non-compliance involves estimated or potential liabilities for remediation or
compliance of $500,000.00 or more, as determined by the Agent in its sole and
absolute discretion, the Borrower shall promptly upon the request of Agent
obtain and deliver to Agent such environmental assessments of such Real Estate
prepared by an Environmental Engineer as may be necessary or advisable for the
purpose of evaluating or confirming (i) whether any Hazardous Substances
are present in the soil or water at or adjacent to such Real

 

73

 

Estate and (ii) whether
the use and operation of such Real Estate comply with all Environmental Laws to
the extent required by the Loan Documents. 
Environmental assessments may include detailed visual inspections of
such Real Estate including, without limitation, any and all storage areas,
storage tanks, drains, dry wells and leaching areas, and the taking of soil
samples, as well as such other investigations or analyses as are reasonably
necessary or appropriate for a complete determination of the compliance of such
Real Estate and the use and operation thereof with all applicable Environmental
Laws.  All environmental assessments
contemplated by this §8.6 shall be at the sole cost and expense of the
Borrower.

 

§8.7         Distributions.

 

(a)           (i) The Borrower
shall not pay any Distribution to the partners, members or other owners of the
Borrower, and REIT shall not pay any Distribution to its partners, members or
other owners, during any period of four (4) consecutive calendar quarters
to the extent that such Distribution would cause the aggregate Distributions
(less any amount of such Distribution constituting Dividend Reinvestment
Proceeds) paid or declared during such period to exceed ninety-five percent
(95%) of such Person’s Funds from Operations for such period; provided that so
long as no Default or Event of Default shall be continuing or would arise as a
result thereof, an amount not to exceed $15,000,000.00 in any period of four (4) consecutive
fiscal quarters paid to redeem Equity Interests in Borrower or REIT shall not
be considered Distributions for the purpose of the foregoing limit; and  provided  further that the
limitations contained in this §8.7(a) shall not preclude the Borrower from
making Distributions in an amount equal to the minimum distributions required
under the Code to maintain the REIT Status of REIT, as evidenced by a
certification of the principal financial or accounting officer of REIT
containing calculations in detail reasonably satisfactory in form and substance
to the Agent.

 

(b)           If an Event of Default
shall have occurred and be continuing, the Borrower shall make no
Distributions, and REIT shall not pay any Distribution to its partners, members
or other owners, other than Distributions in an amount equal to the minimum
distributions required under the Code to maintain the REIT Status of REIT, as
evidenced by a certification of the principal financial or accounting officer
of REIT containing calculations in detail reasonably satisfactory in form and
substance to the Agent.

 

(c)           Notwithstanding the
foregoing, at any time when an Event of Default under §12.1(a) or (b) shall
have occurred, an Event of Default as to Borrower or REIT under §12.1 (g), (h) or
(i) shall have occurred, or the maturity of the Obligations has been
accelerated, neither the Borrower nor REIT shall make any Distributions
whatsoever, directly or indirectly.

 

§8.8         Asset Sales.  The Borrower will not, and will not permit
the Guarantors or their respective Subsidiaries to, sell, transfer or otherwise
dispose of any material asset other than pursuant to a bona fide arm’s length
transaction.  Neither the Borrower, any
Guarantor nor any Subsidiary thereof shall sell, transfer or otherwise dispose
of any Real Estate in one transaction or a series of transactions during any
four (4) consecutive fiscal quarters in excess of an amount equal to
twenty percent (20%) of Gross Asset Value as at the beginning of such four (4) quarter
period, except as the result of a condemnation or casualty, without the prior
written consent of Agent and the Required Lenders.

 

74

 

§8.9         Restriction on
Prepayment of Indebtedness.  The
Borrower and the Guarantors will not, and will not permit their respective
Subsidiaries to, (a) during the existence of any Event of Default, prepay,
redeem, defease, purchase or otherwise retire (except for regularly scheduled
installments of principal) the principal amount, in whole or in part, of any
Indebtedness other than the Obligations; provided, that the foregoing
shall not prohibit (x) the prepayment of Indebtedness which is financed
solely from the proceeds of a new loan which would otherwise be permitted by
the terms of §8.1; and (y) the prepayment, redemption, defeasance or other
retirement of the principal of Indebtedness secured by Real Estate which is
satisfied solely from the proceeds of a sale of the Real Estate securing such
Indebtedness or proceeds resulting from a casualty or condemnation relating to
such Real Estate (and such insurance or condemnation proceeds are not otherwise
required by the terms of any applicable loan documents to be applied to the
restoration or rebuilding of such Real Estate); or (b) modify any document
evidencing any Indebtedness (other than the Obligations) to accelerate the
maturity date or required payments of principal of such Indebtedness during the
existence of an Event of Default.

 

§8.10       Derivatives Contracts.  Neither the Borrower, the Guarantors nor any
of their respective Subsidiaries shall contract, create, incur, assume or suffer
to exist any Derivatives Contracts except for interest rate swap, collar, cap
or similar agreements providing interest rate protection and currency swaps and
currency options made in the ordinary course of business and permitted pursuant
to §8.1.

 

§8.11       Transactions with
Affiliates.  The Borrower shall not,
and shall not permit any Guarantor or Subsidiary of any of them to, permit to
exist or enter into, any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate
(but not including any Subsidiary of REIT, the Borrower or any other
Guarantor), except (i)  transactions set forth on Schedule 6.14
attached hereto and (ii) transactions pursuant to the reasonable
requirements of the business of such Person and upon fair and reasonable terms
which are no less favorable to such Person than would be obtained in a
comparable arm’s length transaction with a Person that is not an Affiliate.

 

§8.12       Equity Pledges.  Except for Liens permitted under §8.2(i)(A),
(ii), (v), (vi) and (viii), neither REIT nor Borrower will create or incur
or suffer to be created or incurred any Lien on any of its direct or indirect
legal, equitable or beneficial interest in the Borrower or any Subsidiary of
Borrower, including, without limitation, any Distributions or rights to
Distributions on account thereof (provided that the foregoing shall not be
deemed to prohibit a Subsidiary that owns Real Estate to have Liens permitted
pursuant to §8.2(iii)).

 

75

 

§8.13       Advisory Fees.  The Borrower and the Guarantors shall not,
and shall not permit any of their respective Subsidiaries to, pay any advisory
fees or other payments under the Advisory Agreement or any replacement thereof
to any advisor that is an Affiliate of the Borrower, such Guarantor or such
Subsidiary in the event that a Default or Event of Default shall have
occurred and be continuing.

 

§9.           FINANCIAL COVENANTS.

 

The Borrower
covenants and agrees that, so long as any Loan, Note or Letter of Credit is
outstanding or any Lender has any obligation to make any Loans or issue any
Letter of Credit:

 

§9.1         Consolidated Total
Indebtedness to Gross Asset Value. 
The Borrower will not permit Consolidated Total Indebtedness to exceed
seventy percent (70%) of Gross Asset Value.

 

§9.2         Adjusted Consolidated
EBITDA to Consolidated Fixed Charges. 
The Borrower will not permit the ratio of Adjusted Consolidated EBITDA
determined as of the end of the most recently ended calendar quarter to
Consolidated Fixed Charges for the most recently ended calendar quarter
annualized, to be less than 1.45 to 1.00.

 

§9.3         Minimum Consolidated
Tangible Net Worth.  The Borrower
will not at any time permit Consolidated Tangible Net Worth to be less than the
sum of (i) $1,000,000,000.00, plus (ii) seventy-five percent (75%) of
the sum of (A) any additional Net Offering Proceeds after the date hereof,
plus (B) the value of interests in the Borrower or interests in REIT
issued upon the contribution of assets to the Borrower or its Subsidiaries.

 

§9.4         Unhedged Variable Rate
Debt.  The Borrower shall not permit
the Unhedged Variable Rate Debt of the Borrower, the Guarantors and their
respective Subsidiaries to exceed twenty percent (20%) of Gross Asset Value.

 

§10.         CLOSING CONDITIONS.

 

The obligation
of the Lenders to make the initial Loans or issue the initial Letter(s) of
Credit shall be subject to the satisfaction of the following conditions
precedent:

 

§10.1       Loan Documents.  Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto and shall be in
full force and effect.  The Agent shall
have received a fully executed counterpart of each such document.

 

§10.2       Certified Copies of
Organizational Documents.  The Agent
shall have received from the Borrower and each Guarantor a copy, certified as
of a recent date by the appropriate officer of each State in which such Person
is organized and a duly authorized officer, partner or member of such Person,
as applicable, to be true and complete, of the partnership agreement, corporate
charter or operating agreement and/or other organizational agreements of the
Borrower and each such Guarantor, as applicable, and its qualification to do
business, as applicable, as in effect on such date of certification.

 

§10.3       Resolutions.  All action on the part of the Borrower and
each Guarantor, as applicable, necessary for the valid execution, delivery and
performance by such Person of this

 

76

 

Agreement and the other
Loan Documents to which such Person is or is to become a party shall have been
duly and effectively taken, and evidence thereof reasonably satisfactory to the
Agent shall have been provided to the Agent.

 

§10.4       Incumbency Certificate;
Authorized Signers.  The Agent shall
have received from the Borrower and each Guarantor an incumbency certificate,
dated as of the Closing Date, signed by a duly authorized officer of such
Person and giving the name and bearing a specimen signature of each individual
who shall be authorized to sign, in the name and on behalf of such Person, each
of the Loan Documents to which such Person is or is to become a party.  The Agent shall have also received from the
Borrower a certificate, dated as of the Closing Date, signed by a duly authorized
representative of the Borrower and giving the name and specimen signature of
each Authorized Officer who shall be authorized to make Loan Requests, Letter
of Credit Requests and Conversion/Continuation Requests and to give notices and
to take other action on behalf of the Borrower under the Loan Documents.

 

§10.5       Opinion of Counsel.  The Agent shall have received an opinion
addressed to the Lenders and the Agent and dated as of the Closing Date from
counsel to the Borrower and each Guarantor in form and substance reasonably
satisfactory to the Agent.

 

§10.6       Payment of Fees.  The Borrower shall have paid to the Agent the
fees payable pursuant to §4.2.

 

§10.7       Performance; No Default.  The Borrower and each Guarantor shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by it on or prior to the Closing Date, and on the
Closing Date there shall exist no Default or Event of Default.

 

§10.8       Representations and
Warranties.  The representations and
warranties made by the Borrower and each Guarantor in the Loan Documents or
otherwise made by or on behalf of the Borrower, the Guarantors and their
respective Subsidiaries in connection therewith or after the date thereof shall
have been true and correct in all material respects when made and shall also be
true and correct in all material respects on the Closing Date.

 

§10.9       Proceedings and
Documents.  All proceedings in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory to the Agent and the Agent’s
counsel in form and substance, and the Agent shall have received all
information and such counterpart originals or certified copies of such
documents and such other certificates, opinions, assurances, consents,
approvals or documents as the Agent and the Agent’s counsel may reasonably
require.

 

§10.10     Compliance Certificate.  The Agent shall have received a Compliance
Certificate dated as of the date of the Closing Date demonstrating compliance
with each of the covenants calculated therein as of the most recent calendar
quarter for which REIT has provided financial statements under §6.4 adjusted in
the best good faith estimate of REIT as of the Closing Date.

 

§10.11     Consents.  The Agent shall have received evidence
reasonably satisfactory to the Agent that all necessary stockholder, partner,
member or other consents required in connection

 

77

 

with the consummation of
the transactions contemplated by this Agreement and the other Loan Documents
have been obtained.

 

§10.12     Contribution Agreement.  The Agent shall have received an executed
counterpart of the Contribution Agreement.

 

§10.13     Other.  The Agent shall have reviewed such other
documents, instruments, certificates, opinions, assurances, consents and
approvals as the Agent or the Agent’s Special Counsel may reasonably have
requested.

 

§11.         CONDITIONS TO ALL
BORROWINGS.

 

The
obligations of the Lenders to make any Loan or issue any Letter of Credit,
whether on or after the Closing Date, shall also be subject to the satisfaction
of the following conditions precedent:

 

§11.1       Prior Conditions
Satisfied.  All conditions set forth
in §10 shall continue to be satisfied as of the date upon which any Loan is to
be made or any Letter of Credit is to be issued.

 

§11.2       Representations True; No
Default.  Each of the representations
and warranties made by or on behalf of the Borrower, the Guarantors or any of
their respective Subsidiaries contained in this Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true and correct in all material
respects both as of the date as of which they were made and shall also be true
and correct in all material respects as of the time of the making of such Loan
or the issuance of such Letter of Credit, with the same effect as if made at
and as of that time, except to the extent of changes resulting from
transactions permitted by the Loan Documents and except as previously disclosed
in writing by the Borrower to Agent and approved by the Agent in writing (which
disclosures shall be deemed to amend the Schedules and other disclosures
delivered as contemplated in this Agreement) (it being understood and agreed
that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct only as of such
specified date), and no Default or Event of Default shall have occurred and be
continuing.

 

§11.3       Borrowing Documents.  The Agent shall have received a fully
completed Loan Request for such Loan and the other documents and information
(including, without limitation, a Compliance Certificate) as required by §2.7,
or a fully completed Letter of Credit Request required by §2.10 in the form of Exhibit F
hereto fully completed, as applicable.

 

§12.         EVENTS OF DEFAULT;
ACCELERATION; ETC.

 

§12.1       Events of Default and
Acceleration.  If any of the
following events (“Events of Default” or, if the giving of notice or the lapse
of time or both is required, then, prior to such notice or lapse of time, “Defaults”)
shall occur:

 

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

 

78

 

(b)           the Borrower shall fail
to pay any interest on the Loans, any reimbursement obligations with respect to
the Letters of Credit or any fees or other sums due hereunder or under any of
the other Loan Documents when the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or at any other
date fixed for payment;

 

(c)           the Borrower shall fail
to perform any other term, covenant or agreement contained in §9;

 

(d)           the Borrower, the
Guarantors or any of their respective Subsidiaries shall fail to perform any
other term, covenant or agreement contained herein or in any of the other Loan
Documents which they are required to perform (other than those specified in the
other subclauses of this §12 or in the other Loan Documents);

 

(e)           any representation or
warranty made by or on behalf of the Borrower, the Guarantors or any of their
respective Subsidiaries in this Agreement or any other Loan Document, or any
report, certificate, financial statement, request for a Loan, Letter of Credit
Request, or in any other document or instrument delivered pursuant to or in
connection with this Agreement, any advance of a Loan, the issuance of any
Letter of Credit or any of the other Loan Documents shall prove to have been
false in any material respect upon the date when made or deemed to have been
made or repeated;

 

(f)            the Borrower, any
Guarantor or any of their Subsidiaries shall fail to pay when due (including,
without limitation, at maturity), or within any applicable period of grace, any
principal, interest or other amount on account any obligation for borrowed
money or credit received or other Indebtedness, or shall fail to observe or
perform any term, covenant or agreement contained in any agreement by which it
is bound, evidencing or securing any obligation for borrowed money or credit
received or other Indebtedness (including under any Derivatives Contract) for
such period of time as would permit (assuming the giving of appropriate notice
if required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof; provided that the events
described in §12.1(f) shall not constitute an Event of Default unless such
failure to perform, together with other failures to perform as described in
§12.1(f), involve singly or in the aggregate obligations for Recourse
Indebtedness totaling in excess of $10,000,000.00 or Non-Recourse Indebtedness
totaling in excess of $50,000,000.00;

 

(g)           the Borrower, any
Guarantor or any of their respective Subsidiaries, (i) shall make an
assignment for the benefit of creditors, or admit in writing its general
inability to pay or generally fail to pay its debts as they mature or become
due, or shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver for it or any substantial part of its assets,
(ii) shall commence any case or other proceeding relating to it under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or hereafter
in effect, or (iii) shall take any action to authorize or in furtherance
of any of the foregoing;

 

(h)           a petition or
application shall be filed for the appointment of a trustee or other custodian,
liquidator or receiver of the Borrower, any Guarantor or any of their
respective

 

79

 

Subsidiaries or any
substantial part of the assets of any thereof, or a case or other proceeding
shall be commenced against any such Person under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect, and
any such Person shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition, application, case or proceeding shall
not have been dismissed within sixty (60) days following the filing or
commencement thereof;

 

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

 

(j)            there shall remain in
force, undischarged, unsatisfied and unstayed, for more than forty-five (45)
days, one or more uninsured or unbonded final judgments against (x) the
Borrower or any Guarantor that, either individually or in the aggregate, exceed
$25,000,000.00 in any calendar year or (y) any Subsidiary of the Borrower
that is not a Subsidiary Guarantor that, either individually or in the
aggregate, exceed $50,000,000.00 in any calendar year;

 

(k)           any of the Loan
Documents or the Contribution Agreement shall be canceled, terminated, revoked
or rescinded otherwise than in accordance with the terms thereof or the express
prior written agreement, consent or approval of the Lenders, or any action at
law, suit in equity or other legal proceeding to cancel, revoke or rescind any
of the Loan Documents or the Contribution Agreement shall be commenced by or on
behalf of the Borrower or any Guarantor, or any court or any other governmental
or regulatory authority or agency of competent jurisdiction shall make a
determination, or issue a judgment, order, decree or ruling, to the effect that
any one or more of the Loan Documents or the Contribution Agreement is illegal,
invalid or unenforceable in accordance with the terms thereof;

 

(l)            any dissolution,
termination, partial or complete liquidation, merger or consolidation of the
Borrower, any Guarantor or any of their respective Subsidiaries shall occur or
any sale, transfer or other disposition of the assets of the Borrower, any
Guarantor or any of their respective Subsidiaries shall occur, in each case,
other than as permitted under the terms of this Agreement or the other Loan
Documents;

 

(m)          with respect to any
Guaranteed Pension Plan, an ERISA Reportable Event shall have occurred and the
Required Lenders shall have determined in their reasonable discretion that such
event reasonably could be expected to result in liability of the Borrower, the
Guarantors or any of their respective Subsidiaries to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding $10,000,000.00 and (x) such
event in the circumstances occurring reasonably could constitute grounds for
the termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Guaranteed Pension Plan; or (y) a trustee shall have been
appointed by the United States District Court to administer such Plan; or (z) the
PBGC shall have instituted proceedings to terminate such Guaranteed Pension
Plan;

 

80

 

(n)           the Borrower, any
Guarantor or any of their respective Subsidiaries or any shareholder, officer,
director, partner or member of any of them shall be indicted for a federal
crime, a punishment for which could include the forfeiture of (i) any
assets of the Borrower or any of their respective Subsidiaries which in the
good faith judgment of the Required Lenders could reasonably be expected to
have a Material Adverse Effect, or (ii) the Collateral;

 

(o)           any Guarantor denies
that it has any liability or obligation under the Guaranty or any other Loan
Document, or shall notify the Agent or any of the Lenders of such Guarantor’s
intention to attempt to cancel or terminate the Guaranty or any other Loan
Document;

 

(p)           the Borrower, any
Guarantor or any of their respective Subsidiaries shall fail to comply with the
covenants set forth in §8.6 hereof; provided, however, no Event
of Default shall occur hereunder as a result of such failure if such failure
relates solely to a parcel or parcels of Real Estate whose book value, either
individually or in the aggregate, does not exceed $50,000,000.00;

 

(q)           any Change of Control
shall occur; or

 

(r)            an Event of Default
under any of the other Loan Documents shall occur;

 

then, and in
any such event, the Agent may, and upon the request of the Required Lenders
shall, by notice in writing to the Borrower declare all amounts owing with
respect to this Agreement, the Notes, the Letters of Credit and the other Loan
Documents to be, and they shall thereupon forthwith become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Borrower; provided that in
the event of any Event of Default specified in §12.1(g), §12.1(h) or §12.1(i) as
to Borrower or REIT, all such amounts shall become immediately due and payable
automatically and without any requirement of presentment, demand, protest or
other notice of any kind from any of the Lenders or the Agent.  Upon demand by Agent or the Majority
Revolving Credit Lenders in their absolute and sole discretion after the
occurrence and during the continuance of an Event of Default, and regardless of
whether the conditions precedent in this Agreement for a Revolving Credit Loan
have been satisfied, the Revolving Credit Lenders will cause a Revolving Credit
Loan to be made in the undrawn amount of all Letters of Credit.  The proceeds of any such Revolving Credit
Loan will be pledged to and held by Agent as security for any amounts that
become payable under the Letters of Credit and all other Obligations.  In the alternative, if demanded by Agent in
its absolute and sole discretion after the occurrence and during the
continuance of an Event of Default, the Borrower will deposit with and pledge
to Agent cash in an amount equal to the amount of all undrawn Letters of
Credit.  Such amounts will be pledged to
and held by Agent for the benefit of the Lenders as security for any amounts
that become payable under the Letters of Credit and all other Obligations.  Upon any draws under Letters of Credit, at
Agent’s sole discretion, Agent may apply any such amounts to the repayment of
amounts drawn thereunder and upon the expiration of the Letters of Credit any
remaining amounts will be applied to the payment of all other Obligations or if
there are no outstanding Obligations and Lenders have no further obligation to
make Revolving Credit Loans or issue Letters of Credit or if such excess no
longer exists, such proceeds deposited by the Borrower will be released to the
Borrower.

 

81

 

§12.2       Certain
Cure Periods; Limitation of Cure Periods.

 

(a)           Notwithstanding
anything contained in §12.1 to the contrary, (i) no Event of Default shall
exist hereunder upon the occurrence of any failure described in §12.1(b) in
the event that the Borrower cures such Default within five (5) Business
Days after the date such payment is due, provided that no such cure
period shall apply to any payments due upon the maturity of the Notes, and (ii) no
Event of Default shall exist hereunder upon the occurrence of any failure
described in §12.1(d) in the event that the Borrower cures (or causes to
be cured) such Default within thirty (30) days following receipt of written
notice of such default, provided that the provisions of this clause (ii) shall
not pertain to any default (whether of Borrower, Guarantor or any Subsidiary
thereof) consisting of a failure to comply with §7.4(c), §7.12, §7.16, §8.1,
§8.2, §8.3, §8.4, §8.7, §8.8 or to any Default excluded from any provision of
cure of defaults contained in any other of the Loan Documents.

 

§12.3       Termination of
Commitments.  If any one or more
Events of Default specified in §12.1(g), §12.1(h) or §12.1(i) shall
occur with respect to Borrower or REIT, then immediately and without any action
on the part of the Agent or any Lender any unused portion of the credit
hereunder shall terminate and the Lenders shall be relieved of all obligations
to make Loans or issue Letters of Credit to the Borrower.  If any other Event of Default shall have
occurred, the Agent may, and upon the election of the Majority Revolving Credit
Lenders shall, by notice to the Borrower terminate the obligation to make
Revolving Credit Loans to and issue Letters of Credit for the Borrower.  No termination under this §12.3 shall relieve
the Borrower of its obligations to the Lenders arising under this Agreement or
the other Loan Documents.

 

§12.4       Remedies.  In case any one or more Events of Default
shall have occurred and be continuing, and whether or not the Lenders shall
have accelerated the maturity of the Loans pursuant to §12.1, the Agent on
behalf of the Lenders may, and upon the direction of the Required Lenders
shall, proceed to protect and enforce their rights and remedies under this
Agreement, the Notes and/or any of the other Loan Documents by suit in equity,
action at law or other appropriate proceeding, including to the full extent
permitted by applicable law the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents, the
obtaining of the ex parte appointment of a receiver, and, if any amount shall
have become due, by declaration or otherwise, the enforcement of the payment
thereof.  No remedy herein conferred upon
the Agent or the holder of any Note is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or any other provision of law.  Notwithstanding the provisions of this
Agreement providing that the Loans may be evidenced by multiple Notes in favor
of the Lenders, the Lenders acknowledge and agree that only the Agent may exercise
any remedies arising by reason of a Default or Event of Default.  If the Borrower or any Guarantor fails to
perform any agreement or covenant contained in this Agreement or any of the
other Loan Documents beyond any applicable period for notice and cure, Agent
may itself perform, or cause to be performed, any agreement or covenant of such
Person contained in this Agreement or any of the other Loan Documents which
such Person shall fail to perform, and the out-of-pocket costs of such
performance, together with any reasonable expenses, including reasonable
attorneys’ fees actually incurred (including attorneys’ fees incurred in any
appeal) by Agent in connection therewith, shall be payable by the Borrower upon
demand and shall constitute a part of the Obligations and shall if not paid
within 

 

82

 

five (5) days after
demand bear interest at the rate for overdue amounts as set forth in this
Agreement.  In the event that all or any
portion of the Obligations is collected by or through an attorney-at-law, the
Borrower shall pay all costs of collection including, but not limited to,
reasonable attorney’s fees.

 

§12.5       Distribution of
Collateral Proceeds.  In the event
that, following the occurrence and during the continuance of any Event of
Default, any monies are received in connection with the enforcement of any of
the Loan Documents, or otherwise with respect to the realization upon any of
the Collateral or other assets of the Borrower or the Guarantors, such monies
shall be distributed for application as follows:

 

(a)           First, to the payment
of, or (as the case may be) the reimbursement of the Agent for or in respect
of, all reasonable out-of-pocket costs, expenses and disbursements which shall
have been paid or incurred by the Agent to protect or preserve the Collateral
or in connection with the collection of such monies by the Agent, for the
exercise, protection or enforcement by the Agent of all or any of the rights,
remedies, powers and privileges of the Agent or the Lenders under this
Agreement or any of the other Loan Documents or in respect of the Collateral or
in support of any provision of adequate indemnity to the Agent against any
taxes or liens which by law shall have, or may have, priority over the rights
of the Agent or the Lenders to such monies;

 

(b)           Second, to all other
Obligations (including any interest, expenses or other obligations incurred
after the commencement of a bankruptcy) in such order or preference as the
Required Lenders shall determine; provided, that (i) Swing Loans
shall be repaid first, (ii) distributions in respect of such other
Obligations shall include, on a pari passu basis, any Agent’s fee payable
pursuant to §4.2; (iii) in the event that any Lender shall have wrongfully
failed or refused to make an advance under §2.5(d), §2.7 or §2.10(f) and
such failure or refusal shall be continuing, advances made by other Lenders
during the pendency of such failure or refusal shall be entitled to be repaid
as to principal and accrued interest in priority to the other Obligations described
in this subsection (b), and (iv) except as otherwise provided in clause
(iii), Obligations owing to the Lenders with respect to each type of Obligation
such as interest, principal, fees and expenses (but excluding the Swing Loans)
shall be made among the Lenders pro rata and as between Revolving Credit Loans
and Term Loans shall be made pro rata; and provided, further that
the Required Lenders may in their discretion make proper allowance to take into
account any Obligations not then due and payable; and

 

(c)           Third, the excess, if
any, shall be returned to the Borrower or to such other Persons as are entitled
thereto.

 

§13.         SETOFF.

 

Regardless of
the adequacy of any Collateral, during the continuance of any Event of Default,
any deposits (general or specific, time or demand, provisional or final,
regardless of currency, maturity, or the branch where such deposits are held)
or other sums credited by or due from any Lender to the Borrower or the
Guarantors and any securities or other property of the Borrower or the
Guarantors in the possession of such Lender may, without notice to the Borrower
or any Guarantor (any such notice being expressly waived by the Borrower and
each

 

83

 

Guarantor) but
with the prior written approval of Agent, be applied to or set off against the
payment of Obligations and any and all other liabilities, direct, or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, of the Borrower or the Guarantors to such Lender under the Loan
Documents.  Each of the Lenders agree
with each other Lender that if such Lender shall receive from the Borrower or
the Guarantors, whether by voluntary payment, exercise of the right of setoff,
or otherwise, and shall retain and apply to the payment of the Note or Notes
held by such Lender (but excluding the Swing Loan Note) any amount in excess of
its ratable portion of the payments received by all of the Lenders with respect
to the Notes held by all of the Lenders, such Lender will make such disposition
and arrangements with the other Lenders with respect to such excess, either by
way of distribution, pro  tanto assignment of claims, subrogation
or otherwise as shall result in each Lender receiving in respect of the Notes held
by it its proportionate payment as contemplated by this Agreement; provided
that if all or any part of such excess payment is thereafter recovered from
such Lender, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.

 

§14.         THE AGENT.

 

§14.1       Authorization.  The Agent is authorized to take such action
on behalf of each of the Lenders and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably incident
thereto, provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Agent.  The obligations of the Agent hereunder are
primarily administrative in nature, and nothing contained in this Agreement or
any of the other Loan Documents shall be construed to constitute the Agent as a
trustee for any Lender or to create an agency or fiduciary relationship.  Agent shall act as the contractual
representative of the Lenders hereunder, and notwithstanding the use of the
term “Agent”, it is understood and agreed that Agent shall not have any
fiduciary duties or responsibilities to any Lender by reason of this Agreement
or any other Loan Document and is acting as an independent contractor, the
duties and responsibilities of which are limited to those expressly set forth
in this Agreement and the other Loan Documents. 
The Borrower and any other Person shall be entitled to conclusively rely
on a statement from the Agent that it has the authority to act for and bind the
Lenders pursuant to this Agreement and the other Loan Documents.

 

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

 

§14.3       No Liability.  Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent, or employee thereof, shall be liable for (a) any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the consequences
of any oversight or error of judgment whatsoever, except that the Agent or such
other Person, as the

 

84

 

case may be, shall be
liable for losses due to its willful misconduct or gross negligence as finally
determined by a court of competent jurisdiction after the expiration of all
applicable appeal periods or (b) any action taken or not taken by Agent
with the consent or at the request of the Required Lenders.  The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Lenders, unless the
Agent has received notice from a Lender or the Borrower referring to the Loan
Documents and describing with reasonable specificity such Default or Event of
Default and stating that such notice is a “notice of default”.

 

§14.4       No Representations.  The Agent shall not be responsible for the
execution or validity or enforceability of this Agreement, the Notes, any of
the other Loan Documents or any instrument at any time constituting, or
intended to constitute, collateral security for the Notes, or for the value of
any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or for any
recitals or statements, warranties or representations made herein, or any
agreement, instrument or certificate delivered in connection therewith or in
any of the other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Borrower, the Guarantors or any of their
respective Subsidiaries, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein or in any of the other Loan Documents.  The Agent shall not be bound to ascertain
whether any notice, consent, waiver or request delivered to it by the Borrower,
the Guarantors or any holder of any of the Notes shall have been duly
authorized or is true, accurate and complete. 
The Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the
Lenders, with respect to the creditworthiness or financial condition of the
Borrower, the Guarantors or any of their respective Subsidiaries, or the value
of the Collateral or any other assets of the Borrower, any Guarantor or any of
their respective Subsidiaries.  Each
Lender acknowledges that it has, independently and without reliance upon the
Agent or any other Lender, and based upon such information and documents as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender, based upon such information and documents as it deems
appropriate at the time, continue to make its own credit analysis and decisions
in taking or not taking action under this Agreement and the other Loan
Documents.  Agent’s Special Counsel has
only represented Agent and KeyBank in connection with the Loan Documents and
the only attorney client relationship or duty of care is between Agent’s
Special Counsel and Agent or KeyBank. Each Lender has been independently
represented by separate counsel on all matters regarding the Loan Documents and
the granting and perfecting of liens in the Collateral.

 

§14.5       Payments.

 

(a)           A payment by the
Borrower or any Guarantor to the Agent hereunder or under any of the other Loan
Documents for the account of any Lender shall constitute a payment to such
Lender.  The Agent agrees to distribute
to each Lender not later than one Business Day after the Agent’s receipt of
good funds, determined in accordance with the Agent’s customary practices, such
Lender’s pro rata share of payments received by the Agent for the account of
the Lenders except as otherwise expressly provided herein or in any of the
other Loan Documents.

 

85

 

In the event that the
Agent receives payment prior to 2:00 p.m. (Cleveland time) on a Business
Day and fails to distribute such amounts the same Business Day, the Agent shall
pay interest on such amount at a rate per annum equal to the Federal Funds
Effective Rate from time to time in effect.

 

(b)           If in the opinion of
the Agent the distribution of any amount received by it in such capacity
hereunder, under the Notes or under any of the other Loan Documents might
involve it in liability, it may refrain from making such distribution until its
right to make such distribution shall have been adjudicated by a court of
competent jurisdiction.  If a court of
competent jurisdiction shall adjudge that any amount received and distributed
by the Agent is to be repaid, each Person to whom any such distribution shall
have been made shall either repay to the Agent its proportionate share of the
amount so adjudged to be repaid or shall pay over the same in such manner and
to such Persons as shall be determined by such court.  In the event that the Agent shall refrain
from making any distribution of any amount received by it as provided in this
§14.5(b), the Agent shall endeavor to hold such amounts in an interest bearing
account and at such time as such amounts may be distributed to the Lenders, the
Agent shall distribute to each Lender, based on their respective Commitment
Percentages, its pro  rata share of the interest or other earnings
from such deposited amount.

 

(c)           Notwithstanding
anything to the contrary contained in this Agreement or any of the other Loan
Documents, any Lender that fails (i) to make available to the Agent its
pro rata share of any Loan or participation in a Letter of Credit or Swing
Loan, (ii) to comply with the provisions of §13 with respect to making
dispositions and arrangements with the other Lenders, where such Lender’s share
of any payment received, whether by setoff or otherwise, is in excess of its
pro rata share of such payments due and payable to all of the Lenders, in each
case as, when and to the full extent required by the provisions of this
Agreement, or (iii) to perform any other obligation within the time period
specified for performance, or if no time period is specified, if such failure
continues for a period of five (5) Business Days after notice from the
Agent shall be deemed delinquent (a “Delinquent Lender”) and shall be deemed a
Delinquent Lender until such time as such delinquency is satisfied.  In addition to the rights and remedies that
may be available to the Agent at law and in equity, a Delinquent Lender’s right
to participate in the administration of the Loan Documents, including, without
limitation, any rights to consent to or direct any action or inaction of the
Agent pursuant to this Agreement or otherwise, or to be taken into account in
the calculation of Majority Revolving Credit Lenders, Required Lenders or any
matter requiring approval of all of the Lenders, shall be suspended while such
Lender is a Delinquent Lender.  A
Delinquent Lender shall be deemed to have assigned any and all payments due to
it from the Borrower or the Guarantors, whether on account of outstanding
Loans, interest, fees or otherwise, to the remaining nondelinquent Lenders for
application to, and reduction of, their respective pro rata shares of all
outstanding Loans.  The Delinquent Lender
hereby authorizes the Agent to distribute such payments to the nondelinquent
Lenders in proportion to their respective pro rata shares of all outstanding
Loans.  The provisions of this Section shall
apply and be effective regardless of whether an Event of Default occurs and is
then continuing, and notwithstanding (i) any other provision of this
Agreement to the contrary or (ii) any instruction of the Borrower as to
its desired application of payments.  The
Agent shall be entitled to (i) withhold or set off, and to apply to the
payment of the obligations of any Delinquent Lender any amounts to be paid to
such Delinquent Lender under this Agreement, (ii) to collect interest from
such Lender for the period from the date on

 

86

 

which the payment was due
at the rate per annum equal to the Federal Funds Effective Rate plus one
percent (1%), for each day during such period, and (iii) bring an action
or suit against such Delinquent Lender in a court of competent jurisdiction to
recover the defaulted obligations of such Delinquent Lender.  A Delinquent Lender shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Loans of the nondelinquent Lenders or as a
result of other payments by the Delinquent Lenders to the nondelinquent
Lenders, the Lenders’ respective pro rata shares of all outstanding Loans have
returned to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.

 

§14.6       Holders of Notes.  Subject to the terms of §18, the Agent may
deem and treat the payee of any Note as the absolute owner or purchaser thereof
for all purposes hereof until it shall have been furnished in writing with a
different name by such payee or by a subsequent holder, assignee or transferee.

 

§14.7       Indemnity.  The Lenders ratably agree hereby to indemnify
and hold harmless the Agent from and against any and all claims, actions and
suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Agent has not been reimbursed by the
Borrower as required by §15), and liabilities of every nature and character
arising out of or related to this Agreement, the Notes, or any of the other
Loan Documents or the transactions contemplated or evidenced hereby or thereby,
or the Agent’s actions taken hereunder or thereunder, except to the extent that
any of the same shall be directly caused by the Agent’s willful misconduct or
gross negligence as finally determined by a court of competent jurisdiction
after the expiration of all applicable appeal periods.  The agreements in this §14.7 shall survive
the payment of all amounts payable under the Loan Documents.

 

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

 

§14.9       Resignation.  The Agent may resign at any time by giving
thirty (30) calendar days’ prior written notice thereof to the Lenders and the
Borrower.  The Required Lenders may
remove the Agent from its capacity as Agent in the event of the Agent’s willful
misconduct or gross negligence.  The
Commitment Percentage of the Lender that is acting as Agent shall not be taken
into account in the calculation of the Required Lenders for the purpose of
removing the Agent in the event of the Agent’s gross negligence or willful
misconduct.  Any such resignation or
removal may at Agent’s option also constitute Agent’s resignation as Issuing
Lender and Swing Loan Lender.  Upon any
such resignation or removal, the Required Lenders, subject to the terms of
§18.1, shall have the right to appoint as a successor Agent and, if applicable,
Issuing Lender and Swing Loan Lender, any Lender or any bank whose senior debt
obligations are rated not less than “A” or its equivalent by Moody’s or not
less than “A” or its equivalent by S&P and which has a net worth of not
less than $500,000,000.00.  Unless a
Event of Default shall have occurred and be continuing, such successor Agent
and, if applicable, Issuing Lender and Swing Loan Lender, shall be reasonably
acceptable to the Borrower.  If no
successor Agent shall have been appointed and shall have accepted such
appointment within thirty (30) days after the retiring Agent’s giving of notice
of resignation or the Required Lenders’ removal of Agent, then

 

87

 

the retiring or removed
Agent may, on behalf of the Lenders, and, so long as no Event of Default shall
have occurred and be continuing, with the Borrower’s consent (such consent not
to be unreasonably withheld, delayed or conditioned) appoint a successor Agent,
which shall be any Lender or any financial institution whose senior debt
obligations are rated not less than “A2” or its equivalent by Moody’s or not
less than “A” or its equivalent by S&P and which has a net worth of not
less than $500,000,000.00.  Upon the
acceptance of any appointment as Agent and, if applicable, Issuing Lender and
Swing Loan Lender, hereunder by a successor Agent and, if applicable, Issuing
Lender and Swing Loan Lender, such successor Agent and, if applicable, Issuing
Lender and Swing Loan Lender, shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Agent
and, if applicable, Issuing Lender and Swing Loan Lender, and the retiring or
removed Agent and, if applicable, Issuing Lender and Swing Loan Lender, shall
be discharged from its duties and obligations hereunder as Agent and, if
applicable, Issuing Lender and Swing Loan Lender.  After any retiring or removed Agent’s
resignation or removal, the provisions of this Agreement and the other Loan
Documents 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 Agent, Issuing Lender
and Swing Loan Lender.  If the resigning
or removed Agent shall also resign as the Issuing Lender, such successor Agent
shall issue letters of credit in substitution for the Letters of Credit, if
any, outstanding at the time of such succession or shall make other
arrangements satisfactory to the current Issuing Lender, in either case, to
assume effectively the obligations of the current Agent with respect to such
Letters of Credit.  Upon any change in
the Agent under this Agreement, the resigning or removed Agent shall execute
such assignments of and amendments to the Loan Documents as may be necessary to
substitute the successor Agent for the resigning or removed Agent.

 

§14.10     Duties in the Case of
Enforcement.  In case one or more
Events of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent may and, if (a) so
requested by the Required Lenders and (b) the Lenders have provided to the
Agent such additional indemnities and assurances in accordance with their
respective Commitment Percentages against expenses and liabilities as the Agent
may reasonably request, shall proceed to exercise all or any legal and
equitable and other rights or remedies as it may have; provided, however,
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
to be in the best interests of the Lenders. 
Without limiting the generality of the foregoing, if Agent reasonably
determines payment is in the best interest of all the Lenders, Agent may
without the approval of the Lenders pay taxes and insurance premiums and spend
money for maintenance, repairs or other expenses which may be necessary to be
incurred, and Agent shall promptly thereafter notify the Lenders of such
action.  Each Lender shall, within thirty
(30) days of request therefor, pay to the Agent its Commitment Percentage of
the reasonable costs incurred by the Agent in taking any such actions hereunder
to the extent that such costs shall not be promptly reimbursed to the Agent by
the Borrower or the Guarantors or out of the Collateral within such
period.  The Required Lenders may direct
the Agent in writing as to the method and the extent of any such exercise, the
Lenders hereby agreeing to indemnify and hold the Agent harmless in accordance
with their respective Commitment Percentages from all liabilities incurred in
respect of all actions taken or omitted in accordance with such directions, except
to the extent that any of the same shall be directly caused by the Agent’s
willful misconduct or gross negligence as finally determined by a court of
competent jurisdiction after the expiration of all applicable

 

88

 

appeal periods, provided
that the Agent need not comply with any such direction to the extent that the
Agent reasonably believes the Agent’s compliance with such direction to be
unlawful in any applicable jurisdiction or commercially unreasonable under the
UCC as enacted in any applicable jurisdiction.

 

§14.11     Bankruptcy.  In the event a bankruptcy or other insolvency
proceeding is commenced by or against the Borrower or any Guarantor with
respect to the Obligations, the Agent shall have the sole and exclusive right
to file and pursue a joint proof claim on behalf of all Lenders.  Any votes with respect to such claims or
otherwise with respect to such proceedings shall be subject to the vote of the
Required Lenders or all of the Lenders as required by this Agreement.  Each Lender irrevocably waives its right to
file or pursue a separate proof of claim in any such proceedings unless Agent
fails to file such claim within thirty (30) days after receipt of written
notice from the Lenders requesting that Agent file such proof of claim.

 

§14.12     Reliance by Agent.  The Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing (including
any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by an Authorized Officer.  The Agent also may rely upon any statement
made to it orally or by telephone and believed by it to have been made by the
proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition
hereunder to the making of a Loan, that by its terms must be fulfilled to the
satisfaction of a Lender, the Agent may presume that such condition is
satisfactory to such Lender unless the Agent shall have received notice to the
contrary from such Lender prior to the making of such Loan.  The Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

 

§14.13     Approvals.  If consent is required for some action under
this Agreement, or except as otherwise provided herein an approval of the
Lenders, the Majority Revolving Credit Lenders or the Required Lenders is
required or permitted under this Agreement, each Lender agrees to give the
Agent, within ten (10) Business Days of receipt of the request for action
together with all reasonably requested information related thereto (or such
lesser period of time required by the terms of the Loan Documents), notice in
writing of approval or disapproval (collectively “Directions”) in respect of
any action requested or proposed in writing pursuant to the terms hereof.  To the extent that any Lender does not
approve any recommendation of Agent, such Lender shall in such notice to Agent
describe the actions that would be acceptable to such Lender.  If consent is required for the requested
action, any Lender’s failure to respond to a request for Directions within the
required time period shall be deemed to constitute a Direction to take such
requested action.  In the event that any
recommendation is not approved by the requisite number of Lenders and a
subsequent approval on the same subject matter is requested by Agent, then for
the purposes of this paragraph each Lender shall be required to respond to a
request for Directions within five (5) Business Days of receipt of such
request.  Agent and each Lender shall be
entitled to assume that any officer of the other Lenders delivering any notice,
consent, certificate or other writing is authorized to give such notice,
consent, certificate or other writing unless Agent and such other Lenders have
otherwise been notified in writing.

 

89

 

§14.14     Borrower Not Beneficiary.  Except for the provisions of §14.9 relating
to the appointment of a successor Agent, the provisions of this §14 are solely
for the benefit of the Agent and the Lenders, may not be enforced by the
Borrower or any Guarantor, and except for the provisions of §14.9, may be
modified or waived without the approval or consent of the Borrower.

 

§15.         EXPENSES.

 

The Borrower
agrees to pay (a) the reasonable costs of producing and reproducing this
Agreement, the other Loan Documents and the other agreements and instruments
mentioned herein, (b) any imposed taxes (including any interest and
penalties in respect thereto) payable by the Agent or any of the Lenders (other
than taxes based upon the Agent’s or any Lender’s gross or net income, except
that the Agent and the Lenders shall be entitled to indemnification for any and
all amounts paid by them in respect of taxes based on income or other taxes
assessed by any State in which Collateral is located, such indemnification to
be limited to taxes due solely on account of the granting of Collateral under
the Security Documents and to be net of any credit allowed to the indemnified
party from any other State on account of the payment or incurrence of such tax
by such indemnified party), including any recording, mortgage, documentary or
intangibles taxes in connection with the Loan Documents, or other taxes payable
on or with respect to the transactions contemplated by this Agreement,
including any such taxes payable by the Agent or any of the Lenders after the
Closing Date (the Borrower hereby agreeing to indemnify the Agent and each
Lender with respect thereto), (c) all environmental reviews and the
reasonable fees, expenses and disbursements of the counsel to the Agent and any
local counsel to the Agent incurred in connection with the preparation, administration,
or interpretation of the Loan Documents and other instruments mentioned herein,
and amendments, modifications, approvals, consents or waivers hereto or
hereunder, (d) the out-of-pocket fees, costs, expenses and disbursements
of Agent incurred in connection with the syndication and/or participation (by
KeyBank) of the Loans, (e) all other reasonable out of pocket fees,
expenses and disbursements of the Agent incurred by the Agent in connection
with the preparation or interpretation of the Loan Documents and other
instruments mentioned herein, the addition or substitution of additional
Collateral, the making of each advance hereunder, the issuance of Letters of
Credit, and the syndication of the Commitments pursuant to §18 (without
duplication of those items addressed in subparagraph (d), above), (f) all
out-of-pocket expenses (including attorneys’ fees and costs) incurred by any
Lender or the Agent in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
the Guarantors or the administration thereof after the occurrence of a Default
or Event of Default and (ii) any litigation, proceeding or dispute whether
arising hereunder or otherwise, in any way related to the Agent’s or any of the
Lenders’ relationship with the Borrower or the Guarantors in respect of the
Loan and the Loan Documents (provided that any attorneys fees and costs
pursuant to this clause (f)(ii) shall be limited to those incurred by
the Agent and one other counsel with respect to the Lenders as a group), (g) all
reasonable fees, expenses and disbursements of the Agent incurred in connection
with UCC searches, UCC filings, title rundowns, title searches or mortgage
recordings, (h) all reasonable out-of-pocket fees, expenses and
disbursements (including reasonable attorneys’ fees and costs) which may be
incurred by KeyBank in connection with the execution and delivery of this
Agreement and the other Loan Documents (without duplication of any of the items
listed above), and (i) all expenses relating to the use of Intralinks,
SyndTrak or any other similar system for the dissemination and sharing of

 

90

 

documents and
information in connection with the Loans. 
The covenants of this §15 shall survive the repayment of the Loans and
the termination of the obligations of the Lenders hereunder.

 

§16.         INDEMNIFICATION.

 

The Borrower
agrees to indemnify and hold harmless the Agent, the Lenders and the Arranger
and each director, officer, employee, agent and Affiliate thereof and Person
who controls the Agent or any Lender or the Arranger against any and all
claims, actions and suits, whether groundless or otherwise, and from and
against any and all liabilities, losses, damages and expenses of every nature
and character arising out of or relating to this Agreement or any of the other
Loan Documents or the transactions contemplated hereby and thereby including,
without limitation, (a) any and all claims for brokerage, leasing, finders
or similar fees which may be made relating to the Real Estate or the Loans, (b) any
condition of the Real Estate, (c) any actual or proposed use by the
Borrower of the proceeds of any of the Loans or Letters of Credit, (d) any
actual or alleged infringement of any patent, copyright, trademark, service
mark or similar right of the Borrower, any Guarantor or any of their respective
Subsidiaries, (e) the Borrower and the Guarantors entering into or
performing this Agreement or any of the other Loan Documents, (f) with
respect to the Borrower, the Guarantors and their respective Subsidiaries and
their respective properties and assets, the violation of any Environmental Law,
the Release or threatened Release of any Hazardous Substances or any action,
suit, proceeding or investigation brought or threatened with respect to any
Hazardous Substances (including, but not limited to, claims with respect to
wrongful death, personal injury, nuisance or damage to property), and (g) any
use of Intralinks, SyndTrak or any other system for the dissemination and
sharing of documents and information, in each case including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding; provided,
however, that the Borrower shall not be obligated under this §16 to
indemnify any Person for liabilities arising from such Person’s own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction after the exhaustion of all applicable appeal periods.  In litigation, or the preparation therefor,
the Lenders and the Agent shall be entitled to select a single law firm as
their own counsel and, in addition to the foregoing indemnity, the Borrower
agrees to pay promptly the reasonable fees and expenses of such counsel.  If, and to the extent that the obligations of
the Borrower under this §16 are unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment in satisfaction
of such obligations which is permissible under applicable law.  The provisions of this §16 shall survive the
repayment of the Loans and the termination of the obligations of the Lenders
hereunder.

 

§17.         SURVIVAL OF COVENANTS,
ETC.

 

All covenants,
agreements, representations and warranties made herein, in the Notes, in any of
the other Loan Documents or in any documents or other papers delivered by or on
behalf of the Borrower or the Guarantors or any of their respective
Subsidiaries pursuant hereto or thereto shall be deemed to have been relied
upon by the Lenders and the Agent, notwithstanding any investigation heretofore
or hereafter made by any of them, and shall survive the making by the Lenders
of any of the Loans, as herein contemplated, and shall continue in full force
and effect so long as any amount due under this Agreement or the Notes or any
of the other Loan

 

91

 

Documents
remains outstanding or any Letters of Credit remain outstanding or any Lender
has any obligation to make any Loans or issue any Letters of Credit.  The indemnification obligations of the
Borrower provided herein and in the other Loan Documents shall survive the full
repayment of amounts due and the termination of the obligations of the Lenders
hereunder and thereunder to the extent provided herein and therein.  All statements contained in any certificate
delivered to any Lender or the Agent at any time by or on behalf of the
Borrower, any Guarantor or any of their respective Subsidiaries pursuant hereto
or in connection with the transactions contemplated hereby shall constitute
representations and warranties by such Person hereunder.

 

§18.         ASSIGNMENT AND
PARTICIPATION.

 

§18.1       Conditions to Assignment
by Lenders.  Except as provided
herein, each Lender may assign to one or more banks or other entities all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment and the
same portion of the Loans at the time owing to it and the Notes held by it); provided
that (a) the Agent, the Issuing Lender and, so long as no Default or Event
of Default exists hereunder, the Borrower shall have each given its prior
written consent to such assignment, which consent shall not be unreasonably
withheld or delayed (provided that such consent shall not be required for any
assignment to another Lender, to a lender or an Affiliate of a Lender which
controls, is controlled by or is under common control with the assigning Lender
or to a wholly-owned Subsidiary of such Lender), (b) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Lender’s rights and obligations under this Agreement with respect to the
Revolving Credit Commitment in the event an interest in the Revolving Credit
Loans is assigned, or of a constant, and not a varying, percentage of all the
assigning Lender’s rights and obligations under this Agreement with respect to
the Term Loan Commitment in the event an interest in the Term Loans is
assigned, (c) the parties to such assignment shall execute and deliver to
the Agent, for recording in the Register (as hereinafter defined) an Assignment
and Acceptance Agreement in the form of Exhibit H annexed hereto,
together with any Notes subject to such assignment, (d) in no event shall
any assignment be to any Person controlling, controlled by or under common
control with, or which is not otherwise free from influence or control by the
Borrower or any Guarantor, (e) such assignee of a portion of the Revolving
Credit Loans shall have a net worth as of the date of such assignment of not
less than $100,000,000.00 (unless otherwise approved by Agent and, so long as
no Default or Event of Default exists hereunder, the Borrower), and (f) such
assignee shall acquire an interest in the Loans of not less than $5,000,000.00
and integral multiples of $1,000,000.00 in excess thereof (or if less, the
remaining Loans of the assignor), unless waived by the Agent, and so long as no
Default or Event of Default exists hereunder, the Borrower.  Upon execution, delivery, acceptance and
recording of such Assignment and Acceptance Agreement, (i) the assignee
thereunder shall be a party hereto and all other Loan Documents executed by the
Lenders and, to the extent provided in such Assignment and Acceptance
Agreement, have the rights and obligations of a Lender hereunder, (ii) the
assigning Lender shall, upon payment to the Agent of the registration fee
referred to in §18.2, be released from its obligations under this Agreement
arising after the effective date of such assignment with respect to the
assigned portion of its interests, rights and obligations under this Agreement,
and (iii) the Agent may unilaterally amend Schedule 1.1 to
reflect such assignment.  In connection
with each assignment, the assignee shall represent and warrant to the Agent,
the assignor and each other Lender as to whether such

 

92

 

assignee is controlling,
controlled by, under common control with or is not otherwise free from
influence or control by, the Borrower and/or any Guarantor.

 

§18.2       Register.  The Agent shall maintain on behalf of the
Borrower a copy of each assignment delivered to it and a register or similar
list (the “Register”) for the recordation of the names and addresses of the
Lenders and the Commitment Percentages of and principal amount of the Loans
owing to the Lenders from time to time. 
The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Guarantors, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement.  The
Register shall be available for inspection by the Borrower and the Lenders at
any reasonable time and from time to time upon reasonable prior notice.  Upon each such recordation, the assigning
Lender agrees to pay to the Agent a registration fee in the sum of $3,500.00.

 

§18.3       New Notes.  Upon its receipt of an Assignment and
Acceptance Agreement executed by the parties to such assignment, together with
each Note subject to such assignment, the Agent shall record the information
contained therein in the Register. 
Within five (5) Business Days after receipt of notice of such
assignment from Agent, the Borrower, at its own expense, shall execute and
deliver to the Agent, in exchange for each surrendered Note, a new Note to the
order of such assignee in an amount equal to the amount assigned to such
assignee pursuant to such Assignment and Acceptance Agreement and, if the
assigning Lender has retained some portion of its obligations hereunder, a new
Note to the order of the assigning Lender in an amount equal to the amount
retained by it hereunder.  Such new Notes
shall provide that they are replacements for the surrendered Notes, shall be in
an aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance Agreement and shall otherwise be in substantially the form of the
assigned Notes.  The surrendered Notes
shall be canceled and returned to the Borrower.

 

§18.4       Participations.  Each Lender may sell participations to one or
more Lenders or other entities in all or a portion of such Lender’s rights and obligations
under this Agreement and the other Loan Documents; provided that (a) any
such sale or participation shall not affect the rights and duties of the
selling Lender hereunder, (b) such participation shall not entitle such
participant to any rights or privileges under this Agreement or any Loan
Documents, including without limitation, rights granted to the Lenders under
§4.8, §4.9, §4.10 and §13, (c) such participation shall not entitle the
participant to the right to approve waivers, amendments or modifications, (d) such
participant shall have no direct rights against the Borrower, (e) such
sale is effected in accordance with all applicable laws, and (f) such
participant shall not be a Person controlling, controlled by or under common
control with, or which is not otherwise free from influence or control by the
Borrower and/or any Guarantor; provided, however, such Lender may agree with
the participant that it will not, without the consent of the participant, agree
to (i) increase, or extend the term or extend the time or waive any
requirement for the reduction or termination of, such Lender’s Commitment, (ii) extend
the date fixed for the payment of principal of or interest on the Loans or
portions thereof owing to such Lender (other than pursuant to an extension of
the Revolving Credit Maturity Date pursuant to §2.12), (iii) reduce the amount of any such payment of principal, (iv) reduce
the rate at which interest is payable thereon or (v) release any Guarantor
or any material Collateral (except as otherwise permitted

 

93

 

under
this Agreement).  Any Lender which
sells a participation shall promptly notify the Agent of such sale and the
identity of the purchaser of such interest.

 

§18.5       Pledge by Lender.  Any Lender may at any time pledge all or any
portion of its interest and rights under this Agreement (including all or any
portion of its Note) to any of the twelve Federal Reserve Banks organized under
§4 of the Federal Reserve Act, 12 U.S.C. §341 or to such other Person as the
Agent may approve to secure obligations of such lenders.  No such pledge or the enforcement thereof
shall release the pledgor Lender from its obligations hereunder or under any of
the other Loan Documents.

 

§18.6       No Assignment by Borrower.  The Borrower shall not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of each of the Lenders.

 

§18.7       Disclosure.  The Borrower agrees to promptly cooperate
with any Lender in connection with any proposed assignment or participation of
all or any portion of its Commitment. 
The Borrower agrees that in addition to disclosures made in accordance
with standard banking practices any Lender may disclose information obtained by
such Lender pursuant to this Agreement to assignees or participants and
potential assignees or participants hereunder. 
Each Lender agrees for itself that it shall use reasonable efforts in
accordance with its customary procedures to hold confidential all information
obtained from the Borrower or any Guarantor that has not been identified in
writing as public by any of them, and shall use reasonable efforts in
accordance with its customary procedures to not disclose such information to
any other Person, it being understood and agreed that, notwithstanding the
foregoing, a Lender may make (a) disclosures to its participants (provided
such Persons are advised of the provisions of this §18.7), (b) disclosures
to its directors, officers, employees, Affiliates, accountants, appraisers,
legal counsel and other professional advisors of such Lender (provided that
such Persons who are not employees of such Lender are advised of the provision
of this §18.7), (c) disclosures customarily provided or reasonably
required by any potential or actual bona fide assignee, transferee or
participant or their respective directors, officers, employees, Affiliates,
accountants, appraisers, legal counsel and other professional advisors in
connection with a potential or actual assignment or transfer by such Lender of
any Loans or any participations therein (provided such Persons are advised of
the provisions of this §18.7), (d) disclosures to bank regulatory
authorities or self-regulatory bodies with jurisdiction over such Lender, or (e) disclosures
required or requested by any other governmental authority or representative
thereof or pursuant to legal process; provided that, unless specifically
prohibited by applicable law or court order, each Lender shall notify the
Borrower of any request by any governmental authority or representative thereof
prior to disclosure (other than any such request in connection with any
examination of such Lender by such government authority) for disclosure of any
such non-public information prior to disclosure of such information.  In addition, each Lender may make disclosure
of such information to any contractual counterparty in swap agreements or such
contractual counterparty’s professional advisors (so long as such contractual
counterparty or professional advisors agree to be bound by the provisions of
this §18.7).  Non-public information
shall not include any information which is or subsequently becomes publicly
available other than as a result of a disclosure of such information by a
Lender, or prior to the delivery to such Lender is within the possession of
such Lender if such information is not known by such Lender to be subject to
another confidentiality agreement with or other obligations of secrecy to the
Borrower

 

94

 

or the Guarantors, or is
disclosed with the prior approval of the Borrower.  Nothing herein shall prohibit the disclosure
of non-public information to the extent necessary to enforce the Loan
Documents.

 

§18.8       Mandatory Assignment.  In the event the Borrower requests that
certain amendments, modifications or waivers be made to this Agreement or any
of the other Loan Documents which request is approved by Agent but is not
approved by one or more of the Lenders (any such non-consenting Lender shall
hereafter be referred to as the “Non-Consenting Lender”), then, within thirty
(30) Business Days after the Borrower’s receipt of notice of such disapproval
by such Non-Consenting Lender, the Borrower shall have the right as to such
Non-Consenting Lender, to be exercised by delivery of written notice delivered
to the Agent and the Non-Consenting Lender within thirty (30) Business Days of
receipt of such notice, to elect to cause the Non-Consenting Lender to transfer
its Commitment.  The Agent shall promptly
notify the remaining Lenders that each of such Lenders shall have the right,
but not the obligation, to acquire a portion of the Commitment, pro rata based
upon their relevant Commitment Percentages, of the Non-Consenting Lender (or if
any of such Lenders does not elect to purchase its pro rata share, then to such
remaining Lenders in such proportion as approved by the Agent).  In the event that the Lenders do not elect to
acquire all of the Non-Consenting Lender’s Commitment, then the Agent shall
endeavor to find a new Lender or Lenders to acquire such remaining
Commitment.  Upon any such purchase of
the Commitment of the Non-Consenting Lender, the Non-Consenting Lender’s
interests in the Obligations and its rights hereunder and under the Loan
Documents shall terminate at the date of purchase, and the Non-Consenting
Lender shall promptly execute and deliver any and all documents reasonably
requested by Agent to surrender and transfer such interest, including, without
limitation, an Assignment and Acceptance Agreement in the form attached hereto
as Exhibit H and such Non-Consenting Lender’s original Note.  The purchase price for the Non-Consenting
Lender’s Commitment shall equal any and all amounts outstanding and owed by
Borrower to the Non-Consenting Lender, including principal and all accrued and
unpaid interest or fees, plus any applicable amounts payable pursuant to §4.7
which would be owed to such Non-Consenting Lender if the Loans were to be
repaid in full on the date of such purchase of the Non-Consenting Lender’s
Commitment (provided that the Borrower may pay to such Non-Consenting Lender
any interest, fees or other amounts (other than principal) owing to such
Non-Consenting Lender).

 

§18.9       Amendments to Loan
Documents.  Upon any such assignment,
the Borrower and the Guarantors shall, upon the request of the Agent, enter
into such documents as may be reasonably required by the Agent to modify the
Loan Documents to reflect such assignment.

 

§18.10     Titled Agents.  The Titled Agents shall not have any
additional rights or obligations under the Loan Documents, except for those
rights, if any, as a Lender.

 

§19.         NOTICES.

 

Each notice,
demand, election or request provided for or permitted to be given pursuant to
this Agreement (hereinafter in this §19 referred to as “Notice”), but
specifically excluding to the maximum extent permitted by law any notices of
the institution or commencement of foreclosure proceedings, must be in writing
and shall be deemed to have been properly given or served by personal delivery
or by sending same by overnight courier or by depositing same in the

 

95

 

United States
Mail, postpaid and registered or certified, return receipt requested, or as
expressly permitted herein, by telegraph, telecopy, telefax or telex, and
addressed as follows:

 

If to the Agent or KeyBank:

 

KeyBank National Association

800 Superior

Cleveland, Ohio  44114-1306

Attn:  Real Estate Capital Services

 

With a copy to:

 

KeyBank National Association

127 Public Square

Cleveland, Ohio  44114-1306

Attn:  Mr. Kevin Murray

Telecopy No.:  (216) 689-5819

 

and

 

McKenna Long & Aldridge LLP

Suite 5300

303 Peachtree Street, N.E.

Atlanta, Georgia  30308

Attn:  William F. Timmons, Esq.

Telecopy No.:  (404) 527-4198

 

If to the Borrower:

 

c/o Behringer Harvard Operating Partnership I
LP 

15601 Dallas Parkway

Suite 600

Addison, TX 75001-6206

Attn:  Gerald J. Reihsen, III, Esq.

Telecopy No.:  (469) 655-1610

 

With a copy to:

 

Luce, Forward, Hamilton & Scripps 

600 W. Broadway

Suite 2600

San Diego, CA 92101

Attn:  Darryl Steinhause

Telecopy No.:  (619) 645-5340

 

to any other
Lender which is a party hereto, at the address for such Lender set forth on its
signature page hereto, and to any Lender which may hereafter become a
party to this Agreement,

 

96

 

at such
address as may be designated by such Lender. 
Each Notice shall be effective upon being personally delivered or upon
being sent by overnight courier or upon being deposited in the United States
Mail as aforesaid, or if transmitted by telegraph, telecopy, telefax or telex
is permitted, upon being sent and confirmation of receipt.  The time period in which a response to such
Notice must be given or any action taken with respect thereto (if any),
however, shall commence to run from the date of receipt if personally delivered
or sent by overnight courier, or if so deposited in the United States Mail, the
earlier of three (3) Business Days following such deposit or the date of
receipt as disclosed on the return receipt. 
Rejection or other refusal to accept or the inability to deliver because
of changed address for which no notice was given shall be deemed to be receipt
of the Notice sent.  By giving at least
fifteen (15) days prior Notice thereof, the Borrower, a Lender or Agent shall
have the right from time to time and at any time during the term of this
Agreement to change their respective addresses and each shall have the right to
specify as its address any other address within the United States of America.

 

§20.         RELATIONSHIP.

 

Neither the
Agent nor any Lender has any fiduciary relationship with or fiduciary duty to
the Borrower, any Guarantor or their respective Subsidiaries arising out of or
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereunder and thereunder, and the relationship
between each Lender and Agent, and the Borrower is solely that of a lender and
borrower, and nothing contained herein or in any of the other Loan Documents
shall in any manner be construed as making the parties hereto partners, joint
venturers or any other relationship other than lender and borrower.

 

§21.         GOVERNING LAW; CONSENT TO
JURISDICTION AND SERVICE.

 

THIS
AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED HEREIN OR THEREIN, SHALL, PURSUANT TO NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.  THE BORROWER AGREES THAT ANY
SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK
(INCLUDING ANY FEDERAL COURT SITTING THEREIN). 
THE BORROWER FURTHER ACCEPTS, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY RELATED APPELLATE COURT AND
IRREVOCABLY (i) SUBJECT TO AVAILABLE RIGHTS TO APPEAL, AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY WITH RESPECT TO THIS AGREEMENT AND ANY OF THE
OTHER LOAN DOCUMENTS AND (ii) WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
OR THAT SUCH A COURT IS AN INCONVENIENT FORUM. 
THE BORROWER FURTHER AGREES THAT SERVICE OF PROCESS IN ANY SUCH SUIT MAY BE
MADE UPON THE BORROWER BY REGISTERED OR CERTIFIED MAIL AT THE ADDRESS SPECIFIED
IN SECTION 19 HEREOF.  IN ADDITION
TO THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN,
THE AGENT OR ANY LENDER MAY BRING ACTION(S) FOR

 

97

 

ENFORCEMENT
ON A NONEXCLUSIVE BASIS WHERE ANY COLLATERAL OR ASSETS OF THE BORROWER EXISTS
AND THE BORROWER CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND
THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY
REGISTERED OR CERTIFIED MAIL AT THE ADDRESS SPECIFIED IN SECTION 19
HEREOF.

 

§22.         HEADINGS.

 

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

 

§23.         COUNTERPARTS.

 

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

 

§24.         ENTIRE AGREEMENT, ETC.

 

This Agreement
and the Loan Documents is intended by the parties as the final, complete and
exclusive statement of the transactions evidenced by this Agreement and the
Loan Documents.  All prior or
contemporaneous promises, agreements and understandings, whether oral or
written, are deemed to be superseded by this Agreement and the Loan Documents,
and no party is relying on any promise, agreement or understanding not set
forth in this Agreement and the Loan Documents. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated, except as
provided in §27.

 

§25.         WAIVER OF JURY TRIAL AND
CERTAIN DAMAGE CLAIMS.

 

EACH OF
THE BORROWER, THE AGENT AND THE LENDERS HEREBY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.  THE BORROWER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES AND TO THE EXTENT PERMITTED BY APPLICABLE
LAW, PUNITIVE OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.  THE BORROWER (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER OR THE AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER OR THE AGENT WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES
THAT THE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN

 

98

 

DOCUMENTS
TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS §25. 
THE BORROWER ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW THIS
§25 WITH LEGAL COUNSEL AND THAT THE BORROWER AGREES TO THE FOREGOING AS ITS
FREE, KNOWING AND VOLUNTARY ACT.

 

§26.         DEALINGS WITH THE
BORROWER.

 

The Agent, the
Lenders and their affiliates may accept deposits from, extend credit to, invest
in, act as trustee under indentures of, serve as financial advisor of, and
generally engage in any kind of banking, trust or other business with the
Borrower, the Guarantors and their respective Subsidiaries or any of their
Affiliates regardless of the capacity of the Agent or the Lender
hereunder.  The Lenders acknowledge that,
pursuant to such activities, KeyBank or its Affiliates may receive information
regarding such Persons (including information that may be subject to
confidentiality obligations in favor of such Person) and acknowledge that the
Agent shall be under no obligation to provide such information to them.

 

§27.         CONSENTS, AMENDMENTS,
WAIVERS, ETC.

 

Except as
otherwise expressly provided in this Agreement, any consent or approval
required or permitted by this Agreement may be given, and any term of this
Agreement or of any other instrument related hereto or mentioned herein may be
amended, and the performance or observance by the Borrower or the Guarantors of
any terms of this Agreement or such other instrument or the continuance of any
Default or Event of Default may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
written consent of the Required Lenders. 
Notwithstanding the foregoing, none of the following may occur without
the written consent of each Lender:  (a) a
reduction in the rate of interest on the Notes (other than a reduction or
waiver of default interest); (b) an increase in the amount of the
Commitments of the Lenders (except as provided in §2.11 and §18.1); (c) a
forgiveness, reduction or waiver of the principal of any unpaid Loan or any
interest thereon or fee payable under the Loan Documents; (d) a change in
the amount of any fee payable to a Lender hereunder; (e) the postponement
of any date fixed for any payment of principal of or interest on the Loan; (f) an
extension of the Revolving Credit Maturity Date (except as provided in §2.12)
or the Term Loan Maturity Date (except as provided in §2.13); (g) a change
in the manner of distribution of any payments to the Lenders or the Agent; (h) the
release of the Borrower, any Guarantor or any Collateral except as otherwise
provided in this Agreement; (i) an amendment of the definition of Majority
Revolving Credit Lenders, Required Lenders or of any requirement for consent by
all of the Lenders; (j) any modification to require a Lender to fund a pro
rata share of a request for an advance of the Loan made by the Borrower other
than based on its Commitment Percentage; (k) an amendment to this §27; or (l) an
amendment of any provision of this Agreement or the Loan Documents which
requires the approval of all of the Lenders, the Majority Revolving Credit
Lenders or the Required Lenders to require a lesser number of Lenders to
approve such action.  The provisions of
§14 may not be amended without the written consent of the Agent.  There shall be no amendment, modification or
waiver of any provision in the Loan Documents with respect to Swing Loans
without the consent of the Swing Loan Lender, nor any amendment, modification
or waiver of any provision in the Loan Documents with respect to Letters of
Credit without the consent of the Issuing Lender.  The

 

99

 

Borrower
agrees to enter into such modifications or amendments of this Agreement or the
other Loan Documents as reasonably may be requested by KeyBank in connection
with the syndication of the Loan, provided that no such amendment or
modification materially affects or increases any of the obligations of the
Borrower hereunder.  No waiver shall
extend to or affect any obligation not expressly waived or impair any right
consequent thereon.  No course of dealing
or delay or omission on the part of the Agent or any Lender in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial
thereto.  No notice to or demand upon the
Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.

 

§28.         SEVERABILITY.

 

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

 

§29.         TIME OF THE ESSENCE.

 

Time is of the
essence with respect to each and every covenant, agreement and obligation of
the Borrower under this Agreement and the other Loan Documents.

 

§30.         NO UNWRITTEN AGREEMENTS.

 

THE LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 
ANY ADDITIONAL TERMS OF THE AGREEMENT BETWEEN THE PARTIES ARE SET FORTH
BELOW.

 

§31.         REPLACEMENT NOTES.

 

Upon receipt
of evidence reasonably satisfactory to the Borrower of the loss, theft,
destruction or mutilation of any Note, and in the case of any such loss, theft
or destruction, upon delivery of an indemnity agreement reasonably satisfactory
to the Borrower or, in the case of any such mutilation, upon surrender and
cancellation of the applicable Note, the Borrower will execute and deliver, in
lieu thereof, a replacement Note, identical in form and substance to the
applicable Note and dated as of the date of the applicable Note and upon such
execution and delivery all references in the Loan Documents to such Note shall
be deemed to refer to such replacement Note.

 

§32.         NO THIRD PARTIES
BENEFITED.

 

This Agreement
and the other Loan Documents are made and entered into for the sole protection
and legal benefit of the Borrower, the Guarantors, the Lenders, the Agent and
their permitted successors and assigns, and no other Person shall be a direct
or indirect legal

 

100

 

beneficiary
of, or have any direct or indirect cause of action or claim in connection with,
this Agreement or any of the other Loan Documents.  All conditions to the performance of the
obligations of the Agent and the Lenders under this Agreement, including the
obligation to make Loans and issue Letters of Credit, are imposed solely and
exclusively for the benefit of the Agent and the Lenders and no other Person
shall have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that the Agent and the Lenders will
refuse to make Loans or issue Letters of Credit in the absence of strict
compliance with any or all thereof and no other Person shall, under any
circumstances, be deemed to be a beneficiary of such conditions, any and all of
which may be freely waived in whole or in part by the Agent and the Lenders at
any time if in their sole discretion they deem it desirable to do so.  In particular, the Agent and the Lenders make
no representations and assume no obligations as to third parties concerning the
quality of the construction by the Borrower or any of its Subsidiaries of any
development or the absence therefrom of defects.

 

§33.         PATRIOT ACT.

 

Each Lender
and the Agent (for itself and not on behalf of any Lender) hereby notifies the
Borrower that, pursuant to the requirements of the Patriot Act, it is required
to obtain, verify and record information that identifies the Borrower, which
information includes names and addresses and other information that will allow
such Lender or the Agent, as applicable, to identify the Borrower in accordance
with the Patriot Act.

 

[remainder of page intentionally
left blank]

 

101

 

IN WITNESS
WHEREOF, each of the undersigned have caused this
Agreement to be executed by its duly authorized representatives as of the date
first set forth above.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD OPERATING

  PARTNERSHIP I LP, a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHR, Inc., a Delaware corporation, its General

  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

(SEAL)

102

 

	
   

  	
  AGENT AND LENDERS:

  
	
   

  	
   

  
	
   

  	
  KEYBANK NATIONAL ASSOCIATION, individually

  and as Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

103

 

	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Address
for Notices:

 

Wachovia Bank, National
Association

301 S. College Street

16th Floor, NC0172

Charlotte, NC 28288

	
  Attention:

  	
   

  	
  Cindy
  Bean

  
	
  Telephone:

  	
   

  	
  (704)
  383-7534

  
	
  Facsimile:

  	
   

  	
  (704)
  715-0065

  

 

104

 

	
   

  	
  AAREAL BANK AG

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Address
for Notices:

 

Aareal Bank AG

Paulinenstrasse 15

65189 Wiesbaden

Germany

	
  Attention:

  	
   

  	
  Markus
  Obenland

  
	
  Telephone:

  	
   

  	
  +49-(0)611-348-3594

  
	
  Facsimile:

  	
   

  	
  +49-(0)611-348-2757

  

 

105

 

	
   

  	
  WESTDEUTSCHE IMMOBILIENBANK AG

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

Address
for Notices:

 

1211 Avenue of the Americas

24th Floor

New York, NY 10036

	
  Attention:

  	
   

  	
  David
  McGannon

  
	
  Telephone:

  	
   

  	
  (212)
  588-0065

  
	
  Facsimile:

  	
   

  	
  (212)
  588-0992

  

 

106

 

	
   

  	
  RBS CITIZENS, N.A. d/b/a CHARTER ONE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Address
for Notices:

 

RBS Citizens, N.A. d/b/a
Charter One

1215 Superior Avenue

6th Floor

Cleveland, OH 44114

	
  Attention:

  	
   

  	
  Don
  Woods

  
	
  Telephone:

  	
   

  	
  (216)
  277-0199

  
	
  Facsimile:

  	
   

  	
  (216)
  277-4607

  

 

107

 

	
   

  	
  FIFTH THIRD BANK, a Michigan banking

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Address
for Notices:

 

Fifth Third Bank

MD C82111

3821 Ruckriegel Parkway

Louisville, KY 40299

	
  Attention:

  	
   

  	
  Tammy
  Leachman

  
	
  Telephone:

  	
   

  	
  (502)
  297-6199

  
	
  Facsimile:

  	
   

  	
  (502)
  267-7747

  

 

108

 

	
   

  	
  NATIONAL
  CITY BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Address
for Notices:

 

National City Bank

2000 Auburn Drive, Suite 400

Beachwood, OH 44122

	
  Attention:

  	
   

  	
  Sean
  Apicella

  
	
  Telephone:

  	
   

  	
  (216)
  488-3687

  
	
  Facsimile:

  	
   

  	
  (216)
  488-3160

  

 

109

 

	
   

  	
  ALLIED IRISH BANKS, P.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

Address
for Notices:

 

Allied Irish Banks, P.L.C.

405 Park Avenue

New York, NY 10022

	
  Attention:

  	
   

  	
  Doug
  Marron / Aaron Bawol

  
	
  Telephone:

  	
   

  	
  (212)
  515-6763 / (212) 339-8038

  
	
  Facsimile:

  	
   

  	
  (212)
  339-8325

  

 

110

 

	
   

  	
  PNC BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Address
for Notices:

 

PNC Bank, National
Association

500 1st Avenue

Pittsburgh, PA 15219

	
  Attention:

  	
   

  	
  Leigh
  Ann Geyer

  
	
  Telephone:

  	
   

  	
  (412)
  762-5600

  
	
  Facsimile:

  	
   

  	
  (412)
  762-6500

  

 

111

 

	
   

  	
  CITIBANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Address
for Notices:

 

Citibank, N.A.

8401 N. Central Expressway

Suite 500

Dallas, Texas  75225

	
  Attention:

  	
   

  	
  Andrea
  L. Murry

  
	
  Telephone:

  	
   

  	
  (972)
  419-3453

  
	
  Facsimile:

  	
   

  	
  (972)
  419-3308

  

 

112

 

	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Address
for Notices:

 

Bank of America, N.A.

901 Main Street, 20th Floor

TX1-492-20-06

Dallas, TX 75202

	
  Attention:

  	
   

  	
  Brett
  Bell

  
	
  Telephone:

  	
   

  	
  (214)
  209-2773

  
	
  Facsimile:

  	
   

  	
  (214)
  209-1832

  

 

113

 

	
   

  	
  TEXAS CAPITAL BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Address
for Notices:

 

Texas Capital Bank, National
Association

500 Throckmorton Street

Suite 300

Fort Worth, TX 76102

	
  Attention:

  	
   

  	
  Jeffrey
  A. Moten

  
	
  Telephone:

  	
   

  	
  (817)
  852-4005

  
	
  Facsimile:

  	
   

  	
  (817)
  336-0553

  

 

114

 

EXHIBIT A

 

FORM OF REVOLVING CREDIT NOTE

 

	
  $                          

  	
   

  	
   

  	
                       , 2007

  	
   

  

 

FOR VALUE
RECEIVED, the undersigned (“Maker”), hereby promises to pay to
                                
                                    
(“Payee”), or order, in accordance with the terms of that certain Credit
Agreement, dated as of December 11, 2007, as from time to time in effect,
by and among Behringer Harvard Operating Partnership I LP, KeyBank National
Association, for itself and as Agent, and such other Lenders as may be from
time to time named therein (the “Credit Agreement”), to the extent not sooner
paid, on or before the Revolving Credit Maturity Date, the principal sum of
                                  
($                    ),
or such amount as may be advanced by the Payee under the Credit Agreement as a
Revolving Credit Loan with daily interest from the date thereof, computed as
provided in the Credit Agreement, on the principal amount hereof from time to
time unpaid, at a rate per annum on each portion of the principal amount which
shall at all times be equal to the rate of interest applicable to such portion
in accordance with the Credit Agreement, and with interest on overdue principal
and, to the extent permitted by applicable law, on overdue installments of
interest and late charges at the rates provided in the Credit Agreement.  Interest shall be payable on the dates
specified in the Credit Agreement, except that all accrued interest shall be
paid at the stated or accelerated maturity hereof or upon the prepayment in
full hereof.  Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in
the Credit Agreement.

 

Payments
hereunder shall be made to the Agent for the Payee at 127 Public Square,
Cleveland, Ohio 44114-1306, or at such other address as Agent may designate
from time to time.

 

This Note is
one of one or more Revolving Credit Notes evidencing borrowings under and is
entitled to the benefits and subject to the provisions of the Credit Agreement.  The principal of this Note may be due and
payable in whole or in part prior to the Revolving Credit Maturity Date and is
subject to mandatory prepayment in the amounts and under the circumstances set
forth in the Credit Agreement, and may be prepaid in whole or from time to time
in part, all as set forth in the Credit Agreement.

 

Notwithstanding
anything in this Note to the contrary, all agreements between the undersigned
Maker and the Lenders and the Agent, whether now existing or hereafter arising
and whether written or oral, are hereby limited so that in no contingency,
whether by reason of acceleration of the maturity of any of the Obligations or
otherwise, shall the interest contracted for, charged or received by the
Lenders exceed the maximum amount permissible under applicable law.  If, from any circumstance whatsoever,
interest would otherwise be payable to the Lenders in excess of the maximum
lawful amount, the interest payable to the Lenders shall be reduced to the
maximum amount permitted under applicable law; and if from any circumstance the
Lenders shall ever receive anything of value deemed interest by applicable law
in excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations of the undersigned Maker and to the payment of interest or, if such
excessive interest exceeds the unpaid balance of principal of the Obligations
of the undersigned Maker, such excess shall be refunded to the undersigned 

 

A-1

 

Maker.  All interest paid or
agreed to be paid to the Lenders shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations of the undersigned
Maker (including the period of any renewal or extension thereof) so that the
interest thereon for such full period shall not exceed the maximum amount
permitted by applicable law.  This paragraph
shall control all agreements between the undersigned Maker and the Lenders and
the Agent.

 

In case an
Event of Default shall occur, the entire principal amount of this Note may
become or be declared due and payable in the manner and with the effect
provided in said Credit Agreement.

 

This Note
shall, pursuant to New York General Obligations Law Section 5-1401, be
governed by the laws of the State of New York.

 

The
undersigned Maker and all guarantors and endorsers hereby waive presentment,
demand, notice, protest, notice of intention to accelerate the indebtedness
evidenced hereby, notice of acceleration of the indebtedness evidenced hereby
and all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, except as specifically otherwise
provided in the Credit Agreement, and assent to extensions of time of payment
or forbearance or other indulgence without notice.

 

IN WITNESS
WHEREOF, the undersigned has by its duly authorized officer executed this Note
on the day and year first above written.

 

	
   

  	
  BEHRINGER
  HARVARD OPERATING 

  PARTNERSHIP I LP, a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHR, Inc., a Delaware corporation,

  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  (SEAL)

  
					

 

A-2

 

EXHIBIT B

 

FORM OF SWING LOAN NOTE

 

	
  $50,000,000.00

  	
   

  	
   

  	
                       , 2007

  	
   

  

 

FOR VALUE
RECEIVED, the undersigned (“Maker”), hereby promises to pay to
                                
                                    
(“Payee”), or order, in accordance with the terms of that certain Credit
Agreement, dated as of December 11, 2007, as from time to time in effect,
by and among Behringer Harvard Operating Partnership I LP, KeyBank National
Association, for itself and as Agent, and such other Lenders as may be from
time to time named therein (the “Credit Agreement”), to the extent not sooner
paid, on or before the Revolving Credit Maturity Date, the principal sum of
Fifty Million and No/100 Dollars ($50,000,000.00), or such amount as may be
advanced by the Payee under the Credit Agreement as a Swing Loan with daily
interest from the date thereof, computed as provided in the Credit Agreement,
on the principal amount hereof from time to time unpaid, at a rate per annum on
each portion of the principal amount which shall at all times be equal to the
rate of interest applicable to such portion in accordance with the Credit
Agreement, and with interest on overdue principal and, to the extent permitted
by applicable law, on overdue installments of interest and late charges at the
rates provided in the Credit Agreement. 
Interest shall be payable on the dates specified in the Credit
Agreement, except that all accrued interest shall be paid at the stated or
accelerated maturity hereof or upon the prepayment in full hereof.  Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Credit
Agreement.

 

Payments
hereunder shall be made to the Agent for the Payee at 127 Public Square,
Cleveland, Ohio 44114-1306, or at such other address as Agent may designate
from time to time.

 

This Note is
one of one or more Swing Loan Notes evidencing borrowings under and is entitled
to the benefits and subject to the provisions of the Credit Agreement.  The principal of this Note may be due and
payable in whole or in part prior to the Revolving Credit Maturity Date and is
subject to mandatory prepayment in the amounts and under the circumstances set
forth in the Credit Agreement, and may be prepaid in whole or from time to time
in part, all as set forth in the Credit Agreement.

 

Notwithstanding
anything in this Note to the contrary, all agreements between the undersigned
Maker and the Lenders and the Agent, whether now existing or hereafter arising and
whether written or oral, are hereby limited so that in no contingency, whether
by reason of acceleration of the maturity of any of the Obligations or
otherwise, shall the interest contracted for, charged or received by the
Lenders exceed the maximum amount permissible under applicable law.  If, from any circumstance whatsoever,
interest would otherwise be payable to the Lenders in excess of the maximum
lawful amount, the interest payable to the Lenders shall be reduced to the
maximum amount permitted under applicable law; and if from any circumstance the
Lenders shall ever receive anything of value deemed interest by applicable law
in excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations of the undersigned Maker and to the payment of interest or, if such
excessive interest exceeds the unpaid balance of principal of the Obligations
of the undersigned Maker, such excess shall be refunded to the undersigned 

 

B-1

 

Maker.  All interest paid or
agreed to be paid to the Lenders shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations of the undersigned
Maker (including the period of any renewal or extension thereof) so that the
interest thereon for such full period shall not exceed the maximum amount
permitted by applicable law.  This paragraph
shall control all agreements between the undersigned Maker and the Lenders and
the Agent.

 

In case an
Event of Default shall occur, the entire principal amount of this Note may
become or be declared due and payable in the manner and with the effect provided
in said Credit Agreement.

 

This Note
shall, pursuant to New York General Obligations Law Section 5-1401, be
governed by the laws of the State of New York.

 

The
undersigned Maker and all guarantors and endorsers hereby waive presentment,
demand, notice, protest, notice of intention to accelerate the indebtedness
evidenced hereby, notice of acceleration of the indebtedness evidenced hereby
and all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, except as specifically otherwise
provided in the Credit Agreement, and assent to extensions of time of payment
or forbearance or other indulgence without notice.

 

IN WITNESS
WHEREOF, the undersigned has by its duly authorized officer executed this Note
on the day and year first above written.

 

	
   

  	
  BEHRINGER
  HARVARD OPERATING

  PARTNERSHIP I LP, a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHR, Inc., a Delaware corporation, its

  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  (SEAL)

  
					

 

B-2

 

EXHIBIT C

 

FORM OF
TERM LOAN NOTE

 

	
  $                          

  	
   

  	
   

  	
                       , 2007

  	
   

  

 

FOR VALUE
RECEIVED, the undersigned (“Maker”), hereby promises to pay to
                                
                                    
(“Payee”), or order, in accordance with the terms of that certain Credit
Agreement, dated as of December 11, 2007, as from time to time in effect,
by and among Behringer Harvard Operating Partnership I LP, KeyBank National
Association, for itself and as Agent, and such other Lenders as may be from
time to time named therein (the “Credit Agreement”), to the extent not sooner
paid, on or before the Term Loan Maturity Date, the principal sum of
                                  
($                    ),
or such amount as may be advanced by the Payee under the Credit Agreement as a
Term Loan with daily interest from the date thereof, computed as provided in
the Credit Agreement, on the principal amount hereof from time to time unpaid,
at a rate per annum on each portion of the principal amount which shall at all
times be equal to the rate of interest applicable to such portion in accordance
with the Credit Agreement, and with interest on overdue principal and, to the
extent permitted by applicable law, on overdue installments of interest and
late charges at the rates provided in the Credit Agreement.  Interest shall be payable on the dates
specified in the Credit Agreement, except that all accrued interest shall be
paid at the stated or accelerated maturity hereof or upon the prepayment in
full hereof.  Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in
the Credit Agreement.

 

Payments
hereunder shall be made to the Agent for the Payee at 127 Public Square,
Cleveland, Ohio 44114-1306, or at such other address as Agent may designate
from time to time.

 

This Note is
one of one or more Term Loan Notes evidencing borrowings under and is entitled
to the benefits and subject to the provisions of the Credit Agreement.  The principal of this Note may be due and
payable in whole or in part prior to the Term Loan Maturity Date and is subject
to mandatory prepayment in the amounts and under the circumstances set forth in
the Credit Agreement, and may be prepaid in whole or from time to time in part,
all as set forth in the Credit Agreement.

 

Notwithstanding
anything in this Note to the contrary, all agreements between the undersigned
Maker and the Lenders and the Agent, whether now existing or hereafter arising
and whether written or oral, are hereby limited so that in no contingency,
whether by reason of acceleration of the maturity of any of the Obligations or
otherwise, shall the interest contracted for, charged or received by the
Lenders exceed the maximum amount permissible under applicable law.  If, from any circumstance whatsoever,
interest would otherwise be payable to the Lenders in excess of the maximum
lawful amount, the interest payable to the Lenders shall be reduced to the
maximum amount permitted under applicable law; and if from any circumstance the
Lenders shall ever receive anything of value deemed interest by applicable law
in excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations of the undersigned Maker and to the payment of interest or, if such
excessive interest exceeds the unpaid balance of principal of the Obligations
of the undersigned Maker, such excess shall be refunded to the undersigned 

 

C-1

 

Maker.  All interest paid or
agreed to be paid to the Lenders shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations of the undersigned
Maker (including the period of any renewal or extension thereof) so that the
interest thereon for such full period shall not exceed the maximum amount
permitted by applicable law.  This
paragraph shall control all agreements between the undersigned Maker and the
Lenders and the Agent.

 

In case an
Event of Default shall occur, the entire principal amount of this Note may
become or be declared due and payable in the manner and with the effect provided
in said Credit Agreement.

 

This Note
shall, pursuant to New York General Obligations Law Section 5-1401, be
governed by the laws of the State of New York.

 

The
undersigned Maker and all guarantors and endorsers hereby waive presentment,
demand, notice, protest, notice of intention to accelerate the indebtedness
evidenced hereby, notice of acceleration of the indebtedness evidenced hereby
and all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, except as specifically otherwise
provided in the Credit Agreement, and assent to extensions of time of payment
or forbearance or other indulgence without notice.

 

IN WITNESS
WHEREOF, the undersigned has by its duly authorized officer executed this Note
on the day and year first above written.

 

	
   

  	
  BEHRINGER
  HARVARD OPERATING

  PARTNERSHIP I LP, a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHR, Inc., a Delaware corporation, its

  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  (SEAL)

  
					

 

C-2

 

EXHIBIT D

 

FORM OF JOINDER AGREEMENT

 

THIS JOINDER
AGREEMENT (“Joinder Agreement”) is executed as of
                                    ,
20    , by
                                                              ,
a                                                     
(“Joining Party”), and delivered to KeyBank National Association, as Agent,
pursuant to §5.2 of the Credit Agreement dated as of December 11, 2007, as
from time to time in effect (the “Credit Agreement”), by and among Behringer
Harvard Operating Partnership I LP (the “Borrower”), KeyBank National
Association, for itself and as Agent, and the other Lenders from time to time
party thereto.  Terms used but not
defined in this Joinder Agreement shall have the meanings defined for those
terms in the Credit Agreement.

 

RECITALS

 

A.                                   Joining
Party is required, pursuant to §5.2  of
the Credit Agreement, to become an additional Subsidiary Guarantor under the
Guaranty, the Indemnity Agreement and the Contribution Agreement.

 

B.                                     Joining
Party expects to realize direct and indirect benefits as a result of the
availability to the Borrower of the credit facilities under the Credit
Agreement.

 

NOW,
THEREFORE, Joining Party agrees as follows:

 

AGREEMENT

 

1.                                       Joinder.  By this
Joinder Agreement, Joining Party hereby becomes a “Subsidiary Guarantor” and a “Guarantor”
under the Credit Agreement, the Guaranty, the Indemnity Agreement, and the
other Loan Documents with respect to all the Obligations of the Borrower now or
hereafter incurred under the Credit Agreement and the other Loan Documents, and
a “Subsidiary Guarantor” under the Contribution Agreement.  Joining Party agrees that Joining Party is
and shall be bound by, and hereby assumes, all representations, warranties,
covenants, terms, conditions, duties and waivers applicable to a “Subsidiary
Guarantor” and a “Guarantor” under the Credit Agreement, the Guaranty, the
Indemnity Agreement, the other Loan Documents and the Contribution Agreement.

 

2.                                       Representations and Warranties of Joining
Party.  Joining Party represents and warrants to
Agent that, as of the Effective Date (as defined below), except as disclosed in
writing by Joining Party to Agent on or prior to the date hereof and approved
by the Agent in writing (which disclosures shall be deemed to amend the
Schedules and other disclosures delivered as contemplated in the Credit
Agreement), the representations and warranties contained in the Credit
Agreement and the other Loan Documents applicable to a “Guarantor” or “Subsidiary
Guarantor” are true and correct in all material respects as applied to Joining
Party as a Subsidiary Guarantor and a Guarantor on and as of the Effective Date
as though made on that date.  As of the
Effective Date, all covenants and agreements in the Loan Documents and the
Contribution Agreement of the Subsidiary Guarantors apply to Joining Party and
no Default or Event of Default shall exist or might exist upon the Effective
Date in the event that Joining Party becomes a Subsidiary Guarantor.

 

D-1

 

3.             Joint and Several. 
Joining Party hereby agrees that, as of the Effective Date, the
Guaranty, the Contribution Agreement and the Indemnity Agreement heretofore
delivered to the Agent and the Lenders shall be a joint and several obligation
of Joining Party to the same extent as if executed and delivered by Joining
Party, and upon request by Agent, will promptly become a party to the Guaranty,
the Contribution Agreement and the Indemnity Agreement to confirm such obligation.

 

4.             Further Assurances. 
Joining Party agrees to execute and deliver such other instruments and
documents and take such other action, as the Agent may reasonably request, in
connection with the transactions contemplated by this Joinder Agreement.

 

5.             GOVERNING LAW.  THIS JOINDER AGREEMENT SHALL BE DEEMED TO BE
A CONTRACTUAL OBLIGATION UNDER, AND SHALL, PURSUANT TO NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

6.             Counterparts. 
This Joinder Agreement may be executed in any number of counterparts
which shall together constitute but one and the same agreement.

 

7.             The effective date (the “Effective Date”)
of this Joinder Agreement is
                                  ,
20    .

 

IN WITNESS
WHEREOF, Joining Party has executed this Joinder Agreement under seal as of the
day and year first above written.

 

	
   

  	
  “JOINING
  PARTY”

  
	
   

  	
   

  
	
   

  	
   

  	
  ,
  a

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  [SEAL]

  
							

 

	
  ACKNOWLEDGED:

  	
   

  
	
   

  	
   

  
	
  KEYBANK
  NATIONAL ASSOCIATION, as Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Printed Name and Title]

  	
   

  
					

 

D-2

 

EXHIBIT E

 

FORM OF REQUEST FOR REVOLVING CREDIT
LOAN

 

	
  KeyBank National Association, as Agent

  
	
  800 Superior

  
	
  Cleveland, Ohio 44114-1306

  
	
  Attn: Diana D’Aquila

  
	
   

  
	
  Ladies
  and Gentlemen:

  

 

Pursuant to
the provisions of §2.7 of the Credit Agreement dated as of December 11,
2007 (as the same may hereafter be amended, the “Credit Agreement”), by and
among Behringer Harvard Operating Partnership I LP (the “Borrower”), KeyBank
National Association for itself and as Agent, and the other Lenders from time
to time party thereto, the undersigned Borrower hereby requests and certifies
as follows:

 

1.                                       Revolving Credit Loan. 
The undersigned Borrower hereby requests a [Revolving
Credit Loan under §2.1] [Swing Loan under §2.5] of the Credit
Agreement:

 

Principal Amount: 
$                    

Type (LIBOR Rate, Base Rate):

Drawdown Date:

Interest Period for Revolving Credit LIBOR Rate Loans:

 

by credit to the general
account of the Borrower with the Agent at the Agent’s Head Office.

 

[If the requested Loan is a Swing Loan and the Borrower desires for
such Loan to be a LIBOR Rate Loan following its conversion as provided in
§2.5(d), specify the Interest Period following
conversion:                                  ]

 

2.                                       Use of Proceeds. 
Such Loan shall be used for purposes permitted by §2.9 of the Credit
Agreement.

 

3.                                       No Default.  The
undersigned chief financial officer or chief accounting officer of Borrower
certifies that the Borrower is and will be in compliance with all covenants
under the Loan Documents after giving effect to the making of the Loan
requested hereby and no Default or Event of Default has occurred and is
continuing.

 

4.                                       Representations True. 
The undersigned chief financial officer or chief accounting officer of
the Borrower certifies, represents and agrees on behalf of the Borrower (and
not in his individual capacity) that each of the representations and warranties
made by or on behalf of the Borrower, the Guarantors or their respective
Subsidiaries, contained in the Credit Agreement, in the other Loan Documents or
in any document or instrument delivered pursuant to or in connection with the
Credit Agreement was true in all material respects as of the date on which it
was made and, is true in all material respects as of the date hereof and shall
also be true at and as of the Drawdown Date for the Loan requested hereby, with
the same effect as if made at and as of such Drawdown Date, except to the
extent of changes resulting from transactions permitted by 

 

E-1

 

the Loan Documents and
except as previously disclosed in writing by the Borrower to Agent and approved
by the Agent in writing (which disclosures shall be deemed to amend the
Schedules and other disclosures delivered as contemplated in this Agreement (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and correct
only as of such specified date).

 

5.                                       Other Conditions. 
The undersigned chief financial officer or chief accounting officer of
the Borrower certifies, represents and agrees on behalf of the Borrower (and
not in his individual capacity) that all other conditions to the making of the
Loan requested hereby set forth in the Credit Agreement have been satisfied or
waived in writing.

 

6.                                       Definitions. 
Terms defined in the Credit Agreement are used herein with the meanings
so defined.

 

IN WITNESS
WHEREOF, the undersigned has duly executed this request this
           day of
                          ,
200    .

 

	
   

  	
  BEHRINGER
  HARVARD OPERATING

  PARTNERSHIP I LP, a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHR, Inc., a Delaware corporation, its

  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

E-2

 

EXHIBIT F

 

FORM OF LETTER OF CREDIT REQUEST

 

[DATE]

 

	
  KeyBank National Association, as Agent

  
	
  1675 Broadway, Suite 400

  
	
  Denver, Colorado 80202

  
	
  Attn: Cheryl Van Klompenberg

  

 

Re:                             Letter
of Credit Request under Credit Agreement dated as of December 11, 2007

 

Ladies and Gentlemen:

 

Pursuant to
§2.10 of the Credit Agreement dated as of December 11, 2007, by and among
you, certain other Lenders and Behringer Harvard Operating Partnership I LP
(the “Borrower”) (the “Credit Agreement”), we hereby request that you issue a
Letter of Credit as follows:

 

(i)                                     Name and
address of beneficiary:

 

(ii)                                  Face amount: $

 

(iii)                               Proposed
Issuance Date:

 

(iv)                              Proposed
Expiration Date:

 

(v)                                 Other terms and
conditions as set forth in the proposed form of Letter of Credit attached
hereto.

 

(vi)                              Purpose of
Letter of Credit:

 

This Letter of
Credit Request is submitted pursuant to, and shall be governed by, and subject
to satisfaction of, the terms, conditions and provisions set forth in §2.10 of
the Credit Agreement.

 

The
undersigned chief financial officer or chief accounting officer of the Borrower
certifies on behalf of the Borrower (and not in his individual capacity) that
the Borrower is and will be in compliance with all covenants under the Loan
Documents after giving effect to the issuance of the Letter of Credit requested
hereby and no Default or Event of Default has occurred and is continuing.

 

F-1

 

We also
understand that if you grant this request this request obligates us to accept
the requested Letter of Credit and pay the issuance fee and Letter of Credit
fee as required by §2.10(e).  All
capitalized terms defined in the Credit Agreement and used herein without
definition shall have the meanings set forth in §1.1 of the Credit Agreement.

 

The
undersigned chief financial officer or chief accounting officer of the Borrower
certifies, represents and agrees on behalf of the Borrower (and not in his
individual capacity) that each of the representations and warranties made by or
on behalf of the Borrower, the Guarantors or their respective Subsidiaries,
contained in the Credit Agreement, in the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with the Credit Agreement
was true in all material respects as of the date on which it was made, is true
as of the date hereof and shall also be true at and as of the proposed issuance
date of the Letter of Credit requested hereby, with the same effect as if made
at and as of the proposed issuance date, except to the extent of changes
resulting from transactions permitted by the Loan Documents and except as
previously disclosed in writing by the Borrower to Agent and approved by the
Agent in writing (which disclosures shall be deemed to amend the Schedules and
other disclosures delivered as contemplated in this Agreement (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct only as of
such specified date).

 

	
   

  	
  Very
  truly yours,

  

 

	
   

  	
  BEHRINGER
  HARVARD OPERATING

  PARTNERSHIP I LP, a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHR, Inc., a Delaware corporation, its

  GeneralPartner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

F-2

 

EXHIBIT G

 

FORM OF COMPLIANCE CERTIFICATE

 

	
  KeyBank National Association, as Agent

  
	
  127 Public Square

  
	
  Cleveland, Ohio 44114-1306

  
	
  Attn: Joshua Mayers

  

 

Ladies and Gentlemen:

 

Reference is
made to the Credit Agreement dated as of December 11, 2007 (as the same
may hereafter be amended, the “Credit Agreement”) by and among Behringer
Harvard Operating Partnership I LP (the “Borrower”), KeyBank National
Association for itself and as Agent, and the other Lenders from time to time
party thereto.  Terms defined in the
Credit Agreement and not otherwise defined herein are used herein as defined in
the Credit Agreement.

 

Pursuant to
the Credit Agreement, the Borrower is furnishing to you herewith (or has most
recently furnished to you) the consolidated financial statements of the
Borrower for the fiscal period ended
                              
(the “Balance Sheet Date”).  Such
financial statements have been prepared in accordance with GAAP and present
fairly the consolidated financial position of the Borrower at the date thereof
and the results of its operations for the periods covered thereby.

 

This
certificate is submitted in compliance with requirements of §2.11(d), §7.4(c),
§8.1, §10.12 or §11.3 of the Credit Agreement. 
If this certificate is provided under a provision other than §7.4(c),
the calculations provided below are made using the consolidated financial
statements of the Borrower as of the Balance Sheet Date adjusted in the best
good faith estimate of the Borrower to give effect to the making of a Loan,
issuance of a Letter of Credit, acquisition or disposition of property or other
event that occasions the preparation of this certificate; and the nature of such
event and the estimate of the Borrower of its effects are set forth in
reasonable detail in an attachment hereto. 
The undersigned officer is the chief financial officer or chief
accounting officer of the Borrower.

 

The
undersigned representative has caused the provisions of the Loan Documents to
be reviewed and has no knowledge of any Default or Event of Default. (Note: If
the signer does have knowledge of any Default or Event of Default, the form of
certificate should be revised to specify the Default or Event of Default, the
nature thereof and the actions taken, being taken or proposed to be taken by
the Borrower with respect thereto.)

 

The
undersigned is providing the attached information to demonstrate compliance as
of the date hereof with the covenants described in the attachment hereto.

 

G-1

 

IN WITNESS WHEREOF, the
undersigned has duly executed this Compliance Certificate on behalf of the
Borrower (and not in his individual capacity) this
           day of
                      ,
200    .

 

	
   

  	
  BEHRINGER
  HARVARD OPERATING

  PARTNERSHIP I LP, a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHR, Inc.,
  a Delaware corporation, its

  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  

 

G-2

 

APPENDIX TO COMPLIANCE CERTIFICATE

 

G-3

 

WORKSHEET

 

GROSS ASSET VALUE*

 

	
  A.

  	
   

  	
  Stabilized
  Properties owned for prior six (6) fiscal quarters (other than 222
  Riverside Plaza and 1325 G Street):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Net
  Operating Income for the prior four (4) consecutive fiscal quarters:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Capital
  Reserves for such Real Estate:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  1
  minus 2 divided by 7.50%:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Real
  Estate acquired during the prior six (6) fiscal quarters (other than 222
  Riverside Plaza and 1325 G Street):

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Construction
  in Progress of Development Properties, until the earlier of (x) the 1
  year anniversary of the project completion for such Real Estate and
  (y) the first day of the first fiscal quarter following the date such
  Real Estate first achieves a Lease Rate of at least 85%:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Acquisition
  cost of 222 Riverside Plaza and 1325 G Street:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Aggregate
  of Unrestricted Cash and Cash Equivalents:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Book
  Value of Land Assets:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
   

  	
  Lesser
  of book value or outstanding principal balance of Mortgage Receivables
  secured by office properties and the Multifamily Facility

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  Pro
  rata share of Gross Asset Value attributable to such assets owned by
  Unconsolidated Affiliates:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Gross
  Assets Value equals sum of A.3 plus B plus C plus D plus
  E plus F plus G plus H

  	
   

  	
  $

  	
   

  	
   

  

 

*  Gross Asset Value will be adjusted, as
appropriate, for acquisitions, dispositions and other changes to the portfolio
during the calendar quarter most recently ended prior to a date of
determination.  All income, expense and
value associated with assets included in Gross Asset Value disposed of during
the four (4) calendar quarter period most recently ended prior to a date 

 

G-4

 

of
determination will be eliminated from calculations. Gross Asset Value shall be
calculated in accordance with §1.2(l).

 

G-5

 

EXHIBIT H

 

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

THIS
ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Agreement”) dated
                                        ,
by and between
                                                        
(“Assignor”), and
                                                        
(“Assignee”).

 

W I T N E S S E T H:

 

WHEREAS, Assignor is a
party to that certain Credit Agreement, dated December 11, 2007, by and
among BEHRINGER HARVARD OPERATING PARTNERSHIP I LP (“Borrower”), the other lenders that
are or may become a party thereto, and KEYBANK
NATIONAL ASSOCIATION, individually and as Agent (the “Credit
Agreement”); and

 

WHEREAS, Assignor
desires to transfer to Assignee [Describe
assigned Commitment] under the Credit Agreement and its rights with
respect to the Commitment assigned and its Outstanding Loans with respect
thereto;

 

NOW,
THEREFORE, for and in consideration of the sum of Ten and
No/100 Dollars ($10.00) and other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby
agree as follows:

 

1.             Definitions.  Terms defined in the Credit Agreement and
used herein without definition shall have the respective meanings assigned to
such terms in the Credit Agreement.

 

2.             Assignment.

 

(a)           Subject to the terms and conditions
of this Agreement and in consideration of the payment to be made by Assignee to
Assignor pursuant to Paragraph 5 of this Agreement, effective as of the “Assignment
Date” (as defined in Paragraph 7 below), Assignor hereby irrevocably sells,
transfers and assigns to Assignee, without recourse, a portion of its [Revolving Credit][Term
Loan] Note in the
amount of
$                              
representing a $                              
[Revolving Credit] [Term Loan]
Commitment, and a
                                  
percent (          %)[Revolving Credit][Term
Loan] Commitment
Percentage, and a corresponding interest in and to all of the other rights and
obligations under the Credit Agreement and the other Loan Documents relating
thereto (the assigned interests being hereinafter referred to as the “Assigned
Interests”), including Assignor’s share of all outstanding [Revolving Credit][Term] Loans with respect to the Assigned
Interests and the right to receive interest and principal on and all other fees
and amounts with respect to the Assigned Interests, all from and after the
Assignment Date, all as if Assignee were an original Lender under and signatory
to the Credit Agreement having a [Revolving Credit][Term Loan] Commitment Percentage equal to the
amount of the respective Assigned Interests.

 

(b)           Assignee, subject to the terms and
conditions hereof, hereby assumes all obligations of Assignor with respect to
the Assigned Interests from and after the Assignment Date as if Assignee were
an original Lender under and signatory to the Credit Agreement, which
obligations shall include, but shall not be limited to, the obligation to make [Revolving 

 

H-1

 

Credit][Term]  Loans to the Borrower with respect to the
Assigned Interests and to indemnify the Agent as provided therein (such
obligations, together with all other obligations set forth in the Credit
Agreement and the other Loan Documents are hereinafter collectively referred to
as the “Assigned Obligations”).  Assignor
shall have no further duties or obligations with respect to, and shall have no
further interest in, the Assigned Obligations or the Assigned Interests.

 

3.             Representations
and Requests of Assignor.

 

(a)           Assignor represents and warrants to
Assignee (i) that it is legally authorized to, and has full power and
authority to, enter into this Agreement and perform its obligations under this
Agreement; (ii) that as of the date hereof, before giving effect to the
assignment contemplated hereby the principal face amount of Assignor’s [Revolving Credit][Term
Loan] Note is
$                        
and the aggregate outstanding principal balance of the [Revolving Credit][Term] Loans made by it equals
$                        ,
and (iii) that it has forwarded to the Agent the [Revolving Credit][Term Loan] Note held by Assignor.  Assignor makes no representation or warranty,
express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness or
sufficiency of any Loan Document or any other instrument or document furnished
pursuant thereto or in connection with the Loan, the collectability of the
Loans, the continued solvency of the Borrower or the continued existence,
sufficiency or value of the Collateral or any assets of the Borrower which may
be realized upon for the repayment of the Loans, or the performance or
observance by the Borrower of any of its obligations under the Loan Documents
to which it is a party or any other instrument or document delivered or
executed pursuant thereto or in connection with the Loan; other than that it is
the legal and beneficial owner of, or has the right to assign, the interests
being assigned by it hereunder and that such interests are free and clear of
any adverse claim.

 

(b)           Assignor requests that the Agent
obtain replacement notes for each of Assignor and Assignee as provided in the
Credit Agreement.

 

4.             Representations of Assignee.  Assignee makes and confirms to the Agent,
Assignor and the other Lenders all of the representations, warranties and
covenants of a Lender under Articles 14 and 18 of the Credit Agreement.  Without limiting the foregoing, Assignee (a) represents
and warrants that it is legally authorized to, and has full power and authority
to, enter into this Agreement and perform its obligations under this Agreement;
(b) confirms that it has received copies of such documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Agreement; (c) agrees that it has and will, independently
and without reliance upon Assignor, any other Lender or the Agent and based
upon such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in evaluating the Loans, the Loan
Documents, the creditworthiness of the Borrower and the value of the assets of
the Borrower, and taking or not taking action under the Loan Documents; (d) appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers as are reasonably incidental thereto pursuant to the terms
of the Loan Documents; (e) agrees that, by this Assignment, Assignee has
become a party to and will perform in accordance with their terms all the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender; (f) represents and warrants that Assignee
does not control, is not controlled by, is not under common control with and is

 

H-2

 

otherwise free from
influence or control by, the Borrower or REIT, (g) represents and warrants
that if Assignee is not incorporated under the laws of the United States of
America or any State, it has on or prior to the date hereof delivered to
Borrower and Agent certification as to its exemption (or lack thereof) from
deduction or withholding of any United States federal income taxes and (h) if
Assignee is an assignee of any portion of the Revolving Credit Notes, Assignee
has a net worth as of the date hereof of not less than $100,000,000.00 unless
waived in writing by Borrower and Agent as required by the Credit
Agreement.  Assignee agrees that Borrower
may rely on the representation contained in Section 4(i).

 

5.             Payments to Assignor.  In consideration of the assignment made
pursuant to Paragraph 1 of this Agreement, Assignee agrees to pay to Assignor
on the Assignment Date, an amount equal to
$                        
representing the aggregate principal amount outstanding of the [Revolving Credit][Term] Loans owing to Assignor under the
Loan Agreement and the other Loan Documents with respect to the Assigned
Interests.

 

6.             Payments by Assignor.  Assignor agrees to pay the Agent on the
Assignment Date the registration fee required by §18.2 of the Credit Agreement.

 

7.             Effectiveness.

 

(a)           The effective date for this Agreement
shall be
                              
(the “Assignment Date”).  Following the
execution of this Agreement, each party hereto shall deliver its duly executed
counterpart hereof to the Agent for acceptance and recording in the Register by
the Agent.

 

(b)           Upon such acceptance and recording
and from and after the Assignment Date, (i) Assignee shall be a party to
the Credit Agreement and, to the extent of the Assigned Interests, have the
rights and obligations of a Lender thereunder, and (ii) Assignor shall,
with respect to the Assigned Interests, relinquish its rights and be released
from its obligations under the Credit Agreement.

 

(c)           Upon such acceptance and recording
and from and after the Assignment Date, the Agent shall make all payments in
respect of the rights and interests assigned hereby accruing after the
Assignment Date (including payments of principal, interest, fees and other
amounts) to Assignee.

 

(d)           All outstanding LIBOR Rate Loans
shall continue in effect for the remainder of their applicable Interest Periods
and Assignee shall accept the currently effective interest rates on its
Assigned Interest of each LIBOR Rate Loan.

 

8.             Notices.  Assignee specifies as its address for notices
and its Lending Office for all assigned Loans, the offices set forth below:

 

H-3

 

	
  Notice Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  	
   

  
	
   

  	
   

  	
  Facsimile:

  

 

	
   

  	
   

  	
   

  
	
  Domestic Lending Office:

  	
   

  	
  Same as above

  
	
   

  	
   

  	
   

  
	
  Eurodollar Lending Office:

  	
   

  	
  Same as above

  

 

9.             Payment Instructions.  All payments to Assignee under the Credit
Agreement shall be made as provided in the Credit Agreement in accordance with
the separate instructions delivered to Agent.

 

10.           Governing Law.  THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS
A SEALED INSTRUMENT FOR ALL PURPOSES AND TO BE GOVERNED BY, AND PURSUANT TO NEW
YORK GENERAL OBLIGATIONS LAW SECTION 5-1401 SHALL BE CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO
CONFLICT OF LAWS).

 

11.           Counterparts.  This Agreement may be executed in any number
of counterparts which shall together constitute but one and the same agreement.

 

12.           Amendments.  This Agreement may not be amended, modified
or terminated except by an agreement in writing signed by Assignor and
Assignee, and consented to by Agent.

 

13.           Successors.  This Agreement shall inure to the benefit of
the parties hereto and their respective successors and assigns as permitted by
the terms of Credit Agreement.

 

[signatures on following page]

 

H-4

 

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

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  

 

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  

 

	
  RECEIPT
  ACKNOWLEDGED AND

  ASSIGNMENT CONSENTED TO BY:

  
	
   

  
	
  KEYBANK
  NATIONAL ASSOCIATION, as Agent

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  
	
   

  
	
  CONSENTED
  TO BY:(1)

  
	
   

  
	
  BEHRINGER
  HARVARD OPERATING

  
	
  PARTNERSHIP
  I LP, a Texas limited partnership

  
	
   

  
	
  By:
  BHR, Inc., a Delaware corporation, its General Partner

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
					

 

(1) Insert to extent
required by Credit Agreement.

 

H-5

 

EXHIBIT I

 

FORM OF LETTER OF CREDIT APPLICATION

 

I-1

 

SCHEDULE 1.1

 

LENDERS AND
COMMITMENTS

 

REVOLVING CREDIT
LOAN

 

	
  Name and Address

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Revolving Credit

  Commitment Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KeyBank National Association

  127 Public Square

  Cleveland, Ohio 44114-1306

  Attention:           Kevin
  Murray

  Telephone:      216-689-5986

  Facsimile:            216-689-4997

  	
   

  	
  $

  	
  45,000,000.00

  	
   

  	
  15

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia
  Bank, National Association

  201 S. College Street, CP9

  NC1183

  Charlotte, NC 28288

  Attention:                 Vincent
  Massey

  Telephone:            (704)-590-3321

  Facsimile:               (704)-715-0094

  	
   

  	
  $

  	
  45,000,000.00

  	
   

  	
  15

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aareal Bank
  AG

  Paulinenstrasse 15

  65189 Wiesbaden

  Germany

  Attention:                 Petra
  Friedhofer

  Telephone:            +49-(0)611-348-2356

  Facsimile:               +49-(0)611-348-2757

  	
   

  	
  $

  	
  45,000,000.00

  	
   

  	
  15

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

	
  Name and Address

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Revolving Credit

  Commitment Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Westdeutsche
  Immobilienbank AG

  Grosse Bleiche 46

  55116 Mainz

  Germany

  Attention:                 Klaus
  May

  Telephone:            +49 6131 9280 - 7428

  Facsimile:               +49 6131 9280 -
  7490

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  	
  10

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RBS
  Citizens, N.A. d/b/a Charter One

  1215 Superior Ave, 6th Floor

  Cleveland, OH 44114

  Attention:                 R.J.
  Quinn

  Telephone:            (216)-277-0744

  Facsimile:               (216)-277-4607

  	
   

  	
  $

  	
  24,000,000.00

  	
   

  	
  8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fifth Third
  Bank, a Michigan banking corporation

  MD 1MOC2B

  5050 Kingsley Drive

  Cincinnati, OH 45263

  Attention:                 Joyce
  Elam

  Telephone:            (513)-358-7336

  Facsimile:               (513)-358-3479

  	
   

  	
  $

  	
  24,000,000.00

  	
   

  	
  8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National
  City Bank

  CREA

  2000 Auburn Drive, Suite 400

  Beachwood, OH 44122

  Attention:                 Peggy
  Cramer

  Telephone:            (216)-488-9124

  Facsimile:               (216)-488-0214

  	
   

  	
  $

  	
  21,000,000.00

  	
   

  	
  7

  	
  %

  

 

2

 

	
  Name and Address

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Revolving Credit

  Commitment Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Allied Irish
  Banks, P.L.C.

  2nd Floor, Iona House

  Shelbourne Road

  Ballsbridge, Dublin 4, Ireland

  	
   

  	
  $

  	
  18,000,000.00

  	
   

  	
  6

  	
  %

  
	
  Attention:

  	
  Berne
  Glynn/Peter Garvey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  +353 1 641
  6633 / 6636

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile:

  	
  +353 1 641
  6668

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PNC Bank,
  National Association

  500 1st Avenue

  Pittsburgh, PA 15219

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  	
  5

  	
  %

  
	
  Attention:

  Telephone:

  Facsimile:

  	
  Colleen Mannerino

  (412)-760-7647

  (412)-705-2124

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Citibank, N.A.

  8401 N. Central Expressway

  Suite 500

  Dallas, TX 75225

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  	
  5

  	
  %

  
	
  Attention:  

  Telephone:

  Facsimile:

  	
  Kimberly Brand

  (972)-419-3454

  (972)-419-3308

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

3

 

	
  Name and Address

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Revolving Credit

  Commitment Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of
  America, N.A.

  901 Main Street, 20th Floor

  TX1-492-20-06

  Dallas, TX 75202

  Attention:                 Cindy
  King

  Telephone:            (214)-209-1925

  Facsimile:               (214)-209-1571

  	
   

  	
  $

  	
  12,000,000.00

  	
   

  	
  4

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Texas
  Capital Bank, National Association

  6060 N. Central Expressway

  Dallas, TX 75206

  Attention:                 Claudia
  Watkins

  Telephone:            (972)-560-4525

  Facsimile:               (214) 706-6849

  	
   

  	
  $

  	
  6,000,000.00

  	
   

  	
  2

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  300,000,000.00

  	
   

  	
  100

  	
  %

  

 

4

 

TERM LOAN

 

	
  Name and Address

  	
   

  	
  Term Loan

  Commitment

  	
   

  	
  Term Loan

  Commitment Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KeyBank
  National Association

  127 Public Square

  Cleveland, Ohio 44114-1306

  Attention:                 Kevin
  Murray

  Telephone:            216-689-5986

  Facsimile:               216-689-4997

  	
   

  	
  $

  	
  42,000,000.00

  	
   

  	
  21

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia
  Bank, National Association

  201 S. College Street, CP9

  NC1183 

  Charlotte, NC 28288

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  	
  15

  	
  %

  
	
  Attention:

  Telephone:

  Facsimile:

  	
  Vincent
  Massey

  (704)-590-3321

  (704)-715-0094

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aareal Bank
  AG

  Paulinenstrasse 15

  65189 Wiesbaden

  Germany

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  	
  15

  	
  %

  
	
  Attention:

  Telephone:

  Facsimile:

  	
  Petra
  Friedhofer

  +49-(0)611-348-2356

  +49-(0)611-348-2757

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Westdeutsche
  Immobilienbank AG

  Grosse Bleiche 46

  55116 Mainz

  Germany

  	
   

  	
  $

  	
  20,000,000.00

  	
   

  	
  10

  	
  %

  
	
  Attention:

  Telephone:

  Facsimile:

  	
  Klaus May

  +49 6131
  9280 - 7428

  +49 6131
  9280 - 7490

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

5

 

	
  Name and Address

  	
   

  	
  Term Loan

  Commitment

  	
   

  	
  Term Loan

  Commitment Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RBS
  Citizens, N.A. d/b/a Charter One

  1215 Superior Ave, 6th Floor

  Cleveland, OH 44114

  Attention:                 R.J.
  Quinn

  Telephone:            (216)-277-0744

  Facsimile:               (216)-277-4607

  	
   

  	
  $

  	
  16,000,000.00

  	
   

  	
  8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fifth Third
  Bank, a Michigan bankingcorporation

  MD 1MOC2B

  5050 Kingsley Drive

  Cincinnati, OH 45263

  Attention:                 Joyce
  Elam

  Telephone:            (513)-358-7336

  Facsimile:               (513)-358-3479

  	
   

  	
  $

  	
  16,000,000.00

  	
   

  	
  8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National
  City Bank

  CREA

  2000 Auburn Drive, Suite 400

  Beachwood, OH 44122

  Attention:                 Peggy
  Cramer

  Telephone:            (216)-488-9124

  Facsimile:               (216)-488-0214

  	
   

  	
  $

  	
  14,000,000.00

  	
   

  	
  7

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PNC Bank,
  National Association

  500 1st Avenue

  Pittsburgh, PA 15219

  Attention:                 Colleen
  Mannerino

  Telephone:            (412)-760-7647

  Facsimile:               (412)-705-2124

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  	
  5

  	
  %

  

 

6

 

	
  Name and Address

  	
   

  	
  Term Loan

  Commitment

  	
   

  	
  Term Loan

  Commitment Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Citibank,
  N.A.

  8401 N. Central Expressway

  Suite 500

  Dallas, TX 75225

  Attention:                 Kimberly
  Brand

  Telephone:            (972)-419-3454

  Facsimile:               (972)-419-3308

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  	
  5

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of
  America, N.A.

  901 Main Street, 20th Floor

  TX1-492-20-06

  Dallas, TX 75202

  Attention:                 Cindy
  King

  Telephone:            (214)-209-1925

  Facsimile:               (214)-209-1571

  	
   

  	
  $

  	
  8,000,000.00

  	
   

  	
  4

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Texas
  Capital Bank, National Association

  6060 N. Central Expressway

  Dallas, TX 75206

  Attention:                 Claudia
  Watkins

  Telephone:            (972) 560-4525

  Facsimile:               (214) 706-6849

  	
   

  	
  $

  	
  4,000,000.00

  	
   

  	
  2

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR
  Lending Office

  Same as Above

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  200,000,000.00

  	
   

  	
  100

  	
  %

  

 

7

 

TOTAL COMMITMENTS

 

	
  Name

  	
   

  	
  Total Commitment

  	
   

  	
  Total Commitment

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KeyBank National Association

  	
   

  	
  $

  	
  87,000,000.00

  	
   

  	
  17.4

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  $

  	
  75,000,000.00

  	
   

  	
  15.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aareal Bank AG

  	
   

  	
  $

  	
  75,000,000.00

  	
   

  	
  15.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Westdeutsche Immobilienbank AG

  	
   

  	
  $

  	
  50,000,000.00

  	
   

  	
  10.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RBS Citizens, N.A. d/b/a Charter One

  	
   

  	
  $

  	
  40,000,000.00

  	
   

  	
  8.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fifth Third Bank, a Michigan banking
  corporation

  	
   

  	
  $

  	
  40,000,000.00

  	
   

  	
  8.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National City Bank

  	
   

  	
  $

  	
  35,000,000.00

  	
   

  	
  7.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Allied Irish Banks, P.L.C.

  	
   

  	
  $

  	
  18,000,000.00

  	
   

  	
  3.6

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PNC Bank, National Association

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  	
  5.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Citibank, N.A.

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  	
  5.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  20,000,000.00

  	
   

  	
  4.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Texas Capital Bank, National Association

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  	
  2.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  500,000,000.00

  	
   

  	
  100.0

  	
  %

  

 

8

 

SCHEDULE 1.2

 

SUBSIDIARY
GUARANTORS

 

(UPDATED FROM
TIME TO TIME BY AGENT)

 

	
  Behringer
  Harvard Cyprus, LLC, a Colorado limited liability company

  
	
   

  
	
  Behringer
  Harvard Wayside, LLC, a Delaware limited liability company

  
	
   

  
	
  Behringer
  Harvard Centreport Office LP, a Texas limited partnership

  
	
   

  
	
  Behringer
  Harvard Texas Street LP, a Delaware limited partnership

  
	
   

  
	
  Behringer
  Harvard Eldridge Land LP, a Texas limited partnership

  

 

1

 

SCHEDULE 4.3

 

ACCOUNTS

 

None.

 

1

 

EXHIBITS AND SCHEDULES

 

	
  Exhibit A

  	
   

  	
  FORM OF REVOLVING CREDIT NOTE

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  FORM OF SWING LOAN NOTE

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  FORM OF TERM LOAN NOTE

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  FORM OF JOINDER AGREEMENT

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  FORM OF REQUEST FOR REVOLVING CREDIT
  LOAN

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  FORM OF LETTER OF CREDIT REQUEST

  
	
   

  	
   

  	
   

  
	
  Exhibit G

  	
   

  	
  FORM OF COMPLIANCE CERTIFICATE

  
	
   

  	
   

  	
   

  
	
  Exhibit H

  	
   

  	
  FORM OF ASSIGNMENT AND ACCEPTANCE
  AGREEMENT

  
	
   

  	
   

  	
   

  
	
  Exhibit I

  	
   

  	
  FORM OF LETTER OF CREDIT APPLICATION

  
	
   

  	
   

  	
   

  
	
  Schedule 1.1

  	
   

  	
  LENDERS AND COMMITMENTS

  
	
   

  	
   

  	
   

  
	
  Schedule 1.2

  	
   

  	
  SUBSIDIARY GUARANTORS

  
	
   

  	
   

  	
   

  
	
  Schedule 4.3

  	
   

  	
  ACCOUNTS

  
	
   

  	
   

  	
   

  
	
  Schedule 6.3

  	
   

  	
  LIST OF ALL ENCUMBRANCES ON ASSETS

  
	
   

  	
   

  	
   

  
	
  Schedule 6.5

  	
   

  	
  NO MATERIAL CHANGES

  
	
   

  	
   

  	
   

  
	
  Schedule 6.7

  	
   

  	
  PENDING LITIGATION

  

 

 

	
  Schedule 6.10

  	
   

  	
  UNPAID TAXES

  
	
   

  	
   

  	
   

  
	
  Schedule 6.14

  	
   

  	
  CERTAIN TRANSACTIONS

  
	
   

  	
   

  	
   

  
	
  Schedule 6.20(a)

  	
   

  	
  SUBSIDIARIES OF REIT

  
	
   

  	
   

  	
   

  
	
  Schedule 6.20(b)

  	
   

  	
  UNCONSOLIDATED AFFILIATES REIT AND ITS
  SUBSIDIARIES

  
	
   

  	
   

  	
   

  
	
  Schedule 6.21

  	
   

  	
  PROPERTY

  
	
   

  	
   

  	
   

  
	
  Schedule 6.23

  	
   

  	
  MATERIAL LOAN AGREEMENTS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]