Document:

exv10w1

 

Exhibit 10.1

 

 

LOAN AGREEMENT

Dated as of March 1, 2006

Between

TRIZECHAHN ONE NY PLAZA LLC

as Borrower

and

GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL and

LEHMAN BROTHERS BANK FSB

collectively, as Lender

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I
	 
	 	 	 	 	 	 
	 PRINCIPLES OF CONSTRUCTION
	 
	 	 	 	 	 	 
	Section 1.1
	 	Definitions	 	 	1	 
	Section 1.2
	 	Principles of Construction	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE II
	 
	 	 	 	 	 	 
	 THE LOAN
	 
	 	 	 	 	 	 
	Section 2.1
	 	The Loan	 	 	20	 
	Section 2.2
	 	Interest Rate	 	 	21	 
	Section 2.3
	 	Loan Payments	 	 	22	 
	Section 2.4
	 	Prepayments	 	 	23	 
	Section 2.5
	 	Defeasance	 	 	24	 
	Section 2.6
	 	Release on Payment in Full	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE III
	 
	 	 	 	 	 	 
	REPRESENTATIONS AND WARRANTIES
	 
	 	 	 	 	 	 
	Section 3.1
	 	Borrower Representations	 	 	27	 
	Section 3.2
	 	Survival of Representations	 	 	38	 
	 
	 	 	 	 	 	 
	 
	 	 ARTICLE IV	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 BORROWER COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.1
	 	Borrower Affirmative Covenants	 	 	38	 
	Section 4.2
	 	Borrower Negative Covenants	 	 	49	 
	 
	 	 	 	 	 	 
	ARTICLE V
	 
	 	 	 	 	 	 
	INSURANCE, CASUALTY AND CONDEMNATION.
	 
	 	 	 	 	 	 
	Section 5.1
	 	Insurance	 	 	51	 
	Section 5.2
	 	Casualty and Condemnation	 	 	57	 
	Section 5.3
	 	Delivery of Net Proceeds	 	 	58	 

-i-

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 ARTICLE VI
	 
	 	 	 	 	 	 
	 RESERVE FUNDS
	 
	 	 	 	 	 	 
	Section 6.1
	 	Intentionally Omitted	 	 	62	 
	Section 6.2
	 	Tax Funds	 	 	62	 
	Section 6.3
	 	Insurance Funds	 	 	63	 
	Section 6.4
	 	Capital Expenditure Funds	 	 	64	 
	Section 6.5
	 	Rollover Funds	 	 	66	 
	Section 6.6
	 	Unfunded Obligations Account	 	 	68	 
	Section 6.7
	 	Release of Reserve Funds upon Termination of Cash Sweep Period	 	 	69	 
	Section 6.8
	 	Security Interest in Reserve Funds	 	 	69	 
	 
	 	 	 	 	 	 
	ARTICLE VII
	 
	 	 	 	 	 	 
	PROPERTY MANAGEMENT.
	 
	 	 	 	 	 	 
	Section 7.1
	 	The Management Agreement	 	 	70	 
	Section 7.2
	 	Prohibition Against Termination or Modification	 	 	70	 
	Section 7.3
	 	Replacement of Manager	 	 	71	 
	 
	 	 	 	 	 	 
	  ARTICLE VIII
	 
	 	 	 	 	 	 
	  TRANSFERS
	 
	 	 	 	 	 	 
	Section 8.1
	 	Transfer or Encumbrance of Property	 	 	71	 
	Section 8.2
	 	Transfer of Equity Interests	 	 	73	 
	 
	 	 	 	 	 	 
	 ARTICLE IX
	 
	 	 	 	 	 	 
	SALE AND SECURITIZATION OF MORTGAGE
	 
	 	 	 	 	 	 
	Section 9.1
	 	Sale of Mortgage and Securitization	 	 	74	 
	Section 9.2
	 	Securitization Indemnification	 	 	77	 
	Section 9.3
	 	Mezzanine Loans	 	 	79	 
	 
	 	 	 	 	 	 
	  ARTICLE X
	 
	 	 	 	 	 	 
	  DEFAULTS
	 
	 	 	 	 	 	 
	Section 10.1
	 	Event of Default	 	 	80	 
	Section 10.2
	 	Remedies	 	 	82	 
	Section 10.3
	 	Right to Cure Defaults	 	 	83	 
	Section 10.4
	 	Remedies Cumulative	 	 	84	 

-ii-

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE XI	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	  MISCELLANEOUS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 11.1
	 	Successors and Assigns	 	 	84	 
	Section 11.2
	 	Lender’s Discretion	 	 	84	 
	Section 11.3
	 	Governing Law	 	 	84	 
	Section 11.4
	 	Modification, Waiver in Writing	 	 	86	 
	Section 11.5
	 	Delay Not a Waiver	 	 	86	 
	Section 11.6
	 	Notices	 	 	86	 
	Section 11.7
	 	Trial by Jury	 	 	87	 
	Section 11.8
	 	Headings	 	 	88	 
	Section 11.9
	 	Severability	 	 	88	 
	Section 11.10
	 	Preferences	 	 	88	 
	Section 11.11
	 	Waiver of Notice	 	 	88	 
	Section 11.12
	 	Remedies of Borrower	 	 	88	 
	Section 11.13
	 	Expenses; Indemnity	 	 	88	 
	Section 11.14
	 	Schedules Incorporated	 	 	90	 
	Section 11.15
	 	Offsets, Counterclaims and Defenses	 	 	90	 
	Section 11.16
	 	No Joint Venture or Partnership; No Third Party Beneficiaries	 	 	90	 
	Section 11.17
	 	Publicity	 	 	90	 
	Section 11.18
	 	Waiver of Marshalling of Assets	 	 	90	 
	Section 11.19
	 	Waiver of Offsets/Defenses/Counterclaims	 	 	91	 
	Section 11.20
	 	Conflict; Construction of Documents; Reliance	 	 	91	 
	Section 11.21
	 	Brokers and Financial Advisors	 	 	91	 
	Section 11.22
	 	Exculpation	 	 	91	 
	Section 11.23
	 	Prior Agreements	 	 	94	 
	Section 11.24
	 	Servicer	 	 	94	 
	Section 11.25
	 	Joint and Several Liability	 	 	94	 
	Section 11.26
	 	Creation of Security Interest	 	 	94	 
	Section 11.27
	 	Assignments and Participations	 	 	95	 
	Section 11.28
	 	Set-Off	 	 	95	 
	Section 11.29
	 	Component Notes	 	 	95	 
	Section 11.30
	 	Approvals; Third Parties; Conditions	 	 	96	 
	Section 11.31
	 	Limitation on Liability of Lender’s Officers, Employees, etc	 	 	96	 

-iii-

 

	 	 	 	 	 
	SCHEDULES
	 	 	 	 
	 
	 	 	 	 
	Schedule I

	 	—
	 	Rent Roll
	Schedule II

	 	—
	 	Form of Qualified Guaranty
	Schedule III

	 	—
	 	Organizational Chart
	Schedule IV

	 	—
	 	Form of Subordination, Non-Disturbance and Attornment Agreement
	Schedule V

	 	—
	 	Amortization Schedule
	Schedule VI

	 	—
	 	Unfunded Obligations
	Schedule VII

	 	—
	 	Form of Subordination of Management Agreement
	Schedule VII

	 	—
	 	Form of Alteration Indemnity

-iv-

 

LOAN AGREEMENT

     THIS LOAN AGREEMENT, dated as of March 1, 2006 (as amended, restated, replaced, supplemented
or otherwise modified from time to time, this “Agreement”), by and between GOLDMAN SACHS
COMMERCIAL MORTGAGE CAPITAL, a Delaware limited partnership, having an address at 85 Broad Street,
New York, New York 10004 (“Goldman”) and LEHMAN BROTHERS BANK FSB, a federal stock savings
bank, having an address at 1000 West Street, Suite 200, Wilmington, Delaware 19801
(“Lehman”; and together with Goldman, collectively, “Lender”), and TRIZECHAHN ONE
NY PLAZA LLC, a Delaware limited liability company, having an address at 10 South Riverside Plaza,
Suite 1100 Chicago, Illinois 60606 (“Borrower”).

     All capitalized terms used herein shall have the respective meanings set forth in Article I
hereof.

WITNESSETH:

     WHEREAS, Borrower desires to obtain the Loan from Lender; and

     WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in accordance with the
conditions and terms of this Agreement and the other Loan Documents.

     NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree, represent and warrant as follows:

ARTICLE I

PRINCIPLES OF CONSTRUCTION

     Section 1.1 Definitions. For all purposes of this Agreement, except as otherwise
expressly provided:

     “Acceptable Indemnitor” shall mean a Qualified Equityholder, provided, that such
indemnitor has a minimum cash liquidity capacity on its balance sheet equal to 2:1 of the amount
being guaranteed.

     “Access Laws” shall have the meaning set forth in Section 4.1.16(a).

     “Actual Debt Service Coverage Ratio” shall mean a ratio for the applicable period in
which:

     (a) the numerator is the Actual Net Cash Flow for such period as set forth in the
financial statements required in accordance with this Agreement; and

 

 

     (b) the denominator is the aggregate amount of principal and interest due and payable
on the Loan for such period.

     “Actual Net Cash Flow” shall mean, for any period, the amount obtained by subtracting
Actual Operating Expenses for such period from Gross Income from Operations for such period;
provided, however, that for purposes of determining whether or not a NOI Trigger
Event has occurred (a) the Rents from the Property will be annualized based upon Leases in
existence as of the date immediately following the applicable Actual NOI Determination Date, based
upon the rent roll delivered to Lender by Borrower under Section 4.16 hereof and (b) Actual
Operating Expenses and Gross Income from Operations (other than Rents) will each be based upon the
trailing 12-month period preceding the Actual NOI Determination Date.

     “Actual NOI Determination Date” shall mean the last day of each calendar quarter that
Lender determines the Actual Net Cash Flow in accordance with this Agreement.

     “Actual Operating Expenses” shall mean for any period, the total of all costs and
expenses, computed in accordance with GAAP, of whatever kind during such period relating to the
operation, maintenance and management of the Property that are actually incurred, including without
limitation, utilities, ordinary repairs and maintenance, insurance, license fees, property taxes
and assessments, advertising expenses, management fees (if any), payroll and related taxes,
computer processing charges, operational equipment, lease payments, “bad debt” expenses and other
similar costs, but excluding depreciation, tenant improvements and leasing commissions, Debt
Service, Capital Expenditures, and contributions to the Capital Expenditure Funds, the Tax Funds,
Insurance Funds, the Rollover Funds and any other reserves required under the Loan Documents.

     “Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, owns more than forty percent (40%) of, is in Control of, is Controlled by or is under
common ownership or Control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.

     “ALTA” shall mean American Land Title Association, or any successor thereto.

     “Alteration Final Notice” shall have the meaning specified in Section
4.1.10(b).

     “Alteration Indemnity” shall mean an indemnity agreement in the form attached hereto
as Schedule VIII from an Acceptable Indemnitor and otherwise satisfying the requirements of
Section 4.1.10.

     “Alteration Request” shall have the meaning specified in Section 4.1.10(b).

     “Alteration Response” shall have the meaning specified in Section 4.1.10(b).

     “Alteration Threshold” shall mean Twenty Million and No/100 Dollars ($20,000,000.00).

-2-

 

     “Annual Budget” shall mean the operating and capital budget for the Property setting
forth Borrower’s good faith estimate of Gross Income from Operations, Operating Expenses, and
Capital Expenditures for the applicable Fiscal Year.

     “Appraisal” shall mean an appraisal of the Property in its then “as is” condition,
prepared not more than ninety (90) days prior to the Closing Date (or other relevant date with
respect to an updated Appraisal or an Appraisal with respect to the Property) by a member of the
American Institute of Real Estate Appraisers selected by Lender, which appraisal (i) shall meet the
minimum appraisal standards for national banks promulgated by the Comptroller of the Currency
pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989,
as amended (FIRREA), and (ii) otherwise shall be in both form and substance satisfactory to Lender
in its sole and absolute discretion.

     “Approved Annual Budget” shall have the meaning set forth in Section 4.1.6(i).

     “Approved Bank” shall mean a bank or other financial institution which has a minimum
long term unsecured debt rating of at least (a) ”AA” by S&P and Fitch and “Aa2” by Moody’s for any
Qualified Letter of Credit issued in an amount equal to or greater than $20,000,000 and (b) ”A” by
S&P and Fitch and “A2” by Moody’s for any Qualified Letter of Credit issued in an amount less than
$20,000,000.

     “Assignment of Leases” shall mean that certain first priority Assignment of Leases and
Rents, dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time to time.

     “Assignment of Management Agreement” shall mean that any Assignment of Management
Agreement and Subordination of Management Fees in the form attached hereto as Schedule VII
to be entered into any time after the date hereof among Borrower, Manager and Lender in accordance
with the provisions of Section 7.2 hereof, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

     “Award” shall mean any compensation paid by any Governmental Authority in connection
with a Condemnation in respect of all or any part of the Property.

     “Bankruptcy Action” shall mean with respect to any Person (i) such Person filing a
voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law; (ii) the filing of an involuntary petition against such Person under the Bankruptcy Code or
any other Federal or state bankruptcy or insolvency law, or soliciting or causing to be solicited
petitioning creditors for any involuntary petition against such Person; (iii) such Person filing an
answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed
against it, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or soliciting or causing to be solicited petitioning creditors for any
involuntary petition from any Person; (iv) such Person consenting to or acquiescing in or joining
in an application for the appointment of a custodian, receiver, trustee, or examiner for such
Person or any portion of the Property or (v) such Person making an

-3-

 

assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding,
its insolvency or inability to pay its debts as they become due.

     “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”,
as amended from time to time, and any successor statute or statutes and all rules and regulations
from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy,
insolvency or creditors’ rights.

     “Basic Carrying Costs” shall mean the sum of the following costs associated with the
Property for the relevant Fiscal Year or payment period: (i) Taxes and (ii) Insurance Premiums.

     “Borrower” shall mean Trizechahn One NY Plaza LLC, a Delaware limited liability
company together with its permitted successors and permitted assigns.

     “Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday
on which national banks are not open for general business in (i) the State of New York, (ii) the
state where the corporate trust office of the Trustee is located, or (iii) the state where the
servicing offices of the Servicer are located.

     “Capital Expenditures” shall mean, for any period, amounts expended for repairs,
replacements and alterations to the Property and required to be capitalized according to GAAP.

     “Capital Expenditure Funds” shall have the meaning set forth in Section 6.4.1.

     “Capital Expenditures Work” shall mean any labor performed or materials installed in
connection with any Capital Expenditure.

     “Cash Management Agreement” shall mean that certain Cash Management Agreement of even
date herewith between Lender and Borrower.

     “Cash Sweep Cure” shall mean any one of the following: (a) if the Cash Sweep Event is
caused solely by the occurrence of the Event of Default that such Event of Default has been cured
or no longer exists or has been waived in writing by Lender or (b) if the Cash Sweep Event is
caused solely by the occurrence of a NOI Trigger Event (defined below), the Actual Net Cash Flow
for two (2) consecutive calendar quarters is equal to or greater than $35,000,000.00, as set forth
in the financial statements required under this Agreement; provided, that, no new Cash
Sweep Event shall have occurred and be continuing under this Agreement.

     “Cash Sweep Event” shall mean any one of the following: (a) the occurrence of an
Event of Default or (b) as of any Actual NOI Determination Date, the Actual Net Cash Flow, as
determined in the manner described in the definition of Actual Net Cash Flow is less than
$35,000,000.00 (a “NOI Trigger Event”).

     “Cash Sweep Period” shall mean the period from and after a Cash Sweep Event until a
Cash Sweep Cure has occurred.

-4-

 

     “Casualty” shall mean the occurrence of any casualty, damage or injury, by fire or
otherwise, to the Property or any part thereof.

     “Casualty Consultant” shall have the meaning set forth in Section 5.3.2(c).

     “Casualty Retainage” shall have the meaning set forth in Section 5.3.2(d).

     “Chilled Water Agreement” shall mean that certain Chilled Water Agreement dated as of
July 1, 1974 by and among New York Plaza Building Company, American Express Company and Chase and
recorded in the Office of the City Register, New York County on July 2, 1974 in Reel 318, Page 432,
as modified by (i) that certain Assignment of Chilled Water Agreement dated as of March 7, 1983
from American Express International Banking Corporation to Olympia & York 125 Broad Street Company
and recorded in the Office of the City Register, New York County on June 17, 1983 in Reel 695, Page
1316, (ii) that certain Assignment and Assumption of Chilled Water Agreement dated October 19, 1989
between New York Plaza Building Company and Chase, and (iii) that certain Assignment and Assumption
of Chilled Water Agreement dated as of April 30, 1999.

     “Clearing Account” shall mean that certain collection account established by Borrower
with Clearing Account Bank into which Borrower shall cause all Rents to be deposited in accordance
with the terms and conditions of the Clearing Account Agreement.

     “Clearing Account Agreement” shall mean that certain Multi-Party Agreement Relating to
Lockbox Services dated as of the date hereof, among Borrower, Lender and Clearing Account Bank.

     “Clearing Account Bank” shall mean JPMorgan Chase Bank, a New York banking corporation
together with its permitted successors and assigns.

     “Closing Date” shall mean the date of funding the Loan.

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

     “Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation
or eminent domain, of all or any part of the Property, or any interest therein or right accruing
thereto, including any right of access thereto or any change of grade affecting the Property or any
part thereof.

     “Condominium Assessments” shall mean all Common Charges and Unit Expenses (as such
terms are defined in the Declaration) and all other assessments for common charges against any of
the Condominium Units.

     “Condominium Documents” shall mean the Declaration, the By-Laws attached thereto, and
all other constituent documents establishing or governing the condominium regime at the Property.

-5-

 

     “Condominium Unit” shall have the meaning set forth in the Mortgage.

     “Control” shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management, policies or activities of a Person, whether through ownership of
voting securities, by contract or otherwise. “Controlled” and “ Controlling” shall have
correlative meanings.

     “Debt” shall mean the outstanding principal amount of the Loan together with all
interest accrued and unpaid thereon and all other sums (including any Yield Maintenance Premium
payable pursuant to the terms of this Agreement) due to Lender in respect of the Loan under the
Note, this Agreement, the Mortgage, the Environmental Indemnity or any other Loan Document.

     “Debt Service” shall mean, with respect to any particular period of time, scheduled
principal (as applicable) and interest payments under the Note.

     “Declaration” shall mean that certain Declaration dated as of February 16, 1993 and
recorded in the Office of the City Register, New York County, on March 4, 1993 in Reel 1951, Page
758, as amended by that certain First Amendment to Declaration of Condominium dated as of March 29,
1993 and recorded in the Office of the City Register, New York County, on May 5, 1993 in Reel 1968,
Page 539, and as amended by that certain Second Amendment to Declaration of Condominium dated as of
April 30, 1999, as the same may be further amended from time to time.

     “Default” shall mean the occurrence of any event hereunder or under any other Loan
Document which, but for the giving of notice or passage of time, or both, would be an Event of
Default.

     “Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the
lesser of (i) the maximum rate permitted by applicable law, or (ii) five percent (5%) above the
Interest Rate.

     “Defeasance Collateral” shall mean U.S. Obligations, which provide payments (i) on or
prior to, but as close as possible to, the Business Day immediately preceding all Monthly Payment
Dates and other scheduled payment dates, if any, under the Note after the Defeasance Date and up to
and including the Permitted Prepayment Date, and (ii) in amounts equal to or greater than the
Scheduled Defeasance Payments relating to such Monthly Payment Dates and other scheduled payment
dates.

     “Defeasance Collateral Account” shall have the meaning set forth in Section
2.5.3.

     “Defeasance Date” shall have the meaning set forth in Section 2.5.1(a)(i).

     “Defeasance Event” shall have the meaning set forth in Section 2.5.1(a).

     “Disclosure Document” shall have the meaning set forth in Section 9.2(a).

-6-

 

     “East River Franchise Agreement” shall mean that certain New York City Revocable
Consent Agreement regarding, among other things, the use and maintenance of pipes and equipment in
connection with the intake and discharge of water from the East River.

     “Eligible Account” shall mean an identifiable account separate from all other funds
held by the holding institution that is either (i) an account or accounts maintained with a federal
or state-chartered depository institution or trust company which complies with the definition of
Eligible Institution or (ii) a segregated trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary capacity which, in
the case of a state chartered depository institution or trust company is subject to regulations
substantially similar to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal and state authority.
An Eligible Account will not be evidenced by a certificate of deposit, passbook or other
instrument.

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

     “Environmental Indemnity” shall mean that certain Environmental Indemnity Agreement,
dated as of the date hereof, executed by Borrower in connection with the Loan for the benefit of
Lender.

     “Environmental Report” shall mean that certain Phase I Environmental Assessment of One
New York Plaza, dated as of February 22, 2006, prepared by EMG in connection with the making of the
Loan.

     “Equipment” shall have the meaning set forth in the granting clause of the Mortgage.

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

     “Event of Default” shall have the meaning set forth in Section 10.1.

     “Exchange Act” shall have the meaning set forth in Section 9.2(a).

     “Exchange Act Filing” shall have the meaning set forth in Section 9.1(c)(vi).

     “Executive Order” shall have the meaning set forth in the definition of “Prohibited
Person”.

     “Fiscal Year” shall mean each twelve month period commencing on January 1 and ending
on December 31 during each year of the term of the Loan.

-7-

 

     “Fitch” shall mean Fitch, Inc.

     “GAAP” shall mean generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial Accounting Standards Board
(or agencies with similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use by significant
segments of the U.S. accounting profession.

     “Goldman Lease” shall mean Lease dated April 5, 1994 between Borrower and Goldman
Tenant, as the same is in effect on the date hereof and as amended, restated or modified in
accordance with the terms of this Agreement.

     “Goldman Note” shall mean that certain Promissory Note, dated the date hereof, made by
Borrower to Goldman in the original principal amount of Two Hundred Million and No/100 Dollars
($200,000,000.00).

     “Goldman Reserve Funds” shall have the meaning set forth in Section 6.5.1.

     “Goldman Tenant” shall mean The Goldman Sachs Group, Inc.

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

     “Gross Income from Operations” shall mean, for any period, all revenues, computed in
accordance with GAAP (excluding straight lining of Rents and items of “Extraordinary Gain” as
determined in accordance with GAAP), derived from the ownership and operation of the Property from
whatever source during such period, including, but not limited to, Rents and income under the
Chilled Water Agreement, service fees or charges, license fees, parking fees and other pass-through
or reimbursements paid by tenants under the Leases of any nature, but excluding rent concessions or
credits, rent abatements, sales, use and occupancy or other taxes on receipts required to be
accounted for by Borrower to any Governmental Authority, refunds and uncollectible accounts, sales
of furniture, fixtures and equipment, Net Proceeds (other than from business interruption or other
loss of income insurance and Awards for temporary takings), and any disbursements to Borrower from
the Tax Funds, Insurance Funds, the Capital Expenditure Funds, the Rollover Funds, or any other
escrow fund established by the Loan Documents.

     “Ground Lease” shall mean that certain Lease dated as of December 31, 1966 between
Sol G. Atlas and John P. McGrath, as lessor, and New York Plaza Building Company, as lessee, a
memorandum of which was recorded in the Office of the City Register, New York County, on April 18,
1967 in Record Liber 172, Page 10, as modified by (i) that certain Agreement Modifying Lease dated
June 14, 1968, a memorandum of which was recorded in the Office of the City Register, New York
County, on July 2, 1968 in Record Liber 323, Page 162, (ii) that certain Assignment and Assumption
of Ground Lease dated October 19, 1989 and recorded in the Office of the City Register, New York
County, on October 24, 1989 in Reel 1631, Page 1561, (iii) that certain Amendment to Ground Lease
dated April 30, 1993, a

-8-

 

memorandum of which was recorded in the Office of the City Register, New York County, on May
5, 1993 in Reel 1968, Page 547, (iv) that certain Second Amendment to Ground Lease dated as of
January 3, 1995 and recorded in the Office of the City Register, New York County, on January 31,
1995 in Reel 2179, Page 397, (v) that certain Assignment and Assumption of Ground Lease dated as of
April 30, 1999, and recorded on May 6, 1999 in Reel 2870, Page 1291 in the Office of the City
Register, New York County, and (vi) that certain Third Amendment to Ground Lease dated as of April
30, 1999, a memorandum of which was recorded on May 6, 1999 in Reel 2870, Page 1338 in the Office
of the City Register, New York County, and all estates, privileges and rights of Borrower as both
lessee and lessor thereunder

     “Improvements” shall have the meaning set forth in the granting clause of the
Mortgage.

     “Indebtedness” shall mean, for any Person, without duplication: (i) all indebtedness
of such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred
purchase price of property for which such Person or its assets is liable, (ii) all unfunded amounts
under a loan agreement, letter of credit, or other credit facility for which such Person would be
liable if such amounts were advanced thereunder, (iii) all amounts required to be paid by such
Person as a guaranteed payment to partners or a preferred or special dividend, including any
mandatory redemption of shares or interests, (iv) all indebtedness guaranteed by such Person,
directly or indirectly, (v) all obligations under leases that constitute capital leases for which
such Person is liable, and (vi) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case whether such Person is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations
such Person otherwise assures a creditor against loss.

     “Indemnified Liabilities” shall have the meaning set forth in Section
11.13(b).

     “Independent Manager” shall have the meaning set forth in Section 3.1.24(p).

     “Insolvency Opinion” shall mean that certain bankruptcy nonconsolidation opinion
letter, dated the date hereof, rendered by DLA Piper Rudnick Gray Cary US LLP in connection with
the Loan.

     “Insurance Funds” shall have the meaning set forth in Section 6.3.1.

     “Insurance Premiums” shall have the meaning set forth in Section 5.1.1(b).

     “Interest Rate” shall mean 5.4995%.

     “Lease” shall mean any lease, sublease or subsublease, letting, license, concession or
other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which
Borrower or any of its predecessors in interest grants or has granted to any Person a possessory
interest in, or right to use or occupy all or any portion of any space in the Property, and every
modification, amendment or other agreement relating to such lease, sublease, subsublease, or other
agreement entered into in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.

-9-

 

     “Legal Requirements” shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions of Governmental Authorities affecting Borrower or the Property or any part thereof or
the construction, use, alteration or operation thereof, or any part thereof, whether now or
hereafter enacted and in force, including, without limitation, the Americans with Disabilities Act
of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any instruments, either of record
or known to Borrower, at any time in force affecting the Property or any part thereof, including,
without limitation, any which may (i) require repairs, modifications or alterations in or to the
Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.

     “Lehman Note” shall mean collectively, the Lehman Note A-1 and the Lehman Note A-2.

     “Lehman Note A-1” shall mean that certain Promissory Note, dated the date hereof, made
by Borrower to Lehman in the original amount of One Hundred Eighty Million and No/100 Dollars
($180,000,000.00).

     “Lehman Note A-2” shall mean that certain Promissory Note, dated the date hereof, made
by Borrower to Lehman in the original amount of Twenty Million and No/100 Dollars ($20,000,000.00).

     “Lender” shall mean, collectively, Goldman Sachs Commercial Mortgage Capital, a
Delaware limited partnership, and Lehman Brothers Bank FSB, a federal stock savings bank, together
with their respective successors and assigns.

     “Lender Group” shall have the meaning set forth in Section 9.2(b).

     “Lender Indemnitees” shall have the meaning set forth in Section 11.13(b).

     “Letter of Credit” shall mean an irrevocable, unconditional, transferable (without
cost or fee), clean sight draft letter of credit acceptable to Lender and the Rating Agencies
(either an evergreen letter of credit or one which does not expire until at least thirty (30)
Business Days after the Maturity Date) in favor of Lender and entitling Lender to draw thereon in
New York, New York, issued by a domestic Eligible Institution or the U.S. agency or branch of a
foreign Eligible Institution. If at any time the bank issuing any such Letter of Credit shall
cease to be an Eligible Institution, Lender shall have the right immediately to draw down the same
in full and hold the proceeds of such draw in accordance with the applicable provisions hereof.

     “Liabilities” shall have the meaning set forth in Section 9.2(b).

     “Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of, on or affecting the
Property or any portion thereof or Borrower, or any interest therein, including, without
limitation, any conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.

-10-

 

     “Loan” shall mean the loan in the original principal amount of Four Hundred Million
and No/100 Dollars ($400,000,000.00) made by Lender to Borrower pursuant to this Agreement
evidenced by the Note and secured by the Mortgage, together with all sums due or to become due
thereunder.

     “Loan Documents” shall mean, collectively, this Agreement, the Note, the Mortgage, the
Assignment of Leases, the Cash Management Agreement, the Clearing Account Agreement, the
Environmental Indemnity and any other document pertaining to the Property as well as all other
documents now or hereafter executed and/or delivered in connection with the Loan.

     “Loan-to-Value Ratio” shall mean the ratio, as of a particular date, in which the
numerator is equal to the outstanding principal balance of the Debt and the denominator is equal to
the appraised value of the Property as determined by an appraisal prepared in accordance with the
requirements for the Appraisal.

     “Major Lease” shall mean any Lease (i) demising 200,000 square feet or more at the
Property, (ii) made with a Tenant that is a Tenant under another Lease at the Property, if the
Leases together cover 200,000 square feet or more at the Property (assuming the exercise of all
expansion rights and all preferential rights to lease additional space contained in such lease, is
expected to cover more than 200,000 rentable square feet), (iii) containing an option or
preferential right to purchase all or any portion of the Property, (iv) with an Affiliate of
Borrower or (v) entered into during the continuance of an Event of Default.

     “Management Agreement” shall mean any management agreement with respect to the
Property entered into by Borrower in accordance with the terms and conditions of the Loan Documents
pursuant to which the Manager is to provide management and other services with respect to the
Property.

     “Manager” shall mean any manager of the Property approved in accordance with the terms
and conditions of the Loan Documents.

     “Material Adverse Effect” shall mean any material adverse effect upon (i) the business
operations, economic performance or financial condition of Borrower or the Property, (ii) the
ability of Borrower to perform, in all material respects, its obligations under each of the Loan
Documents or (iii) the enforceability or validity of any Loan Document, the perfection or priority
of any Lien created under any Loan Document or the remedies of the Lender under any Loan Document.

     “Material Agreements” shall mean each contract and agreement relating to the
ownership, management, development, use, operation, leasing, maintenance, repair or improvement of
the Property, (other than the Management Agreement, the Leases and cleaning and security service
contracts) which (i) require Borrower to pay more than $2,000,000 per annum and (ii) has a term
that exceeds one year, and cannot be terminated by Borrower without cause upon 90 days’ notice or
less without payment of a termination fee.

     “Material Alteration” shall have the meaning set forth in Section 4.1.10.

-11-

 

     “Maturity Date” shall mean March 6, 2016 or such other date on which the final payment
of principal of the Note becomes due and payable as therein or herein provided, whether at such
stated maturity date, by declaration of acceleration, or otherwise.

     “Maximum Legal Rate” shall mean 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
indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under
the laws of such state or states whose laws are held by any court of competent jurisdiction to
govern the interest rate provisions of the Loan.

     “Minimum Disbursement Amount” shall mean Twenty-Five Thousand and No/100 Dollars
($25,000).

     “Monthly Debt Service Payment Amount” shall mean from the first Monthly Payment Date
through and including April 6, 2009 a monthly payment of interest only and thereafter a constant
monthly payment of $2,456,230.53 as more particularly described on Schedule V attached hereto.

     “Monthly Payment Date” shall mean the sixth (6th) day of every calendar
month occurring during the term of the Loan, provided, however, that, prior to a
Securitization, Lender shall have the right to change the Monthly Payment Date to any other day (or
such other day of a calendar month selected by Lender, in its sole and absolute discretion, to
collect debt service payments under loans which it makes and securitizes) upon at least ten (10)
days prior written notice to Borrower (in which event such change shall then be deemed effective)
and, if requested by Lender, Borrower shall promptly execute an amendment to this Agreement to
evidence such change.

     “Moody’s” shall mean Moody’s Investors Service, Inc.

     “Mortgage” shall mean that certain first priority Consolidated, Amended and Restated
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated the date
hereof, executed and delivered by Borrower as security for the Loan and encumbering the Property,
as the same may be amended, restated, replaced, supplemented or otherwise modified from time to
time.

     “Net Proceeds” shall mean: (i) the net amount of all insurance proceeds payable as a
result of a Casualty to the Property, after deduction of reasonable costs and expenses (including,
but not limited to, reasonable attorneys’ fees), if any, in collecting such insurance proceeds, or
(ii) the net amount of the Award, after deduction of reasonable costs and expenses (including, but
not limited to, reasonable attorneys’ fees), if any, in collecting such Award.

     “Net Proceeds Deficiency” shall have the meaning set forth in Section
5.3.2(f).

     “New Mezzanine Borrower” shall have the meaning set forth in Section 9.3.

     “New Mezzanine Loan” shall have the meaning set forth in Section 9.3.

-12-

 

     “Non-Material Lease Modification” shall mean with respect to a Major Lease, any
modification or amendment thereto which (i) does not reduce the rental rate payable thereunder or
adversely affect in any manner any of the other economic terms thereunder, (ii) does not shorten
the term of such Major Lease, (iii) does not involve the expansion or addition of more than 200,000
square feet of space to such Major Lease, and (iv) does not otherwise have a material adverse
effect with respect to such Major Lease.

     “Note” shall mean, collectively the Goldman Note and the Lehman Note.

     “Notice” shall have the meaning set forth in Section 11.6.

     “Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower which
is signed by an authorized officer of Borrower.

     “Operating Agreements” shall mean any material covenants, restrictions or agreements
of record relating to the construction, operation or use of the Property.

     “Other Charges” shall mean all Condominium Assessments, ground rents, maintenance
charges, impositions other than Taxes, and any other charges, including, without limitation, vault
charges and license fees for the use of vaults, chutes and similar areas adjoining the Property,
now or hereafter levied or assessed or imposed against the Property or any part thereof.

     “Patriot Act” shall mean collectively all laws of the United States federal government
relating to terrorism or money laundering, including Executive Order No. 13224 on Terrorist
Financing (effective September 24, 2001) and the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107 56).

     “Permitted Encumbrances” shall mean, collectively, (i) the Liens and security
interests created by the Loan Documents, (ii) all Liens, encumbrances and other matters expressly
set forth in the Title Insurance Policy, (iii) Liens, if any, for Taxes imposed by any Governmental
Authority not yet due or delinquent, (iv) mechanics’, materialmen’s or similar Liens for delinquent
taxes, if being contested by Borrower in accordance with the terms of this Agreement, (v) Liens on
personal property securing financing leases, (vi) rights of tenants, as tenants only, under Leases
in existence on the Closing Date and any Leases entered into thereafter in accordance with the
requirements of this Agreement, (vii) the Ground Lease, (viii) easements, rights-of-way,
restrictions, minor encroachments, or other similar encumbrances not impairing the marketability of
the Property and not interfering with the use of the Property for uses permitted under this
Agreement or in the ordinary conduct of the business of Borrower, and (ix) such other title and
survey exceptions as Lender has approved or may approve in writing in Lender’s reasonable
discretion.

     “Permitted Investments” shall have the meaning set forth in the Cash Management
Agreement.

     “Permitted Prepayment Date” shall have the meaning set forth in Section 2.4.1.

-13-

 

     “Permitted Transfer” shall have the meaning set forth in Section 8.2.

     “Permitted Transferee” shall mean a Qualified Equityholder (i) which is not, and the
principals of which are not, (a) in default on any indebtedness or loan from Lender, (b) the
subject of any Bankruptcy Action, (c) the subject of any criminal charges or proceedings which is
deemed significant as reasonably determined by Lender, (d) involved, or whose parent or Affiliates
are involved, in litigation which would impair its ability to own, manage or lease the Property as
reasonably determined by Lender, (e) on any list maintained by the Office of Foreign Assets Control
or (f) in violation of the Patriot Act, (ii) that qualifies as a single purpose, bankruptcy remote
entity under criteria established by the Rating Agencies; and (iii) whose counsel has delivered to
Lender a non-consolidation opinion reasonably acceptable to Lender and acceptable to the Rating
Agencies in their sole discretion.

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

     “Policy” shall have the meaning specified in Section 5.1.1(b).

     “Principal” shall mean, TH One NY Plaza LLC, a Delaware limited liability company.

     “Prohibited Person” shall mean any Person:

     (a) listed in the Annex to, or is otherwise subject to the provisions of, the Executive
Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit,
or Support Terrorism (the “Executive Order”);

     (b) that is owned or Controlled by, or acting for or on behalf of, any person or entity
that is listed in the Annex to, or is otherwise subject to the provisions of the Executive
Order;

     (c) with whom Lender is prohibited from dealing or otherwise engaging in any
transaction by the Patriot Act;

     (d) who commits, threatens or conspires to commit or supports “terrorism” as defined in
the Executive Order;

     (e) that is named as a “specially designated national and blocked person” on the most
current list published by the U.S. Treasury Department Office of Foreign Assets Control at
its official website or at any replacement website or other replacement official publication
of such list; or

     (f) who is an Affiliate of a Person listed above.

-14-

 

     “Property” shall mean the parcel of real property, the Improvements thereon and all
personal property owned by Borrower and encumbered, from time to time, by the Mortgage, together
with all rights of Borrower pertaining to such property and Improvements, all as more particularly
described in the granting clauses of the Mortgage.

     “Property Condition Report” shall mean that certain Property Condition Assessment,
dated as of February 22, 2006, prepared by EMG in connection with the making of the Loan.

     “Proposed Alterations” shall have the meaning specified in Section 4.1.10(b).

     “Qualified Equityholder” shall mean (i) TPI, THL or THO and (ii) any bank, savings
and loan association, investment bank, insurance company, trust company, commercial credit
corporation, pension plan, pension fund, pension advisory firm, mutual fund, government entity or
plan, real estate company, investment fund or institution substantially similar to any of the
foregoing, provided in each case that such institution or its wholly-owned Affiliates have
total assets (in name or under management) in excess of $2,000,000,000 and (except with respect to
a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity in
excess of $1,000,000,000, in each case excluding the Property, and is regularly engaged in the
business of owning and operating properties similar to the Property in major metropolitan areas,
and (iii) any entity with respect to which Rating Agency Confirmation is received.

     “Qualified Guaranty” shall have the meaning set forth in Section 6.5.

     “Qualified Letter of Credit” means a clean, irrevocable, unconditional, transferable
sight draft letter of credit (either an evergreen letter of credit or a letter of credit which does
not expire until at least ten (10) Business Days after the Maturity Date or such other date
reasonably acceptable to Lender) in form reasonably satisfactory to Lender with respect to which
Borrower has no reimbursement obligation, in favor of Lender and entitling Lender to draw thereon
in New York, New York, based solely on a statement executed by an officer of Lender stating that it
has the right to draw thereon, issued by a domestic Approved Bank or the U.S. agency or branch of a
foreign Approved Bank, or if there is no domestic Approved Bank or U.S. agencies or branches of a
foreign Approved Bank then issuing letters of credit, then such letter of credit may be issued by a
domestic bank, the long term unsecured debt rating of which is the highest such rating then given
by the Rating Agencies to a domestic commercial bank. The following terms and conditions shall
apply to each Qualified Letter of Credit:

     (a) Each such Qualified Letter of Credit shall expressly provide that partial draws are
permitted thereunder.

     (b) Each such Qualified Letter of Credit shall expressly provide that it is freely
transferable to any successor or assign of Lender.

     (c) Lender shall be entitled to draw on any Qualified Letter of Credit immediately and
without further notice (i) upon the occurrence and during the continuance of any Event of
Default, (ii) if such Letter of Credit shall not have been automatically renewed in
accordance with the evergreen provisions thereof not less than thirty days prior to the
expiration of such Qualified Letter of Credit (including any

-15-

 

renewal or extension thereof) and Borrower shall not have delivered to Lender, no less
than 30 days prior to the expiration date of such Qualified Letter of Credit (including any
renewal or extension thereof), a renewal or extension of such Qualified Letter of Credit or
a replacement Qualified Letter of Credit for a term of not less than one year (or through
the date that is ten (10) Business Days beyond the Maturity Date, whichever is earlier), or
(iii) if the credit rating of the issuing bank falls below the ratings set forth in
definition Approved Bank and Borrower fails to satisfy its obligations under Section
6.5.1.

     “Qualified Manager” shall mean any of the following provided such Person is
not the subject of any Bankruptcy Action: (a) any Trizec Affiliate or (b) a reputable and
experienced professional management organization which manages, together with its Affiliates,
exclusive of the Property, at least 6,000,000 square feet of office buildings comparable to the
Property 3,000,000 square feet of which shall be with respect to office buildings comparable to the
Property located in New York City on a national basis; provided, however, that
Borrower shall have delivered to Lender (i) in the case of (b) above, a Rating Agency Confirmation
(or, if a Securitization shall not have occurred and notwithstanding Section 7.2 hereof,
Borrower shall have obtained the prior written consent of Lender not to be unreasonably withheld or
delayed) and (ii) in the case of (a) above, a new and/or updated Insolvency Opinion which shall be
in form, scope and substance reasonably acceptable in all respects to Lender and acceptable in all
respects to the Rating Agencies.

     “Rating Agencies” shall mean, prior to the final Securitization of the Loan, each of
S&P, Moody’s and Fitch, or any other nationally-recognized statistical rating agency which has been
designated by Lender and, after the final Securitization of the Loan, shall mean any of the
foregoing that have rated any of the Securities.

     “Rating Agency Confirmation” shall mean a written affirmation from each of the Rating
Agencies that the credit rating of the Securities by such Rating Agency immediately prior to the
occurrence of the event with respect to which such Rating Agency Confirmation is sought will not be
qualified, downgraded or withdrawn as a result of the occurrence of such event, which affirmation
may be granted or withheld in such Rating Agency’s sole and absolute discretion.

     “Registration Statement” shall have the meaning set forth in Section 9.2(b).

     “Regulation AB” has the meaning set forth in Section 9.1(c) hereof.

     “Related Loan” has the meaning set forth in Section 9.1(c) hereof.

     “Related Property” has the meaning set forth in Section 9.1(c) hereof.

     “Release Date” shall mean the earlier to occur of (i) the third (3rd) anniversary of
the Closing Date and (ii) the date that is two (2) years from the “startup day” (within the meaning
of Section 860G(a)(9) of the Code) of the REMIC Trust established in connection with the last
Securitization involving any portion of this Loan.

-16-

 

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

     “Rents” shall mean all rents (including, without limitation, percentage rents), rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents, royalties
(including, without limitation, all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without limitation, security, utility and
other deposits), accounts, cash, issues, profits, charges for services rendered, and other
consideration of whatever form or nature received by or paid to or for the account of or benefit of
Borrower or its agents or employees from any and all sources arising from or attributable to the
Property, and proceeds, if any, from business interruption or other loss of income insurance.

     “Reserve Funds” shall mean, collectively, the Capital Expenditure Funds, the Insurance
Funds, the Tax Funds, the Unassessed Tax Funds, the Rollover Funds, the Goldman Reserve Funds, the
Wachovia Reserve Funds and the Unfunded Obligations Funds.

     “Restoration” shall have the meaning set forth in Section 5.2.1.

     “Restoration Threshold” shall mean Twenty Million and No/100 Dollars ($20,000,000).

     “Rollover Funds” shall have the meaning set forth in Section 6.5.1.

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

     “Scheduled Defeasance Payments” shall mean all scheduled payments of interest and
principal under the Note for all Monthly Payment Dates occurring after the Defeasance Date and up
to and including the Permitted Prepayment Date (including, the outstanding principal balance on the
Note as of the Permitted Prepayment Date).

     “Secondary Market Transaction” shall have the meaning set forth in Section
9.1(a).

     “Securities” shall have the meaning set forth in Section 9.1(a).

     “Securities Act” shall have the meaning set forth in Section 9.2(a).

     “Securitization” shall have the meaning set forth in Section 9.1(a).

     “Security Agreement” shall mean a security agreement in form and substance that would
be satisfactory to a prudent lender pursuant to which Borrower grants Lender a perfected, first
priority security interest in the Defeasance Collateral.

     “Servicer” shall have the meaning set forth in Section 11.24(a).

     “Servicing Agreement” shall have the meaning set forth in Section 11.24(a).

-17-

 

     “Severed Loan Documents” shall have the meaning set forth in Section 10.2(c).

     “Significant Obligor” has the meaning set forth in Section 9.1(c) hereof.

     “SPC Party” shall have the meaning set forth in Section 3.1.24(o).

     “Specified Decisions” shall mean, with respect to the Borrower or any SPC Party,
decisions to (a) refinance, (b) amend the organizational documents of Borrower or any SPC Party,
(c) alter voting rights of the owners of the Borrower or any SPC Party, (d) merge with, consolidate
with or acquire another entity, (e) transfer ownership interests in such Person, (f) dissolve, (g)
reorganize or change or remove a managing member or general partner of such Person, as applicable,
or (h) similar decisions affecting such Person, as reasonably determined by Lender;
provided, however, in no event shall any decision with respect to the day-to-day
control, operation and/or management of Borrower or the Property be deemed to constitute a
Specified Decision for purposes hereof.

     “Standard Statements” shall have the meaning set forth in Section 9.1(c)(i).

     “State” shall mean the State or Commonwealth in which the Property or any part thereof
is located.

     “Successor Borrower” shall have the meaning set forth in Section 2.5.4.

     “Survey” shall mean a land survey for the Property, certified to the title company and
Lender and its successors and assigns, in form and content reasonably satisfactory to Lender.

     “Tax Funds” shall have the meaning set forth in Section 6.2.1.

     “Taxes” shall mean all real estate and personal property taxes, assessments, water
rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or part
thereof, together with all interest and penalties thereon.

     “Tenant” shall mean any Person obligated by contract or otherwise to pay monies
(including a percentage of gross income, revenue or profits) under any Lease now or hereafter
affecting all or any part of the Property.

     “Terrorism Losses” shall be those types of losses which result from perils of
terrorism and acts of terrorism as are currently “certified” under TRIA whether or not TRIA is in
effect excluding losses for nuclear, biological or chemical acts.

     “Terrorism Premium Limit” shall mean an annual Insurance Premium equal to
$1,300,000.00.

     “THL” shall mean Trizec Holdings, LLC or any successor thereto by merger, conversion,
consolidation, reorganization or other form of business combination.

     “THO” shall mean Trizec Holdings Operating LLC, or any successor thereto by merger,
conversion, consolidation, reorganization or other form of business combination.

-18-

 

     “Title Insurance Policy” shall mean an ALTA mortgagee title insurance policy in the
form reasonably acceptable to Lender issued with respect to the Property and insuring the lien of
the Mortgage together with such endorsements and affirmative coverages as Lender may reasonably
require.

     “TPI” shall mean Trizec Properties, Inc. or any successor thereto by merger,
conversion, consolidation, reorganization or other form of business combination.

     “Transferee” shall have the meaning set forth in Section 8.1.1(f)(iii) .

     “TRIA” shall mean the Terrorism Risk Insurance Act of 2002, as amended, or similar
Federal statute.

     “Trizec Affiliate” shall mean (a) THL, (b) TPI, (c) THO or (d) any entity which
directly or indirectly has Control over, is Controlled by or is under common Control with THL, TPI
or THO.

     “Trustee” shall mean any trustee holding the Loan in a Securitization.

     “UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as
in effect in the State.

     “Unassessed Tax Funds” has the meaning set forth in Section 6.2.2 hereof

     “Unassessed Property” has the meaning set forth in Section 6.2.2 hereof

     “Unfunded Obligations” means the items described in Schedule VI.

     “Unfunded Obligations Account” has the meaning set forth in Section 6.6
hereof.

     “Unfunded Obligations Amount” means $14,926,487.50.

     “Unfunded Obligations Funds” has the meaning set forth in Section 6.6 hereof.

     “Underwriter Group” shall have the meaning set forth in Section 9.2(b).

     “Updated Information” shall have the meaning set forth in Section 9.1(b)(i).

     “U.S. Obligations” shall mean non redeemable securities evidencing an obligation to
timely pay principal and/or interest in a full and timely manner that are (a) direct obligations of
the United States of America for the payment of which its full faith and credit is pledged, (b)
other non-callable “government securities” as defined in Treasury Regulations Section
1.860G-2(a)(8)(i), as amended which will not result in a reduction, downgrade or withdrawal of the
ratings for the Securities or any class thereof issued in connection with a Security and which are
then outstanding or (c) other instruments, which if a Securitization has occurred, the REMIC Trust
formed pursuant to such Securitization will not fail to maintain its status as a “real estate
mortgage investment conduit” within the meaning of Section 860D of the Code and which will not
result in a reduction, downgrade or withdrawal of the ratings for the

-19-

 

Securities or any class thereof issued in connection with a Security and which are then
outstanding.

     “Wachovia” shall mean Wachovia Securities Financial Holdings, LLC.

     “Wachovia Lease” shall mean Lease dated March 29, 1993 between Borrower and Wachovia,
as the same is in effect on the date hereof and as amended, restated or modified in accordance with
the terms of this Agreement.

     “Wachovia Reserve Funds” shall have the meaning set forth in Section 6.5.1.

     “Yield Maintenance Premium” shall mean an amount equal to the greater of: (i) three
percent (3%) of the principal amount of the Loan being prepaid and (ii) the present value as of the
Prepayment Date of the Calculated Payments from the Prepayment Date through the Permitted
Prepayment Date determined by discounting such payments at the Discount Rate. As used in this
definition, the term “Prepayment Date” shall mean the date on which prepayment is made. As
used in this definition, the term “Calculated Payments” shall mean the monthly payments of
interest only which would be due based on the principal amount of the Loan being prepaid on the
Prepayment Date and assuming an interest rate per annum equal to the difference (if such difference
is greater than zero) between (y) the Interest Rate and (z) the Yield Maintenance Treasury Rate.
As used in this definition, the term “Discount Rate” shall mean the rate which, when
compounded monthly, is equivalent to the Yield Maintenance Treasury Rate, when compounded
semi-annually. As used in this definition, the term “Yield Maintenance Treasury Rate”
shall mean the yield calculated by Lender by the linear interpolation of the yields, as reported in
the Federal Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S.
Government Securities/Treasury Constant Maturities for the week ending prior to the Prepayment
Date, of U.S. Treasury Constant Maturities with maturity dates (one longer or one shorter) most
nearly approximating the Maturity Date. In the event Release H.15 is no longer published, Lender
shall select a comparable publication to determine the Yield Maintenance Treasury Rate. In no
event, however, shall Lender be required to reinvest any prepayment proceeds in U.S. Treasury
obligations or otherwise.

     Section 1.2 Principles of Construction. All references to sections and schedules are
to sections and schedules in or to this Agreement unless otherwise specified. Unless otherwise
specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be
equally applicable to both the singular and plural forms of the terms so defined.

ARTICLE II

THE LOAN

     Section 2.1 The Loan.

-20-

 

        .

     2.1.1 Agreement to Lend and Borrow. Subject to and upon the terms and conditions set
forth herein, Lender shall make the Loan to Borrower and Borrower shall accept the Loan from Lender
on the Closing Date.

     2.1.2 Single Disbursement to Borrower. Borrower shall receive only one (1) borrowing
hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the
Loan may not be reborrowed.

     2.1.3 Note, Mortgage and Loan Documents. The Loan shall be evidenced by the Note and
secured by the Mortgage, the Assignment of Leases and the other Loan Documents.

     2.1.4 Use of Proceeds. Borrower shall use proceeds of the Loan to (a) pay and
refinance any existing loans relating to the Property, (b) pay all past due Basic Carrying Costs,
if any, in respect of the Property, (c) deposit the Reserve Funds, as applicable, (d) pay costs and
expenses incurred in connection with the closing of the Loan, (e) fund any working capital
requirements of the Property and (f) distribute the balance of the proceeds, if any to Borrower
which Borrower may then lend to its members or direct or indirect owners of Borrower.

     Section 2.2 Interest Rate.

     2.2.1 Interest Rate. Interest on the outstanding principal balance of the Loan shall
accrue from the Closing Date up to and including the Maturity Date at the Interest Rate.

     2.2.2 Default Rate. In the event that, and for so long as, any Event of Default shall
have occurred and be continuing, the outstanding principal balance of the Loan and, to the extent
permitted by law, overdue interest in respect of the Loan, shall accrue interest at the Default
Rate, calculated from the date such payment was due without regard to any grace or cure periods
contained herein.

     2.2.3 Interest Calculation. Interest on the outstanding principal balance of the Loan
shall be calculated by multiplying (a) the actual number of days elapsed in the period for which
the calculation is being made by (b) a daily rate based on a three hundred sixty (360) day year
(that is, the Interest Rate or the Default Rate, as then applicable, expressed as an annual rate
divided by 360) by (c) the
outstanding principal balance. The accrual period for calculating interest due on each Monthly
Payment Date shall commence on the sixth (6th) day of the calendar month immediately
prior to such Monthly Payment Date and end on (and including) the fifth (5th) day of the
calendar month in which the Monthly Payment Date occurs.

     2.2.4 Usury Savings. This Agreement and the other Loan Documents are subject to the
express condition that at no time shall Borrower be required to pay interest on the principal
balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Interest Rate or
the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum
Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due hereunder. All sums
paid or agreed to be paid to Lender for the use, forbearance, or

-21-

 

detention of the sums due under
the Loan shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Loan until payment in full so that the rate or amount
of interest on account of the Loan does not exceed the Maximum Legal Rate from time to time in
effect and applicable to the Loan for so long as the Loan is outstanding.

     Section 2.3 Loan Payments.

     2.3.1 Payment Before Maturity Date. Borrower shall make a payment to Lender of
interest only on the Closing Date for the period from the Closing Date through the fifth day of the
month in which the Closing Date occurs (unless the Closing Date is the sixth (6th) day
of a calendar month, in which case no such separate payment of interest shall be due). Borrower
shall make a payment to Lender in the amount of the Monthly Debt Service Payment Amount on the
Monthly Payment Date occurring on [April 6, 2006] and on each Monthly Payment Date thereafter to
and including the Maturity Date. Each payment shall be applied first to accrued and unpaid
interest and the balance to principal, as applicable. The principal portion of the Monthly Debt
Service Payment Amount required hereunder is based upon a twenty-five (25) year amortization
schedule.

     2.3.2 Payment on Maturity Date. Borrower shall pay to Lender on the Maturity Date the
outstanding principal balance of the Loan, all accrued and unpaid interest and all other amounts
due hereunder and under the Note, the Mortgage and the other Loan Documents.

     2.3.3 Late Payment Charge. If any principal, interest or any other sum due under the
Loan Documents, other than the payment of principal due on the Maturity Date, is not paid by
Borrower on the date on
which it is due, Borrower shall pay to Lender upon demand an amount equal to the lesser of (a)
five percent (5%) of such unpaid sum or (b) the Maximum Legal Rate in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to compensate Lender for
the loss of the use of such delinquent payment. Any such amount shall be secured by the Mortgage
and the other Loan Documents.

     2.3.4 Method and Place of Payment. (a) Except as otherwise specifically provided
herein, all payments and prepayments under this Agreement and the Note shall be made to Lender not
later than 2:00 P.M., New York City time, on the date when due and shall be made in lawful money of
the United States of America in immediately available funds at Lender’s office, and any funds
received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on
the next succeeding Business Day.

     (b) Whenever any payment to be made hereunder or under any other Loan Document shall be stated
to be due on a day which is not a Business Day, the due date thereof shall be the first Business
Day that is immediately succeeding such due date (notwithstanding such adjustment of due dates,
Borrower shall not be entitled to any deduction of interest due under the Note, this Agreement or
any of the other Loan Documents) and, with respect to payments of principal due on the Maturity
Date, interest shall be payable at the Interest Rate or the Default Rate, as the case may be,
during such extension.

-22-

 

     (c) All payments required to be made by Borrower hereunder or under the Note or the other Loan
Documents shall be made irrespective of, and without deduction for, any setoff, claim or
counterclaim and shall be made irrespective of any defense thereto.

     Section 2.4 Prepayments.

     2.4.1 Voluntary Prepayments. Except as otherwise provided herein, Borrower shall not
have the right to prepay the Loan in whole or in part. On and after December 6, 2015] (the
“Permitted Prepayment Date”), Borrower may, at its option and upon not less than fifteen
(15) days (or such shorter period of time if permitted by Lender in its reasonable discretion)
prior notice to Lender, prepay the Debt in whole but not in part, on any date without payment of
the Yield Maintenance Premium. Any prepayment received by Lender on a date other than a Monthly
Payment Date shall include interest which would have accrued thereon to the next Monthly Payment
Date. Any partial prepayment shall be applied to the last payments of principal due under the
Loan. Lender shall not be obligated to accept such prepayment made pursuant to this Section
2.4.1 unless it is accompanied with a payment of all interest which would have accrued on the
outstanding principal amount of such prepayment and remains unpaid through but excluding the next
succeeding Monthly Payment Date, together with other amounts due under the Loan Documents.
Borrower shall have the right to revoke any notice of prepayment under this Section 2.4.1;
provided that Borrower pays to Lender any and all actual out-of-pocket third party costs
and expenses incurred by Lender arising as a result of any such revocation.

     2.4.2 Mandatory Prepayments. On each date on which Lender actually receives a
distribution of Net Proceeds, and if Lender does not make such Net Proceeds available to Borrower
for a Restoration, Borrower shall, at Lender’s option, prepay the outstanding principal balance of
the Note in an amount equal to one hundred percent (100%) of such Net Proceeds together with
interest that would have accrued on such amounts through the next Monthly Payment Date. No Yield
Maintenance Premium shall be due in connection with any prepayment made pursuant to this
Section 2.4.2. Any prepayment of the Loan received by Lender pursuant to the terms of this
Section 2.4.2 shall be applied to reduction of the outstanding principal balance, on a pari
passu basis, the Goldman Note, the Lehman Note A-1 and the Lehman Note A-2.

     2.4.3 Prepayments After Default. If during the continuance of an Event of Default,
payment of all or any part of the principal of the Loan is tendered by Borrower (which tender
Lender may reject to the extent permitted under applicable Legal Requirements), a purchaser at
foreclosure or any other Person, such tender shall be deemed an attempt to circumvent the
prohibition against prepayment set forth in Section 2.4.1 and Borrower, such purchaser at
foreclosure or other Person shall pay the Yield Maintenance Premium, in addition to the outstanding
principal balance, all accrued and unpaid interest and other amounts payable under the Loan
Documents. Any prepayment of the Loan received by Lender pursuant to the terms of this Section
2.4.3 may be retained and applied by Lender toward the payment of the Debt in such order,
priority and proportions as Lender in its sole discretion shall determine.

-23-

 

             Section 2.5 Defeasance.

             2.5.1 Defeasance. (a) Provided no Event of Default shall have occurred and
remain uncured, Borrower shall have the right at any time after the Release Date to voluntarily
defease the entire Loan and obtain a release of the lien of the Mortgage by providing Lender with
the Defeasance Collateral (hereinafter, a “Defeasance Event”), subject to the satisfaction
of the following conditions precedent:

     (i) Borrower shall provide Lender not less than thirty (30) days prior written notice
(or such shorter period of time if permitted by Lender in its reasonable discretion)
specifying a date (the “Defeasance Date”) on which the Defeasance Event is to occur;

     (ii) Borrower shall pay to Lender (A) all payments of principal and interest due on the
Loan to and including the Defeasance Date (including, without limitation, interest accrued
but not paid or payable through and including the Defeasance Date, if any) and (B) all other
sums, then due under the Note, this Agreement, the Mortgage and the other Loan Documents;

     (iii) Borrower shall deposit the Defeasance Collateral into the Defeasance Collateral
Account and otherwise comply with the provisions of Section 2.5.3 and 2.5.4
hereof;

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

     (v) Borrower shall deliver to Lender an opinion of counsel for Borrower that is
standard in commercial lending transactions and subject only to customary qualifications,
assumptions and exceptions opining, among other things, that (A) Lender has a legal and
valid perfected first priority security interest in the Defeasance Collateral Account and
the Defeasance Collateral, (B) if a Securitization has occurred, the REMIC Trust formed
pursuant to such Securitization will not fail to maintain its status as a “real estate
mortgage investment conduit” within the meaning of Section 860D of the Code as a result of a
Defeasance Event pursuant to this Section 2.5.1, and (C) if required by the Rating
Agencies, a non consolidation opinion with respect to the Successor Borrower;

     (vi) Borrower shall deliver to Lender a Rating Agency Confirmation as to the Defeasance
Event;

     (vii) Borrower shall deliver an Officer’s Certificate certifying that the requirements
set forth in this Section 2.5.1 and in Section 2.5.3 and 2.5.4 have
been satisfied;

     (viii) Borrower shall deliver a certificate of Grant Thornton or a “big four” or other
nationally recognized public accounting firm reasonably acceptable to Lender certifying that
the Defeasance Collateral will generate monthly amounts equal to or greater than the
Scheduled Defeasance Payments;

-24-

 

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

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

     (b) If Borrower has elected to defease the Note and the requirements of this Section
2.5 have been satisfied, the Property shall be released from the lien of the Mortgage and the
other Loan Documents and the Defeasance Collateral pledged pursuant to the Security Agreement shall
be the sole source of collateral securing the Note. In connection with the release of the Lien,
Borrower shall submit to Lender, not less than fifteen (15) days prior to the Defeasance Date (or
such shorter time as is acceptable to Lender in its reasonable discretion), a release of Lien (and
related Loan Documents) for execution by Lender. Such release shall be in a form appropriate in
the jurisdiction in which the Property is located. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in connection with such
release, together with an Officer’s Certificate certifying that such documentation (i) is in
compliance with all Legal Requirements, and (ii) will effect such release in accordance with the
terms of this Agreement. Borrower shall pay all costs, taxes and expenses
associated with the release of the lien of the Mortgage, including Lender’s reasonable
attorneys’ fees actually incurred. Except as set forth in this Section 2.5 or Section
11.33 hereof, no repayment, prepayment or defeasance of all or any portion of the Note shall
cause, give rise to a right to require, or otherwise result in, the release of the Lien of the
Mortgage on the Property.

     2.5.2 Intentionally Omitted.

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

     2.5.4 Successor Borrower. In connection with a Defeasance Event under this
Section 2.5, Borrower shall, if required by the Rating Agencies or if Borrower elects to do
so,

-25-

 

establish or designate a successor entity (the “Successor Borrower”) which shall be a
single purpose bankruptcy remote entity and which shall be approved by the Rating Agencies. Any
such Successor Borrower may, at Borrower’s option, be an Affiliate of Borrower unless the Rating
Agencies shall require otherwise. Borrower shall transfer and assign all obligations, rights and
duties under and to the Note together with the Defeasance Collateral to such Successor Borrower.
Such Successor Borrower shall assume the obligations under the Note and the Security Agreement and
Borrower shall be relieved of its obligations under such documents and shall be relieved from all
obligations accruing under this Agreement and the other Loan Documents from and after the
Defeasance Event except for those obligations and indemnities which are expressly stated to survive
the payment in full of the Loan. Borrower shall pay a minimum of One Thousand and No/100 ($1,000)
to any such Successor Borrower as consideration for assuming the obligations under the Note and the
Security Agreement. Borrower shall pay all out of pocket costs and
expenses actually incurred by Lender, including Lender’s reasonable attorney’s fees and
expenses incurred in connection therewith.

     2.5.5 Assignment upon Defeasance. If Borrower has advised Lender that it desires to
effectuate a Defeasance Event in a manner which will permit the assignment of the Note and Mortgage
to a new lender providing a portion of the funds necessary to acquire the Defeasance Collateral in
order to save mortgage recording tax, Borrower and Lender shall cooperate to effect such proposed
assignment in the following manner: Lender shall assign the Note and the Mortgage, each without
recourse, covenant or warranty of any nature, express or implied, (except as to representations as
to due execution, delivery, authority, and no transfer or encumbrance of the Note or Mortgage by
Lender) to such new lender designated by Borrower (other than Borrower or a nominee of Borrower)
provided that Borrower (a) has either prepaid the Debt or has executed and delivered to such new
lender a new note to be secured by the Defeasance Collateral pursuant to the Security Agreement
between Borrower and such new lender (such new note to have the same term, interest rate, unpaid
principal balance and all other material terms and conditions of the Note), which new note,
together with the Security Agreement and the rights of such new lender in and to the Defeasance
Collateral, shall be assigned by such new lender to Lender simultaneously with the assignment of
the Note and Mortgage by Lender and (b) has complied with all other provisions of Section
2.5 to the extent not inconsistent with this Section 2.5.5. In addition, any such
assignment shall be conditioned on the following: (i) payment by Borrower of (x) Lender’s then
customary administrative fee for processing assignments of mortgage; (y) the reasonable actual
out-of-pocket expenses of Lender incurred in connection therewith; and (z) Lender’s reasonable
attorney’s fees for the preparation, delivery and performance of such an assignment; (ii) Borrower
shall have caused the delivery of an executed Statement of Oath under Section 275 of the New York
Real Property Law; (iii) such new lender shall materially modify the Note such that it shall be
treated as a new loan for federal tax purposes; (iv) such an assignment is not then prohibited by
any federal, state or local law, rule, regulation, order or by any other governmental authority;
(v) such assignment and the actions described above do not constitute a prohibited transaction for
any REMIC Trust formed pursuant to a Secondary Market Transaction and will not disqualify such
REMIC Trust as a “real estate mortgage investment conduit” within the meaning of Section 860D of
the Code as a result of such assignment and the Defeasance, and, if required, an opinion of counsel
to Borrower to that effect is delivered to Lender in a form that would be reasonably satisfactory
to a prudent lender; and (vi) Borrower shall provide such other opinions, items, information and
documents which a prudent lender acting reasonably would require to effectuate such assignment.
Borrower

-26-

 

shall be responsible for all mortgage recording taxes, recording fees and other charges
payable in connection with any such assignment. Borrower and Lender acknowledge and agree that the
assignment of the Note and Mortgage to the new lender and the assignment of the new note, the
Defeasance Collateral and the Security Agreement by the new lender to Lender shall be accomplished
by an escrow closing conducted through an escrow agent reasonably satisfactory to Lender and
pursuant to an escrow agreement reasonably satisfactory to Lender in form and substance.

     Section 2.6 Release on Payment in Full.
Lender shall, upon the written request and at the expense of Borrower, upon payment in full
of all principal and interest due on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms and provisions of the Note and this Agreement, release the
Lien of the Mortgage on the Property. Upon Borrower’s request and at Borrower’s sole cost and
expense, Lender agrees, in connection with any release under this Section 2.6, to assign,
without any recourse, representation or warranty (except as to representations as to due execution,
delivery, authority and no transfer or encumbrance of the Note or Mortgage by Lender), and deliver
to the assignee the Mortgage and Note, as applicable, to any such new lender in connection with any
refinance of the Loan (or portion thereof). In connection with any such the release or assignment
of the Mortgage, Borrower shall submit to Lender, not less than fifteen (15) days prior to the date
of such release, a release or assignment of Lien (and related Loan Documents, including a
replacement of the Note in the event that the Mortgage is assigned to a new lender in connection
with a refinance or defeasance) for the Property or an assignment of the Note and Mortgage in form
and substance reasonably satisfactory to Lender for execution by Lender. Such release or
assignment shall be in a form appropriate in the jurisdiction in which the Property is located and
that would be reasonably satisfactory to a prudent lender and contain standard provisions, if any,
protecting the rights of the releasing or assigning lender.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     Section 3.1 Borrower Representations. Borrower represents and warrants that:

     3.1.1 Organization. (a) Each of Borrower and each SPC Party is duly organized,
validly existing and in good standing with full power and authority to own its assets and conduct
its business, and is duly qualified in all jurisdictions in which the ownership or lease of its
property or the conduct of its business requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on its ability to perform its obligations
hereunder, and Borrower has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents by it, and has the power and authority
to execute, deliver and perform under this Agreement, the other Loan Documents and all the
transactions contemplated hereby.

     (b) Borrower’s exact legal name is correctly set forth in the first paragraph of this
Agreement. Borrower is an organization of the type specified in the first paragraph of this
Agreement. Borrower is incorporated or organized under the laws of the state specified in the
first paragraph of this Agreement. Borrower’s principal place of business and chief executive

-27-

 

office, and the place where Borrower keeps its books and records, including recorded data of any
kind or nature, regardless of the medium of recording, including software, writings, plans,
specifications and schematics, has been for the preceding four (4) months (or, if less than four
(4) months, the entire period of the existence of Borrower) and will continue to be the address of
Borrower set forth in the first paragraph of this Agreement and/or the address of the Property
(unless Borrower notifies Lender in writing at least thirty (30) days prior to the date of such
change). Borrower’s organizational identification number, if any, assigned by the state of its
incorporation or organization is 2984305. Borrower’s federal tax identification number is
13-4196875.

     3.1.2 Proceedings. This Agreement and the other Loan Documents have been duly
authorized, executed and delivered by Borrower and constitute a legal, valid and binding obligation
of Borrower, enforceable against Borrower in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law).

     3.1.3 No Conflicts. The execution and delivery of this Agreement and the other Loan
Documents by Borrower and the performance of its obligations hereunder and thereunder will not
conflict with any provision of any law or regulation to which Borrower is subject, or conflict
with, result in a breach of, or constitute a default under, any of the terms, conditions or
provisions of any of Borrower’s organizational documents or any agreement or instrument to which
Borrower is a party or by which it is bound, or any order or decree applicable to Borrower, or
result in the creation or imposition of any lien on any of Borrower’s assets or property (other
than pursuant to the Loan Documents).

     3.1.4 Litigation. There is no action, suit, proceeding or investigation pending or,
to Borrower’s knowledge, threatened against Borrower in any court or by or before any other
Governmental Authority that would have a Material Adverse Effect.

     3.1.5 Agreements. Borrower is not in default with respect to any order or decree of
any court or any order, regulation or demand of any Governmental Authority, which default might
have a Material Adverse Effect.

     3.1.6 Consents. No consent, approval, authorization or order of any court or
Governmental Authority is required for the execution, delivery and performance by Borrower of, or
compliance by Borrower with, this Agreement or the consummation of the transactions contemplated
hereby, other than those which have been obtained by Borrower.

     3.1.7 Title. Borrower has good, marketable and insurable fee simple title to the real property
comprising part of the Property and good title to the balance of the Property owned by it, free and
clear of all Liens whatsoever except the Permitted Encumbrances. The Mortgage, when properly
recorded in the appropriate records, together with any UCC financing statements required to be
filed in connection therewith will create (a) a valid, first priority, perfected lien on the
Property, subject only to Permitted Encumbrances and (b) perfected security interests in and to,
and perfected collateral assignments of, all personalty (including the Leases), all in

-28-

 

accordance
with the terms thereof, in each case subject only to any Permitted Encumbrances. Except as
disclosed in the Title Insurance Policy, there are no mechanics’, materialman’s or other similar
liens or claims which have been filed for work, labor or materials affecting the Property which are
or may be liens prior to, or equal or coordinate with, the lien of the Mortgage. None of the
Permitted Encumbrances, individually or in the aggregate, materially interfere with the benefits of
the security intended to be provided by the Mortgage and this Loan Agreement, materially and
adversely affect the value of the Property, materially impair the use or operations of the Property
or impair Borrower’s ability to pay its obligations in a timely manner.

     3.1.8 No Plan Assets. As of the date hereof (a) Borrower is not an “employee benefit
plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA, (b) none of the assets of
Borrower constitutes “plan assets” of one or more such plans within the meaning of 29 C.F.R.
Section 2510.3-101, (c) Borrower is not a “governmental plan” within the meaning of Section 3(32)
of ERISA, and (d) transactions by or with Borrower are not subject to any state statute regulating
investments of, or fiduciary obligations with respect to, governmental plans.

     3.1.9 Compliance. Except as described in the Title Insurance Policy, the
Environmental Report or the Physical Condition Report delivered to Lender, Borrower and the
Property and the use thereof comply in all material respects with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and codes, the
noncompliance of which would have a Material Adverse Effect. Borrower will comply with the Patriot
Act and Borrower is not in default or violation of any order, writ, injunction, decree or demand of
any Governmental Authority, the violation of which would have a Material Adverse Effect. Borrower
has not committed any act which may give any Governmental Authority the right to cause Borrower to
forfeit the Property or any part thereof or any monies paid in performance of Borrower’s
obligations under any of the Loan Documents.

     3.1.10 Financial Information. All financial data, including, without limitation, the
statements of cash flow and income and operating expense, that have been delivered by Borrower to
Lender in respect of the Property (a) are true, complete and correct in all material respects, (b)
accurately represent the financial condition of the Property in all material respects as of the
date of such reports, and (c) have been prepared in accordance with GAAP throughout the periods
covered, except as disclosed therein. Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable
commitments that are known to Borrower and reasonably likely to have a Material Adverse
Effect.

     3.1.11 Condemnation. No Condemnation or other proceeding has been commenced or, to
Borrower’s best knowledge, is contemplated with respect to all or any portion of the Property or
for the relocation of roadways providing access to the Property.

     3.1.12 Utilities and Public Access. The Property has rights of access to public ways
and is served by water, sewer, sanitary sewer and storm drain facilities adequate to service the
Property for its intended uses.

-29-

 

     3.1.13 Separate Lots. The Property is comprised of one (1) or more parcels which
constitute separate tax lots and do not constitute a portion of any other tax lot not a part of the
Property.

     3.1.14 Assessments. Borrower has not received any notice of any pending or proposed
special or other assessments for public improvements or otherwise affecting the Property and there
are no contemplated improvements to the Property that may result in any such special or other
assessments.

     3.1.15 Enforceability. The Loan Documents are not subject to any right of rescission,
set off, counterclaim or defense by Borrower, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of any right thereunder,
render the Loan Documents unenforceable, and Borrower has not asserted any right of rescission, set
off, counterclaim or defense with respect thereto.

     3.1.16 Assignment of Leases. The Assignment of Leases creates a valid assignment of,
or a valid security interest in, certain rights under the Leases, subject only to a license granted
to Borrower to exercise certain rights and to perform certain obligations of the lessor under the
Leases, as more particularly set forth therein, including the right to operate the Property. No
Person other than Lender (and Borrower in its capacity as landlord under the Leases) has any
interest in or assignment of the Leases or any portion of the Rents due and payable or to become
due and payable thereunder.

     3.1.17 Insurance. Borrower has obtained and has delivered to Lender original or
certified copies of all of the Policies, with all premiums prepaid thereunder, reflecting the
insurance coverages,
amounts and other requirements set forth in this Agreement. No Person, including Borrower,
has done, by act or omission, anything which would impair the coverage of any of the Policies.

     3.1.18 Licenses. To the best of Borrower’s knowledge all material permits and
approvals, including, without limitation, certificates of occupancy required by any Governmental
Authority for the use, occupancy and operation of the Property in the manner in which the Property
is currently being used, occupied and operated have been obtained and are in full force and effect.

     3.1.19 Flood Zone. The Improvements on the Property are located in an area identified
by the Federal Emergency Management Agency as Flood Zone A-7 (100 year flood area).

     3.1.20 Physical Condition. Except as set forth in the Property Condition Report and
the Environmental Report delivered to Lender, the Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing
systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior
sidings and doors, landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; except as set forth in the Property Condition
Report and the Environmental Report, there exists no structural or other material defects or
damages in the Property, whether latent (to Borrower’s knowledge) or

-30-

 

otherwise, and Borrower has
not received notice from any insurance company or bonding company of any defects or inadequacies in
the Property, or any part thereof, which would adversely affect the insurability of the same or
cause the imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.

     3.1.21 Boundaries. Except as set forth on the Survey, all of the Improvements lie
wholly within the boundaries and building restriction lines of the Property, and no improvements on
adjoining properties encroach upon the Property, and no easements or other encumbrances affecting
the Property encroach upon any of the improvements, so as to affect the value or marketability of
the Property except those which are insured against by title insurance.

     3.1.22 Leases. Borrower represents and warrants to Lender with respect to the Leases
that: (a) the rent roll attached hereto as Schedule I is true, complete and correct and
the Property is not subject to any Leases other than the Leases described in Schedule I,
(b) except as set forth in the estoppel letters to Lender or as set forth on Schedule I the
Leases identified on Schedule I are in full force and effect to Borrower’s knowledge and
there are no defaults thereunder by Borrower, or to the knowledge of Borrower, any Tenant, (c) the
copies of the Leases delivered to Lender are true and complete, and there are no oral agreements
with respect thereto, (d) except as otherwise disclosed on Schedule I, no Rent (including
security deposits) has been paid more than
one (1) month in advance of its due date, (e) except as otherwise disclosed on Schedule
I, any free rent or other allowances required to be given by Borrower to any Tenant has already
been received by such Tenant, (f) all security deposits are being held in accordance with Legal
Requirements, (g) Borrower has no knowledge of any notice of termination or default with respect to
any Lease, (h) Borrower has not assigned or pledged any of the Leases, the rents or any interests
therein except to Lender, (i) no Tenant or other party has an option or right of first refusal or
offer, to purchase all or any portion of the Property; and (j) except as otherwise disclosed on
Schedule I, no Tenant under any Lease that is not a Major Lease has the right to terminate
its Lease prior to expiration of the stated term of such Lease. For purposes hereof, the term
“Lease” shall not include any sublease or other occupancy agreement to which Borrower is not a
party.

     3.1.23 Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes
or other amounts in the nature of transfer taxes required to be paid under applicable Legal
Requirements in connection with the transfer of the Property to Borrower have been paid or are
being paid simultaneously herewith. All mortgage, mortgage recording, stamp, intangible or other
similar tax required to be paid under applicable Legal Requirements in connection with the
execution, delivery, recordation, filing, registration, perfection or enforcement of any of the
Loan Documents, including, without limitation, the Mortgage, have been paid or are being paid
simultaneously herewith. All taxes and governmental assessments due and owing in respect of the
Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has
been established hereunder.

     3.1.24 Single Purpose. Borrower hereby represents and warrants to, and covenants
with, Lender that as of the date hereof and until such time as the Debt shall be paid in full:

-31-

 

     (a) Borrower does not own and will not own any asset or property other than (i) the Property,
and (ii) incidental personal property necessary for the ownership, operation, leasing, management
and/or maintenance of the Property.

     (b) Borrower will not engage in any business other than the ownership, financing, management,
operation, leasing, maintenance and sale of the Property and other activities incidental thereto
(in each case in accordance with the terms and provisions of this Agreement and the other Loan
Documents).

     (c) Except for capital contributions or capital distributions (including dividends) permitted
under the terms and conditions of Borrower’s operating agreement and properly reflected on the
books and records of Borrower, Borrower will not enter into any contract or agreement with any
Affiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party,
except upon terms and conditions that are commercially reasonable and substantially similar to
those that would be available on an arms-length basis with third parties other than any such party.

     (d) Borrower has not incurred and will not incur any Indebtedness other than (i) the Debt,
(ii) unsecured trade payables and operational debt not evidenced by a note and
(iii) Indebtedness incurred in the financing of equipment and other personal property used on
the Property; provided that (A) any Indebtedness incurred pursuant to subclause
(ii) shall be (x) not more than sixty (60) days past the date incurred and (y) incurred in the
ordinary course of business, and (B) any Indebtedness incurred pursuant to subclauses (ii)
and (iii) in an aggregate amount not to exceed, at any one time, five percent (5%) of the
original principal balance of the Loan. No Indebtedness other than the Debt may be secured
(subordinate or pari passu) by the Property.

     (e) Borrower has not made and will not make any loans or advances to any third party, and
shall not acquire obligations or securities of its Affiliates except as otherwise expressly
permitted in this Agreement.

     (f) Borrower will not make any distributions so as to render Borrower insolvent or cause
Borrower to be unable to pay its debts and liabilities (including, as applicable, shared personnel
and overhead expenses) from its assets as the same shall become due.

     (g) Borrower has done or caused to be done and will do all things necessary to observe
organizational formalities and preserve its existence, and Borrower will not, nor will Borrower
permit any constituent party to amend, modify or otherwise change the partnership certificate,
partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other
organizational documents of Borrower without the prior consent of Lender in any manner that (i)
violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends,
modifies or otherwise changes any provision thereof that by its terms cannot be modified at any
time when the Loan is outstanding or by its terms cannot be modified without Lender’s consent.

     (h) Borrower will maintain all of its books, records, financial statements and bank accounts
separate from those of its Affiliates and any constituent party. Borrower’s assets

-32-

 

will not be
listed as assets on the financial statement of any other Person, provided, however,
that Borrower’s assets may be included in a consolidated financial statement of its Affiliates (or
its member’s Affiliates) provided that (i) appropriate notation shall be made on such
consolidated financial statements to indicate the separateness of Borrower from such Affiliates and
to indicate that Borrower’s assets and credit are not available to satisfy the debts and other
obligations of such Affiliates or any other Person and (ii) such assets shall be listed on
Borrower’s own separate balance sheet. Borrower will file its own tax returns, except to the
extent that (i) Borrower is treated as a disregarded entity for tax purposes and is not required to
file tax returns under applicable law, or (ii) Borrower is allowed to file consolidated tax
returns, in which case Borrower may include its taxable income, loss, deductions, gains or other
items as part of a consolidated tax return, provided that each consolidated tax return will
make clear that the assets of Borrower are not available to satisfy the liabilities of any other
Person or that the assets of such Person are not available to satisfy the liabilities of Borrower.
Borrower shall observe organizational formalities with respect to its books, records, resolutions
and agreements.

     (i) Borrower will be, and at all times will hold itself out to the public as, a legal entity
separate and distinct from any other entity (including any Affiliate of Borrower or any constituent
party of Borrower), shall correct any known misunderstanding regarding its status as a separate
entity, shall conduct business in its own name, shall not identify itself or any
of its Affiliates as a division or part of the other and shall maintain and utilize separate
stationery, invoices and checks bearing its own name.

     (j) Borrower will maintain adequate capital for the normal obligations reasonably foreseeable
in a business of its size and character and in light of its contemplated business operations.

     (k) Neither Borrower nor any constituent party, to the fullest extent permitted by law, will
seek or effect the liquidation, termination, dissolution, winding up, consolidation or merger, in
whole or in part, of Borrower.

     (l) Borrower will not commingle the funds and other assets of Borrower with those of any
Affiliate or constituent party or any other Person, and will hold all of its assets in its own
name.

     (m) Borrower has and will maintain its assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or
constituent party or any other Person.

     (n) Borrower will not guarantee or become obligated for the debts of any other Person and does
not and will not hold itself out to be responsible for or have its credit available to satisfy the
debts or obligations of any other Person.

     (o) (i) If Borrower is a limited partnership or a limited liability company (other than a
single member Delaware limited liability company), each general partner or managing member (each,
an “SPC Party”) shall be a corporation or limited liability company whose sole asset is its
interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to
comply, with each of the representations, warranties, and covenants

-33-

 

contained in this Section
3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party.
Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately
appoint a new SPC Party whose organizational documents are substantially similar to those of such
SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as
applicable, with respect to the new SPC Party and its equity owners.

     (ii) If Borrower is a single member Delaware limited liability company, Borrower shall
have at least two (2) springing members, one of which, upon the dissolution of such sole
member or the withdrawal or the disassociation of the sole member from Borrower, shall
immediately become the sole member of Borrower.

            (p) SPC Party or Borrower shall at all times cause there to be at least two duly appointed
managers of SPC Party or Borrower (each, an “Independent Manager”) who shall not have been
at the time of such individual’s appointment or at any time while serving as a manager of SPC Party
or Borrower, and may not have been at any time during the preceding five years (i) a stockholder,
director or manager (other than as an Independent Manager of SPC Party or Borrower), officer,
employee, trustee, partner, attorney or counsel of Borrower or any Affiliate of Borrower, (ii) a
customer, creditor, supplier or other Person who derives any of its purchases or revenues from its
activities with Borrower or any Affiliate of Borrower, (iii) a Person or other
entity Controlling or under common Control with any such stockholder, partner, customer,
creditor, supplier or other Person, or (iv) a member of the immediate family by blood or marriage
of any such stockholder, director, officer, employee, trustee, partner, customer, creditor,
supplier or other Person. A natural person who satisfies the foregoing definition other than
subparagraph (ii) shall not be disqualified from serving as an Independent Manager of the SPC Party
if such individual is an independent director or manager provided by a nationally recognized
company that provides professional independent directors or managers and that also provides other
corporate services in the ordinary course of its business. A natural person who otherwise
satisfies the foregoing definition except for being the independent director or manager of a
“special purpose entity” affiliated with the Borrower that does not own a direct or indirect equity
interest in the Borrower or any co-borrower shall not be disqualified from serving as an
Independent Manager of the SPC Party or Borrower, as applicable, if such individual is at the time
of initial appointment, or at any time while serving as an Independent Manager, provided by a
nationally recognized company that provides professional independent directors/managers and other
corporate services in the ordinary course of its business. Notwithstanding the immediately
preceding sentence, an Independent Manager may not simultaneously serve as Independent Manager of
Borrower and independent manager or director of a special purpose entity that owns a direct or
indirect equity interest in Borrower or a direct or indirect interest in any co-borrower with
Borrower. As used in this paragraph, a “special purpose entity” is an entity, whose organizational
documents contain restrictions on its activities and impose requirements intended to preserve its
separateness that are substantially similar to those of Borrower, and provide, inter alia, that it
(A) is organized for a limited purpose, (B) has restrictions on its ability to incur indebtedness,
dissolve, liquidate, consolidate, merge and/or sell assets, (C) may not file voluntarily a
bankruptcy petition without the consent of the Independent Manager and (D) shall conduct itself in
accordance with certain “separateness covenants,” including, but not limited to, the maintenance of
its books, records, bank accounts and assets separate from those of any other person or entity.

-34-

 

     (q) Borrower shall not cause or permit the board of directors or managers of any SPC Party
and/or Borrower, as applicable, to take any action which, under the terms of any certificate of
incorporation, by laws or any voting trust agreement with respect to any common stock or under any
organizational document of Borrower or SPC Party (if any), as applicable, requires a vote of the
board of directors or board of managers of each SPC Party (if any) and Borrower, as applicable,
unless at the time of such action there shall be at least two (2) members who are each an
Independent Manager.

     (r) Borrower shall conduct its business so that the assumptions made with respect to Borrower
in the Insolvency Opinion shall be true and correct in all respects. In connection with the
foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance
with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Affiliate)
set forth in the Insolvency Opinion except as otherwise provided in Article VIII herein,
(ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii)
all the organizational documents of the Borrower and any SPC Party.

     (s) Borrower will not permit any Affiliate (other than a property manager which is an
Affiliate of Borrower or its members and then only in accordance with the terms and provisions of
the applicable Management Agreement and this Agreement) or constituent party
independent access to its bank accounts; provided, however, that certain
authorized employees of THI who perform administrative duties with respect to the operation and
management of bank accounts and in such capacity identify themselves as Borrower’s agent, under the
supervision and direction of Borrower’s officers or members, may perform such duties with respect
to Borrower’s bank accounts.

     (t) Borrower shall pay the salaries of its own employees (if any) from its own funds and
maintain a sufficient number of employees (if any) in light of its contemplated business
operations.

     (u) Borrower shall not form, acquire or hold any subsidiary (whether corporate, partnership,
limited liability, company or others) or hold any equity interest in any other entity.

     (v) Borrower hereby represents and warrants that since the date of its formation to the date
of its Amended and Restated Operating Agreement on April 30, 1999, the Borrower conducted no
business other than preparing to acquire or acquiring the Property.

     (w) Borrower has, at all times, complied with the provisions of its organizational documents
then in effect in all respects material to the separateness of Borrower, including all of those
provisions set forth in Section 11 of it’s Operating Agreement dated April 30, 1999.

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

-35-

 

adjustments required by the Internal Revenue Service or other applicable tax authority
upon audit.

     3.1.26 Solvency. Borrower (a) has not entered into the transaction or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor and (b) received
reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving
effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately
following the making of the Loan, exceed Borrower’s total liabilities, including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities. The fair saleable
value of Borrower’s assets is and will, immediately following the making of the Loan, be greater
than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities on
its debts as such debts become absolute and matured. Borrower’s assets do not and, immediately
following the making of the Loan will not, constitute unreasonably small capital to carry out its
business as conducted or as proposed to be conducted. Borrower does not intend to, and does not
believe that it will, incur Indebtedness and liabilities (including contingent liabilities and
other commitments) beyond its ability to pay such Indebtedness and liabilities as they mature
(taking into account the
timing and amounts of cash to be received by Borrower and the amounts to be payable on or in
respect of obligations of Borrower).

     3.1.27 Federal Reserve Regulations. No part of the proceeds of the Loan will be used
for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or for any other purpose which would be
inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the
other Loan Documents.

     3.1.28 Organizational Chart. The organizational chart attached as Schedule
III hereto, relating to Borrower and certain Affiliates and other parties, is true, complete
and correct on and as of the date hereof.

     3.1.29 Bank Holding Company. Borrower is not a “bank holding company” or a direct or
indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956,
as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.

     3.1.30 No Other Debt. Borrower has not borrowed or received debt financing (other
than permitted pursuant to this Agreement) that has not been heretofore repaid or refinanced in
full.

     3.1.31 Investment Company Act. Borrower is not (a) an “investment company” or a
company “controlled” by an “investment company,” within the meaning of the Investment Company Act
of 1940, as amended; (b) a “holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (c) subject to any other federal or
state law or regulation which purports to restrict or regulate its ability to borrow money.

-36-

 

     3.1.32 Access/Utilities. All public utilities necessary to the continued use and
enjoyment of the Property as presently used and enjoyed are located in the public right-of-way
abutting the Property. All roads necessary for the full utilization of the Property for its
current purpose have been completed and dedicated to public use and accepted by all governmental
authorities or are the subject of access easements for the benefit of the Property.

     3.1.33 No Bankruptcy Filing. Borrower is not 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 Borrower
does not have any knowledge of any Person contemplating the filing of any such petition against it.

     3.1.34 Full and Accurate Disclosure. To the best of Borrower’s knowledge, no
information contained in this Agreement, the other Loan Documents, or any written statement
furnished by or on behalf of Borrower pursuant to the terms of this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under which they were
made. There is no fact or circumstance presently known to Borrower which has not been disclosed to
Lender and which will have a Material Adverse Effect.

     3.1.35 Foreign Person. Borrower is not a “foreign person” within the meaning of
Section 1445(f)(3) of the Code.

     3.1.36 No Change in Facts or Circumstances; Disclosure. To the best of Borrower’s
knowledge, there has been no material adverse change in any condition, fact, circumstance or event
that would make the financial statements, rent rolls, reports, certificates or other documents
submitted in connection with the Loan (taken as a whole) inaccurate, incomplete or otherwise
misleading in any material respect or that otherwise materially and adversely affects the business
operations or the financial condition of Borrower or the Property.

     3.1.37 Management Agreement. All of the representations and warranties with respect
to the Management Agreement set forth in Article VII of this Agreement are true and correct in all
respects.

     3.1.38 Perfection of Accounts. Borrower hereby represents and warrants to Lender
that:

     (a) This Agreement, together with the other Loan Documents, create a valid and continuing
security interest (as defined in the Uniform Commercial Code) in the Accounts (as defined in the
Cash Management Agreement) and the Clearing Account in favor of Lender, which security interest is
prior to all other Liens, and is enforceable as such against creditors of and purchasers from
Borrower. Other than in connection with the Loan Documents, Borrower has not sold or otherwise
conveyed the Accounts or the Clearing Account;

     (b) The Accounts and the Clearing Account constitute “deposit accounts” and the Accounts
constitute “securities accounts” within the meaning of the Uniform Commercial Code;

-37-

 

     (c) Pursuant and subject to the terms hereof and the Clearing Agreement, Clearing Account Bank
has agreed to comply with all instructions originated by Lender, without further consent by
Borrower, directing disposition of the Clearing Account and all sums at any time held, deposited or
invested therein, together with any interest or other earnings thereon, and all proceeds thereof
(including proceeds of sales and other dispositions), whether accounts, general intangibles,
chattel paper, deposit accounts, instruments, documents or securities; and

     (d) The Accounts and the Clearing Account are not in the name of any Person other than
Borrower, as pledgor, or Lender, as pledgee. Borrower has not consented to Clearing Account Bank
complying with instructions with respect to the Clearing Account from any Person other than Lender.

     3.1.39 Condominium. Each individual Condominium Unit constituting a part of the
Property is a unit in a validly formed and existing condominium complying with all applicable Legal
Requirements governing the formation of a valid condominium regime. The Condominium Documents are
in full force and effect and there are no defaults thereunder by any party and there are no
conditions that, with the passage of time or the giving of notice, or both, would constitute a
default thereunder. Borrower owns all of the Condominium Units.

     3.1.40 Patriot Act. (a) None of Borrower or any of its Affiliates is a Prohibited
Person.

     (b) Borrower covenants and agrees to deliver to Lender any certification or other evidence
requested from time to time by Lender in its reasonable discretion, confirming Borrower’s
compliance with the Patriot Act.

     3.1.41 East River Franchise and Chilled Water Agreements. The East River Franchise
Agreement and the Chilled Water Agreement are in full force and effect and, to the best of
Borrower’s knowledge, (a) there are no defaults thereunder by Borrower and (b) there are no
monetary defaults thereunder by any party.

     Section 3.2 Survival of Representations. The representations and warranties set forth
in Section 3.1 shall survive for so long as any amount remains payable to Lender under this
Agreement or any of the other Loan Documents.

ARTICLE IV

BORROWER COVENANTS

     Section 4.1 Borrower Affirmative Covenants. Borrower hereby covenants and agrees with
Lender that:

     4.1.1 Existence; Compliance with Legal Requirements. Borrower shall do or cause to be
done all things necessary to preserve, renew and keep in full force and effect its existence,
rights, licenses, permits and franchises and comply with all Legal Requirements applicable to it
and the Property to the extent failure of same would result in a Material Adverse Effect. Borrower
will not commit any act which may give any Governmental Authority the right

-38-

 

to cause Borrower to
forfeit the Property or any part thereof or any monies paid in performance of Borrower’s
obligations under any of the Loan Documents.

     4.1.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other Charges now or
hereafter levied or assessed or imposed against the Property or any part thereof as the same become
due and payable; provided, however, Borrower’s obligation to directly pay Taxes
shall be suspended for so long as Borrower complies with the terms and provisions of Section
6.2 hereof. Borrower shall furnish to Lender receipts for the payment of the Taxes and the
Other Charges within five (5) Business Days after payment by Borrower provided such payment
shall in any event be made prior to the date such Taxes and/or Other Charges shall become
delinquent; provided, however, that Borrower is not required to furnish such
receipts for payment of Taxes in the event that such Taxes have been paid by Lender pursuant to
Section 6.2 hereof. Borrower shall not permit or suffer and shall promptly discharge any
lien or charge against the Property. Notwithstanding the foregoing, after prior notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding, conducted in good faith
and with due diligence, the amount or validity of any Taxes or Other Charges, provided that
(a) no Event of Default has occurred and remains uncured; (b) such proceeding shall be permitted
under and be conducted in accordance with all applicable statutes, laws and ordinances; (c) neither
the Property nor any part thereof or interest therein will be in danger of being sold, forfeited,
terminated, canceled or lost; (d) Borrower shall promptly upon final determination thereof pay the
amount of any such Taxes or Other Charges, together with all costs, interest and penalties which
may be payable in connection therewith; (e) such proceeding shall suspend the collection of Taxes
or Other Charges from the Property; (f) Borrower shall, if requested by Lender, deposit with Lender
cash, or other security as may be reasonably approved by Lender, in an amount equal to one hundred
twenty-five percent (125%) of the contested amount, to insure the payment of any such Taxes or
Other Charges, together with all interest and penalties thereon; and (g) such contest by Borrower
is not in violation of Leases or Operating Agreements. Lender may pay over any such cash or other
security held by Lender to the claimant entitled thereto at any time when, in the good faith
judgment of Lender, the entitlement of such claimant is established.

     4.1.3 Litigation. Borrower shall give prompt notice to Lender of any litigation or
governmental proceedings pending or threatened against Borrower which if adversely determined would
have a Material Adverse Effect.

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

     4.1.5 Reserved.

     4.1.6 Financial Reporting.

     (a) GAAP. Borrower shall keep and maintain or shall cause to be kept and maintained,
in accordance with GAAP proper and accurate books, records and accounts reflecting all of the
financial affairs of Borrower and all items of income and expense in connection with the operation
on an individual basis of the Property. All financial statements delivered to Lender in accordance
with this Section 4.1.6 shall be prepared in accordance with

-39-

 

GAAP in the United States of
America as in effect on the date so indicated and consistently applied (or such other accounting
basis reasonably acceptable for Lender).

     (b) Monthly Reports. Prior to a Securitization and during any Cash Sweep Period,
within forty-five (45) days after the end of each calendar month (except for the months of January
and the last month of any fiscal quarter), Borrower shall furnish to Lender a current balance
sheet, a detailed operating statement (showing monthly activity and year to date) and a rent roll
for the subject month.

     (c) Quarterly Reports. Within sixty (60) days after the end of each fiscal quarter
(except during the last fiscal quarter of each Fiscal Year), Borrower shall furnish to Lender a
detailed operating statement (showing quarterly activity and year to date) stating Gross Income
from Operations, Actual Operating Expenses, Actual Net Cash Flow for such calendar quarter and a
balance sheet for such quarter for Borrower. Borrower’s quarterly statements shall be accompanied
by (i) a comparison of the budgeted income and expenses and the actual income and expenses for such
calendar quarter, (ii) a calculation reflecting the Actual Debt Service Coverage Ratio as of the
last day of such quarter for such quarter; (iii) a current rent roll for the Property; and (iv) an
Officer’s Certificate stating that each such quarterly statement presents fairly the financial
condition and the results of operations of the Borrower and the Property in all material respects
and has been prepared in accordance with GAAP.

     (d) Annual Reports. Within one hundred twenty (120) days after the end of each
calendar year of Borrower’s operation of the Property, Borrower will furnish to Lender a complete
copy of Borrower’s annual financial statements audited by a “big four” accounting firm or other
independent certified public accountant reasonably acceptable to Lender in accordance with GAAP for
such calendar year which financial statements shall contain a balance sheet, a detailed operating
statement stating Gross Income from Operations, Actual Operating Expenses and Actual Net Cash Flow
for the Property. Borrower’s annual financial statements shall be accompanied by (i) a comparison
of the budgeted income and expenses and the actual income and expenses for the prior calendar year,
(ii) an Officer’s Certificate stating that each such annual financial statement presents fairly the
financial condition and the results of operations of
Borrower and the Property in all material respects and has been prepared in accordance with
GAAP, and (iii) an unqualified opinion of a “big four” accounting firm or other independent
certified public accountant reasonably acceptable to Lender.

     (e) Certification; Supporting Documentation. Each such financial statement shall be
in scope and detail reasonably satisfactory to Lender and certified by an officer of Borrower.

     (f) Additional Reports. Borrower shall deliver to Lender as soon as reasonably
available but in no event later than thirty (30) days after such items become available to Borrower
in final form:

     (i) if requested by Lender, copies of any final engineering or environmental reports
prepared for Borrower with respect to the Property;

-40-

 

     (ii) a copy of any notice received by Borrower from any environmental authority having
jurisdiction over the Property with respect to a condition existing or alleged to exist or
emanate from or at the Property; and

     (iii) if requested by Lender, a summary report listing only Tenants and square footage
occupied by such Tenants.

     (g) Access. Lender shall have the right from time to time at all times during normal
business hours, upon reasonable prior written notice to Borrower, to examine such books, records
and accounts at the office of Borrower or other Person maintaining such books, records and accounts
and to make such copies or extracts thereof as Lender shall desire. After the occurrence and
during the continuance of an Event of Default, Borrower shall pay any costs and expenses incurred
by Lender to examine Borrower’s accounting records with respect to the Property, as Lender shall
determine to be necessary or appropriate in the protection of Lender’s interest.

     (h) Format of Delivery. Any reports, statements or other information required to be
delivered under this Agreement shall be delivered (i) in paper form, (ii) if requested by Lender
and if within the capabilities of Borrower’s data system without change or modification thereto, on
a diskette and (iii) if requested by Lender and within the capabilities of Borrower’s data systems
without change or modification thereto, in electronic form reasonably acceptable to Lender.

     (i) Annual Budget. Borrower shall submit the Annual Budget to Lender not later than
thirty (30) days prior to the commencement of each Fiscal Year. During a Cash Sweep Period, the
Annual Budget, shall be subject to Lender’s written approval, such approval not to be unreasonably
withheld, delayed or qualified (each such Annual Budget, an “Approved Annual Budget”). In
the event that Lender objects to a proposed Annual Budget submitted by Borrower, Lender shall
advise Borrower of such objections within fifteen (15) days after receipt thereof (and deliver to
Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise
such Annual Budget and resubmit the same to Lender. Lender shall advise Borrower of any objections
to such revised Annual Budget within ten (10) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and
Borrower shall promptly revise the same in accordance with the process described in this
subsection until Lender approves the Annual Budget. Until such time that Lender approves a
proposed Annual Budget, the most recently Approved Annual Budget shall apply; provided
that, such Approved Annual Budget shall be adjusted to reflect actual increases in real estate
taxes, insurance premiums, utilities expenses, labor rates and similar expenses that are not
subject to Borrower’s control.

     (j) Other Required Information. Borrower shall furnish to Lender, within five (5)
Business Days after request (or as soon thereafter as may be reasonably possible), such further
detailed information with respect to the operation of the Property and the financial affairs of
Borrower as may be reasonably requested by Lender, including, without limitation, a comparison of
the budgeted income and expenses and the actual income and expenses for a quarter and year to date
for the Property, together with a detailed explanation of any variances exceeding the greater of
(i) $100,000, and (ii) five percent (5%) between budgeted and actual

-41-

 

amounts for such period and
year to date, as well as prompt notice (containing reasonable detail) of any material change in the
financial or physical condition of the Property, as reasonably determined by Borrower including,
but not limited to, any lease for greater than 200,000 square feet.

     4.1.7 Title to the Property. Borrower will warrant and defend the validity and
priority of the Liens of the Mortgage and the Assignment of Leases on the Property against the
claims of all Persons whomsoever, subject only to Permitted Encumbrances.

     4.1.8 Estoppel Statement. (a) After request by Lender, Borrower shall within ten (10)
Business Days furnish Lender with a statement, duly acknowledged and certified, stating (i) the
unpaid principal amount of the Note, (ii) the Interest Rate of the Note, (iii) the date
installments of interest and/or principal were last paid, (iv) any known offsets or defenses to the
payment of the Debt, if any, and (v) that this Agreement and the other Loan Documents have not been
modified or if modified, giving particulars of such modification.

     (b) After request by Borrower, but not more than two (2) times in any calendar year, Lender
shall within ten (10) Business Days furnish Borrower with a statement, duly acknowledged and
certified, stating (i) the unpaid principal amount of the Note, (ii) the Interest Rate of the Note,
(iii) the date installments of interest and/or principal were last paid and (iv) whether or not
Lender has sent any notice of default under the Loan Documents which remains uncured in the opinion
of Lender.

     (c) Borrower shall use commercially reasonable efforts to obtain and deliver to Lender, upon
request, an estoppel certificate from each Tenant under any Lease; provided that such
certificate may be in the form required under such Lease or in the form delivered to Lender in
connection with the closing of the Loan; provided, further, that Borrower shall not
be required to deliver such certificates more frequently than two (2) times in any calendar year.

     4.1.9 Leases. (a) Except as otherwise provided in this Agreement to the contrary, all Leases executed
after the date hereof shall in all respects be approved by Lender and shall be on a standard Lease
form previously approved by Lender with no material modifications (the “Lease Form”)
(except as approved by Lender not to be unreasonably withheld; provided, that, Lender shall
not unreasonably withhold its consent to changes to the Lease Form). Such Lease Form shall provide
that (i) the Lease is subordinate to the Mortgage, and (ii) the tenant shall attorn to Lender
following an Event of Default, provided, that the Lender has delivered to the tenant a
commercially reasonably form of non-disturbance and attornment agreement. To the extent required
by applicable law, Borrower shall hold, in trust, all tenant security deposits in a segregated
account and shall not commingle any such funds with any other funds of Borrower. Within ten (10)
Business Days after Lender’s request, Borrower shall furnish to Lender a statement of all tenant
security deposits, and copies of all Leases not previously delivered to Lender, certified by
Borrower as being true and correct. Notwithstanding anything contained in the Loan Documents,
Lender’s approval shall not be required for future Leases or Lease modifications or extensions if
the following conditions are satisfied:

     (A) no Event of Default has occurred and is continuing;

-42-

 

     (B) the Lease is in effect as of the date of this Agreement or is on the Lease
Form with no modifications, except for commercially reasonable changes agreed to in
the ordinary course of Borrower’s business, provided, that, in no event
shall there be any material modifications to the subordination, attornment, estoppel
clauses (other than to provide for the execution of a subordination, non-disturbance
and attornment agreement by Lender in the form attached hereto as Schedule
IV) or “so-called” exculpation clauses that limit the landlord’s liability to
the Landlord’s interest in the Property (including the proceeds thereof) without the
prior written consent of Lender, which consent will not be unreasonably withheld;

     (C) with respect to the modifications of any Lease, such Lease and such
modification(s) (w) is entered into in the ordinary course of business, consistent
with prudent property management practices, (x) would not cause such Lease to
constitute a Major Lease (subject to clause (z) below), (y) would not have a
Material Adverse Effect and (z) if the Lease is a Major Lease, such modification
constitutes a Non-Material Lease Modification;

     (D) the Lease does not conflict with any Operating Agreements affecting the
Property or any other Lease for space in the Property;

     (E) the Lease is not a Major Lease;

     (F) the Lease shall provide for rental rates and landlord concessions
comparable to existing local market rates and shall be an arm’s-length transaction,
provided, that in no event shall the Lease be with an Affiliate of Borrower;

     (G) the Lease shall not contain any options for renewal or expansion by the
tenant at rental rates which are below reasonable comparable market levels for
renewals or expansions at the time the Lease is executed;

     (H) the Lease shall be to a tenant which Borrower, in its professional and
commercially reasonable judgment, has determined is creditworthy taking into account
the obligations of the landlord and the tenant thereunder; and

     (I) the Lease is for a term of not more than fifteen (15) years (exclusive of
renewal options which together with the initial lease term shall not exceed twenty
(20) years).

     Lender shall execute and deliver a Subordination Non-Disturbance and Attornment Agreement in
the form annexed hereto as Schedule IV to Tenants under any future Lease demising in excess
of 10,000 square feet promptly upon request with such commercially reasonable changes as may be
requested by Tenants, from time to time, and which are reasonably acceptable to Lender.

     (b) Borrower (i) shall perform the obligations which Borrower is required to perform under the
Leases in a commercially reasonable manner; (ii) shall enforce the obligations to be performed by
the tenants in a commercially reasonable manner; (iii) shall promptly furnish

-43-

 

to Lender any notice
of material default or termination received by Borrower from any tenant whose Lease demises one
floor or more at the Property, and any notice of material default or termination given by Borrower
to any tenant whose Lease demises one floor or more at the Property; (iv) shall not collect any
rents for more than thirty (30) days in advance of the time when the same shall become due, except
for bona fide security deposits; (v) shall not enter into any ground lease of any part of the
Property (except for the Ground Lease); (vi) shall not further assign or encumber any Lease; (vii)
shall not, except with Lender’s prior written consent (which consent will not be unreasonably
withheld and it shall be deemed reasonable for Lender to withhold its consent to any such Lease
cancellation or acceptance of termination or surrender if after giving effect thereof, such
cancellation, surrender or termination would cause an NOI Trigger Event to occur), cancel or accept
surrender or termination of (A) any Lease other than a Major Lease unless such cancellation,
termination or acceptance of surrender is entered into in the ordinary course of business,
consistent with prudent property management practices or (B) any Major Lease, provided,
that, the Borrower shall be permitted to accept such cancellation, surrender or termination of a
Major Lease if such action is being taken in accordance with the express provisions of such Major
Lease which is in existence as of the date of this Agreement, or has been approved by the Lender
(such approval not to be unreasonably withheld) in accordance with the terms hereof or;
provided, that, if no Cash Sweep Period is then in effect, such termination or surrender is
contemporaneous with the releasing of the space demised under such Major Lease (or applicable
portion thereof) at a rental rate equal to or greater than such Major Lease; (viii) shall not,
except with Lender’s prior written consent (such consent not to be unreasonably withheld), modify
or amend any Lease unless such modification or amendment complies with the provisions of
Section 4.1.9(a)(C) hereof, (ix) shall deposit any Major Lease termination, default or
cancellation fees with Lender, to be held by Lender as Rollover Funds; and (ix) shall not enter
into any Major Lease without the prior written consent of Lender (such
consent not to be unreasonably withheld). Any action in violation of clauses (v),
(vi), (vii), (viii) or (ix) of this Section 4.1.9(b) shall
be void as against Lender at the election of Lender.

     (c) Lender shall respond to a request for Lender’s approval to any Lease or other matter under
Section 4.1.9 hereof delivered, if applicable, together with copies of the applicable lease
documents, and, if applicable, a budget setting forth the applicable tenant improvement costs and
leasing commissions for which Lender’s consent is required (i) within ten (10) Business Days after
Borrower’s written request therefore, or (ii) within five (5) Business Days after Borrower’s
written request therefore, provided, that, prior to such five (5) Business Day period
Lender has approved all of the economic material terms of such Lease as set forth in a written
summary thereof provided by Borrower to Lender. If the correspondence from Borrower requesting
such approval contains the following statement at the top of the first page thereof in capitalized,
bold faced, 14 point type stating that “IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS REQUEST
FOR APPROVAL IN WRITING WITHIN TEN (10) or FIVE (5) BUSINESS DAYS (as the case may be), YOUR
APPROVAL SHALL BE DEEMED GIVEN,” and if Lender shall fail to respond to or to expressly deny such
request for approval in writing (stating in reasonable detail the reason for such disapproval)
within ten (10) or five (5) Business Days (as the case may be) after receipt of Borrower’s written
request then Lender’s consent to the action or matter in question with respect to such Lease shall
be deemed given. Borrower shall also provide any other information reasonably requested by Lender
in writing in connection with such Lease prior to the expiration of such ten (10) or five (5)
Business Day (as the case may be) period in order to adequately review the same.

-44-

 

     4.1.10 Alterations. (a) Lender’s prior approval shall be required in connection with
any alterations to any Improvements (a) that may have a Material Adverse Effect or (b) the cost of
which (including any related alteration, improvement or replacement) is reasonably anticipated to
exceed the Alteration Threshold, which approval shall not be unreasonably withheld or delayed or
qualified. Notwithstanding the foregoing, Lender’s consent shall not be required in connection
with any alterations in connection with (i) tenant improvement work performed pursuant to the terms
of any Lease executed on or before the date hereof, (ii) tenant improvement work performed pursuant
to the terms and provisions of a Lease entered into by Borrower in accordance with the terms of
this Agreement, or (iii) alterations performed in connection with the restoration of the Property
after the occurrence of a casualty or condemnation in accordance with the terms and provisions of
this Agreement. If (x) the total unpaid amounts incurred and to be incurred with respect to any
alterations (other than amounts to be paid or reimbursed by tenants under Leases) that require the
consent of Lender under this Section 4.1.10 (each such alteration is called a “Material
Alteration”) to the Improvements shall at any time exceed the Alteration Threshold and such
Material Alterations are not of the type intended to be reimbursed out of the Rollover Funds or the
Capital Expenditure Funds or (y) if the Material Alterations are of the type intended to be
reimbursed from Rollover Funds or Capital Expenditure Funds, as applicable, and the total unpaid
amounts incurred and to be incurred with respect to such alterations to the Improvements shall at
any time exceed the Alteration Threshold and the amount of Rollover Funds and/or Capital
Expenditures Funds, as the case may be, on deposit with Lender for the reimbursement of the cost of
such alterations, then, to the extent such cost of the Material Alterations exceeds the amount of
the Reserve Funds available, Borrower shall
promptly deliver to Lender at Borrower’s option, either (i) as security for the payment of
such amounts and as additional security for Borrower’s obligations under the Loan Documents any of
the following: (A) cash, (B) Letters of Credit, (C) U.S. Obligations, (D) other securities
reasonably acceptable to Lender, provided that Lender shall have received a Rating Agency
Confirmation as to the form and issuer of same, or (E) a completion bond issued by a Person having
a rating by S&P of not less than A-1+ if the term of such bond is no longer than three (3) months
or, if such term is in excess of three (3) months, issued by a Person having a rating that is
reasonably acceptable to Lender and that the applicable Rating Agency or Rating Agencies have
confirmed in writing will not, in and of itself, result in a downgrade, withdrawal or qualification
of the then current ratings assigned to the Securities issued in connection with a Securitization,
such security shall be in an amount equal to the excess of the total unpaid amounts incurred and to
be incurred with respect to such Material Alterations (other than such amounts to be paid or
reimbursed by tenants under the Leases) over the Alteration Threshold, less the amount of the
Rollover Funds and the Capital Expenditure Funds to the extent that the alterations are of the type
intended to be reimbursed from Rollover Funds or Capital Expenditure Reserve Funds, as applicable
or (ii) cause an Acceptable Indemnitor to execute and deliver to Lender an Alteration Indemnity in
the form attached hereto as Schedule VIII with respect to such Material Alterations, such
Alteration Indemnity to be in an amount equal to the excess of the total unpaid amounts with
respect to such Material Alterations to the Improvements (other than such amounts to be paid or
reimbursed by tenants under the Leases) over the Alteration Threshold and the amount of Rollover
Funds and Capital Expenditure Funds, as the case may be, on deposit with Lender for such Material
Alterations; the Alteration Indemnity will be accompanied by a “bring down” of the Nonconsolidation
Opinion. The amount indemnified

-45-

 

under the Alteration Indemnity and the amount guaranteed under any
Qualified Guaranty shall not at any time ,in the aggregate, exceed $40,000,000.00.

     (b) With respect to any Material Alterations, Borrower shall deliver to Lender via a
nationally recognized overnight courier for overnight delivery its request for approval of such
proposed alterations (the “Proposed Alterations”), together with all materials, plans,
specifications, documents and any other information (and in such detail) as reasonably requested by
Lender in order to evaluate such Proposed Alterations (each, an “Alteration Request”).
Each Alteration Request shall contain a legend on the top of the cover page thereof, which legend
shall be in boldface type and in a font size of not less than 20 points, stating that Lender’s
failure to respond to the Alteration Request within twenty (20) Business Days shall be deemed to be
an approval by Lender of the Proposed Alterations set forth therein. In the event that Lender
fails to notify Borrower within twenty (20) Business Days of Lender’s receipt of an Alteration
Request that Lender (i) requires additional information or documentation to evaluate the Proposed
Alterations, (ii) requires modifications, amendments or other changes to be made to the plans and
specifications with respect to such Proposed Alterations as a condition to the approval thereof,
(iii) consents to such Proposed Alterations, or (iv) withholds its consent to such Proposed
Alterations (each of items (i) through (iii) above, an “Alteration Response”), Borrower
shall send to Lender a written notice (an “Alteration Final Notice”) via a nationally
recognized overnight courier for overnight delivery, which notice shall contain a legend on the top
of the cover page thereof, which legend shall be capitalized, bold faced, not less than 14 points
type, stating that “IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN
WRITING WITHIN TWENTY (20) BUSINESS DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN.” In the event that
Lender fails to provide an Alteration
Response to Borrower within twenty (20) Business Days of Lender’s receipt of the Alteration
Final Notice, Lender shall be deemed to have approved of such Proposed Alterations;
provided, that, with respect to any Proposed Alterations which are approved or deemed
approved by Lender, such approval or deemed approval shall not extend to any material changes or
modifications to the plans and specifications or other materials submitted to Lender in the
Alteration Request, and Borrower shall be required to submit to Lender any such material changes or
modifications for approval in accordance with this Section 4.1.10; provided,
further, that, in the case of clauses (i) and (ii) above, Lender shall have
a period of time to respond to Borrower, as provided herein, equal to the greater of (A) the
unexpired portion of the period of time in which Lender is otherwise entitled to provide an
Alteration Response to Borrower as set forth above, and (B) ten (10) Business Days after receipt by
Lender of any requested additional information or documentation, or any modification, amendment or
other change to the plans and specifications for any Proposed Alteration requested by Lender, and
the failure by Lender to so respond within such time period shall constitute deemed approval by
Lender. In the event Lender shall withhold its consent to any Proposed Alteration, Lender shall
provide Borrower with a reasonably detailed description of the reasons therefor.

     4.1.11 Material Agreements. Borrower shall (a) promptly perform and/or observe all of
the material covenants and agreements required to be performed and observed by it under each
Material Agreement and Operating Agreement to which it is a party, and do all things necessary to
preserve and to keep unimpaired its rights thereunder, (b) promptly notify Lender in writing of the
giving of any notice of any default by any party under any Material Agreement and Operating
Agreement of which it is aware and (c) promptly enforce the

-46-

 

performance and observance of all of
the material covenants and agreements required to be performed and/or observed by the other party
under each Material Agreement and Operating Agreement to which it is a party in a commercially
reasonable manner.

     4.1.12 Performance by Borrower. Borrower shall in a timely manner observe, perform
and fulfill each and every covenant, term and provision of each Loan Document executed and
delivered by Borrower, and shall not enter into or otherwise suffer or permit any amendment,
waiver, supplement, termination or other modification of any Loan Document executed and delivered
by Borrower without the prior consent of Lender.

     4.1.13 Costs of Enforcement/Remedying Defaults. In the event (a) that the Mortgage is
foreclosed in whole or in part or the Note or any other Loan Document is put into the hands of an
attorney for collection, suit, action or foreclosure, (b) the foreclosure of any Lien or Mortgage
prior to or subsequent to the Mortgage in which proceeding Lender is made a party, (c) of the
bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or any
Principal or an assignment by Borrower or any Principal for the benefit of its creditors, or (d)
Lender shall remedy or attempt to remedy any Event of Default hereunder, Borrower shall be
chargeable with and agrees to pay all costs actually incurred by Lender as a result thereof,
including costs of collection and defense
(including reasonable attorneys’, experts’, consultants’ and witnesses’ fees and
disbursements) in connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, which shall be due and payable on demand, together with
interest thereon from the date incurred by Lender at the Default Rate, and together with all
required service or use taxes.

     4.1.14 Business and Operations. Borrower will continue to engage in the businesses
currently conducted by it as and to the extent the same are necessary for the ownership and leasing
of the Property. Borrower will qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the ownership and leasing
of the related Property. Borrower shall at all times cause the Property to be maintained as an
office property with related ancillary uses.

     4.1.15 Intentionally Omitted.

     4.1.16 Handicapped Access. (a) Borrower covenants and agrees that the Property shall
at all times comply in all material respects, to the extent applicable, with the requirements of
the Americans with Disabilities Act of 1990, all state and local laws and ordinances related to
handicapped access and all rules, regulations, and orders issued pursuant thereto including,
without limitation, the Americans with Disabilities Act Accessibility Guidelines for Buildings and
Facilities (collectively, “Access Laws”).

     (b) Notwithstanding any provisions set forth herein or in any other document regarding
Lender’s approval of alterations of the Property, (i) Borrower shall make and shall require all
Tenants to make, any alterations to the Property in material compliance with all applicable Access
Laws and (ii) Lender may condition any approval of alterations hereunder upon receipt of a
certificate of Access Law compliance from an architect, engineer, or other person acceptable to
Lender.

-47-

 

     (c) Borrower covenants and agrees to give prompt notice to Lender of the commencement of any
proceedings or investigations which relate to compliance with applicable Access Laws.

     4.1.17 Notice of Certain Events. Borrower shall promptly notify Lender of (a) any
Default or Event of Default, together with a detailed statement of the steps being taken to cure
such Default or Event of Default; (b) any notice of default received by Borrower under other
material obligations relating to the Property or otherwise material to Borrower’s business; and (c)
any pending legal, judicial or regulatory proceedings, including any dispute between Borrower and
any Governmental Authority, affecting Borrower or the Property, which, if adversely determined,
would have a Material Adverse Effect.

     4.1.18 Further Assurances. Borrower shall promptly (a) cure any defects in the
execution and delivery of the Loan Documents, (b) execute and deliver, or cause to be executed and
delivered, all such other documents, agreements, certificates, assignments and other writings as
Lender may reasonably request to further evidence and more fully describe the collateral for the
Loan, to correct any omissions in the Loan Documents, to perfect, protect or preserve the
collateral at any time securing or intended to secure the obligations of Borrower under the Loan
Documents and any Liens created under any of the Loan Documents, or to make any recordings, file
any notices, or obtain any consents, as may be necessary or appropriate in connection therewith and
(c) do and execute all and such further lawful and reasonable acts, conveyances and assurances for
the better and more effective carrying out of the intents and purposes of this Agreement and the
other Loan Documents, as Lender shall reasonably require from time to time. Borrower grants Lender
an irrevocable power of attorney coupled with an interest for the purpose of exercising and
perfecting any and all rights and remedies available to Lender under the Loan Documents, at law and
in equity, provided, that, the Lender shall not act under such power of attorney unless
Borrower has failed to act within five (5) days of Lender’s written request for action by Borrower.

     4.1.19 Taxes on Security. Borrower shall pay all taxes, charges, filing, registration
and recording fees, excises and levies payable with respect to the Note or the Liens created or
secured by the Loan Documents, other than income, franchise and doing business taxes imposed on
Lender. If there shall be enacted any law (a) deducting the Loan from the value of the Property
for the purpose of taxation, (b) affecting any Lien on the Property, or (c) changing existing laws
of taxation of mortgages, deeds of trust, security deeds, or debts secured by real property, or
changing the manner of collecting any such taxes, Borrower shall promptly pay to Lender, on demand,
all taxes, costs and charges for which Lender is or may be liable as a result thereof; however, if
such payment would be prohibited by law or would render the Loan usurious, then instead of
collecting such payment, Lender may declare all amounts owing under the Loan Documents due and
payable to Lender within ninety (90) days of Lender’s demand therefor.

     4.1.20 Condominium Obligations. Borrower (i) shall pay all maintenance and
Condominium Assessments and shall observe and perform the obligations imposed upon it under the
Condominium Documents; (ii) shall enforce the terms, covenants and conditions contained in the
Condominium Documents to be observed or performed upon the part of the other parties thereunder in
a commercially reasonable manner; (iii) shall not alter, modify or change the terms

-48-

 

of the
Condominium Documents without Lender’s consent, such consent not to be unreasonably withheld,
delayed or qualified, (iv) shall comply with any such state, local or federal law, rule and
regulation applicable to the condominium regime at the Property, the Condominium Units or the sale
or transfer of the Condominium Units, including, but not limited to, the securities and condominium
laws of the State and the rules and regulations pertaining thereto, if applicable, (v) shall,
except as provided herein, take all actions as may be necessary from time to time to preserve and
maintain the condominium regime at the Property in accordance with Article 9-B of the New
York Real Property Law, and (vi) shall give to Lender prompt notice of any notice of any
special assessment relating to the condominium regime received by Borrower.

     4.1.21 East River Franchise and Chilled Water Agreements. Borrower (i) shall observe
and perform the obligations imposed upon it under the East River Franchise Agreement and the
Chilled Water Agreement; (ii) shall enforce the terms, covenants and conditions contained in the
East River Franchise Agreement and the Chilled Water Agreement to be observed or performed upon the
part of the other parties thereunder in a commercially reasonable manner; (iii) shall not
terminate, alter, modify or change the terms of the East River Franchise Agreement or the Chilled
Water Agreement without Lender’s consent, such consent not to be unreasonably withheld, delayed or
qualified, and (iv) shall deliver to Lender copies of any notices of default or revocation received
with respect to the East River Franchise Agreement and the Chilled Water Agreement.

     Section 4.2 Borrower Negative Covenants. Borrower covenants and agrees with Lender
that:

     4.2.1 Liens. Borrower shall not create, incur, assume or, subject to Borrower’s
rights in this Agreement and the other Loan Documents to contest the validity and application of
Liens, suffer to exist any Lien on any portion of the Property except for Permitted Encumbrances.

     4.2.2 Dissolution. Borrower shall not (a) engage in any dissolution, liquidation or
consolidation or merger with or into any other business entity, (b) engage in any business activity
not related to the ownership and operation of the Property, (c) transfer, lease or sell, in one
transaction or any combination of transactions, all or substantially all of the property or assets
of Borrower except to the extent expressly permitted by the Loan Documents, or (d) cause, permit or
suffer any SPC Party to (i) dissolve, wind up or liquidate or take any action, or omit to take an
action, as a result of which such SPC Party would be dissolved, wound up or liquidated in whole or
in part, or (ii) amend, modify, waive or terminate the certificate of incorporation or bylaws of
such SPC Party, in each case without obtaining the prior consent of Lender in any matter that (i)
violates the single purpose covenants set forth in Section 3.1.24, or (ii) amends, modifies
or otherwise changes any provision thereof that by its terms cannot be modified at any time when
the Loan is outstanding or by its terms cannot be modified without Lender’s consent.

     4.2.3 Change in Business. Borrower shall not enter into any line of business other
than the ownership and operation of the Property.

     4.2.4 Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any claim or debt (other than
termination of Leases in accordance herewith) owed to

-49-

 

Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower’s business.

     4.2.5 Affiliate Transactions. Borrower shall not enter into, or be a party to, any
transaction with an Affiliate of Borrower or any of the partners of Borrower except in the ordinary
course of business and on terms which are fully disclosed to Lender in advance and are no less
favorable to Borrower or such Affiliate than would be obtained in a comparable arm’s length
transaction with an unrelated third party.

     4.2.6 Zoning. Borrower shall not initiate or consent to any zoning reclassification
of any portion of the Property or seek any variance under any existing zoning ordinance or use or
permit the use of any portion of the Property in any manner that could result in such use becoming
a non conforming use under any zoning ordinance or any other applicable land use law, rule or
regulation, without the prior written consent of Lender (such consent not to be unreasonably
withheld or delayed). Borrower shall use commercially reasonable efforts to cause Goldman Tenant
to obtain an amended certificate of occupancy with respect to the permit issued by the City of New
York to change the occupancy load on floors 42, 46, 48 and 50 at the Property or to otherwise
comply with all Legal Requirements with respect to such permits.

     4.2.7 Assets. Borrower shall not purchase or own any property other than the Property
and any property necessary or incidental for the operation of the Property. Borrower may make
loans to any of its Affiliates, provided that, Borrower shall not enforce any of its remedies with
respect thereto during the term of the Loan.

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

     4.2.9 Principal Place of Business. Borrower shall not change its principal place of
business from the address set forth on the first page of this Agreement without first giving Lender
twenty (20) days prior notice.

     4.2.10 ERISA. (a) Throughout the term of the Loan (A) Borrower will not be an “employee benefit plan,” as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, (B) none of the assets of Borrower
will constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101, (C) Borrower will not be a “governmental plan” within the meaning of Section 3(32) of
ERISA, and (D) transactions by or with Borrower will not be subject to any state statute regulating
investments of, or fiduciary obligations with respect to, governmental plans.

     (b) Borrower shall deliver to Lender such certifications or other evidence from time to time
throughout the term of the Loan, as requested by Lender in its sole discretion, that (i) Borrower
is not an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I
of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (ii) Borrower is
not subject to any state statute regulating investments of, or fiduciary

-50-

 

obligations with respect
to, governmental plans; and (iii) one or more of the following circumstances is true:

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

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

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

     4.2.11 Material Agreements. Borrower shall not, without Lender’s prior written
consent (such consent not to be unreasonably withheld or delayed): (a) enter into any Material
Agreement or Operating Agreement, except on an arm’s-length basis and commercially reasonable terms
(b) surrender or terminate any Material Agreement or Operating Agreement to which it is a party
(unless the other party thereto is in material default or the termination of such agreement would
be commercially reasonable), (b) increase or consent to the increase of the amount of any charges
under any Material Agreement or Operating Agreement to which it is a party, except as provided
therein or on an arms-length basis and commercially reasonable terms; or (c) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and remedies under any
Material Agreement or Operating Agreement to which it is a party in any material respect, except on
an arms’-length basis and commercially reasonable terms.

ARTICLE V

INSURANCE, CASUALTY AND CONDEMNATION.

     Section 5.1 Insurance.

     5.1.1 Insurance Policies. (a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least the following coverages:

     (i) comprehensive “All Risk” or “Special Perils” insurance on the Improvements and the
personal property at the Property (A) in an amount equal to one hundred percent (100%) of
the “Full Replacement Cost,” which for purposes of this Agreement shall mean actual
replacement value (exclusive of costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and personal property at the Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of One Hundred Thousand and No/100
Dollars ($100,000.00) for all such insurance coverage; and (D) containing an “Ordinance or
Law Coverage” or “Enforcement” endorsement if any of the Improvements or the use of the
Property shall at any time constitute legal non-conforming structures or uses. In addition,
Borrower shall obtain: (y) if any portion of the Improvements is currently or at any time
in the future located in a federally designated “special flood hazard area,” flood hazard

-51-

 

insurance in an amount equal to the lesser of (1) the outstanding principal balance of the
Note or (2) the maximum amount of such insurance available under the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended or such greater amount as Lender shall
reasonably require, except with respect to portions of the Property located in Flood Zone
A-7 in which Borrower shall maintain $50,000,000.00 of flood insurance with a maximum
deductible of up to five percent (5%); and (z) earthquake insurance in amounts and in form
and substance satisfactory to Lender (notwithstanding anything to the contrary set forth in
Section 5.1.2 hereof, such insurance shall be provided by insurance companies having
a claims paying ability rating reasonably acceptable to Lender) in the event the Property is
located in an area with a high degree of seismic activity, provided that the
insurance pursuant to clauses (y) and (z) hereof shall otherwise be on terms
consistent with the comprehensive “All Risk” or “Special Perils” insurance policy required
under this subsection (i).

     (ii) commercial general liability insurance against claims for personal injury, bodily
injury, death or property damage occurring upon, in or about the Property, such insurance
(A) to be on the so-called “occurrence” form with a combined limit of not less than Five
Million and No/100 Dollars ($5,000,000); (B) to continue at not less than the aforesaid
limit until required to be changed by Lender by reason of changed economic conditions making
such protection inadequate; and (C) to cover at least the following hazards: (1) premises
and operations; (2) products and completed operations on an “if any” basis; (3) independent
contractors; (4) blanket contractual liability for all legal contracts; and (5) contractual
liability covering the indemnities contained in Article 9 of the Mortgage to the
extent the same is available; the deductible for this coverage shall not exceed $250,000.00;

     (iii) business income insurance (A) with loss payable to Lender; (B) covering all risks
required to be covered by the insurance provided for in subsection (i) above for a
period commencing at the time of loss for such length of time as it takes to repair or
replace with the exercise of due diligence and dispatch; (C) containing an extended period
of indemnity endorsement which provides that after the physical loss to the Improvements and
Personal Property has been repaired, the continued loss of income will be insured until such
income either returns to the same level it was at prior to the loss, or the expiration of
twelve (12) months from the date that the Property is repaired or replaced and operations
are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to
the end of such period; and (D) in an amount equal to one hundred percent (100%) of the
projected gross income from the Property for a period from the date of loss to a date
(assuming total destruction) which is twenty-four (24) months from the date that the
Property is repaired or replaced and operations are resumed. The amount of such business
income insurance shall be determined prior to the date hereof and at least once each year
thereafter based on Borrower’s reasonable estimate of the gross income from the Property for
the succeeding twenty-four (24) month period. All proceeds payable to Lender pursuant to
this subsection shall be held by Lender and shall be applied to the obligations secured by
the Loan Documents from time to time due and payable hereunder and under the Note;
provided, however, that nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the

-52-

 

obligations secured by the Loan Documents on the
respective dates of payment provided for in the Note and the other Loan Documents except to
the extent such amounts are actually paid out of the proceeds of such business income
insurance;

     (iv) at all times during which structural construction, repairs or alterations are
being made with respect to the Improvements, and only if the Property coverage form does not
otherwise apply, (A) owner’s contingent or protective liability insurance covering claims
not covered by or under the terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for in subsection (i)
above written in a so-called builder’s risk completed value form (1) on a non-reporting
basis, (2) against all risks insured against pursuant to subsection (i) above, (3)
including permission to occupy the Property, and (4) with an agreed amount endorsement
waiving co-insurance provisions;

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

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

     (vii) umbrella liability insurance in addition to primary coverage in an amount not
less than Seventy-Five Million and No/100 Dollars ($75,000,000) per occurrence on terms
consistent with the commercial general liability insurance policy required under
subsection (ii) above and (viii) below;

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

     (ix) so-called “dramshop” insurance or other liability insurance required in connection
with the sale of alcoholic beverages;

     (x) insurance against employee dishonesty in an amount not less than one (1) month of
gross revenue from the Property and with a deductible not greater than Twenty-Five Thousand
and No/100 Dollars ($25,000); and

     (xi) insurance coverage for Terrorism Losses and the loss of business income resulting
from Terrorism Losses, may be maintained by Borrower, at its option, either (A) as part of
its “All Risk” or “Special Perils” and business income insurance required under Sections
5.1.1(a)(i) and (iii) above on terms consistent with those required under
Sections 5.1.1(a)(i) and (iii) above except that such coverage shall be in
an amount (the “Minimum Coverage Amount”) at least equal to the lesser of (a) the
outstanding principal balance of the Loan (provided such policy contains a waiver of
coinsurance) or (b) the sum of the business income insurance equal to 100% of the projected
gross income from

-53-

 

the Property for a period of twenty-four (24) months from the date that
the Property is repaired or replaced and operations are resumed plus the Full Replacement
Cost; (B) through a policy or policies covering multiple locations so long as such coverage
is on terms consistent with those required under Sections 5.1.1(a)(i) and
(iii) above with a deductible of not greater than $250,000 and such coverage is in
an amount equal to the Minimum Coverage Amount and further provided that if any claim is
made (unless on per occurrence basis) under such policy or policies reducing the amount of
coverage below that which is required to be maintained under this Section, then Borrower
shall increase the amount of such policy or policies to an amount that satisfies the
requirements of this Section; or (C) as a stand-alone policy or policies that covers solely
the Property against Terrorism Losses, which stand-alone policy or policies shall be on
terms consistent with those required under Sections 5.1.1(a)(i) and (iii)
above with a deductible of not greater than $5,000,000.00 and such coverage is in an amount
equal to the Minimum Coverage Amount. Notwithstanding the foregoing, in no event shall
Borrower be required to pay annual premiums for insurance covering Terrorism Losses in
excess of the Terrorism Premium Limit (i.e., if the cost exceeds the Terrorism Premium
Limit, Borrower shall obtain as much coverage as is available at a cost equal to the
Terrorism Premium Limit);

     (xii) upon sixty (60) days’ written notice, such other reasonable insurance and in such
reasonable amounts as Lender from time to time may reasonably request against such other
insurable hazards which at the time are commonly insured against for property similar to the
Property located in or around the region in which the Property is located.

     (b) All insurance provided for in Section 5.1.1(a) shall be obtained under valid and
enforceable policies (collectively, the “Policies” or, in the singular, the
“Policy”) and, to the extent not specified above, shall be subject to the reasonable
approval of Lender as to deductibles, loss payees and insureds. Not less than five (5) Business
Days prior to the
expiration dates of the Policies theretofore furnished to Lender, certificates of insurance
evidencing the Policies accompanied by evidence satisfactory to Lender of payment of the premiums
then due thereunder (the “Insurance Premiums”), shall be delivered by Borrower to Lender.

     (c) Any blanket insurance Policy (“Blanket Policy”) shall specifically allocate to the
Property the amount of coverage from time to time required hereunder and shall otherwise provide
the same protection as would a separate Policy insuring only the Property in compliance with the
provisions of Section 5.1.1(a).

     (d) All Policies of insurance provided for or contemplated by Section 5.1.1(a) shall
be primary coverage and, except for the Policy referenced in Section 5.1.1(a)(v), shall
name Borrower as the insured and Lender and its successors and/or assigns as the additional
insured, as its interests may appear, and in the case of property damage, boiler and machinery,
flood, earthquake and terrorism insurance, shall contain a so-called New York standard non
contributing mortgagee clause in favor of Lender providing that the loss thereunder shall be
payable to Lender. Borrower shall not procure or permit any of its constituent entities to procure
any other insurance coverage which would be on the same level of payment as the Policies or

-54-

 

would
adversely impact in any way the ability of Lender or Borrower to collect any proceeds under any of
the Policies.

     (e) All Policies of insurance provided for in Section 5.1.1(a), except for the
Policies referenced in Section 5.1.1(a)(v) and (a)(viii), shall contain clauses or
endorsements to the effect that:

     (i) no act or negligence of Borrower, or anyone acting for Borrower, or of any Tenant
or other occupant, or failure to comply with the provisions of any Policy, which might
otherwise result in a forfeiture of the insurance or any part thereof, shall in any way
affect the validity or enforceability of the insurance insofar as Lender is concerned;

     (ii) the Policy shall not be canceled without at least thirty (30) days’ written notice
to Lender and any other party named therein as an additional insured and, if obtainable by
Borrower using commercially reasonable efforts, shall not be materially changed (other than
to increase the coverage provided thereby) without such a thirty (30) day notice; and

     (iii) Lender shall not be liable for any Insurance Premiums thereon or subject to any
assessments thereunder.

     (f) If at any time Lender is not in receipt of written evidence that all insurance required
hereunder is in full force and effect, Lender shall have the right, without notice to Borrower, to
take such action as Lender deems necessary to protect its interest in the Property, including,
without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate and all premiums incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Borrower to Lender
upon demand and until paid shall be secured by the Mortgage and shall bear interest at the
Default Rate.

     (g) In the event of foreclosure of the Mortgage or other transfer of title to the Property in
extinguishment in whole or in part of the Debt, all right, title and interest of Borrower in and to
the Policies that are not blanket Policies then in force concerning the Property and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.

     (h) In no event shall Borrower permit the Board of Managers (as defined in the Declaration) to
obtain the insurance required to be obtained by Borrower pursuant to Section 5.1.1(a)(i),
(iii), (iv) and (vi) of this Agreement, nor shall the Board of Managers be
named as an additional insured or loss payee under any such policy.

     (i) Lender acknowledges that for the current period of the Policy, the Insurance Premiums will
not be paid twelve (12) months in advance, but rather, are financed by Borrower. This arrangement
is acceptable to Lender, provided, that (i) Borrower provides Lender for its review and reasonable
approval the details of such financing arrangement; (ii) Borrower provides Lender with evidence
that all periodic Insurance Premium payments have been paid at its request, per the terms of the
financing arrangement, as they become due; (iii)

-55-

 

Lender receives not less than thirty (30) days
prior written notice of any potential termination or expiration of any insurance coverages required
herein. In addition, Borrower agrees that upon the expiration of the Policy scheduled to occur on
December 31, 2006, it shall replace the Montpelier Reinsurance Co. layer with an acceptable insurer
such that the Policy shall no longer be subject to co-insurance to extent commercially available at
commercially reasonable rates, provided that Lender and Borrower shall not be exposed to
co-insurance risk (i.e. Borrower obtains an “agreed upon value” Endorsement to the Policy).

     5.1.2 Insurance Company. The Policies shall be issued by financially sound and
responsible insurance companies authorized to do business in the state in which the Property is
located and having a claims paying ability rating with the issuing companies and or within the
reinsurance companies/organizations that reinsure 100% of the risks of the issuing companies, of
“A” or better by S&P and Fitch and an insurance financial strength rating of “Aa2” by Moody’s
(provided, however, (A) if more than one (1) but less than five (5) insurance
companies issue the Policies required hereunder, then at least seventy-five percent (75%) of the
applicable insurance coverages represented by the Policies required hereunder must be provided by
insurance companies having a credit rating of “A” or better by S&P (or the equivalent rating by
Moody and Fitch) and the balance of the applicable insurance coverages represented by the Policies
required hereunder must be provided by insurance companies having a credit rating of “A” or better
by S&P (or the equivalent rating by Moody and Fitch), or (B) if five (5) or more insurance
companies issue the Policies required hereunder, then at least seventy percent (70%) of the
applicable insurance coverages required hereunder must be provided by insurance companies having a
credit rating of “A-” or better by S&P (or the equivalent rating by Moody and Fitch) and at least
95% of the total of the applicable insurance coverages required hereunder must be provided by
insurance companies having a credit rating of “BBB” or better by S&P (or the
equivalent rating by Moody and Fitch); provided further, however, that
in no event shall any insurance company providing primary insurance coverage hereunder have a
credit rating of less than “A” by S&P (or the equivalent rating by Moody and Fitch)). If a
Securitization occurs, the foregoing required insurance company rating by a Rating Agency not
rating any Securities shall be disregarded. If a Securitization occurs and S&P is not a Rating
Agency, each of the insurance companies shall have the ratings from Fitch and Moody’s as provided
above; provided, however, if Fitch or Moody’s shall not provide a rating for an
insurance company, then an A.M. Best rating of A(X) shall be substituted for an S&P rating of “A-”
or better and an A.M. Best rating of A-VIII for each of the other foregoing rating requirements of
S&P, Fitch or Moody’s, as applicable. Notwithstanding the foregoing, Borrower shall be permitted
to maintain the Policies required hereunder with insurance companies which do not meet the
foregoing requirements (an “Otherwise Rated Insurer”), provided Borrower obtains a
“cut-through” endorsement (that is, an endorsement which permits recovery against the provider of
such endorsement) with respect to any Otherwise Rated Insurer from an insurance company which meets
the claims paying ability ratings required above. Moreover, if Borrower desires to maintain
insurance required hereunder from an insurance company which does not meet the claims paying
ability ratings set forth herein but the parent of such insurance company, which owns at least
fifty-one percent (51%) of such insurance company, maintains such ratings, Borrower may use such
insurance companies if approved by the Rating Agencies (such approval may be conditioned on items
required by the Rating Agencies including a requirement that the parent guarantee the obligations
of such insurance company).

-56-

 

     5.1.3 Concordia Insurance Limited. Notwithstanding anything to the contrary contained
in Section 5.1.2, with respect to insurance required to be maintained by Borrower pursuant
to Section 5.1.1(a)(xi) hereof, Concordia Insurance, LLC (“Concordia”) shall be an
acceptable insurer of excess property insurance, perils of terrorism and acts of terrorism so long
as (i) the policy issued by Concordia has (a) a per occurrence limit of no less than $500,000,000
and (b) a deductible of no greater than $100,000, (ii) other than the $100,000 deductible, the
portion of such insurance which is not reinsured by TRIA, is reinsured by an insurance carrier
rated no less than “A” (or its equivalent) by all of the Rating Agencies rating the Securities,
(iii) TRIA or a similar federal statute is in effect and provides that the federal government must
reinsure that portion of any terrorism insurance claim above (a) the applicable deductible payable
by Concordia and (b) those amounts which are reinsured pursuant to clause (ii) above, (iv)
Concordia is not the subject of a bankruptcy or similar insolvency proceeding and (v) no
Governmental Authority issues any statement, finding or decree that insurers of perils of terrorism
similar to Concordia (i.e., captive insurers arranged similar to Concordia) do not qualify
for the payments or benefits of TRIA. In the event that Concordia is providing insurance coverage
(A) to other properties in close proximity to the Property, and/or (B) to other properties owned by
a Person(s) who is not an Affiliate of Borrower, and such insurance is not subject to the same
reinsurance and other requirements of this Section 5.1.3, then Lender may reasonably
re-evaluate the limits and deductibles of the insurance required to be provided by Concordia
hereunder. In the event any of the foregoing conditions are not satisfied, Concordia shall not be
deemed an acceptable insurer of Terrorism Losses. Borrower represents, warrants and covenants to
Lender on behalf of Concordia that the insurance premiums for the insurance coverages provided to
Borrower by Concordia are fair market value insurance premiums.

     Section 5.2 Casualty and Condemnation.

     5.2.1 Casualty. If the Property shall sustain a Casualty, Borrower shall give prompt
notice of such Casualty to Lender and shall promptly commence and diligently prosecute to
completion the repair and restoration of the Property as nearly as possible to the condition the
Property was in immediately prior to such Casualty (a “Restoration”) and otherwise in
accordance with Section 5.3, it being understood, however, that Borrower shall not be
obligated to restore the Property to the precise condition of the Property prior to such Casualty
provided the Property is restored, to the extent practicable, to be of at least equal value
and of substantially the same character as prior to the Casualty. Borrower shall pay all costs of
such Restoration whether or not such costs are covered by insurance. Lender may, but shall not be
obligated to, make proof of loss if not made promptly by Borrower. In the event of a Casualty
where the loss does not exceed Restoration Threshold, Borrower may settle and adjust such claim;
provided that (a) no Event of Default has occurred and is continuing and (b) such
adjustment is carried out in a commercially reasonable and timely manner. In the event of a
Casualty where the loss exceeds the Restoration Threshold or if an Event of Default then exists,
Borrower may settle and adjust such claim only with the prior written consent of Lender (which
consent shall not be unreasonably withheld or delayed) and Lender shall have the opportunity to
participate, at Borrower’s cost, in any such adjustments. Notwithstanding any Casualty, Borrower
shall continue to pay the Debt at the time and in the manner provided for its payment in the Note
and in this Agreement.

-57-

 

     5.2.2 Condemnation. Borrower shall give Lender prompt notice of any actual or
threatened Condemnation by any Governmental Authority of all or any part of the Property and shall
deliver to Lender a copy of any and all papers served in connection with such proceedings.
Provided no Event of Default has occurred and is continuing, in the event of a Condemnation
where the amount of the taking does not exceed the Restoration Threshold, Borrower may settle and
compromise such Condemnation; provided that the same is effected in a commercially
reasonable and timely manner. In the event of a Condemnation where the amount of the taking
exceeds the Restoration Threshold or if an Event of Default then exists, Borrower may settle and
compromise the Condemnation only with prior written the consent of Lender (which consent shall not
be unreasonably withheld or delayed) and Lender shall have the opportunity to participate, at
Borrower’s cost, in any litigation and settlement discussions in respect thereof and Borrower shall
from time to time deliver to Lender all instruments requested by Lender to permit such
participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Lender is hereby irrevocably appointed as Borrower’s
attorney-in-fact, coupled with an interest, with exclusive power to collect, receive and retain any
Award and to make any compromise or settlement in connection with any such Condemnation that Lender
is otherwise permitted to settle pursuant to the terms of this Agreement. Notwithstanding any
Condemnation, Borrower shall continue to pay the Debt at the time and in
the manner provided for its payment in the Note and in this Agreement. Lender shall not be
limited to the interest paid on the Award by any Governmental Authority but shall be entitled to
receive out of the Award interest at the rate or rates provided herein or in the Note. If the
Property or any portion thereof is taken by any Governmental Authority, Borrower shall promptly
commence and diligently prosecute the Restoration of the Property and otherwise comply with the
provisions of Section 5.3. If the Property is sold, through foreclosure or otherwise,
prior to the receipt by Lender of the Award, Lender shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Award,
or a portion thereof sufficient to pay the Debt.

     5.2.3 Casualty Proceeds. Notwithstanding the last sentence of Section
5.1.1(a)(iii) and provided no Event of Default then exists hereunder, proceeds received
by Lender on account of the business interruption insurance specified in Section
5.1.1(a)(iii) above with respect to any Casualty shall be deposited by Lender directly into the
Borrower Account (as defined in the Clearing Account Agreement) but (a) only to the extent it
reflects a replacement for (i) lost Rents that would have been due under Leases existing on the
date of such Casualty, and/or (ii) lost Rents under Leases that had not yet been executed and
delivered at the time of such Casualty which Borrower has proven to the insurance company would
have been due under such Leases (and then only to the extent such proceeds disbursed by the
insurance company reflect a replacement for such past due Rents) and (b) only to the extent
necessary to fully make the disbursements required by Section 3.3(a)(i) through
(a)(vi) of the Cash Management Agreement. All other such proceeds shall be held by Lender
and disbursed in accordance with Section 5.3 hereof.

     Section 5.3 Delivery of Net Proceeds.

     5.3.1 Minor Casualty or Condemnation. If a Casualty or Condemnation has occurred to
the Property and the Net Proceeds shall be less than the Restoration Threshold and

-58-

 

the costs of
completing the Restoration shall be less than the Restoration Threshold, and provided no
Event of Default shall have occurred and remain uncured, the Net Proceeds will be disbursed by
Lender to Borrower. Promptly after receipt of the Net Proceeds, Borrower shall commence and
satisfactorily complete with due diligence the Restoration in accordance with the terms of this
Agreement. If any Net Proceeds are received by Borrower and may be retained by Borrower pursuant
to the terms hereof, such Net Proceeds shall, until completion of the Restoration, be held in trust
for Lender and shall be segregated from other funds of Borrower to be used to pay for the cost of
Restoration in accordance with the terms hereof.

     5.3.2 Major Casualty or Condemnation. (a) If a Casualty or Condemnation has occurred
to the Property and the Net Proceeds are equal to or greater than the Restoration Threshold or the
costs of completing the Restoration is equal to or greater than the Restoration Threshold, Lender
shall make the Net Proceeds available for the Restoration, provided that each of the
following conditions are met:

     (i) no Event of Default shall have occurred and be continuing;

     (ii) (A) in the event the Net Proceeds are insurance proceeds, less than thirty percent
(30%) of the total floor area of the Improvements at the Property has been damaged,
destroyed or rendered unusable as a result of such Casualty or (B) in the event the Net
Proceeds are an Award, less than ten percent (10%) of the land constituting the Property is
taken, and such land is located along the perimeter or periphery of the Property, and no
portion of the Improvements is the subject of the Condemnation;

     (iii) Leases requiring payment of annual rent equal to sixty-five (65%) of the Gross
Income from Operations received by Borrower during the twelve (12) month period immediately
preceding the Casualty or Condemnation and all Major Leases shall remain in full force and
effect during and after the completion of the Restoration without abatement of rent beyond
the time required for Restoration, notwithstanding the occurrence of such Casualty or
Condemnation;

     (iv) Borrower shall commence the Restoration as soon as reasonably practicable (but in
no event later than sixty (60) days after such Casualty or Condemnation, whichever the case
may be, occurs) and shall diligently pursue the same to satisfactory completion;

     (v) Lender shall be satisfied that any operating deficits and all payments of principal
and interest under the Note will be paid during the period required for Restoration from (A)
the Net Proceeds, or (B) other funds of Borrower;

     (vi) Lender shall be satisfied that the Restoration will be completed on or before the
earliest to occur of (A) the date six (6) months prior to the Maturity Date, (B) the
earliest date required for such completion under the terms of any Lease, (C) such time as
may be required under applicable Legal Requirements in order to repair and restore the
Property to the condition it was in immediately prior to such Casualty or to as nearly as
possible the condition it was in immediately prior to such Condemnation, as

-59-

 

applicable or
(D) the expiration of the insurance coverage referred to in Section 5.1.1(a)(iii);

     (vii) the Property and the use thereof after the Restoration will be in compliance with
and permitted under all applicable Legal Requirements;

     (viii) the Restoration shall be done and completed by Borrower in an expeditious and
diligent fashion and in compliance with all applicable Legal Requirements;

     (ix) such Casualty or Condemnation, as applicable, does not result in the loss of
access to the Property or the related Improvements; and

     (x) all Operating Agreements shall remain in full force and effect.

     (b) The Net Proceeds shall be paid directly to Lender and held by Lender in an
interest-bearing account and, until disbursed in accordance with the provisions of this
Section 5.3.2, shall constitute additional security for the Debt. The Net Proceeds
(and all interest accrued thereon) shall be disbursed by Lender to, or as directed by, Borrower
from time to time during the course of the Restoration, upon receipt of evidence reasonably
satisfactory to Lender that (i) all requirements set forth in Section 5.3.2(a) have been
satisfied, (ii) all materials installed and work and labor performed (except to the extent that
they are to be paid for out of the requested disbursement) in connection with the Restoration have
been paid for in full, and (iii) there exist no notices of pendency, stop orders, mechanic’s or
materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the Property arising out of the Restoration which have not either been fully
bonded to the satisfaction of Lender and discharged of record or in the alternative fully insured
to the satisfaction of Lender by the title company issuing the Title Insurance Policy.

     (c) All plans and specifications required in connection with the Restoration shall be subject
to prior approval of Lender (not to be unreasonably withheld or delayed) and an independent
architect selected by Lender (the “Casualty Consultant”). The plans and specifications
shall require that the Restoration be completed in a first-class workmanlike manner at least
equivalent to the quality and character of the original work in the Improvements (provided,
however, that in the case of a partial Condemnation, the Restoration shall be done to the
extent reasonable practicable after taking into account the consequences of such partial
Condemnation), so that upon completion thereof, the Property shall be at least equal in value and
general utility to the Property prior to the damage or destruction; it being understood, however,
that Borrower shall not be obligated to restore the Property to the precise condition of the
Property prior to such Casualty provided the Property is restored, to the extent
practicable, to be of at least equal value and of substantially the same character as prior to the
Casualty. Borrower shall restore all Improvements such that when they are fully restored and/or
repaired, such Improvements and their contemplated use fully comply with all applicable material
Legal Requirements. The identity of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been engaged, shall be subject to
approval (not to be unreasonably withheld or delayed) of Lender and the Casualty Consultant. All
reasonable out of pocket costs and expenses actually incurred by Lender in connection with

-60-

 

recovering, holding and advancing the Net Proceeds for the Restoration including, without
limitation, reasonable attorneys’ fees and disbursements and the Casualty Consultant’s fees and
disbursements, shall be paid by Borrower.

     (d) In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess
of an amount equal to the costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Casualty Consultant, less the Casualty Retainage. The term
“Casualty Retainage” shall mean, as to each contractor, subcontractor or materialman
engaged in the Restoration, an amount equal to ten percent (10%) of the costs actually incurred for
work in place as part of the Restoration, as certified by the Casualty Consultant, until such time
as the Casualty Consultant certifies to Lender that fifty percent (50%) or more of the Restoration
has been completed following which the Casualty Retainage shall be reduced to five percent (5%)
until the Restoration has been completed. The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this Section 5.3.2(d), be less
than the amount actually held back by Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released until the Casualty
Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2(d) and that all approvals
necessary for the re-occupancy and use of the Property have been obtained from all appropriate
Governmental Authorities, and Lender receives evidence satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out of the Casualty Retainage;
provided, however, notwithstanding the foregoing, Lender will release the portion
of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman
engaged in the Restoration as of the date upon which the Casualty Consultant certifies to Lender
that the contractor, subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the contractor’s, subcontractor’s or
materialman’s contract, the contractor, subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may
be reasonably requested by Lender or by the title company issuing the Title Insurance Policy, and
Lender receives an endorsement to the Title Insurance Policy insuring the continued priority of the
lien of the Mortgage and evidence of payment of any premium payable for such endorsement. If
required by Lender, the release of any such portion of the Casualty Retainage shall be approved by
the surety company, if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

     (e) Lender shall not be obligated to make disbursements of the Net Proceeds more frequently
than once every calendar month.

     (f) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the
opinion of Lender in consultation with the Casualty Consultant, be sufficient to pay in full the
balance of the costs which are estimated by the Casualty Consultant to be incurred in connection
with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net
Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be
made. The Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be
disbursed for costs actually incurred in connection with the Restoration on the same conditions
applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 5.3.2 shall constitute additional security for the Debt.

-61-

 

     (g) The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net
Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that
the Restoration has been completed in accordance with the provisions of this Section 5.3.2,
and the receipt by Lender of evidence reasonably satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing under any of the
Loan Documents; provided, however, the amount of such excess returned to Borrower
in the case of a Condemnation shall not exceed the amount of Net Proceeds Deficiency deposited by
Borrower with the balance being applied to the Debt in the manner provided for in subsection
5.3.2(h).

     (h) All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be
returned to Borrower as excess Net Proceeds pursuant to Section 5.3.2(g) may be retained
and applied by Lender toward the payment of the Debt, whether or not then due and payable, in such
order, priority and proportions as Lender in its sole discretion shall deem proper,
or, at the discretion of Lender, the same may be paid, either in whole or in part, to Borrower
for such purposes as Lender shall designate.

ARTICLE VI

RESERVE FUNDS

     Section 6.1 Intentionally Omitted.

     Section 6.2 Tax Funds.

     6.2.1 Deposits of Tax Funds. At all times during a Cash Sweep Period, Borrower shall,
pursuant to the Cash Management Agreement, make deposits on each Monthly Payment Date in an amount
equal to one-twelfth of the Taxes that Lender reasonably estimates will be payable with respect to
the Property during the next ensuing twelve (12) months in order to accumulate sufficient funds to
pay all such Taxes at least thirty (30) days prior to their respective due dates. Amounts
deposited pursuant to this Section 6.2.1 are referred to herein as the “Tax Funds”
and the account in which such amounts are held shall hereinafter be referred to as Borrower’s
“Tax Fund Reserve Account”. If at any time deposits are required to be made pursuant to
this Section 6.2.1 and Lender reasonably determines that the Tax Funds will not be
sufficient to pay the Taxes, Lender shall notify Borrower of such determination and the monthly
deposits for Taxes shall be increased by the amount that Lender estimates is sufficient to make up
the deficiency at least thirty (30) days prior to the respective due dates for the Taxes;
provided that if Borrower receives notice of any deficiency after the date that is ten (10)
days prior to the date that Taxes are due, Borrower will deposit such amount within one (1)
Business Day after its receipt of such notice. Borrower has deposited with Lender on the date
hereof the sum of $7,374,632.00 (the “Unassessed Tax Funds”) to be held in the Tax Fund
Reserve Account and to be disbursed in accordance with Section 6.2.2 with respect to those
portions of the Property which are currently not assessed for Taxes for the 2004/05 and 2005/06 tax
years (the “Unassessed Property”). In the event that New York City fails to correctly
calculate and bill the Borrower for real estate taxes with respect all or any portion of to the
Unassessed Property within six (6) months from the date hereof, Borrower may replace the Unassessed
Tax Funds by

-62-

 

delivering to Lender a Qualified Letter of Credit and/or Qualified Guaranty (or any
combination thereof) in an aggregate amount equal to the Unassessed Tax Funds or such other amount
reasonably agreed to by Lender at which time Lender shall return the Unassessed Tax Funds, together
with interest thereon, to Borrower. The Qualified Guaranty shall be accompanied by a “bring down”
of the Nonconsolidation Opinion. In no event shall the amount indemnified under the Alteration
Indemnity and the amount guaranteed under any Qualified Guaranties, in the aggregate, at any time
exceed $40,000,000.00. Upon payment of such Taxes for the Unassessed Property, the balance of the
Unassessed Tax Funds, together with interest thereon, shall be returned to Borrower.

     6.2.2 Release of Tax Funds. Lender shall apply the Tax Funds to payments of Taxes
before the date Taxes are due and payable, provided that no Event of Default is continuing
and subject to Lender’s receipt of all necessary bills for Taxes to be so paid at least ten (10)
Business Days prior to the date the same are due and payable. In making any payment relating to
Taxes, Lender may do so according to any bill, statement or estimate procured from the appropriate
public office (with respect to Taxes) without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof. If the amount of the Tax Funds shall exceed the amounts due for Taxes, Lender shall, in
its sole discretion, return any excess to Borrower or credit such excess against future payments to
be made to the Tax Funds. Any Tax Funds remaining after the occurrence of a Defeasance Event or
the Debt has been paid in full shall be returned to Borrower.

     Section 6.3 Insurance Funds.

     6.3.1 Deposits of Insurance Funds. At all times during a Cash Sweep Period, Borrower
shall, pursuant to the Cash Management Agreement, make deposits on each Monthly Payment Date in an
amount equal to one-twelfth of the Insurance Premiums that Lender estimates will be payable for the
renewal of the coverage afforded by the Policies upon the expiration thereof in order to accumulate
sufficient funds to pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies. Amounts deposited pursuant to this Section 6.3.1 are referred
to herein as the “Insurance Funds”. If at any time deposits are required to be made
pursuant to this Section 6.3.1 and Lender reasonably determines that the Insurance Funds
will not be sufficient to pay the Insurance Premiums, Lender shall notify Borrower of such
determination and the monthly deposits for Insurance Premiums shall be increased by the amount that
Lender estimates is sufficient to make up the deficiency at least thirty (30) days prior to
expiration of the Policies. Notwithstanding the foregoing, deposits of Insurance Funds under this
Section 6.3.1 shall not be required in respect of Insurance Premiums payable under Blanket
Policies maintained by Borrower in accordance with Section 5.1 hereof, provided,
that Lender receives evidence reasonably acceptable to it of Borrower making the payment of all
such Insurance Premiums.

     6.3.2 Release of Insurance Funds. Lender shall apply the Insurance Funds to payment
of Insurance Premiums before the date Insurance Premiums are due and payable, provided that
no Event of Default is continuing and subject to Lender’s receipt of all necessary bills and/or
invoices for Insurance Premiums to be so paid at least ten (10) Business Days prior to the date the
same are due and payable. In making any payment relating to Insurance Premiums, Lender may do so
according to any bill, statement or estimate procured from the

-63-

 

insurer or its agent, without
inquiry into the accuracy of such bill, statement or estimate. If the amount of the Insurance
Funds shall exceed the amounts due for Insurance Premiums, Lender shall, in its sole discretion,
return any excess to Borrower or credit such excess against future payments to be made to the
Insurance Funds. Any
Insurance Funds remaining after the occurrence of a Defeasance Event or the Debt has been paid
in full shall be returned to Borrower.

     Section 6.4 Capital Expenditure Funds.

     6.4.1 Deposits of Capital Expenditure Funds. At all times during a Cash Sweep Period,
Borrower shall make deposits on each Monthly Payment Date in an amount equal to Fifty Thousand
Three Hundred Seven and 31/100 Dollars $50,307.31 for Capital Expenditures. Amounts deposited
pursuant to this Section 6.4.1 are referred to herein as the “Capital Expenditure
Funds”. To the extent the balance in the Capital Expenditures Fund should equal or exceed
$1,207,375.44 then Borrower’s obligation for such monthly deposits under this Section 6.4.1
shall be suspended; provided, however, such obligations for monthly deposits shall
be reinstated to the extent the balance in the Capital Expenditures Fund should thereafter be less
than $1,207,375.44.

     6.4.2 Release of Capital Expenditure Funds. (a) Lender shall disburse Capital
Expenditure Funds only for Capital Expenditures.

     (b) Lender shall disburse to Borrower the Capital Expenditure Funds upon satisfaction by
Borrower of each of the following conditions: (i) Borrower shall submit a request for payment to
Lender at least ten (10) days prior to the date on which Borrower requests such payment be made and
specifies the Capital Expenditures to be paid, (ii) on the date such request is received by Lender
and on the date such payment is to be made, no Event of Default shall exist and remain uncured and
Lender shall not have exercised its right to cause the Borrower to replace the Manager (if any)
pursuant to Section 7.3 hereof, provided, that, the condition set forth in this
clause (ii) below shall not be applicable in the event that the Capital Expenditure for
which a request for payment has been submitted relates to the installation, maintenance or
improvement of fire or smoke alarms, sprinklers or other life safety systems, (iii) Lender shall
have received an Officer’s Certificate (A) stating that the items to be funded by the requested
disbursement are Capital Expenditures, (B) stating that all Capital Expenditures at the Property to
be funded by the requested disbursement have been completed or, subject to clause (D)
below, performed, in a good and workmanlike manner and in accordance with all applicable Legal
Requirements, such Officer’s Certificate to be accompanied by a copy of any license, permit or
other approval required by any Governmental Authority in connection with the Capital Expenditures,
(C) identifying each Person that supplied materials or labor in connection with the Capital
Expenditures to be funded by the requested disbursement, and (D) stating that each such Person has
been paid in full or will be paid in full upon such disbursement for all costs relating to such
Capital Expenditure as of the date identified in such Certificate, or in the event that the cost of
the Capital Expenditure to be funded by the requested disbursement is in excess of $250,000 and the
underlying contract requires payment before such Capital Expenditure is fully completed, stating
that such Person has been paid in full or will be paid in full for the work performed upon such
disbursement, such Officer’s Certificate to be accompanied by lien waivers
or other evidence of payment satisfactory to Lender, (iv) at Lender’s option, if the cost of
any individual Capital Expenditure exceeds One Million Dollars ($1,000,000), a title search for the

-64-

 

Property indicating that the Property is free from all Liens, claims and other encumbrances not
previously approved by Lender, (v) at Lender’s option, if the cost of any individual Capital
Expenditure exceeds One Million and No/100 Dollars ($1,000,000), Lender shall have received a
report reasonably satisfactory to Lender in its reasonable discretion from an architect or engineer
approved by Lender in respect of such architect or engineer’s inspection of the required repairs,
and (vi) Lender shall have received such other evidence as Lender shall reasonably request that the
Capital Expenditures at the Property to be funded by the requested disbursement have been completed
or, subject to clause (D) above, performed, and are paid for or will be paid upon such
disbursement to Borrower. Lender shall not be required to disburse Capital Expenditure Funds more
frequently than once each calendar month, unless such requested disbursement is in an amount
greater than the Minimum Disbursement Amount (or a lesser amount if the total amount of Capital
Expenditure Funds is less than the Minimum Disbursement Amount, in which case only one disbursement
of the amount remaining in the account shall be made).

     (c) Nothing in this Section 6.4.2 shall (i) make Lender responsible for making or
completing the Capital Expenditures Work; (ii) require Lender to expend funds in addition to the
Capital Expenditure Funds to complete any Capital Expenditures Work; (iii) obligate Lender to
proceed with the Capital Expenditures Work; or (iv) obligate Lender to demand from Borrower
additional sums to complete any Capital Expenditures Work.

     (d) Borrower shall permit Lender and Lender’s agents and representatives (including, without
limitation, Lender’s engineer, architect, or inspector) or third parties to enter onto the Property
(upon prior notice, except in an emergency, during normal business hours and subject to the rights
of Tenants under their Leases) to inspect the progress of any Capital Expenditures Work and all
materials being used in connection therewith and to examine all plans and shop drawings relating to
such Capital Expenditures Work. Borrower shall use commercially reasonable efforts to cause all
contractors and subcontractors to cooperate with Lender or Lender’s representatives or such other
Persons described above in connection with inspections described in this Section 6.4.2(d).

     (e) If a disbursement will exceed One Million and No/100 Dollars ($1,000,000), Lender may
require an inspection of the Property at Borrower’s expense prior to making a disbursement of
Capital Expenditure Funds in order to verify completion of the Capital Expenditures Work for which
reimbursement is sought. Lender may require that such inspection be conducted by an appropriate
independent qualified professional selected by Lender and may require a certificate of completion
by an independent qualified professional architect reasonably acceptable to Lender prior to the
disbursement of Capital Expenditure Funds. Borrower shall pay the reasonable, out of pocket costs
and expenses actually incurred by Lender in connection with such inspection required hereunder,
whether such inspection is conducted by Lender or by an independent qualified professional
architect. Any Capital Expenditure Funds remaining after the occurrence of a Defeasance Event or
the Debt has been paid in full shall be returned to Borrower.

     (f) In addition to any insurance required under the Loan Documents, Borrower shall provide or
cause to be provided workmen’s compensation insurance, builder’s
risk, and public liability insurance and other insurance to the extent required under
applicable

-65-

 

law in connection with Capital Expenditures Work. All such policies shall be in form
and amount reasonably satisfactory to Lender.

     Section 6.5 Rollover Funds.

     6.5.1 Deposits of Rollover Funds. (a) Borrower shall make deposits (i) on each
Monthly Payment Date commencing on January 6, 2008 and continuing for the next nineteen (19)
succeeding Monthly Payment Dates thereafter, an amount equal to $1,000,000 (the “Goldman
Reserve Funds”), until such time that the amount of the Goldman Reserve Funds shall be equal to
$20,000,000 for costs of tenant improvements or work allowances, leasing commissions and other
costs associated with the space currently leased to Goldman Tenant to the Goldman Lease (the
“Goldman Space”) and (ii) on each Monthly Payment Date commencing on December 6, 2010 and
continuing for the next forty-seven (47) succeeding Monthly Payment Dates thereafter, an amount
equal to $1,000,000 (the “Wachovia Reserve Funds”), until such time that the amount of the
Wachovia Reserve Funds shall be equal to $48,000,000 for costs of tenant improvements or work
allowances, leasing commissions and other costs associated with the space currently leased to
Wachovia pursuant to the Wachovia Lease (the “Wachovia Space”). All amounts deposited
pursuant to this Section 6.5.1 including the Goldman Reserve Funds and the Wachovia Reserve
Funds are referred to herein as the “Rollover Funds” and the account in which such amounts
are held shall hereinafter be referred to as Borrower’s “Rollover Reserve Account”. In
lieu of all or any portion of the cash deposits referenced in the preceding sentence, Borrower may
satisfy its obligations with respect to the Goldman Reserve Funds and the Wachovia Reserve Funds by
delivering to Lender a Qualified Letter of Credit and/or a guarantee of all or any part of the
Goldman Reserve Funds and the Wachovia Reserve Funds from a Qualified Equity Holder;
provided that such guarantor has a minimum cash liquidity capacity on its balance sheet
equal to 2:1 of the amount being guaranteed (a “Qualified Guaranty”) in the form attached
hereto as Schedule II. The Qualified Guaranty will be accompanied by a “bring down” of the
Nonconsolidation Opinion. In the event that Borrower delivers a Qualified Guaranty for all or any
part of the Goldman Reserve Funds and the Wachovia Reserve Funds, the amount of such Qualified
Guaranty shall be increased on each Monthly Payment Date by the monthly amount (or portion thereof)
required to be delivered to Lender with respect to the Goldman Reserve Funds and the Wachovia
Reserve Funds, respectively, for such month less any amounts delivered to Lender in the form of
cash or Qualified Letter of Credit with respect to such monthly payment. In no event shall the
amount indemnified under the Alteration Indemnity and the amount guaranteed under any Qualified
Guaranties, in the aggregate, at any time exceed $40,000,000.00.

     (b) In the event that that Borrower delivers a Qualified Letter of Credit for all or any part
of the Goldman Reserve Funds and the Wachovia Reserve Funds, Borrower shall, within 10 days
following the Borrower’s receipt of written notice from Lender that such Letter of Credit has
ceased to be a Qualified Letter of Credit, either make a deposit into the Rollover Reserve Account
in an amount equal to the amount that would then be required to be held in such account had such
letter of credit not been posted (and thereafter continue to make monthly
deposits as provided herein), in which event such letter of credit delivered to Lender will be
returned to Borrower, or deliver to Lender a Qualified Letter of Credit (in each case subject to
the requirements set forth in this Section 6.5.1).

-66-

 

     (c) In the event the terms of the Goldman Lease and the Wachovia Lease are extended pursuant
to the terms thereof (or replacement Leases are entered into in accordance with the terms of this
Agreement) with respect to all or any portion of the Goldman Space and the Wachovia Space,
respectively, the aggregate amount of Goldman Reserve Funds and/or the Wachovia Reserve Funds
required to be deposited by Borrower hereunder shall be reduced on a pro-rata basis by an amount
equal to the Goldman Space and/or Wachovia Space re-let; provided that, with respect to any
extension of the Goldman Lease or Wachovia Lease or any new Lease(s) of all or any portion of the
Goldman Space and/or Wachovia Space, the portion of the Goldman Reserve Funds and/or the Wachovia
Reserve Funds, allocable to such space shall be disbursed to Borrower at the written request of
Borrower in accordance with Section 6.5.2 below in respect of leasing commissions and
tenant improvement costs incurred by Borrower in connection with extension of the Goldman Lease or
Wachovia Lease or any such replacement Lease(s) entered into in accordance with the terms hereof in
respect of the applicable space provided no Event of Default is continuing. At such time as all of
the Goldman Space and Wachovia Space have been so re-let, provided no Event of Default has occurred
and is continuing, the balance of the Goldman Reserve Funds and Wachovia Reserve Funds, as
applicable, together with interest thereon, shall be returned to Borrower and any Qualified Letter
of Credit and/or Qualified Guaranty with respect to such Reserves shall be cancelled and/or
terminated and returned to Borrower.

     (d) If (i) a Major Lease is terminated in whole or in part (whether by buy out, cancellation,
default, reduction or otherwise) or any space demised thereunder is surrendered, and Borrower
receives any payment, fee or penalty in respect thereof (a “Termination Fee”), then
Borrower shall promptly cause such Termination Fee to be deposited into the Rollover Reserve
Account. Provided no Event of Default is continuing, Lender shall disburse each
Termination Fee (to the extent reserved in the Rollover Reserve Account) to Borrower at the written
request of Borrower in accordance with Section 6.5.2 below in respect of leasing
commissions and tenant improvement costs incurred by Borrower in connection with a Lease entered
into in accordance with the terms hereof and, provided no Event of Default has occurred and
is continuing, the remainder of such Termination Fee, if any, shall be remitted to Borrower after
Borrower has entered into Leases demising space at the Property having a square footage equal to or
greater than the square footage demised under the terminated Major Lease.

     6.5.2 Release of Rollover Funds. Lender shall disburse to Borrower the Rollover Funds
upon satisfaction by Borrower of each of the following conditions: (a) Borrower shall submit a
request for payment to Lender at least ten (10) days prior to the date on which Borrower requests
such payment be made and specifies the tenant improvement costs and leasing commissions to be paid,
(b) on the date such request is received by Lender and on the date such payment is to be made, no
Event of Default shall exist and remain uncured, (c) if such Lease is subject to Lender’s approval,
Lender shall have reviewed and approved the Lease in accordance with the terms hereof in respect of
which Borrower is obligated to pay or reimburse certain tenant improvement costs and leasing
commissions, (d) if such Lease is subject to Lender’s approval, Lender shall have received
and approved (which approval will not be unreasonably withheld) a budget for tenant improvement
costs and a schedule of leasing commissions payments and the requested disbursement will be used to
pay all or a portion of such costs and payments, (e) Lender shall have received an Officer’s
Certificate (i) stating that the tenant improvements (or applicable portion thereof) at the
Property to be funded by the requested

-67-

 

disbursement have been or, subject to clause (iii)
below, performed, in good and workmanlike manner and in accordance with all applicable federal,
state and local laws, rules and regulations, such Officer’s Certificate to be accompanied by a copy
of any license, permit or other approval by any Governmental Authority required in connection with
such tenant improvements or leasing commissions, as applicable, (ii) identifying each Person that
supplied materials or labor in connection with the tenant improvements to be funded by the
requested disbursement, and (iii) stating that each such Person has been paid in full or will be
paid in full upon such disbursement for work completed as of the date identified in such
certificate, or in the event that the cost of the tenant improvements to be funded by the requested
disbursement is in excess of $250,000 and the underlying contract requires payment before such
tenants improvements are fully completed, stating that such Person has been paid in full or will be
paid in full for the work performed upon such disbursement for work completed as of the date
identified in such certificate, such Officer’s Certificate to be accompanied by lien waivers or
other evidence of payment satisfactory to Lender, (f) at Lender’s option, if the cost of any
individual disbursement exceeds One Million Dollars ($1,000,000), a title search for the Property
indicating that the Property is free from all Liens, claims and other encumbrances not previously
approved by Lender, (g) as a condition to the final disbursement with respect to a particular
Lease, Lender shall have received an estoppel certificate from the applicable tenant stating that
(i) all required work is complete and refunds or reimbursements are due Tenant pursuant to its
Lease and (ii) such tenant is in occupancy or has taken possession of the demised premises, and (h)
Lender shall have received such other evidence as Lender shall reasonably request that the tenant
improvements at the Property to be funded by the requested disbursement have been completed and are
paid for or will be paid upon such disbursement to Borrower. Lender shall not be required to
disburse Rollover Funds more frequently than once each calendar month unless such requested
disbursement is in an amount greater than the Minimum Disbursement Amount (or a lesser amount if
the total amount of Rollover Funds is less than the Minimum Disbursement Amount, in which case only
one disbursement of the amount remaining in the account shall be made).

     Section 6.6 Unfunded Obligations Account. (a) On the Closing Date, Borrower has
deposited with Lender the sum of Fourteen Million Nine Hundred Twenty-Six Thousand Four Hundred
Eighty-Seven and 50/100 Dollars ($14,926,487.50) for the purpose of reserving an amount in respect
of Unfunded Obligations more particularly desirable on Schedule VI hereto required to be
funded by Borrower with respect to the payment or performance of tenant improvements under that
certain Lease dated as of September 16, 1994 with Fried, Frank, Harris, Shriver and Jacobson (the
“Fried Frank Lease”) and that certain Lease dated as of August 22, 2005 with Benfield
Holdings Inc. (the “Benfield Lease”). Amounts so deposited shall hereinafter be referred
to as Borrower’s “Unfunded Obligations Funds” and the account in which such amounts are
held shall hereinafter be referred to as Borrower’s “Unfunded Obligations Account”. Upon
Borrower’s satisfactory performance and completion of the Unfunded Obligations, provided no Event
of Default has
occurred and is continuing, the balance of the Unfunded Obligations Funds, together with
interest thereon, shall be returned to Borrower.

     (b) Borrower shall perform the Unfunded Obligations, in a diligent, workmanlike manner, if
applicable, and shall complete the same within the respective time periods set forth in the Fried
Frank Lease and the Benfield Lease, as applicable. Within five (5) Business Days following the
request of Borrower at any time that no Event of Default is

-68-

 

continuing (but not more often than
once per calendar month), Lender shall cause disbursements from the Unfunded Obligations Account to
pay (or, if applicable, to reimburse Borrower) for reasonable costs and expenses incurred in the
performance of Unfunded Obligations, provided, that:

     (i) To the extent required under the Fried Frank Lease and the Benfield Lease, as
applicable, Borrower shall deliver to Lender invoices evidencing the costs for such
disbursements;

     (ii) Borrower shall deliver to Lender an Officer’s Certificate confirming that the
amounts requested are due and payable under the Fried Frank Lease and/or the Benfield Lease,
as applicable; and

     (iii) Lender may condition the making of a requested disbursement on (1) reasonable
evidence establishing that Borrower has applied any amounts previously received by it in
accordance with this Section for the expenses to which specific draws made hereunder relate
and (2) to the extent required under the Fried Frank Lease or Benfield Lease, as applicable,
receipt of partial lien releases and waivers from any contractors, subcontractors and others
with respect to amounts for which disbursements have previously been made by Lender under
this Section 6.6.

     Section 6.7 Release of Reserve Funds upon Termination of Cash Sweep Period. Upon the
occurrence of a Cash Sweep Cure, Lender shall disburse to Borrower the Tax Fund, Insurance Funds
and the Capital Expenditure Funds, the Rollover Funds (other than the Goldman Reserve Funds and the
Wachovia Reserve Funds) and any other amounts then remaining on deposit in the Accounts (as defined
in the Cash Management Agreement).

     Section 6.8 Security Interest in Reserve Funds.

     6.8.1 Grant of Security Interest. Borrower hereby pledges to Lender, and grants a
security interest in, any and all monies now or hereafter deposited in the Reserve Funds as
additional security for the payment of the Loan. The Reserve Funds shall be held in Lender’s name
for the benefit of Borrower, shall be assigned the federal tax identification number of Borrower,
and may be commingled with any of Lender’s other funds then being held by the Lender or Servicer.
The Reserve Funds shall be held in an interest-bearing Eligible Account in Permitted Investments in
accordance with the terms of this Agreement and, during a Cash Sweep Period, pursuant to the
provisions of the Cash
Management Agreement. Borrower may direct the investment of the Reserve Funds, provided that
no Event of Default has occurred and is continuing. Upon the occurrence of an Event of Default,
Lender may apply any sums then on deposit in the Reserve Funds to the payment of the Loan in any
order in its sole discretion, provided, that, if any Capital Expenditure Funds have not
been otherwise applied to amounts payable under the Loan Documents, Borrower shall be entitled to
obtain disbursements thereof for life safety purposes to the extent provided in Section
6.4.2. Until expended or applied as above provided, the Reserve Funds shall constitute
additional security for the Loan. Lender shall have no obligation to release any of the Reserve
Funds while any Event of Default then exists.

-69-

 

     6.8.2 Income Taxes. Interest shall accrue on the Reserve Funds for the benefit and
account of Borrower. Borrower shall report on its federal, state and local income tax returns all
interest or income earned on the applicable Reserve Funds.

     6.8.3 Prohibition Against Further Encumbrance. Borrower shall not, without the prior
consent of Lender, further pledge, assign or grant any security interest in the Reserve Funds or
permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be filed with respect
thereto.

ARTICLE VII

PROPERTY MANAGEMENT.

     Section 7.1 The Management Agreement. (a) Borrower represents, warrants and covenants
to Lender that, as of the date hereof, (i) the Property is managed by Borrower and no other Person,
(ii) there exists no management or other agreement pursuant to which the Property or any portion
thereof is managed, and (iii) any individuals engaged in the management of the Property are (and at
all times during which Borrower shall be the Manager shall continue to be) the direct employees or
consultants of an Affiliate of Borrower and are directly compensated for their services by
Borrower.

     (b) Borrower shall cause the Property to be managed in accordance with any Management
Agreement; provided, that, at all times during which Borrower shall be the Manager,
Borrower shall manage the Property in a manner consistent with other prudent owners of real estate
similar to the Property and in accordance with the terms and provisions of this Agreement.
Borrower shall (i) diligently perform and observe all of the terms, covenants and conditions of any
Management Agreement on the part of Borrower to be performed and observed, (ii) promptly notify
Lender of any notice to Borrower of any default by Borrower in the performance or observance of any
of the terms, covenants or conditions of any Management Agreement on the part of Borrower to be
performed and observed, and (iii) promptly deliver to Lender a copy of each financial statement,
business plan, capital expenditures plan, report and
estimate received by it under any Management Agreement as it relates to the Property. If
Borrower shall default in the performance or observance of any material term, covenant or condition
of any Management Agreement on the part of Borrower to be performed or observed (beyond the
expiration of any applicable notice and/or grace periods), then, without limiting Lender’s other
rights or remedies under this Agreement or the other Loan Documents, and without waiving or
releasing Borrower from any of its obligations hereunder or under such Management Agreement, Lender
shall have the right, but shall be under no obligation, to pay any sums and to perform any act as
may be appropriate to cause all the material terms, covenants and conditions of such Management
Agreement on the part of Borrower to be performed or observed.

     Section 7.2 Prohibition Against Termination or Modification. Borrower shall not
surrender, terminate, cancel, modify, renew, amend or extend any Management Agreement or cause or
consent to the surrender, termination, cancellation, modification, renewal amendment or extension
(unless such renewal or extension is commercially reasonably), or enter into any

-70-

 

other agreement
relating to the management or operation of the Property with Manager or any other Person, or
consent to the assignment by the Manager of its interest under any Management Agreement, in each
case without the express consent of Lender, which consent shall not be unreasonably withheld;
provided, however, (i) with respect to a new manager, such new manager shall be a
Qualified Manager (and Borrower shall have satisfied each of the conditions set forth in the
definition of Qualified Manager which are applicable to such new manager, i.e., delivery of a
Rating Agency Confirmation and/or a new or updated Insolvency Opinion, as applicable), and (ii)
with respect to a new management agreement, Lender’s consent to such new management agreement may
be conditioned upon Borrower delivering a Rating Agency Confirmation as to such new management
agreement if a Securitization shall have occurred. If at any time Lender consents to the
appointment of a new manager (except in the case where such new manager is Borrower), such new
manager and Borrower shall, as a condition of Lender’s consent, execute an Assignment of Management
Agreement.

     Section 7.3 Replacement of Manager. In the event that the Property is managed by a
Manager after the date hereof, Lender shall have the right to require Borrower to replace such
Manager with a Person which is not an Affiliate of, but is chosen by, Borrower and approved by
Lender upon the occurrence of any one or more of the following events: (a) at any time following
the occurrence of and during the continuance of a monetary Event of Default, (b) a Bankruptcy
Action with respect to the Manager and/or (c) if Manager (who is not a Trizec Affiliate) shall be
in default under the Management Agreement beyond any applicable notice and cure period.

ARTICLE VIII

TRANSFERS

     Section 8.1 Transfer or Encumbrance of Property. (a) Without the prior written consent of Lender, neither Borrower nor any other Person
having an ownership or beneficial interest in Borrower shall (i) directly or indirectly sell,
transfer, convey, mortgage, pledge, or assign the Property, any part thereof or any interest
therein (including any partnership or any other ownership interest in Borrower); (ii) further
encumber, alienate, grant a Lien or grant any other interest in the Property or any part thereof
(including any partnership or other ownership interest in Borrower), whether voluntarily or
involuntarily; or (iii) enter into any easement or other agreement granting rights in or
restricting the use or development of the Property.

     (b) As used in this Article VIII, “transfer” shall include (i) an installment sales
agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid
in installments; (ii) an agreement by Borrower leasing all or a substantial part of the Property
for other than actual occupancy by a space tenant thereunder or a sale, assignment or other
transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to
any Leases or any Rents; (iii) if Borrower or any general partner or managing member of Borrower is
a corporation, the voluntary or involuntary sale, conveyance or transfer of such corporation’s
stock (or the stock of any corporation directly or indirectly Controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock such that such
corporation’s stock shall be vested in a party or parties who are not now stockholders or any
change in the Control of

-71-

 

such corporation; and (iv) if Borrower or any general partner or managing
member of Borrower is a limited or general partnership, joint venture or limited liability company,
the change, removal, resignation or addition of a general partner, managing partner, limited
partner, joint venturer, managing member or member or the transfer of the partnership interest of
any general partner, managing partner or limited partner or the transfer of the interest of any
joint venture or member.

            (c) Lender shall not be required to demonstrate any actual impairment of its security or any
increased risk of default hereunder in order to declare the Debt immediately due and payable upon
Borrower’s sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Property
without Lender’s consent. This provision shall apply to every sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Property regardless of whether voluntary or not,
or whether or not Lender has consented to any previous sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Property.

            (d) Lender’s consent to one sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Property shall not be deemed to be a waiver of Lender’s right to require such
consent to any future occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Property made in contravention of this paragraph shall be null and void
and of no force and effect.

            (e) Borrower agrees to bear and shall pay or reimburse Lender on demand for all reasonable
expenses (including, without limitation, reasonable attorneys’ fees and disbursements, title search
costs and title insurance endorsement premiums) incurred by Lender in connection with the review,
approval and documentation of any such sale, conveyance, alienation, mortgage, encumbrance, pledge
or transfer.

            (f) Lender shall not withhold its consent to the sale or transfer of the entire Property;
provided that the following conditions are satisfied as reasonably determined by Lender:

     (i) no Event of Default or material Default shall have occurred and remain uncured;

     (ii) payment of an assumption fee of $100,000;

     (iii) the proposed transferee (the “Transferee”) is a Permitted Transferee;

     (iv) after such conveyance of the Property, any Manager shall be a Qualified Manager;

     (v) after a Securitization, Lender shall have received a Rating Agency Confirmation as
to such transfer;

     (vi) Lender shall have received evidence satisfactory to it (which shall include a
legal non-consolidation opinion acceptable to Lender) that the single purpose nature and
bankruptcy remoteness of Borrower its shareholders, partners, or members, as the

-72-

 

case may
be, following such transfers are in accordance with the standards of the Rating Agencies;

     (vii) the Transferee shall have executed and delivered to Lender an assumption
agreement in form and substance acceptable to Lender in its reasonable discretion,
evidencing such Transferee’s agreement to assume Borrower’s obligations under, abide and be
bound by the terms of this Agreement, the Note, the Mortgage and the other Loan Documents
after the date of such conveyance, together with such legal opinions, Officer’s
Certificates, documents and title insurance endorsements as may be reasonably requested by
Lender; and

     (viii) Lender shall have received on or prior to the date of the sale or transfer (A) a
rating confirmation fee for each of the Rating Agencies delivering a confirmation pursuant
to clause (v) above, which confirmation fees shall be equal to the then customary
fees charged by each applicable Rating Agency for such a confirmation and (B) the payment of
all reasonable third party costs and expenses actually incurred by Lender and Servicer and
all costs and expenses of the Rating Agencies in connection with such assumption.

            Upon satisfaction of each of the conditions set forth in subparagraphs (f)(i)-(viii) above,
Lender shall release Borrower from any liability or obligation under the Loan Documents which
arises from any act, omission or event that occurs from and after the date of the conveyance of the
Property to a Transferee.

            Section 8.2 Transfer of Equity Interests. Notwithstanding the restrictions on transfers set forth in Section 8.1(a) above,
the following transfers of ownership interests in the Borrower shall not be deemed to be a
violation of such restrictions on transfers (each of the following is a “Permitted
Transfer”):

            (a) the transfer of the direct or indirect ownership interests in Borrower to a Permitted
Transferee, provided, that, the following conditions are satisfied:

     (i) no Event of Default shall have occurred and be continuing;

     (ii) if, after giving effect to such proposed transfer and all prior transfers, more
than forty-nine percent (49%) in the aggregate of direct or indirect interests in Borrower
are owned by any Person and/or its Affiliates that owned less than a forty-nine percent
(49%) direct or indirect interest in Borrower as of the date of this Agreement, Lender
receives a non-consolidation opinion reasonably acceptable to Lender and acceptable to the
Rating Agencies in their sole discretion;

     (iii) such transfer shall not affect the single purpose, bankruptcy remote nature of
Borrower as required pursuant to this Agreement and in its organizational documents;

     (iv) Borrower shall have paid all reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable and actual attorney’s fees) incurred by Lender,
Servicer or the Rating Agencies in connection with such transfer; and

-73-

 

     (v) following such transfer, (A) Borrower continues to be Controlled directly or
indirectly by a Permitted Transferee and (B) the Property shall continue to be managed by a
Qualified Manager; or

            (b) any transfer not otherwise permitted pursuant to clause (a) above of the direct or
indirect ownership interests in Borrower to any Person, provided, that, the following
conditions are satisfied:

     (i) no Event of Default shall have occurred and be continuing; and

     (ii) if, after giving effect to such proposed transfer and all prior transfers, more
than forty-nine percent (49%) in the aggregate of direct or indirect interests in Borrower
are owned by any Person and/or its Affiliates that owned less than a forty-nine percent
(49%) direct or indirect interest in Borrower as of the date of this Agreement, Lender
receives a non-consolidation opinion reasonably acceptable to Lender and acceptable to the
Rating Agencies in their sole discretion; and

     (iii) such transfer shall not affect the single purpose, bankruptcy remote nature of
Borrower as required hereunder and in its organizational documents; and

     (iv) Borrower shall have paid all reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable and actual attorney’s fees) incurred by Lender,
Servicer and the Rating Agencies in connection with such transfer; and

     (v) following such transfer, (A) Borrower continues to be Controlled directly or
indirectly by a Permitted Transferee (provided that Specified Decisions may be
subject to customary approval by a Permitted Transferee if the direct or indirect ownership
interests in Borrower are being transferred to a Permitted Transferee), (B) an aggregate of
50.1% or more of the interests in Borrower are owned directly or indirectly by a Permitted
Transferee and (C) the Property shall continue to be managed by a Qualified Manager; or

            (c) Transfers of direct or indirect interests in any Qualified Equity Holder shall be
permitted.

ARTICLE IX

SALE AND SECURITIZATION OF MORTGAGE

            Section 9.1 Sale of Mortgage and Securitization. (a) Lender shall have the right (i)
to sell or otherwise transfer the Loan or any portion thereof as a whole loan, (ii) to sell
participation interests in the Loan or (iii) to securitize the Loan or any portion thereof in a
single asset securitization or a pooled loan securitization. (The transactions referred to in
clauses (i), (ii) and (iii) shall hereinafter be referred to collectively
as “Secondary Market Transactions” and the transaction referred to in clause (iii)
shall hereinafter be referred to as a “Securitization”. Any certificates, notes or other
securities issued in connection with a Securitization are hereinafter referred to as
“Securities”).

-74-

 

            (b) If requested by Lender, Borrower shall use commercially reasonable, good faith efforts to
assist Lender in satisfying the market standards to which Lender customarily adheres or which may
be reasonably required in the marketplace or by the Rating Agencies in connection with any
Secondary Market Transactions, including, without limitation, to:

     (i) (A) provide updated financial and other information with respect to the Property,
the business operated at the Property, Borrower and the Manager (if any), (B) provide
updated budgets relating to the Property and (C) at Lender’s expense, provide updated
appraisals, market studies, environmental reviews (Phase I’s and, if appropriate, Phase
II’s), property condition reports and other due diligence investigations of the Property
(the “Updated Information”), together, if customary, with appropriate verification
of the Updated Information through letters of auditors or opinions of counsel acceptable to
Lender and the Rating Agencies;

     (ii) provide opinions of counsel, at Lender’s expense, which may be relied upon by
Lender, the Rating Agencies and their respective counsel, agents and representatives, as to
non-consolidation, fraudulent conveyance, and “true sale” or any other opinion customary in
Secondary Market Transactions or required by the Rating Agencies with respect to the
Property and Borrower and Affiliates, which counsel and opinions shall be satisfactory to
Lender and the Rating Agencies;

     (iii) provide updated, as of the closing date of the Secondary Market Transaction,
representations and warranties made in the Loan Documents and such additional
representations and warranties as the Rating Agencies may require;

     (iv) execute such amendments to the Loan Documents and Borrower’s organizational
documents reasonably requested by Lender, including, without limitation, amending the
Monthly Payment Date, the execution of one or more replacement loan agreements, as may be
requested by Lender or the Rating Agencies to effect the Securitization and/or deliver one
or more new component notes to replace the original note or modify the original note to
reflect multiple components of the Loan (and such new notes or modified note shall have the
same weighted average coupon and amortization of the original note, but such new notes or
modified note may change the interest rate, Monthly Payment Date and amortization of the
Loan after the occurrence of an Event of Default), and modify the Cash Management Agreement
with respect to the newly created components such that the pricing and marketability of the
Securities and the size of each class of Securities and the rating assigned to each such
class by the Rating Agencies shall provide the most favorable rating levels and achieve the
optimum rating levels for the Loan; provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or amendment would
(A) change the interest rate, the stated maturity or the amortization of principal except as
set forth above, (B) modify or amend any other material economic term of the Loan or (C)
otherwise have a material adverse effect on any of Borrower’s rights and obligations under
the Loan Documents; and

     (v) attend management meetings and conduct tours of the Property.

-75-

 

     (c) If, at the time one or more Disclosure Documents are being prepared for a Securitization,
Lender expects that Borrower alone or Borrower and one or more affiliates of Borrower collectively,
or the Property alone or the Property and any other parcel(s) of real property, together with
improvements thereon and personal property related thereto, that is “related”, within the meaning
of the definition of Significant Obligor, to the Property (a “Related Property”)
collectively, will be a Significant Obligor, Borrower shall furnish to Lender upon request (i) the
selected financial data or, if applicable, net operating income, required under Item 1112(b)(1) of
Regulation AB and meeting the requirements thereof, if Lender reasonably expects that the principal
amount of the Loan, together with any loans made to an affiliate of Borrower or secured by a
Related Property that is included in a securitization with the Loan (a “Related Loan”), as
of the cut-off date for such securitization may, or if the principal amount of the Loan together
with any Related Loans as of the cut-off date for such securitization does, equal or exceed ten
percent (10%) (but less than twenty percent (20%)) of the aggregate principal amount of all
mortgage loans included or expected to be included, as applicable, in the securitization or (ii)
the financial statements required under Item 1112(b)(2) of Regulation AB and meeting the
requirements thereof, if Lender reasonably expects that the principal amount of the Loan together
with any Related Loans as of the cut-off date for such securitization may, or if the principal
amount of the Loan together with any Related Loans as of the cut-off date for such securitization
does, equal or exceed twenty percent (20%) of the aggregate principal amount of all mortgage loans
included or expected to be included, as applicable, in the securitization. Such financial data or
financial statements shall be furnished to Lender (A) within thirty (30) Business Days
after notice from Lender in connection with the preparation of Disclosure Documents for the
securitization, (B) not later than sixty (60) days after the end of each fiscal quarter of Borrower
and (C) not later than ninety (90) days after the end of each fiscal year of Borrower; provided,
however, that Borrower shall not be obligated to furnish financial data or financial statements
pursuant to clauses (B) or (C) of this sentence with respect to any period for which a filing
pursuant to the Securities Exchange Act of 1934 in connection with or relating to the
securitization (an “Exchange Act Filing”) is not required. As used herein, “Regulation AB”
shall mean Regulation AB under the Securities Act of 1933 and the Securities Exchange Act of 1934
(as amended). As used herein, “Disclosure Document” shall mean a prospectus, prospectus
supplement, private placement memorandum, or similar offering memorandum or offering circular, in
each case in preliminary or final form, used to offer securities in connection with a
securitization. As used herein, “Significant Obligor” shall have the meaning set forth in Item
1101(k) of Regulation AB. Lender shall use commercially reasonable efforts in connection with a
Securitization of all or part of the Loan so that Borrower may avoid compliance with Regulation AB.

     (d) If requested by Lender, Borrower shall furnish, or shall cause the applicable tenant to
furnish, to Lender financial data and/or financial statements in accordance with Regulation AB (as
defined above) for any tenant of any Property if, in connection with a securitization, Lender
expects there to be, with respect to such tenant or group of affiliated tenants, a concentration
within all of the mortgage loans included or expected to be included, as applicable, in such
securitization such that such tenant or group of affiliated tenants would constitute a Significant
Obligor (as defined above); provided, however, that in the event the related lease does not require
the related tenant to provide the foregoing information, Borrower shall only be required to use
commercially reasonable efforts to cause the applicable tenant to furnish such information.

-76-

 

     (e) At such time (i) the entire principal balance of the Loan has been placed into one or more
Securitizations, and (ii) no reports are required to be filed under the Securities Exchange Act of
1934 with respect to any such Securitization that would require provision of any of the financial
statements identified in Section 9.1 (c) and (d) (which time is anticipated by Lender to occur
following the end of the fiscal year in which the last such Securitization occurs and the provision
of the financial statements required by Section 9.1 (c) and (d) for such fiscal year), Borrower
shall no longer be required to provide the financial statements required by this Section 9.1 (c)
and (d).

     (f) Lender shall reimburse Borrower for all of its reasonable costs and expenses up to an
amount not to exceed $5,000 incurred in connection with its cooperation with such Lender pursuant
to this Section 9.1, Section 9.3 and Section 11.29 (except that such Lender
shall have no obligation to reimburse Borrower with respect to any of the foregoing which Borrower
is otherwise required to perform and/or deliver at its cost under another provision of this
Agreement).

     Section 9.2 Securitization Indemnification. (a) Borrower understands that information
provided to Lender by Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection
with the Securitization, including, without limitation, an offering circular, a prospectus,
prospectus supplement, private placement memorandum or other offering document (each, a
“Disclosure Document”) and may also be included in filings with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or
the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and may be made
available to investors or prospective investors in the Securities, the Rating Agencies, and service
providers relating to the Securitization.

     (b) Borrower shall provide in connection with each of (i) a preliminary and a final private
placement memorandum or (ii) a preliminary and final prospectus or prospectus supplement, as
applicable, an agreement (A) certifying that Borrower has examined such Disclosure Documents
specified by Lender and that each such Disclosure Document, as it relates to Borrower, Borrower
Affiliates, the Property and Manager (if any), does not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements made, in the light
of the circumstances under which they were made, not misleading, (B) indemnifying Lender (and for
purposes of this Section 9.2, Lender hereunder shall include its officers and directors),
the Affiliate of Lender that has filed the registration statement relating to the Securitization
(the “Registration Statement”), each of its directors, each of its officers who have signed
the Registration Statement and each Person that Controls the Affiliate within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Lender
Group”), and Lender, and any other placement agent or underwriter with respect to the
Securitization, each of their respective directors and each Person who Controls Lender or any other
placement agent or underwriter within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively, the “Underwriter Group”) for any losses, claims,
damages or liabilities (collectively, the “Liabilities”) to which Lender, the Lender Group
or the Underwriter Group may become subject insofar as the Liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact contained in such
sections or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated in such sections or necessary in order to make the statements
in such

-77-

 

sections, in light of the circumstances under which they were made, not misleading and (C)
agreeing to reimburse Lender, the Lender Group and/or the Underwriter Group for any legal or other
expenses reasonably incurred by Lender, the Lender Group and the Underwriter Group in connection
with investigating or defending the Liabilities; provided, however, that Borrower
will be liable in any such case under clauses (B) or (C) above only to the extent
that any such loss claim, damage or liability arises out of or is based upon any such untrue
statement or omission made therein in reliance upon and in conformity with information furnished to
Lender by or on behalf of Borrower in connection with the preparation of the Disclosure Document or
in connection with the underwriting or closing of the Loan, including, without limitation,
financial statements of Borrower, operating statements and rent rolls with respect to the Property.
This indemnity agreement will be in addition to any liability which Borrower may otherwise have.

     (c) In connection with Exchange Act Filings, Borrower shall (i) indemnify Lender, the Lender
Group and the Underwriter Group for Liabilities to which Lender, the Lender Group or the
Underwriter Group may become subject insofar as the Liabilities arise out of or are based upon the
omission or alleged omission to state in the Disclosure Document relating to Borrower, the
Property, the Manager (if any), the Principal or the Trizec Affiliates a material fact required to
be stated in the Disclosure Document in order to make the statements in the
Disclosure Document, in light of the circumstances under which they were made, not misleading
and (ii) reimburse Lender, the Lender Group or the Underwriter Group for any legal or other
expenses reasonably incurred by Lender, the Lender Group or the Underwriter Group in connection
with defending or investigating the Liabilities; provided, however, that Borrower
will be liable in any such case above only to the extent that any such Liability arises out of, or
is based upon, any such untrue statement or omission made in the Disclosure Document in reliance
upon, and in conformity with, information furnished to Lender by or at the direction of Borrower,
any Affiliate of Borrower, any Trizec Affiliate pursuant to the Loan Documents, whether in
connection with the preparation of a Disclosure Document, or in connection with the underwriting or
closing of the Loan or otherwise, including, without limitation, the financial statements of
Borrower and THL and the operating statements and rent rolls with respect to the Property.

     (d) Promptly after receipt by an indemnified party under this Section 9.2 of notice of
the commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 9.2, notify the indemnifying party
in writing of the commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying party may have to any
indemnified party hereunder except to the extent that failure to notify causes prejudice to the
indemnifying party. In the event that any action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and, to the extent that
it (or they) may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the defense thereof with
counsel satisfactory to such indemnified party. After notice from the indemnifying party to such
indemnified party under this Section 9.2, such indemnified party shall pay for any legal or
other expenses subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, if the
defendants in any such action include both the indemnified party and the

-78-

 

indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal defenses available to it
and/or other indemnified parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party at the cost of the indemnifying party. The indemnifying party
shall not be liable for the expenses of more than one separate counsel unless an indemnified party
shall have reasonably concluded that there may be legal defenses available to it that are different
from or additional to those available to another indemnified party.

     (e) In order to provide for just and equitable contribution in circumstances in which the
indemnity agreement provided for in Section 9.2(b) or (c) is for any reason held to
be unenforceable as to an indemnified party in respect of any losses, claims, damages or
liabilities (or action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 9.2(b) or (c), the indemnifying party shall contribute
to the amount paid or payable by the indemnified party as a result of such losses, claims, damages
or liabilities (or action in respect thereof); provided, however, that no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. In determining the amount
of contribution to which the respective parties are entitled, the following factors shall be
considered: (i) Lender’s and Borrower’s relative knowledge and access to information concerning
the matter with respect to which the claim was asserted; (ii) the opportunity to correct and
prevent any statement or omission; and (iii) any other equitable considerations appropriate in the
circumstances. Lender and Borrower hereby agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation.

     (f) The liabilities and obligations of both Borrower and Lender under this Section 9.2
shall survive the termination of this Agreement and the satisfaction and discharge of the Debt.

     Section 9.3 Mezzanine Loans. Notwithstanding the provisions of Article IX to
the contrary, Borrower covenants and agrees that after the Closing Date and prior to a
Securitization, Lender shall have the right to create one or more mezzanine loans (each, a “New
Mezzanine Loan”), to establish different interest rates and to reallocate the amortization, and
principal balances of the Loan and any New Mezzanine Loan amongst each other and to require the
payment of the Loan and any New Mezzanine Loan in such order of priority as may be designated by
Lender; provided, that in no event shall the weighted average spread and amortization of
the Loan and any New Mezzanine Loan following any such reallocation or modification change from the
weighted average spread and amortization for all in effect immediately preceding such reallocation,
modification or creation of any New Mezzanine Loan. Borrower shall execute and deliver such
documents as shall reasonably be required by Lender as promptly as possible under the circumstances
in connection with this Section 9.3, all in form and substance reasonably satisfactory to
Lender and the Rating Agencies, including, without limitation, in connection with the creation of
any New Mezzanine Loan, a promissory note and loan documents necessary to evidence such New
Mezzanine Loan, and Borrower shall execute such amendments to the Loan Documents as are necessary
in connection with the creation of such New Mezzanine Loan. In addition, Borrower shall cause the
formation of one or more special purpose, bankruptcy remote entities as required by Lender in order
to serve as the

-79-

 

borrower under any New Mezzanine Loan (each, a “New Mezzanine Borrower”)
and the applicable organizational documents of Borrower shall be amended and modified as necessary
or required in the formation of any New Mezzanine Borrower. Further, in connection with any New
Mezzanine Loan, Borrower shall deliver to Lender opinions of legal counsel with respect to due
execution, authority and enforceability of the New Mezzanine Loan and the Loan Documents, as
amended and an additional Insolvency Opinion for the Loan and a substantive non-consolidation
opinion with respect to any New Mezzanine Loan, each as reasonably acceptable to Lender,
prospective investors and/or the Rating Agencies.

ARTICLE X

DEFAULTS

     Section 10.1 Event of Default. (a) Each of the following events shall constitute an event of default hereunder (an
“Event of Default”):

     (i) if (A) any monthly installment of principal and/or interest due under the Note is
not paid when due or (B) the payment due on the Maturity Date is not paid when due or (C)
any other portion of the Debt is not paid when due and such non-payment continues for five
(5) days following notice to Borrower that the same is due and payable;

     (ii) if any of the Taxes or Other Charges are not paid when due subject, however, to
the provisions of Section 4.1.2;

     (iii) if the Policies are not kept in full force and effect;

     (iv) if Borrower breaches or permits or suffers a breach of Article 6 of the Mortgage
and same is not cured within five (5) Business Days after notice thereof from Lender;

     (v) if any representation or warranty made by Borrower herein or in any other Loan
Document, or in any report, certificate, financial statement or other instrument, agreement
or document furnished to Lender shall have been false or misleading in any material respect
as of the date the representation or warranty was made and same is not cured within five (5)
Business Days after notice thereof from Lender;

     (vi) if Borrower, any SPC Party or any Principal shall make an assignment for the
benefit of creditors;

     (vii) reserved;

     (viii) if a receiver, liquidator or trustee shall be appointed for Borrower or any
Principal or if Borrower or any Principal shall be adjudicated a bankrupt or insolvent, or
if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy
law, or any similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Borrower or any Principal, or if any proceeding for the dissolution or
liquidation of Borrower or any Principal shall be instituted; provided,

-80-

 

however, if such appointment, adjudication, petition or proceeding was involuntary
and not consented to by Borrower or any Principal, upon the same not being discharged,
stayed or dismissed within sixty (60) days or if an order for relief is entered;

     (ix) if Borrower attempts to assign its rights under this Agreement or any of the other
Loan Documents or any interest herein or therein in contravention of the Loan Documents;

     (x) a default under any agreement creating a Lien or encumbrance on the Property,
subject to Borrower’s right to contest such Lien or encumbrance in strict accordance with
the terms of the Loan Documents;

     (xi) if any of the assumptions contained in the Insolvency Opinion, or in any other
non-consolidation opinion delivered to Lender in connection with the Loan, or in
any other non-consolidation delivered subsequent to the closing of the Loan, is or
shall become untrue in any material respect; provided, however, such
assumption which has become untrue in such material respect (an “Untrue Material
Assumption”) shall not constitute an Event of Default in the event that (1) such Untrue
Material Assumption is not intentional, (2) such Untrue Material Assumption is immaterial,
(3) such Untrue Material Assumption shall be remedied within a timely manner and (4) within
fifteen (15) Business Days of the request of Lender, Borrower delivers to Lender an
additional Insolvency Opinion, or a modification of the Insolvency Opinion, to the effect
that such Untrue Material Assumption shall not in any way impair, negate or adversely change
the opinions rendered in the Insolvency Opinion, which opinion or modification and any
counsel delivering such opinion or modification shall be acceptable to Lender in its
reasonable discretion;

     (xii) if Borrower breaches any representation, warranty or covenant contained in
Section 3.1.24 hereof; provided, however, such violation or breach
shall not constitute an Event of Default in the event that (1) such violation or breach is
not intentional, (2) such violation or breach is immaterial, (3) such violation or breach
shall be remedied within a timely manner and (4) within fifteen (15) Business Days of the
request of Lender, Borrower delivers to Lender an additional Insolvency Opinion, or a
modification of the Insolvency Opinion, to the effect that such breach or violation shall
not in any way impair, negate or adversely change the opinions rendered in the Insolvency
Opinion, which opinion or modification and any counsel delivering such opinion or
modification shall be acceptable to Lender in its reasonable discretion;

     (xiii) if Borrower breaches any of the negative covenants contained in Section
4.2.10;

     (xiv) if Borrower or any owner of Borrower violates any of the covenants set forth in
Section 8.1 or 8.2 hereof and same is not cured within five (5) Business
Days after notice thereof from Lender; or

     (xv) if Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement or any other Loan Document not specified in

-81-

 

subsections (i) to (xiv) above, for ten (10) days after notice to Borrower
from Lender, in the case of any Default which can be cured by the payment of a sum of money,
or for thirty (30) days after notice from Lender in the case of any other Default;
provided, however, that if such non monetary Default is susceptible of cure
but cannot reasonably be cured within such thirty (30) day period and provided,
further, that Borrower shall have commenced to cure such Default within such thirty
(30) day period and thereafter diligently and expeditiously proceeds to cure the same, such
thirty (30) day period shall be extended for such time as is reasonably necessary for
Borrower in the exercise of due diligence to cure such Default, such additional period not
to exceed sixty (60) days.

            (b) Upon the occurrence of an Event of Default (other than an Event of Default described in
Section 10.1(a)(vi), (vii) or (viii) above) and at any time thereafter
Lender may, in addition to any other rights or remedies available to it pursuant to this Agreement
and the other Loan Documents or at law or in equity, take such action, without notice or demand,
that
Lender deems advisable to protect and enforce its rights against Borrower and in and to the
Property, including, without limitation, declaring the Debt to be immediately due and payable, and
Lender may enforce or avail itself of any or all rights or remedies provided in the Loan Documents
against Borrower and the Property, including, without limitation, all rights or remedies available
at law or in equity; and upon any Event of Default described in Section 10.1(a)(vi),
(vii) or (viii) above, the Debt and all other obligations of Borrower hereunder and
under the other Loan Documents shall immediately and automatically become due and payable, without
notice or demand, and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.

            Section 10.2 Remedies. (a) During the continuance of an Event of Default, all or any
one or more of the rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or
applicable to, Borrower or at law or in equity may be exercised by Lender at any time and from time
to time, whether or not all or any of the Debt shall be declared due and payable, and whether or
not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents with respect to the Property. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as Lender may determine
in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise
affecting the other rights and remedies of Lender permitted by law, equity or contract or as set
forth herein or in the other Loan Documents. Without limiting the generality of the foregoing, if
an Event of Default is continuing (i) Lender is not subject to any “one action” or “election of
remedies” law or rule, and (ii) all liens and other rights, remedies or privileges provided to
Lender shall remain in full force and effect until Lender has exhausted all of its remedies against
the Property and the Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.

            (b) Lender shall have the right from time to time to partially foreclose the Mortgage in any
manner and for any amounts secured by the Mortgage then due and payable as determined by Lender in
its sole discretion including, without limitation, the following

-82-

 

circumstances: (i) in the event
Borrower defaults beyond any applicable grace period in the payment of one or more scheduled
payments of principal and interest, Lender may foreclose the Mortgage to recover such delinquent
payments, or (ii) in the event Lender elects to accelerate less than the entire outstanding
principal balance of the Loan, Lender may foreclose the Mortgage to recover so much of the
principal balance of the Loan as Lender may accelerate and such other sums secured by the Mortgage
as Lender may elect. Notwithstanding one or more partial foreclosures, the Property shall remain
subject to the Mortgage to secure payment of sums secured by the Mortgage and not previously
recovered.

     (c) Lender shall have the right from time to time to sever the Note and the other Loan
Documents into one or more separate notes, mortgages and other security documents (the “Severed
Loan Documents”) in such denominations as Lender shall determine in its sole discretion for
purposes of evidencing and enforcing its rights and remedies provided hereunder.
Borrower shall execute and deliver to Lender from time to time, promptly after the request of
Lender, a severance agreement and such other documents as Lender shall request in order to effect
the severance described in the preceding sentence, all in form and substance reasonably
satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and
lawful attorney, coupled with an interest, in its name and stead to make and execute all documents
necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said
attorney shall do by virtue thereof; provided, however, Lender shall not make or
execute any such documents under such power until three (3) days after notice has been given to
Borrower by Lender of Lender’s intent to exercise its rights under such power. Except as may be
required in connection with a Securitization pursuant to Section 9.1 hereof, (i) Borrower
shall not be obligated to pay any costs or expenses incurred in connection with the preparation,
execution, recording or filing of the Severed Loan Documents, and (ii) the Severed Loan Documents
shall not contain any representations, warranties or covenants not contained in the Loan Documents
and any such representations and warranties contained in the Severed Loan Documents will be given
by Borrower only as of the Closing Date.

     (d) Any amounts recovered from the Property or any other collateral for the Loan after an
Event of Default may be applied by Lender toward the payment of any interest and/or principal of
the Loan and/or any other amounts due under the Loan Documents in such order, priority and
proportions as Lender in its sole discretion shall determine.

     Section 10.3 Right to Cure Defaults. After the occurrence of an Event of Default,
Lender may, but without any obligation to do so and without notice to or demand on Borrower and
without releasing Borrower from any obligation hereunder or being deemed to have cured any Event of
Default hereunder, make, do or perform any obligation of Borrower hereunder in such manner and to
such extent as Lender may deem necessary. Lender is authorized to enter upon the Property for such
purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the
Property for such purposes, and the cost and expense thereof (including reasonable attorneys’ fees
to the extent permitted by law), with interest as provided in this Section 10.3, shall
constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such
costs and expenses incurred by Lender in remedying such Event of Default or such failed payment or
act or in appearing in, defending, or bringing any action or proceeding shall bear interest at the
Default Rate, for the period after such cost or expense was incurred into the date of payment to
Lender. All such costs and expenses incurred

-83-

 

by Lender together with interest thereon calculated
at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by the
liens, claims and security interests provided to Lender under the Loan Documents and shall be
immediately due and payable upon demand by Lender therefore.

     Section 10.4 Remedies Cumulative. The rights, powers and remedies of Lender under
this Agreement shall be cumulative and not exclusive of any other right, power or remedy which
Lender may have against Borrower pursuant to this Agreement or the other Loan Documents, or
existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued
singly, concurrently or otherwise, at such time and in such order as Lender may determine in
Lender’s
sole discretion. No delay or omission to exercise any remedy, right or power accruing upon an
Event of Default shall impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time and as often as may
be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower shall
not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to
impair any remedy, right or power consequent thereon.

ARTICLE XI

MISCELLANEOUS

     Section 11.1 Successors and Assigns. All covenants, promises and agreements in this
Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.

     Section 11.2 Lender’s Discretion. Whenever pursuant to this Agreement Lender
exercises any right given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise
specifically herein provided) be in the sole discretion of Lender and shall be final and
conclusive. Prior to a Securitization, whenever pursuant to this Agreement the Rating Agencies are
given any right to approve or disapprove, or any arrangement or term is to be satisfactory to the
Rating Agencies, or the requirement for delivery of a Rating Agency Confirmation exists, the
decision of Lender (a) to approve or disapprove, (b) to decide whether arrangements or terms are
satisfactory or not satisfactory or (c) to determine whether it is reasonably likely that a Rating
Agency Confirmation would be issued, based upon Lender’s determination of Rating Agency criteria,
shall be substituted therefore.

     Section 11.3 Governing Law. (A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, AND MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE
NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES
AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED
HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE

-84-

 

GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT
LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, IT BEING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE
OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER
HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER
JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

     (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING
TO THIS AGREEMENT MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF
NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER AND LENDER WAIVE ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE
BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER AND
LENDER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

     CORPORATION SERVICE COMPANY

     80 STATE STREET

     ALBANY, NEW YORK 12207

     AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW
YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN
NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY
CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE
AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III)
SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT

-85-

 

CEASES TO HAVE AN OFFICE IN NEW
YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

     Section 11.4 Modification, Waiver in Writing. No modification, amendment, extension, discharge, termination or waiver of any provision of
this Agreement or of any other Loan Document, nor consent to any departure by Borrower therefrom,
shall in any event be effective unless the same shall be in a writing signed by the party against
whom enforcement is sought, and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no
notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in
the same, similar or other circumstances.

     Section 11.5 Delay Not a Waiver. Neither any failure nor any delay on the part of
Lender in insisting upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under any other Loan Document, shall
operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude
any other future exercise, or the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement or any other Loan Document, Lender shall not be deemed to have waived
any right either to require prompt payment when due of all other amounts due under this Agreement
or the other Loan Documents, or to declare a default for failure to effect prompt payment of any
such other amount. Lender shall have the right to waive or reduce any time periods that Lender is
entitled to under the Loan Documents in its sole and absolute discretion.

     Section 11.6 Notices. All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a “Notice”) required, permitted, or desired to be
given hereunder shall be in writing sent by telefax (with answer back acknowledged) or by
registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or
reputable overnight courier addressed to the party to be so notified at its address hereinafter set
forth, or to such other address as such party may hereafter specify in accordance with the
provisions of this Section 11.6. Any Notice shall be deemed to have been received: (a)
three (3) days after the date such Notice is mailed, (b) on the date of sending by telefax if sent
during business hours on a Business Day (otherwise on the next Business Day), (c) on the date of
delivery by hand if delivered during business hours on a Business Day (otherwise on the next
Business Day), and (d) on the next Business Day if sent by an overnight commercial courier, in each
case addressed to the parties as follows:

	 	 	 	 
	 	If to Goldman:

	 	Goldman Sachs Commercial Mortgage Capital
	 	 

	 	c/o Goldman Sachs & Co.
	 	 

	 	85 Broad Street
	 	 

	 	New York, NY 10004
	 	 

	 	Attention: J. Theodore Borter
	 	 

	 	Facsimile No.: (212) 346-3594

-86-

 

	 	 	 	 
	 	with a copy to:

	 	Cadwalader, Wickersham & Taft LLP
	 	 

	 	One World Financial Center
	 	 

	 	New York, New York 10281
	 	 

	 	Attention: Fredric L. Altschuler, Esq.
	 	 

	 	Facsimile No. (212) 504-6666
	 	 
	 	 
	 	If to Lehman:

	 	Lehman Brothers Bank FSB
	 	 

	 	1000 West Street, Suite 200
	 	 

	 	Wilmington, Delaware 19801
	 	 

	 	Attention: Jeffrey R. Peltier
	 	 

	 	Facsimile No.: (646) 758-3128
	 	 
	 	 
	 	with a copy to:

	 	Lehman Brothers Holdings Inc.
	 	 

	 	399 Park Avenue, 8th Floor
	 	 

	 	New York, New York 10022
	 	 

	 	Attention: Jeffrey R. Peltier
	 	 

	 	Facsimile No.: (646) 758-3128
	 	 
	 	 
	 	with a copy to:

	 	Cadwalader, Wickersham & Taft LLP
	 	 

	 	100 Maiden Lane
	 	 

	 	New York, New York 10038
	 	 

	 	Attention: Fredric L. Altschuler, Esq.
	 	 

	 	Facsimile No. (212) 504-6666
	 	 
	 	 
	 	If to Borrower:

	 	Trizechahn One NY Plaza, LLC
	 	 

	 	c/o Trizec Properties, Inc.
	 	 

	 	10 South Riverside Plaza, Suite 1100
	 	 

	 	Chicago, Illinois 60606
	 	 

	 	Attention: Finance Department
	 	 

	 	Facsimile No.: (866) 728-6454
	 	 
	 	 
	 	with a copy to:

	 	DLA Piper Rudnick Gray Cary US LLP
	 	 

	 	203 North LaSalle Street
	 	 

	 	Chicago, Illinois 60601
	 	 

	 	Attention: James L. Beard, Esq.
	 	 

	 	Facsimile No.: (312) 236-7516

     Section 11.7 Trial by Jury. BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR
ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE

-87-

 

ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE
A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

     Section 11.8 Headings. The Article and/or Section headings and the Table of Contents
in this Agreement are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

     Section 11.9 Severability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.

     Section 11.10 Preferences. Lender shall have the continuing and exclusive right to
apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of
Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of
such payment or proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such payment or proceeds
had not been received by Lender.

     Section 11.11 Waiver of Notice. Borrower shall not be entitled to any notices of any
nature whatsoever from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower
and except with respect to matters for which Borrower is not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right
to receive any notice from Lender with respect to any matter for which this Agreement or the other
Loan Documents do not specifically and expressly provide for the giving of notice by Lender to
Borrower.

     Section 11.12 Remedies of Borrower. In the event that a claim or adjudication is made
that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such agent, as the case may
be, has an obligation to act reasonably or promptly, neither Lender nor its agents shall be liable
for any monetary damages, and Borrower’s sole remedy shall be limited to commencing an action
seeking injunctive relief or declaratory judgment. Any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment.

     Section 11.13 Expenses; Indemnity. (a) Except as expressly provided herein, Borrower
shall pay or, if Borrower fails to pay, reimburse Lender upon receipt of notice from Lender, for
all reasonable out of pocket costs and expenses (including reasonable attorneys’ fees and
disbursements) actually incurred by Lender in connection with (i) Borrower’s ongoing performance of
and compliance with Borrower’s agreements and covenants contained in this Agreement and the other
Loan Documents on its part to be performed or complied with after the

-88-

 

Closing Date, including,
without limitation, confirming compliance with environmental and insurance requirements (but
expressly excluding Lender’s ordinary internal administrative costs and expenses and costs and
expenses incurred by Lender in the day-to-day administration of the Loan prior to the occurrence of
an Event of Default); (ii) Lender’s ongoing performance of and compliance with all agreements and
covenants contained in this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date (but expressly excluding Lender’s ordinary internal
administrative costs and expenses and costs and expenses incurred by Lender in the day-to-day
administration of the Loan prior to the occurrence of an Event of Default); (iii) the negotiation,
preparation, execution, delivery and administration of any consents, amendments, waivers or other
modifications to this Agreement and the other Loan Documents and any other documents or matters
requested by Borrower; (iv) the filing and recording fees and expenses, title insurance and
reasonable fees and expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred, in creating and perfecting the Liens in favor of Lender pursuant
to this Agreement and the other Loan Documents; (v) enforcing or preserving any rights, in response
to third party claims or the prosecuting or defending of any action or proceeding or other
litigation or otherwise, in each case against, under or affecting Borrower, this Agreement, the
other Loan Documents, the Property, or any other security given for the Loan; and (vi) enforcing
any obligations of or collecting any payments due from Borrower under this Agreement, the other
Loan Documents or with respect to the Property or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the nature of a “work
out” or of any insolvency or bankruptcy proceedings; provided, however, that
Borrower shall not be liable for the payment of any such costs and expenses to the extent the same
arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender. Any
costs due and payable to Lender may be paid to Lender pursuant to the Cash Management Agreement.

     (b) Borrower shall indemnify, defend and hold harmless Lender and its officers, directors,
agents, employees (and the successors and assigns of the foregoing) (the “Lender
Indemnitees”) from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel
for the Lender Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not the Lender Indemnitees shall be designated a
party thereto), that may be imposed on, incurred by, or asserted against the Lender Indemnitees in
any manner relating to or arising out of (i) any breach by Borrower of its
obligations under, or any material misrepresentation by Borrower contained in, this Agreement
or the other Loan Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Indemnified Liabilities”); provided, however, that
Borrower shall not have any obligation to the Lender Indemnitees hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or willful misconduct
of the Lender Indemnitees. To the extent that the undertaking to indemnify, defend and hold
harmless set forth in the preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the
Lender Indemnitees.

-89-

 

     Section 11.14 Schedules Incorporated. The Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set forth in the body
hereof.

     Section 11.15 Offsets, Counterclaims and Defenses. Any assignee of Lender’s interest
in and to this Agreement and the other Loan Documents shall take the same free and clear of all
offsets, counterclaims or defenses which are unrelated to such documents which Borrower may
otherwise have against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such
assignee upon such documents and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

     Section 11.16 No Joint Venture or Partnership; No Third Party Beneficiaries.
(a) Borrower and Lender intend that the relationships created hereunder and under the other
Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to
create a joint venture, partnership, tenancy in common, or joint tenancy relationship between
Borrower and Lender nor to grant Lender any interest in the Property other than that of mortgagee,
beneficiary or lender.

     (b) This Agreement and the other Loan Documents are solely for the benefit of Lender and
nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon
anyone other than Lender any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the obligations of Lender to
make the Loan hereunder are imposed solely and exclusively for the benefit of Lender and no other
Person shall have standing to require satisfaction of such conditions in accordance with their
terms or be entitled to assume that Lender will refuse to make the Loan 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 or all of which may be freely waived in whole or in part
by Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable to do so.

     Section 11.17 Publicity. All news releases, publicity or advertising by Borrower or its Affiliates through any media
intended to reach the general public which refers to the Loan Documents or the financing evidenced
by the Loan Documents, to Lender or any of its Affiliates shall be subject to the prior written
approval of Lender. All news releases, publicity or advertising by Lender or its Affiliates
through any media intended to reach the general public which refers to the Loan, the Property,
Borrower, any Trizec Affiliate shall be subject to the prior approval of Borrower (other than any
information and disclosure in connection with or in furtherance of any actual or proposed Secondary
Market Transaction, and other than any standard so-called “tombstone” announcements referring to
the financing evidenced by the Loan Documents).

     Section 11.18 Waiver of Marshalling of Assets. To the fullest extent permitted by
law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the
assets of Borrower, Borrower’s partners and others with interests in Borrower, and of the Property,
and shall not assert any right under any laws pertaining to the marshalling of assets, the

-90-

 

sale in
inverse order of alienation, homestead exemption, the administration of estates of decedents, or
any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Property for the collection of the Debt without any prior or different
resort for collection or of the right of Lender to the payment of the Debt out of the net proceeds
of the Property in preference to every other claimant whatsoever.

     Section 11.19 Waiver of Offsets/Defenses/Counterclaims. Borrower hereby waives the
right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding
brought against it by Lender or its agents or otherwise to offset any obligations to make the
payments required by the Loan Documents. No failure by Lender to perform any of its obligations
hereunder shall be a valid defense to, or result in any offset against, any payments which Borrower
is obligated to make under any of the Loan Documents.

     Section 11.20 Conflict; Construction of Documents; Reliance. In the event of any
conflict between the provisions of this Agreement and any of the other Loan Documents, the
provisions of this Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting and execution of the
Loan Documents and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that, with respect to
the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan
without relying in any manner on any statements, representations or recommendations of Lender or
any parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any of the Loan
Documents or any other agreements or instruments which govern the Loan by virtue of the ownership
by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of them may
acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or
remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and other real
estate transactions and investments which may be viewed as adverse to or competitive with the
business of Borrower or its Affiliates.

     Section 11.21 Brokers and Financial Advisors. Each of Borrower and Lender hereby
represents that it has dealt with no financial advisors, brokers, underwriters, placement agents,
agents or finders in connection with the transactions contemplated by this Agreement. Each of
Borrower and Lender shall indemnify, defend and hold the other party harmless from and against any
and all claims, liabilities, costs and expenses of any kind (including reasonable attorneys’ fees
and expenses actually incurred) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the transactions contemplated
herein. The provisions of this Section 11.21 shall survive the expiration and termination
of this Agreement and the payment of the Debt.

     Section 11.22 Exculpation. (a) Subject to the qualifications below, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the obligations contained
in the Note, this Agreement, the Mortgage or the other Loan Documents by any action or proceeding
wherein a money judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interest under the Note, this

-91-

 

Agreement, the Mortgage and the other Loan Documents, or in the Property, the Rents, or any other
collateral given to Lender pursuant to the Loan Documents; provided, however, that,
except as specifically provided herein, any judgment in any such action or proceeding shall be
enforceable against Borrower only to the extent of Borrower’s interest in the Property, in the
Rents, Net Proceeds and in any other collateral given to Lender, and Lender, by accepting the Note,
this Agreement, the Mortgage and the other Loan Documents, shall not sue for, seek or demand any
deficiency judgment against Borrower in any such action or proceeding under or by reason of or
under or in connection with the Note, this Agreement, the Mortgage or the other Loan Documents.
The provisions of this Section shall not, however, (a) constitute a waiver, release or impairment
of any obligation evidenced or secured by any of the Loan Documents; (b) impair the right of Lender
to name Borrower as a party defendant in any action or suit for foreclosure and sale under the
Mortgage; (c) affect the validity or enforceability of any guaranty made in connection with the
Loan or any of the rights and remedies of Lender thereunder; (d) impair the right of Lender to
obtain the appointment of a receiver; (e) impair the enforcement of the Assignment of Leases; (f)
constitute a prohibition against Lender to seek a deficiency judgment against Borrower in order to
fully realize the security granted by the Mortgage or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against the Property; or (g) constitute a
waiver of the right of Lender to enforce the liability and obligation of Borrower, by money
judgment or otherwise, to the extent of any loss, damage, cost, expense, liability, claim or other
obligation incurred by Lender (including attorneys’ fees and costs reasonably and actually
incurred) arising out of or in connection with and Borrower shall be personally liable for the
following:

     (i) fraud or intentional misrepresentation by Borrower or any guarantor in connection
with the Loan;

     (ii) the gross negligence or willful misconduct of Borrower;

     (iii) the breach of any representation, warranty, covenant or indemnification provision
in the Environmental Indemnity or in the Mortgage concerning environmental laws, hazardous
substances and asbestos and any indemnification of Lender with respect thereto in either
document;

     (iv) the misappropriation, removal or disposal of any portion of the Property in
violation of the terms of the Loan Documents;

     (v) the misapplication or conversion by Borrower of (A) any insurance proceeds paid by
reason of any loss, damage or destruction to the Property, (B) any Awards or other amounts
received in connection with the Condemnation of all or a portion of the Property, or (C) any
Rents following an Event of Default or any Rents collected for more than one month in
advance to the extent such Rents or any other payments in respect of the Leases and other
income of the Property or any other collateral are not applied to the costs of maintenance
and operation of the Property and to the payment of taxes, lien claims, insurance premiums,
Debt Service and other amounts due under the Loan Documents;

-92-

 

     (vi) failure to pay charges for labor or materials or other charges that can create
Liens on any portion of the Property other than Liens specifically permitted by the terms of
this Agreement and the other Loan Documents;

     (vii) any security deposits, advance deposits or any other deposits collected with
respect to the Property which are not delivered to Lender upon a foreclosure of the Property
or action in lieu thereof, except to the extent any such security deposits were applied in
accordance with the terms and conditions of any of the Leases prior to the occurrence of the
Event of Default that gave rise to such foreclosure or action in lieu thereof;

     (viii) Borrower’s indemnification of Lender set forth in Section 9.2 hereof;

     (ix) Borrower’s failure to maintain insurance as required by this Agreement or to pay
any taxes or assessments affecting the Property;

     (x) any intentional damage or destruction to the Property caused by the acts or
omissions of Borrower, its agents, employees, or contractors;

     (xi) any failure of Borrower to maintain its status as a single purpose entity as
required by, and in accordance with, the terms hereof; or

     (xii) Borrower’s commission of a criminal act.

     (b) Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan
Documents, (A) Lender shall not be deemed to have waived any right which Lender may have under
Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for
the full amount of the Debt or to require that all collateral shall continue to secure all of the
Debt owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be fully
recourse to Borrower in the event that: (i) the first full monthly payment of interest under the
Note is not paid when due; (ii) Borrower fails to permit on-site inspections of the Property, fails
to provide financial information, fails to maintain its status as a single purpose entity or fails
to appoint a new property manager upon the request of Lender after an Event of Default, each as
required by, and in accordance with the terms and provisions of, this Agreement and the Mortgage;
(iii) Borrower fails to obtain Lender’s prior consent to any subordinate financing or other
voluntary Lien encumbering the Property; (iv) Borrower fails to obtain Lender’s prior consent to
any assignment, transfer, or conveyance of the Property or any interest therein as required by the
Mortgage or this Agreement; (v) Borrower files a voluntary petition under the Bankruptcy code or
any other Federal or state bankruptcy or insolvency law; (vi) an Affiliate, officer, director, or
representative which controls, directly or indirectly, Borrower files, or joins in the filing of,
an involuntary petition against Borrower under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any
involuntary petition against Borrower from any Person; (vii) Borrower files an answer consenting to
or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other
Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or
solicits or causes to be solicited petitioning creditors for any involuntary petition from any
Person; (viii) any Affiliate, officer,

-93-

 

director, or representative which controls Borrower consents
to or acquiesces in or joins in an application for the appointment of a custodian, receiver,
trustee, or examiner for Borrower or any portion of the Property; or (ix) Borrower makes an
assignment for the benefit of creditors, or admits, in writing or in any legal proceeding, its
insolvency or inability to pay its debts as they become due.

     Section 11.23 Prior Agreements. This Agreement and the other Loan Documents contain
the entire agreement of the parties hereto and thereto in respect of the transactions contemplated
hereby and thereby, and all prior agreements among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other Loan Documents.

     Section 11.24 Servicer. (a) At the option of Lender, the Loan may be serviced by a
servicer (the “Servicer”) selected by Lender and Lender may delegate all or any portion of
its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to
a servicing agreement (the “Servicing Agreement”) between Lender and Servicer. Servicer
shall be entitled to reimbursement of reasonable out of pocket costs and expenses actually incurred
as and to the same extent (but without duplication) as Lender is entitled thereto under the
applicable provisions of this Agreement and the other Loan Documents.

     (b) Upon notice thereof from Lender, Servicer shall have the right to exercise all rights of
Lender and enforce all obligations of Borrower pursuant to the provisions of this Agreement, the
Note and the other Loan Documents.

     (c) Provided Borrower shall have been given notice of Servicer’s address by Lender,
Borrower shall deliver to Servicer duplicate originals of all notices and other instruments which
Borrower may or shall be required to deliver to Lender pursuant to this Agreement, the Note and the
other Loan Documents (and no delivery of such notices or other instruments by Borrower shall be of
any force or effect unless delivered to Lender and Servicer as provided above).

     (d) Notwithstanding anything to the contrary contained herein or in any other Loan Documents,
if the Loan is subject to multiple Securitizations, Borrower shall only be required to deal with
one primary Servicer with respect to any consents, approvals, notices, required from, or to, Lender
pursuant to the Loan Documents (it being understood that such primary Servicer may need to consult
with other Persons that hold a portion of Lender’s rights and obligations under the Loan or with
the Rating Agencies in connection with any such consent, approval or notice). Lender may replace
such primary Servicer with another single primary Servicer at any time in Lender’s sole discretion.
Lender agrees that promptly after the date hereof it shall appoint such primary Servicer.

     Section 11.25 Joint and Several Liability. If more than one Person has executed this
Agreement as “Borrower,” the representations, covenants, warranties and obligations of all such
Persons hereunder shall be joint and several.

     Section 11.26 Creation of Security Interest. Notwithstanding any other provision set
forth in this Agreement, the Note, the Mortgage or any of the other Loan Documents, Lender

-94-

 

may at
any time create a security interest in all or any portion of its rights under this Agreement, the
Note, the Mortgage and any other Loan Document (including, without limitation, the advances owing
to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.

     Section 11.27 Assignments and Participations. (a) The Lender may assign to one or
more Persons all or a portion of its rights and obligations under this Loan Agreement.

     (b) Upon such execution and delivery, from and after the effective date specified in such
Assignment and Acceptance, the assignee thereunder shall be a party hereto and have the rights and
obligations of Lender hereunder.

     (c) Lender may, in connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.27, disclose to the assignee or participant or
proposed assignee or participant, as the case may be, any information relating to
Borrower or any of its Affiliates or to any aspect of the Loan that has been furnished to the
Lender by or on behalf of Borrower or any of its Affiliates.

     Section 11.28 Set-Off. In addition to any rights and remedies of Lender provided by
this Loan Agreement and by law, the Lender shall have the right, without prior notice to Borrower,
any such notice being expressly waived by Borrower to the extent permitted by applicable law, upon
any amount becoming due and payable by Borrower hereunder and after the expiration of any
applicable notice and/or cure period (whether at the stated maturity, by acceleration or otherwise)
to set-off and appropriate and apply against such amount any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured
or unmatured, at any time held or owing by Lender or any Affiliate thereof to or for the credit or
the account of Borrower. Lender agrees promptly to notify Borrower after any such set-off and
application made by Lender; provided that the failure to give such notice shall not affect
the validity of such set-off and application.

     Section 11.29 Component Notes. (a) Prior to the last Securitization, Lender, without
in any way limiting Lender’s other rights hereunder, in its sole and absolute discretion, shall
have the right at any time to require Borrower to execute and deliver “component” notes (including
senior and junior notes) in replacement of the Note or re-size the Notes as evidence of the Loan,
which notes may be paid in such order of priority as may be designated by Lender, provided
that (i) the aggregate principal amount of such “component” notes and/or resized notes shall equal
the outstanding principal balance of the Loan immediately prior to the creation of such “component”
notes and/or re-sized notes, (ii) the weighted average interest rate of all such “component” notes
and/or re-sized notes shall on the date created equal the interest rate which was applicable to the
Loan immediately prior to the creation of such “component” notes and/or re-sized notes, (iii) the
debt service payments and the amortization on all such “component” notes and/or re-sized notes
shall on the date created equal the debt service payment which was due under the Loan immediately
prior to the creation of such component notes and/or re-sized notes and (iv) the other terms and
provisions of each of the “component” notes and/or resized notes shall be identical in substance
and substantially similar in form to the Loan Documents. Subject to the next paragraph of this
Section, at Borrower’s cost and expense, Borrower shall

-95-

 

cooperate with all reasonable requests of
Lender in order to establish the “component” notes and/or re-sized notes and shall execute and
deliver such documents as shall reasonably be required by Lender and any Rating Agency in
connection therewith, all in form and substance reasonably satisfactory to Lender and satisfactory
to any Rating Agency, including, without limitation, the severance of security documents if
requested. In the event Borrower fails to execute and deliver such documents to Lender within five
(5) Business Days following such request by Lender, Borrower hereby absolutely and irrevocably
appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to
make and execute all documents necessary or desirable to effect such transactions, Borrower
ratifying all that such attorney shall do by virtue thereof.

     (b) Lender shall reimburse Borrower for all of its reasonable costs and expenses (including
Borrower’s legal fees) in an amount not to exceed $5,000) incurred in connection with its
cooperation with Lender pursuant to this Section 11.29, Section 9.3 and Section
9.1 (except that Lender shall have no obligation to reimburse Borrower with respect to any of
the foregoing which Borrower is otherwise required to perform and/or deliver at its cost under
another provision of this Agreement).

     (c) It shall be an Event of Default under this Agreement, the Note, the Mortgage and the other
Loan Documents if Borrower fails to comply with any of the terms, covenants or conditions of this
Section 11.29 within ten (10) Business Days of notice thereof.

     Section 11.30 Approvals; Third Parties; Conditions. All approval rights retained or
exercised by Lender with respect to Leases, contracts, plans, studies and other matters are solely
to facilitate Lender’s credit underwriting, and shall not be deemed or construed as a determination
that Lender has passed on the adequacy thereof for any other purpose and may not be relied upon by
Borrower or any other Person. This Agreement is for the sole and exclusive use of Lender and
Borrower and may not be enforced, nor relied upon, by any Person other than Lender and Borrower.
All conditions of the obligations of Lender hereunder, including the obligation to make advances,
if any, are imposed solely and exclusively for the benefit of Lender, its successors and assigns,
and no other Person shall have standing to require satisfaction of such conditions or be entitled
to assume that Lender will refuse to make advances in the absence of strict compliance with any or
all of such conditions, 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
Lender at any time in Lender’s sole discretion.

     Section 11.31 Limitation on Liability of Lender’s Officers, Employees, etc. Any
obligation or liability whatsoever of Lender which may arise at any time under this Agreement or
any other Loan Document shall be satisfied, if at all, out of Lender’s interest in the Property
only. No such obligation or liability shall be personally binding upon, nor shall resort for the
enforcement thereof be had to, the property of any of Lender’s shareholders, directors, officers,
employees or agents, regardless of whether such obligation or liability is in the nature of
contract, tort or otherwise.

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

-96-

 

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

	 	 	 	 	 
	 	BORROWER:

TRIZECHAHN ONE NY PLAZA LLC,

a Delaware limited liability company

 	 
	 	By:  	/s/ Patrick L. Aldrich	 
	 	 	Name:  	Patrick L. Aldrich 	 
	 	 	Title:  	Assistant Treasurer 	 
	 

	 	 	 	 	 
	 	LENDER:

GOLDMAN SACHS COMMERCIAL MORTGAGE 

CAPITAL, a
Delaware limited partnership

 
	 	By:  	/s/ Andy Reiken	 
	 	 	Name:  	Andy Reiken	 
	 	 	Title:  	Director	 
	 

	 	 	 	 	 
	 	LEHMAN BROTHERS BANK FSB, a
federal stock 

savings
bank

 
	 	By:  	/s/
Charlene Thomas	 
	 	 	Name:  	Charlene Thomas	 
	 	 	Title:  	Vice President	 
	 

 

 

SCHEDULE I

(RENT ROLL)

[Intentionally Omitted]

 

 

SCHEDULE II

FORM OF QUALIFIED GUARANTY

[Intentionally Omitted]

 

 

SCHEDULE III

PROPERTY OWNERSHIP STRUCTURE

[Intentionally Omitted]

 

 

SCHEDULE IV

FORM OF SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

[Intentionally Omitted]

 

 

SCHEDULE V

AMORTIZATION SCHEDULE

	 	 	 	 	 	 	 	 	 
	Whole Loan	 	 	 	 	 	 	 	 
	Loan Amt
	 	 	400,000,000	 	 	 	 	 
	Gross Cpn
	 	 	5.4995	%	 	 	 	 
	Day Count
	 	 	1	 	 	( 1 = Actual/360,  2 = 30/360)
	Loan Term
	 	 	120	 	 	 	 	 
	Amort Term
	 	 	300	 	 	 	 	 
	Mthly Pmt
	 	$	2,456,230.53	 	 	 	 	 
	1st Payment
	 	 	4/6/2006	 	 	 	 	 
	IO Period
	 	 	36	 	 	 	 	 
	Closing Date
	 	 	3/1/2006	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Period	 	Pmt Date	 	 	Days	 	 	Interest	 	 	Principal	 	 	Total Payment	 	 	Ending Balance	 
	 
	0
	 	 	03/06/06	 	 	 	5	 	 	 	305,527.78	 	 	 	 	 	 	 	305,527.78	 	 	 	400,000,000.00	 
	1
	 	 	04/06/06	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	2
	 	 	05/06/06	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	3
	 	 	06/06/06	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	4
	 	 	07/06/06	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	5
	 	 	08/06/06	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	6
	 	 	09/06/06	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	7
	 	 	10/06/06	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	8
	 	 	11/06/06	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	9
	 	 	12/06/06	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	10
	 	 	01/06/07	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	11
	 	 	02/06/07	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	12
	 	 	03/06/07	 	 	 	28	 	 	 	1,710,955.56	 	 	 	—	 	 	 	1,710,955.56	 	 	 	400,000,000.00	 
	13
	 	 	04/06/07	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	14
	 	 	05/06/07	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	15
	 	 	06/06/07	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	16
	 	 	07/06/07	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	17
	 	 	08/06/07	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	18
	 	 	09/06/07	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	19
	 	 	10/06/07	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	20
	 	 	11/06/07	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	21
	 	 	12/06/07	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	22
	 	 	01/06/08	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	23
	 	 	02/06/08	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	24
	 	 	03/06/08	 	 	 	29	 	 	 	1,772,061.11	 	 	 	—	 	 	 	1,772,061.11	 	 	 	400,000,000.00	 
	25
	 	 	04/06/08	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	26
	 	 	05/06/08	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	27
	 	 	06/06/08	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	28
	 	 	07/06/08	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	29
	 	 	08/06/08	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	30
	 	 	09/06/08	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	31
	 	 	10/06/08	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 

Schedule V-1

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Period	 	Pmt Date	 	 	Days	 	 	Interest	 	 	Principal	 	 	Total Payment	 	 	Ending Balance	 
	 
	32
	 	 	11/06/08	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	33
	 	 	12/06/08	 	 	 	30	 	 	 	1,833,166.67	 	 	 	—	 	 	 	1,833,166.67	 	 	 	400,000,000.00	 
	34
	 	 	01/06/09	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	35
	 	 	02/06/09	 	 	 	31	 	 	 	1,894,272.22	 	 	 	—	 	 	 	1,894,272.22	 	 	 	400,000,000.00	 
	36
	 	 	03/06/09	 	 	 	28	 	 	 	1,710,955.56	 	 	 	—	 	 	 	1,710,955.56	 	 	 	400,000,000.00	 
	37
	 	 	04/06/09	 	 	 	31	 	 	 	1,894,272.22	 	 	 	561,958.31	 	 	 	2,456,230.53	 	 	 	399,438,041.69	 
	38
	 	 	05/06/09	 	 	 	30	 	 	 	1,830,591.26	 	 	 	625,639.27	 	 	 	2,456,230.53	 	 	 	398,812,402.42	 
	39
	 	 	06/06/09	 	 	 	31	 	 	 	1,888,648.14	 	 	 	567,582.39	 	 	 	2,456,230.53	 	 	 	398,244,820.03	 
	40
	 	 	07/06/09	 	 	 	30	 	 	 	1,825,122.82	 	 	 	631,107.71	 	 	 	2,456,230.53	 	 	 	397,613,712.32	 
	41
	 	 	08/06/09	 	 	 	31	 	 	 	1,882,971.53	 	 	 	573,259.00	 	 	 	2,456,230.53	 	 	 	397,040,453.32	 
	42
	 	 	09/06/09	 	 	 	31	 	 	 	1,880,256.75	 	 	 	575,973.78	 	 	 	2,456,230.53	 	 	 	396,464,479.54	 
	43
	 	 	10/06/09	 	 	 	30	 	 	 	1,816,963.67	 	 	 	639,266.86	 	 	 	2,456,230.53	 	 	 	395,825,212.68	 
	44
	 	 	11/06/09	 	 	 	31	 	 	 	1,874,501.76	 	 	 	581,728.77	 	 	 	2,456,230.53	 	 	 	395,243,483.91	 
	45
	 	 	12/06/09	 	 	 	30	 	 	 	1,811,367.95	 	 	 	644,862.58	 	 	 	2,456,230.53	 	 	 	394,598,621.33	 
	46
	 	 	01/06/10	 	 	 	31	 	 	 	1,868,693.02	 	 	 	587,537.51	 	 	 	2,456,230.53	 	 	 	394,011,083.82	 
	47
	 	 	02/06/10	 	 	 	31	 	 	 	1,865,910.63	 	 	 	590,319.90	 	 	 	2,456,230.53	 	 	 	393,420,763.92	 
	48
	 	 	03/06/10	 	 	 	28	 	 	 	1,682,813.60	 	 	 	773,416.93	 	 	 	2,456,230.53	 	 	 	392,647,346.99	 
	49
	 	 	04/06/10	 	 	 	31	 	 	 	1,859,452.41	 	 	 	596,778.12	 	 	 	2,456,230.53	 	 	 	392,050,568.87	 
	50
	 	 	05/06/10	 	 	 	30	 	 	 	1,796,735.09	 	 	 	659,495.44	 	 	 	2,456,230.53	 	 	 	391,391,073.43	 
	51
	 	 	06/06/10	 	 	 	31	 	 	 	1,853,503.10	 	 	 	602,727.43	 	 	 	2,456,230.53	 	 	 	390,788,346.00	 
	52
	 	 	07/06/10	 	 	 	30	 	 	 	1,790,950.42	 	 	 	665,280.11	 	 	 	2,456,230.53	 	 	 	390,123,065.89	 
	53
	 	 	08/06/10	 	 	 	31	 	 	 	1,847,498.22	 	 	 	608,732.31	 	 	 	2,456,230.53	 	 	 	389,514,333.58	 
	54
	 	 	09/06/10	 	 	 	31	 	 	 	1,844,615.46	 	 	 	611,615.07	 	 	 	2,456,230.53	 	 	 	388,902,718.51	 
	55
	 	 	10/06/10	 	 	 	30	 	 	 	1,782,308.75	 	 	 	673,921.78	 	 	 	2,456,230.53	 	 	 	388,228,796.73	 
	56
	 	 	11/06/10	 	 	 	31	 	 	 	1,838,527.56	 	 	 	617,702.97	 	 	 	2,456,230.53	 	 	 	387,611,093.76	 
	57
	 	 	12/06/10	 	 	 	30	 	 	 	1,776,389.34	 	 	 	679,841.19	 	 	 	2,456,230.53	 	 	 	386,931,252.57	 
	58
	 	 	01/06/11	 	 	 	31	 	 	 	1,832,382.81	 	 	 	623,847.72	 	 	 	2,456,230.53	 	 	 	386,307,404.85	 
	59
	 	 	02/06/11	 	 	 	31	 	 	 	1,829,428.47	 	 	 	626,802.06	 	 	 	2,456,230.53	 	 	 	385,680,602.79	 
	60
	 	 	03/06/11	 	 	 	28	 	 	 	1,649,705.93	 	 	 	806,524.60	 	 	 	2,456,230.53	 	 	 	384,874,078.19	 
	61
	 	 	04/06/11	 	 	 	31	 	 	 	1,822,640.69	 	 	 	633,589.84	 	 	 	2,456,230.53	 	 	 	384,240,488.35	 
	62
	 	 	05/06/11	 	 	 	30	 	 	 	1,760,942.14	 	 	 	695,288.39	 	 	 	2,456,230.53	 	 	 	383,545,199.96	 
	63
	 	 	06/06/11	 	 	 	31	 	 	 	1,816,347.55	 	 	 	639,882.98	 	 	 	2,456,230.53	 	 	 	382,905,316.98	 
	64
	 	 	07/06/11	 	 	 	30	 	 	 	1,754,823.16	 	 	 	701,407.37	 	 	 	2,456,230.53	 	 	 	382,203,909.61	 
	65
	 	 	08/06/11	 	 	 	31	 	 	 	1,809,995.62	 	 	 	646,234.91	 	 	 	2,456,230.53	 	 	 	381,557,674.70	 
	66
	 	 	09/06/11	 	 	 	31	 	 	 	1,806,935.26	 	 	 	649,295.27	 	 	 	2,456,230.53	 	 	 	380,908,379.43	 
	67
	 	 	10/06/11	 	 	 	30	 	 	 	1,745,671.36	 	 	 	710,559.17	 	 	 	2,456,230.53	 	 	 	380,197,820.26	 
	68
	 	 	11/06/11	 	 	 	31	 	 	 	1,800,495.42	 	 	 	655,735.11	 	 	 	2,456,230.53	 	 	 	379,542,085.15	 
	69
	 	 	12/06/11	 	 	 	30	 	 	 	1,739,409.75	 	 	 	716,820.78	 	 	 	2,456,230.53	 	 	 	378,825,264.37	 
	70
	 	 	01/06/12	 	 	 	31	 	 	 	1,793,995.44	 	 	 	662,235.09	 	 	 	2,456,230.53	 	 	 	378,163,029.28	 
	71
	 	 	02/06/12	 	 	 	31	 	 	 	1,790,859.30	 	 	 	665,371.23	 	 	 	2,456,230.53	 	 	 	377,497,658.05	 
	72
	 	 	03/06/12	 	 	 	29	 	 	 	1,672,372.30	 	 	 	783,858.23	 	 	 	2,456,230.53	 	 	 	376,713,799.82	 
	73
	 	 	04/06/12	 	 	 	31	 	 	 	1,783,996.22	 	 	 	672,234.31	 	 	 	2,456,230.53	 	 	 	376,041,565.51	 
	74
	 	 	05/06/12	 	 	 	30	 	 	 	1,723,367.16	 	 	 	732,863.37	 	 	 	2,456,230.53	 	 	 	375,308,702.14	 
	75
	 	 	06/06/12	 	 	 	31	 	 	 	1,777,342.12	 	 	 	678,888.41	 	 	 	2,456,230.53	 	 	 	374,629,813.73	 
	76
	 	 	07/06/12	 	 	 	30	 	 	 	1,716,897.22	 	 	 	739,333.31	 	 	 	2,456,230.53	 	 	 	373,890,480.42	 
	77
	 	 	08/06/12	 	 	 	31	 	 	 	1,770,625.88	 	 	 	685,604.65	 	 	 	2,456,230.53	 	 	 	373,204,875.77	 
	78
	 	 	09/06/12	 	 	 	31	 	 	 	1,767,379.07	 	 	 	688,851.46	 	 	 	2,456,230.53	 	 	 	372,516,024.31	 
	79
	 	 	10/06/12	 	 	 	30	 	 	 	1,707,209.90	 	 	 	749,020.63	 	 	 	2,456,230.53	 	 	 	371,767,003.68	 
	80
	 	 	11/06/12	 	 	 	31	 	 	 	1,760,569.77	 	 	 	695,660.76	 	 	 	2,456,230.53	 	 	 	371,071,342.92	 
	 

Schedule V-2

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Period	 	Pmt Date	 	 	Days	 	 	Interest	 	 	Principal	 	 	Total Payment	 	 	Ending Balance	 
	 
	81
	 	 	12/06/12	 	 	 	30	 	 	 	1,700,589.04	 	 	 	755,641.49	 	 	 	2,456,230.53	 	 	 	370,315,701.43	 
	82
	 	 	01/06/13	 	 	 	31	 	 	 	1,753,696.87	 	 	 	702,533.66	 	 	 	2,456,230.53	 	 	 	369,613,167.77	 
	83
	 	 	02/06/13	 	 	 	31	 	 	 	1,750,369.89	 	 	 	705,860.64	 	 	 	2,456,230.53	 	 	 	368,907,307.13	 
	84
	 	 	03/06/13	 	 	 	28	 	 	 	1,577,960.02	 	 	 	878,270.51	 	 	 	2,456,230.53	 	 	 	368,029,036.62	 
	85
	 	 	04/06/13	 	 	 	31	 	 	 	1,742,867.95	 	 	 	713,362.58	 	 	 	2,456,230.53	 	 	 	367,315,674.04	 
	86
	 	 	05/06/13	 	 	 	30	 	 	 	1,683,377.12	 	 	 	772,853.41	 	 	 	2,456,230.53	 	 	 	366,542,820.63	 
	87
	 	 	06/06/13	 	 	 	31	 	 	 	1,735,829.71	 	 	 	720,400.82	 	 	 	2,456,230.53	 	 	 	365,822,419.81	 
	88
	 	 	07/06/13	 	 	 	30	 	 	 	1,676,533.66	 	 	 	779,696.87	 	 	 	2,456,230.53	 	 	 	365,042,722.94	 
	89
	 	 	08/06/13	 	 	 	31	 	 	 	1,728,725.72	 	 	 	727,504.81	 	 	 	2,456,230.53	 	 	 	364,315,218.13	 
	90
	 	 	09/06/13	 	 	 	31	 	 	 	1,725,280.49	 	 	 	730,950.04	 	 	 	2,456,230.53	 	 	 	363,584,268.09	 
	91
	 	 	10/06/13	 	 	 	30	 	 	 	1,666,276.40	 	 	 	789,954.13	 	 	 	2,456,230.53	 	 	 	362,794,313.96	 
	92
	 	 	11/06/13	 	 	 	31	 	 	 	1,718,077.98	 	 	 	738,152.55	 	 	 	2,456,230.53	 	 	 	362,056,161.41	 
	93
	 	 	12/06/13	 	 	 	30	 	 	 	1,659,273.22	 	 	 	796,957.31	 	 	 	2,456,230.53	 	 	 	361,259,204.10	 
	94
	 	 	01/06/14	 	 	 	31	 	 	 	1,710,808.19	 	 	 	745,422.34	 	 	 	2,456,230.53	 	 	 	360,513,781.76	 
	95
	 	 	02/06/14	 	 	 	31	 	 	 	1,707,278.11	 	 	 	748,952.42	 	 	 	2,456,230.53	 	 	 	359,764,829.34	 
	96
	 	 	03/06/14	 	 	 	28	 	 	 	1,538,854.08	 	 	 	917,376.45	 	 	 	2,456,230.53	 	 	 	358,847,452.89	 
	97
	 	 	04/06/14	 	 	 	31	 	 	 	1,699,386.91	 	 	 	756,843.62	 	 	 	2,456,230.53	 	 	 	358,090,609.27	 
	98
	 	 	05/06/14	 	 	 	30	 	 	 	1,641,099.42	 	 	 	815,131.11	 	 	 	2,456,230.53	 	 	 	357,275,478.16	 
	99
	 	 	06/06/14	 	 	 	31	 	 	 	1,691,942.53	 	 	 	764,288.00	 	 	 	2,456,230.53	 	 	 	356,511,190.16	 
	100
	 	 	07/06/14	 	 	 	30	 	 	 	1,633,861.08	 	 	 	822,369.45	 	 	 	2,456,230.53	 	 	 	355,688,820.71	 
	101
	 	 	08/06/14	 	 	 	31	 	 	 	1,684,428.63	 	 	 	771,801.90	 	 	 	2,456,230.53	 	 	 	354,917,018.81	 
	102
	 	 	09/06/14	 	 	 	31	 	 	 	1,680,773.62	 	 	 	775,456.91	 	 	 	2,456,230.53	 	 	 	354,141,561.90	 
	103
	 	 	10/06/14	 	 	 	30	 	 	 	1,623,001.27	 	 	 	833,229.26	 	 	 	2,456,230.53	 	 	 	353,308,332.64	 
	104
	 	 	11/06/14	 	 	 	31	 	 	 	1,673,155.40	 	 	 	783,075.13	 	 	 	2,456,230.53	 	 	 	352,525,257.51	 
	105
	 	 	12/06/14	 	 	 	30	 	 	 	1,615,593.88	 	 	 	840,636.65	 	 	 	2,456,230.53	 	 	 	351,684,620.86	 
	106
	 	 	01/06/15	 	 	 	31	 	 	 	1,665,466.02	 	 	 	790,764.51	 	 	 	2,456,230.53	 	 	 	350,893,856.35	 
	107
	 	 	02/06/15	 	 	 	31	 	 	 	1,661,721.21	 	 	 	794,509.32	 	 	 	2,456,230.53	 	 	 	350,099,347.03	 
	108
	 	 	03/06/15	 	 	 	28	 	 	 	1,497,511.06	 	 	 	958,719.47	 	 	 	2,456,230.53	 	 	 	349,140,627.56	 
	109
	 	 	04/06/15	 	 	 	31	 	 	 	1,653,418.48	 	 	 	802,812.05	 	 	 	2,456,230.53	 	 	 	348,337,815.51	 
	110
	 	 	05/06/15	 	 	 	30	 	 	 	1,596,403.18	 	 	 	859,827.35	 	 	 	2,456,230.53	 	 	 	347,477,988.16	 
	111
	 	 	06/06/15	 	 	 	31	 	 	 	1,645,544.75	 	 	 	810,685.78	 	 	 	2,456,230.53	 	 	 	346,667,302.38	 
	112
	 	 	07/06/15	 	 	 	30	 	 	 	1,588,747.36	 	 	 	867,483.17	 	 	 	2,456,230.53	 	 	 	345,799,819.21	 
	113
	 	 	08/06/15	 	 	 	31	 	 	 	1,637,597.48	 	 	 	818,633.05	 	 	 	2,456,230.53	 	 	 	344,981,186.16	 
	114
	 	 	09/06/15	 	 	 	31	 	 	 	1,633,720.70	 	 	 	822,509.83	 	 	 	2,456,230.53	 	 	 	344,158,676.33	 
	115
	 	 	10/06/15	 	 	 	30	 	 	 	1,577,250.53	 	 	 	878,980.00	 	 	 	2,456,230.53	 	 	 	343,279,696.33	 
	116
	 	 	11/06/15	 	 	 	31	 	 	 	1,625,662.98	 	 	 	830,567.55	 	 	 	2,456,230.53	 	 	 	342,449,128.78	 
	117
	 	 	12/06/15	 	 	 	30	 	 	 	1,569,415.82	 	 	 	886,814.71	 	 	 	2,456,230.53	 	 	 	341,562,314.07	 
	118
	 	 	01/06/16	 	 	 	31	 	 	 	1,617,530.01	 	 	 	838,700.52	 	 	 	2,456,230.53	 	 	 	340,723,613.55	 
	119
	 	 	02/06/16	 	 	 	31	 	 	 	1,613,558.19	 	 	 	842,672.34	 	 	 	2,456,230.53	 	 	 	339,880,941.21	 
	120
	 	 	03/06/16	 	 	 	29	 	 	 	1,505,724.50	 	 	 	339,880,941.21	 	 	 	341,386,665.71	 	 	 	—	 
	 

Schedule V-3

 

 

SCHEDULE VI

UNFUNDED OBLIGATIONS

[Intentionally Omitted]

 

 

SCHEDULE VII

ASSIGNMENT OF MANAGEMENT AGREEMENT AND

SUBORDINATION OF MANAGEMENT FEES

[Intentionally Omitted]

 

 

SCHEDULE VIII

FORM OF MATERIAL ALTERATION INDEMNITY AGREEMENT

[Intentionally Omitted]exv4w1

 

Exhibit 4.1

SECURITIES PURCHASE AGREEMENT

          SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 1, 2006, by and among
Akorn, Inc., a Louisiana corporation with headquarters located at 2500 Millbrook Drive, Buffalo
Grove, Illinois 60089 (the “Company”), and the investors listed on the Schedule of Investors
attached hereto as Exhibit A (individually, an “Investor” and collectively, the “Investors”).

WHEREAS:

          A. The Company and each Investor is executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933,
as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “Commission”) under the 1933 Act.

          B. Each Investor, severally and not jointly, wishes to purchase, and the Company wishes to
sell, upon the terms and conditions stated in this Agreement, (i) that aggregate number of shares
of the Common Stock, no par value per share, of the Company (the “Common Stock”), set forth
opposite such Investor’s name in column two (2) on the Schedule of Investors in Exhibit A (which
aggregate amount for all Investors together shall be 4,311,669 shares of Common Stock and shall
collectively be referred to herein as the “Common Shares”) and (ii) a warrant to acquire up to that
number of additional shares of Common Stock set forth opposite such Investor’s name in column three
(3) on the Schedule of Investors (the “Warrants”), in substantially the form attached hereto as
Exhibit F (as exercised, collectively, the “Warrant Shares”)

          C. The Common Shares, the Warrants and the Warrant Shares issued pursuant to this Agreement
are collectively referred to herein as the “Securities”.

          NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and the Investors agree as follows:

ARTICLE I

DEFINITIONS

     1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated:

          “Advice” has the meaning set forth in Section 6.5.

          “Agent” has the meaning set forth in Section 3.1(j).

          “Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 144 under the Securities Act.

1

 

          “AMEX” means the American Stock Exchange.

          “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York or Buffalo Grove, Illinois are authorized or required by law to
remain closed.

          “Closing” means the closing of the purchase and sale of the Securities pursuant to Section
2.1.

          “Closing Date” means the date and time of the Closing and shall be 5:00 p.m., New York City
Time, on such date as is mutually agreed to by the Company and each Investor after satisfaction of
the conditions to Closing set forth in Article V.

          “Commission” means the Securities and Exchange Commission.

          “Common Shares” means an aggregate of 4,311,669 shares of Common Stock, which are being
issued and sold by the Company to the Investors at the Closing.

          “Common Stock” means the common stock of the Company, no par value per share.

          “Company Counsel” means each of Luce, Forward, Hamilton & Scripps LLP and Jones, Walker,
Waechter, Poitevent, Carrère & Denègre, L.L.P., counsel to the Company.

          “Convertible Securities” means any stock or securities (other than Options) convertible into
or exercisable or exchangeable for Common Stock.

          “Current Securities Laws” means the rules and regulations, existing on the date hereof, of the
1933 Act and the Exchange Act, in each case as are set forth in currently disseminated
interpretations by the Commission in writing, through rules, regulations, releases, no-action
letters or published telephone interpretations.

          “Disposition” has the meaning set forth in Section 3.2(h).

          “DWAC Fees” means fees payable to the Transfer Agent’s Deposit Withdrawal Agent for the
electronic transmission of shares of Common Stock by crediting the account of an Investor’s broker
with Depository Trust Company Fast Automated Securities Transfer through the Transfer Agent’s
Deposit Withdrawal Agent Commission system.

          “Effective Date” means the date that the Registration Statement is first declared effective by
the Commission.

          “Effectiveness Period” has the meaning set forth in Section 6.1(b).

          “Eligible Market” means any of the New York Stock Exchange, AMEX, the NASDAQ National Market
or the NASDAQ Capital Market.

          “Event” has the meaning set forth in Section 6.1(d).

2

 

          “Event Payments” has the meaning set forth in Section 6.1(d).

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Excluded Events” has the meaning set forth in Section 6.1(d).

          “8-K Filing” has the meaning set forth in Section 4.5.

          “Filing Date” means the day 45 after the Closing Date.

          “Holders of Existing Rights” shall mean The John N. Kapoor Trust dated 9/20/89, AEG Partners,
LLC, current and former holders of the Series B Preferred Stock, former holders of the Series A
Preferred Stock, current and former holders of warrants issued in connection with the Series B
Preferred Stock, and current and former holders of warrants issued in connection with the Series A
Preferred Stock.

          “Indemnified Party” has the meaning set forth in Section 6.4(c).

          “Indemnifying Party” has the meaning set forth in Section 6.4(c).

          “Intellectual Property Rights” has the meaning set forth in Section 3.1(r).

          “Knowledge of the Company”, “to the knowledge of the Company”, “to the Company’s knowledge” or
any phrase of similar import shall be deemed to mean only to the actual knowledge, without
investigation or inquiry, of either of Arthur S. Przybyl, the Chief Executive Officer of the
Company, or Jeffrey A. Whitnell, the Chief Financial Officer of the Company.

          “LaSalle Bank” means LaSalle Bank, National Association.

          “Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal
or other restriction, except for any Permitted Liens.

          “Losses” means any and all losses, claims, damages, liabilities, settlement costs and
expenses, including, without limitation, costs of preparation and reasonable attorneys’ fees.

          “Material Adverse Effect” has the meaning set forth in Section 3.1(b).

          “Material Permits” has the meaning set forth in Section 3.1(t).

          “NASD” has the meaning set forth in Section 3.2(k).

          “Options” means any rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities.

          “Permitted Liens” means any lien, charge, claim, security interest, encumbrance, right of
first refusal or other restriction disclosed in or contemplated by the SEC Reports, and any
purchase money security interests and any Liens (i) in favor of LaSalle Bank or incurred in
connection with the Senior Credit Agreement or the transactions associated therewith, and (ii) in

3

 

favor of Standard Mortgage Investors, LLC or incurred in connection with the Company’s
mortgage agreement with Standard Mortgage Investors, LLC.

          “Person” means any individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, or joint stock company.

          “Plan of Distribution” shall mean the Plan of Distribution attached hereto as Exhibit D, which
shall be contained in the Registration Statement.

          “Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition).

          “Prospectus” means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the Registration Statement,
and all other amendments and supplements to the Prospectus including post effective amendments, and
all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.

          “Registrable Securities” means any Common Stock (including Warrant Shares) issued or issuable
pursuant to the Transaction Documents, together with any securities issued or issuable upon any
stock split, dividend or other distribution, recapitalization or similar event with respect to the
foregoing; provided, however, that securities shall only be treated as Registrable Securities if
and only for so long as they (A) have not been disposed of pursuant to a registration statement
declared effective by the Commission, and (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the 1933 Act so that all transfer restrictions
and restrictive legends with respect thereto are removed upon the consummation of such sale.

          “Registration Statement” means each registration statement required to be filed under Article
VI, including (in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by reference in such
registration statement.

          “Required Effectiveness Date” means the day 105 after the Closing Date.

          “Required Senior Lenders” shall mean “Required Lenders” as such term is defined in the Senior
Credit Agreement.

          “Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424, respectively,
promulgated by the Commission pursuant to the Securities Act, as such Rules may be amended from
time to time, or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

          “SEC Reports” has the meaning set forth in Section 3.1(f).

4

 

          “Securities” means the Common Shares, Warrants and Warrant Shares.

          “Senior Credit Agreement” shall mean that certain Credit Agreement dated as of October 7, 2003
by and among the Company, Akorn (New Jersey), Inc., the financial institutions from time to time
party thereto, as lenders, and LaSalle Bank, as administrative agent, as such Credit Agreement may
be amended, restated, supplemented or otherwise modified from time to time.

          “Series A Preferred Stock” means the Company’s Series A 6% Participating Convertible Preferred
Stock

          “Series B Preferred Stock” means the Company’s Series B 6% Participating Convertible Preferred
Stock

          “Shares” means shares of the Company’s Common Stock.

          “Subsidiary” means any Person in which the Company, directly or indirectly, owns a majority of
the capital stock or similar interest that would be disclosable pursuant to Regulation S-K, Item
601(b)(21).

          “Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on
its primary Trading Market, (b) if the Common Stock is not then listed or quoted and traded on any
Eligible Market, then a day on which trading occurs on the NASDAQ National Market (or any successor
thereto), or (c) if trading ceases to occur on the NASDAQ National Market (or any successor
thereto), any Business Day.

          “Trading Market” means AMEX or any other Eligible Market, or any national securities exchange,
market or trading or quotation facility on which the Common Stock is then listed or quoted.

          “Transaction Documents” means this Agreement, the schedules and exhibits attached hereto, the
Warrants and the Transfer Agent Instructions.

          “Transfer Agent” means Computershare Investor Services LLC, or any successor transfer agent
for the Company.

          “Transfer Agent Instructions” means, with respect to the Company, the Irrevocable Transfer
Agent Instructions, in the form of Exhibit E, executed by the Company and delivered to and
acknowledged in writing by the Transfer Agent.

          “Warrants” has the meaning set forth in the Preamble.

          “Warrant Shares” has the meaning set forth in the Preamble.

5

 

ARTICLE II

PURCHASE AND SALE

     2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the
Closing the Company shall issue and sell to each Investor, and each Investor shall, severally and
not jointly, purchase from the Company, such number of Common Shares and Warrants set forth
opposite such Investor’s name on Exhibit A hereto under the headings “Common Shares” and
“Warrants”. The date and time of the Closing and shall be 5:00 p.m., New York City Time, on the
Closing Date. The Closing shall take place at the offices of Luce, Forward, Hamilton & Scripps
LLP.

          The obligations of the Investors under this Agreement are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under this Agreement. Nothing contained
herein, and no action taken by any Investor hereto, shall be deemed to constitute the Investors as
a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Investors are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated hereby, provided that such obligations or the transactions
contemplated hereby may be modified, amended or waived in accordance with this Agreement. Each
Investor shall be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement (provided, that such rights may be modified,
amended or waived in accordance with this Agreement), and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose.

     2.2 Closing Deliveries.

          (a) At the Closing, the Company shall deliver or cause to be delivered to each Investor the
following:

               (i) one or more stock certificates (or facsimile copies thereof), free and clear of all
restrictive and other legends (except as expressly provided in Section 4.1(b) hereof), evidencing
such number of Company Shares equal to the number of Shares set forth opposite such Investor’s name
on Exhibit A hereto under the heading “Common Shares,” registered in the name of such Investor;

               (ii) a Warrant, issued in the name of such Investor, pursuant to which such Investor shall
have the right to acquire such number of Warrant Shares set forth opposite such Investor’s name on
Exhibit A hereto under the heading “Warrant Shares”;

               (iii) a legal opinion of each Company Counsel, substantially in the forms attached hereto as
Exhibit C, executed by such counsel and delivered to the Investors; and

               (iv) duly executed Transfer Agent Instructions acknowledged by the Company’s transfer agent.

          (b) At the Closing, each Investor shall deliver or cause to be delivered to the Company the
purchase price set forth opposite such Investor’s name on Exhibit A hereto under the heading
“Purchase Price” in United States dollars and in immediately available funds, by

6

 

wire transfer to an account designated in writing to such Investor by the Company for such
purpose.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants to the Investors as follows:

          (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than those
listed in the SEC Reports. All of the capital stock or comparable equity interests of each
Subsidiary owned directly or indirectly by the Company are free and clear of any Lien and all the
issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and similar rights.

          (b) Organization and Qualification. Each of the Company and the Subsidiaries is an
entity duly organized, validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization (as applicable), with the requisite legal authority to own and
use its properties and assets and to carry on its business as currently conducted. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not, individually or in the aggregate, (i)
materially and adversely affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in a material adverse effect on the results of operations, assets,
business or financial condition of the Company and the Subsidiaries, taken as a whole on a
consolidated basis, or (iii) materially and adversely impair the Company’s ability to perform fully
on a timely basis its obligations under any of the Transaction Documents (any of (i), (ii) or
(iii), a “Material Adverse Effect”).

          (c) Authorization; Enforcement. The Company has the requisite corporate authority to
enter into and to consummate the transactions contemplated by each of the Transaction Documents to
which it is a party and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents to which it is a party by the Company
and the consummation by it of the transactions contemplated hereby and thereby have been (or upon
delivery will be) duly authorized by all necessary action on the part of the Company and no further
consent or action is, or will be, required by the Company, its Board of Directors or its
stockholders. Each of the Transaction Documents to which it is a party has been (or upon delivery
will be) duly executed by the Company and is, or when delivered in accordance with the terms
hereof, will constitute, the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or affecting the
enforcement of creditors rights generally, and (ii) the

7

 

effect of rules of law governing the availability of specific performance, injunctive relief
and other equitable remedies.

          (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents to which it is a party by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not, and will not, (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or
other organizational or charter documents, (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of
time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is bound, or affected,
except to the extent that such conflict, default, termination, amendment, acceleration or
cancellation right (A) could not reasonably be expected to have a Material Adverse Effect or (B) is
waived pre-Closing, or (iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company
or a Subsidiary is subject (including federal and state securities laws and regulations and the
rules and regulations of any self-regulatory organization to which the Company or its securities
are subject), or by which any property or asset of the Company or a Subsidiary is bound or
affected, except to the extent that such violation could not reasonably be expected to have a
Material Adverse Effect. The Securities (including the Warrant Shares) are duly authorized and,
when issued and paid for in accordance with the Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens and shall not be subject to
preemptive or similar rights of stockholders. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable upon exercise of the Warrants.

          (e) Capitalization. The capitalization of the Company as of September 30, 2005, is as
set forth in the most recent applicable SEC Report, increased as set forth in the next sentence.
The Company has not issued any capital stock since that date other than pursuant to (i) employee
and director benefit plans disclosed in the SEC Reports, or (ii) outstanding warrants, options or
other securities disclosed in the SEC Reports. The outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and are not subject to any enforceable
preemptive rights or similar rights to subscribe for or purchase securities granted by law.
Without limiting the foregoing, except as set forth in the SEC Reports, no preemptive right,
co-sale right, right of first refusal, registration right, or other similar right exists with
respect to the Common Shares, the Warrants or the Warrant Shares or the issuance and sale thereof.
Upon delivery, no further approval or authorization of any stockholder, the Board of Directors of
the Company or others will be required for the issuance and sale of the Common Shares, the Warrants
and the Warrant Shares, including under Trading Market rules. Except as disclosed in the SEC
Reports, or in filings with the SEC under Sections 13 or 16 of the Exchange Act with respect to
ownership of Company securities, there are no stockholders agreements, voting agreements or other
similar agreements with respect to the Common Stock to which the Company is a party or, to the
knowledge of the Company, between or among any of the Company’s stockholders.

8

 

          (f) SEC Reports; Financial Statements. The Company has filed all reports required to
be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the twelve months preceding the date hereof (the foregoing materials (together with any materials
filed by the Company under the Exchange Act and the 1933 Act, whether or not required) being
collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules and regulations of
the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The financial statements of the Company included in
the reports required to be filed by the Company under the Exchange Act for the twenty-four months
preceding the date hereof comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto, and fairly
present in all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal, year-end audit
adjustments. Except as disclosed in the SEC Reports, since the date of the latest audited
financial statements included within the SEC Reports, (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or that could result in a Material
Adverse Effect, (ii) the Company has not altered its method of accounting or the identity of its
auditors, (iii) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders, in their capacities as such, or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock (except for repurchases by the
Company of shares of capital stock held by employees, officers, directors, or consultants pursuant
to an option of the Company to repurchase such shares upon the termination of employment or
services), and (iv) the Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock-based plans.

          (g) Absence of Litigation. Except as disclosed in the Company’s SEC Reports, there is
no action, suit, claim, or proceeding, or, to the Company’s knowledge, inquiry or investigation,
before or by any court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries that could, individually or in the aggregate, have a Material Adverse Effect.

          (h) Compliance. Neither the Company nor any Subsidiary, except in each case as could
not, individually or in the aggregate, reasonably be expected to have or result in a Material
Adverse Effect, is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim that it
is in default under or that it is in violation of, any indenture, loan or

9

 

credit agreement or any other agreement or instrument to which it is a party or by which it or
any of its properties is bound, which default has not been waived in writing, (ii) is in violation
of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of
any law, statute, rule or regulation of any governmental authority.

          (i) Title to Assets. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them that is material to the business of the Company
and the Subsidiaries and good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens that do not, individually or in the aggregate, have or result in a Material
Adverse Effect. Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company
and the Subsidiaries are in material compliance.

          (j) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor, to the
Company’s knowledge, any of its affiliates, nor any Person acting on its or, to the Company’s
knowledge, on their behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of the Securities. The
Company shall be responsible for the payment of any placement agent’s fees, financial advisory
fees, or brokers’ commissions (other than for persons engaged by, or on behalf of, any Investor or
its agents or investment advisors) relating to or arising out of the issuance of the Securities
pursuant to this Agreement. The Company shall pay, and hold each Investor harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney’s fees and
out-of-pocket expenses) arising in connection with any such claim for fees (other than for persons
engaged by, or on behalf of, any Investor or its agents or investment advisors) arising out of the
issuance of the Securities pursuant to this Agreement. The Company acknowledges that is has
engaged Banc of America Securities LLC as placement agent (the “Agent”) in connection with the sale
of the Securities. Other than the Agent, the Company has not engaged any placement agent or other
agent in connection with the sale of the Securities.

          (k) Private Placement. Neither the Company nor any Person acting on the Company’s
behalf has, directly or indirectly, at any time within the past six months, made any offer or sale
of any security or solicitation of any offer to buy any security under circumstances that would (i)
eliminate the availability of the exemption from registration under Regulation D under the
Securities Act in connection with the offer and sale by the Company of the Securities as
contemplated hereby or (ii) cause the offering of the Securities pursuant to the Transaction
Documents to be integrated with prior offerings by the Company for purposes of any applicable law,
regulation or stockholder approval provisions, including, without limitation, under the rules and
regulations of any Trading Market. The Company is not required to be registered as an “investment
company” within the meaning of the Investment Company Act of 1940, as amended. The Company is not
required to be registered as, a United States real property holding corporation within the meaning
of the Foreign Investment in Real Property Tax Act of 1980.

          (l) Form S-3 Eligibility. The Company is eligible to register the Common Shares and
the Warrant Shares for resale by the Investors using Form S-3 promulgated under the Securities Act.

10

 

          (m) Listing and Maintenance Requirements. The Company has not, in the twelve months
preceding the date hereof, received written notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Company is in compliance with all
such listing and maintenance requirements.

          (n) Registration Rights. Except as disclosed in or contemplated by the SEC Reports,
the Company has not granted or agreed to grant to any Person any rights (including “piggy-back”
registration rights) to have any securities of the Company registered with the Commission or any
other governmental authority that have not been satisfied or waived.

          (o) Application of Takeover Protections. There is no control share acquisition,
business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s charter documents or the laws of its state of
incorporation that is or could become applicable to any of the Investors as a result of the
Investors and the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, as a result of the Company’s issuance of the
Securities and the Investors’ ownership of the Securities.

          (p) Disclosure. The Company confirms that neither it nor any officers, directors or
Affiliates, has provided any of the Investors or their agents or counsel with any information that
constitutes or might constitute material, nonpublic information (other than the existence and terms
of the issuance of Securities, as contemplated by this Agreement). The Company understands and
confirms that each of the Investors will rely on the foregoing representations, the SEC Reports and
other information, if any, produced by the Investors investigation of the Company in effecting
transactions in securities of the Company. All disclosure provided by the Company to the Investors
in this Agreement regarding the Company, its business and the transactions contemplated hereby,
including the Schedules to this Agreement, furnished by or on the behalf of the Company are true
and correct in all material respects and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. To the Company’s knowledge,
no event or circumstance has occurred or information exists with respect to the Company or any of
its Subsidiaries or its or their business, properties, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed. The Company acknowledges and agrees
that no Investor makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in the Transaction
Documents.

          (q) Acknowledgment Regarding Investors’ Purchase of Securities. Based upon the
assumption that the transactions contemplated by this Agreement are consummated in all material
respects in conformity with the Transaction Documents, the Company acknowledges and agrees that
each of the Investors is acting solely in the capacity of an arm’s length purchaser with respect to
the Transaction Documents and the transactions contemplated hereby and thereby. The Company
further acknowledges that no Investor is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the

11

 

transactions contemplated hereby and any advice given by any Investor or any of their
respective representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to the Investors’ purchase of the
Securities. The Company further represents to each Investor that the Company’s decision to enter
into this Agreement has been based solely on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.

          (r) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the SEC Reports and which the failure
to so have does not have a Material Adverse Effect (collectively, the “Intellectual Property
Rights”). Neither the Company nor any Subsidiary has received a written notice that any of such
Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any Person. All such Intellectual Property Rights are enforceable and, to the Company’s
knowledge, there is no existing infringement by another Person of any of the Intellectual Property
Rights.

          (s) Insurance. The Company and the Subsidiaries are insured against such losses and
risks and in such amounts as are prudent and customary in the businesses and location in which the
Company and the Subsidiaries are engaged. To the Company’s knowledge, neither the Company nor any
Subsidiary has been notified that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business without a significant increase in cost.

          (t) Regulatory Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits does not, individually or in the aggregate, have
or result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any written notice of proceedings relating to the revocation or
modification of any Material Permit.

          (u) Internal Accounting Controls. The Company maintains a system of internal control
over financial reporting (as such term is defined in the Exchange Act) sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with management’s general or
specific authorizations, and (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset accountability. The Company’s
certifying officers are responsible for establishing and maintaining disclosure controls and
procedures (as defined in the Exchange Act) for the Company and they have (a) designed such
disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under their supervision, to ensure that material information relating to the Company is
made known to the certifying officers by others within those entities, particularly during the
periods since December 31, 2003 in which the Company’s filings under the Exchange Act have been
prepared; (b) evaluated the effectiveness of the Company’s disclosure controls and procedures and
presented in the Company’s filings under the Exchange Act their conclusions about the effectiveness
of the disclosure controls and

12

 

procedures, as of the end of the periods covered by such filings since December 31, 2003 under
the Exchange Act based on such evaluation; and (c) since the last evaluation date referred to in
(b) above, there has been no change in the Company’s internal control over financial reporting that
has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting (as such term is defined in the Exchange Act) or, to the Company’s
knowledge, in other factors that could significantly affect the Company’s internal control over
financial reporting, and no significant deficiencies or material weaknesses in internal controls
over financial reporting have been identified.

          (v) Sarbanes-Oxley Act. To the Company’s knowledge, the Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of
the Closing Date.

     3.2 Representations and Warranties of the Investors. Each Investor hereby, as to
itself only and for no other Investor, represents and warrants to the Company as follows:

          (a) Organization; Authority. Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including the purchase by such Investor of the Securities
hereunder, has been duly authorized by all necessary action on the part of such Investor. This
Agreement has been duly executed and delivered by such Investor and constitutes the valid and
binding obligation of such Investor, enforceable against it in accordance with its terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors rights generally, and (ii) the
effect of rules of law governing the availability of specific performance, injunctive relief and
other equitable remedies.

          (b) No Public Sale or Distribution; Investment Intent. Such Investor understands that
none of the Securities have been registered under the Securities Act by reason of a claimed
exemption under the provisions of the 1933 Act which depends, in part, on the Investor’s intent in
connection therewith. Such Investor represents that it is (i) acquiring the Common Shares and the
Warrants and (ii) upon exercise of the Warrants will acquire the Warrant Shares issuable upon
exercise thereof, in the ordinary course of business for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution thereof, except pursuant
to sales registered under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws, and such Investor does not have a
present arrangement to effect any distribution of the Securities to or through any person or
entity; provided, however, that, except as set forth in Sections 3.2(h) and 4.8, by
making the representations herein, such Investor does not agree to hold any of the Securities for
any minimum or other specific term and reserves the right to dispose of the Securities at any time
in accordance with or pursuant to a registration statement or an exemption under the Securities
Act.

13

 

          (c) Investor Status. At the time such Investor was offered the Securities, it was,
and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the
Securities Act.

          (d) Experience of such Investor. Such Investor, either alone or together with its
representatives has such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment. Such Investor is able to
bear the economic risk of an investment in the Securities and is able to afford a complete loss of
such investment.

          (e) Access to Information. Such Investor acknowledges that it has been provided and
has carefully reviewed the Company’s SEC Reports, including without limitation the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2004 and the additional risk factors
specific to the Securities, the Common Stock, and all other information regarding the Company which
such Investor has requested or desired to know and has been afforded: (i) the opportunity to ask
such questions as it has deemed necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the offering of the Securities and the merits and
risks of investing in the Securities; (ii) access to information (other than material non-public
information) about the Company and the Subsidiaries and their respective financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional information that the
Company possesses or can acquire without unreasonable effort or expense that is necessary to make
an informed investment decision with respect to the investment. Neither such inquiries nor any
other investigation conducted by or on behalf of such Investor or its representatives or counsel
shall modify, amend or affect such Investor’s right to rely on the truth and accuracy of the
Company’s representations and warranties contained in the Transaction Documents. Such Investor
acknowledges and agrees that the Company does not make and has not made any representations or
warranties with respect to the transactions contemplated hereby other than those specifically set
forth in the Transaction Documents.

          (f) No Governmental Review. Such Investor understands that no United States federal
or state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.

          (g) No Conflicts. The execution, delivery and performance by such Investor of this
Agreement and the consummation by such Investor of the transactions contemplated hereby and thereby
do not, and will not, (i) result in a violation of the certificate or articles of incorporation,
Bylaws or other organizational or charter documents of such Investor or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of (with or without notice, lapse of time or both), any agreement, indenture or
instrument to which such Investor is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree or other restriction of any court or government

14

 

authority (including federal and state securities laws) applicable to such Investor, except in
the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise
affect the ability of such Investor to consummate the transactions contemplated hereby.

          (h) Illegal Transactions. Neither the Investor nor any person acting on its behalf or
at its direction has engaged in any purchase or sale of Common Stock (including without limitation
any short sale), pledge, transfer, establish an open “put equivalent position” within the meaning
of Rule 16a-1(h) under the Exchange Act) during the 5 Trading Days immediately preceding the date
of this Agreement.

          (i) No Legal, Tax or Investment Advice. Such Investor understands that nothing in
this Agreement or any other materials presented by or on behalf of the Company to the Investor in
connection with the purchase of the Securities constitutes legal, tax or investment advice. Such
Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of the Securities. Such Investor
understands that the Agent has acted solely as the agent of the Company in this placement of the
Securities, and that the Agent makes no representation or warranty with regard to the merits of
this transaction or as to the accuracy of any information such Investor may have received in
connection therewith. Such Investor acknowledges that he has not relied on any information or
advice furnished by or on behalf of the Agent. Such Investor further acknowledges that Company
Counsel has acted solely as legal counsel to the Company in connection with the transactions
contemplated by this Agreement and that Company Counsel has not acted as counsel for such Investor
in connection therewith.

          (j) Private Placement. Such Investor represents that (i) such Investor was contacted
regarding the sale of the Securities by the Agent (or an authorized agent or representative
thereof) with whom such Investor had a prior substantial pre-existing relationship and (ii) no
Securities were offered or sold to it by means of any form of general solicitation or general
advertising, and in connection therewith such Investor did not (A) receive or review any
advertisement, article, notice or other communication published in a newspaper or magazine or
similar media or broadcast over television or radio, whether closed circuit or generally available;
or (B) attend any seminar, meeting or industry investor conference whose attendees were invited by
any general solicitation or general advertising.

          (k) No Broker; Agent. Except as otherwise specifically set forth in such Investor’s
Registration Statement Questionnaire, such Investor represents and warrants that such Investor is
not (a) a broker or dealer admitted to membership in the National Association of Securities
Dealers, Inc. (“NASD”), (b) a controlling stockholder of an NASD member, or (c) a person associated
with a member of the NASD; provided, however, that any exception to the foregoing set forth in such
Investor’s Registration Statement Questionnaire shall be appropriately disclosed in the Plan of
Distribution. Such Investor acknowledges that (a) the Company has engaged, consented to and
authorized the Agent in connection with the transactions contemplated by this Agreement, and (b)
the Company shall pay the Agent a commission and reimburse the Agent’s expenses. Such Investor
represents and warrants that it has not engaged, consented to nor authorized any broker, finder or
intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement. Such Investor shall indemnify and
hold harmless the Company from and

15

 

against all fees, commissions or other payments owing to any such person or firm acting on
behalf of such Investor hereunder.

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

     4.1 Transfer Restrictions.

          (a) The Investors covenant that the Securities will only be disposed of pursuant to an
effective registration statement under, and in compliance with the requirements of, the Securities
Act or pursuant to an available exemption from the registration requirements of the Securities Act,
and in compliance with any applicable state securities laws. The Investors further expressly agree
that any sale by the Investor of Common Shares and Warrant Shares pursuant to the Registration
Statement shall be sold in a manner described under the Plan of Distribution, and, if then required
to do so, the Investor will deliver a copy of the Prospectus contained in the Registration
Statement to the purchaser or purchasers, directly or through the Investor’s broker, in connection
with such sale, in each case in compliance with the requirements of the 1933 Act and Exchange Act
applicable to such sale. In connection with any transfer of Securities other than pursuant to an
effective registration statement or to the Company, or pursuant to Rule 144(k) except as otherwise
set forth herein, the Company requires the transferor to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require registration under
the Securities Act.

          (b) The Investors agree to the imprinting, so long as is required by this Section 4.1(b), of
the following legend on any certificate evidencing Securities:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE
WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

Certificates evidencing Securities shall not be required to contain such legend or any other legend
(i) after a transfer pursuant to a Registration Statement that is effective under the Securities
Act covering the resale of such Securities, (ii) following any sale of such Securities pursuant to
Rule 144, (iii) if such Securities are eligible for sale under Rule 144(k), (iv) if such legend is
not required under applicable requirements of the Securities Act (including controlling

16

 

judicial interpretations and pronouncements issued by the Staff of the Commission) in an opinion of
(x) Company Counsel, or (y) counsel to an Investor, the form and substance of which opinion shall
be reasonably satisfactory to the Company, or (v) as otherwise set forth in Section 4.1(c) below.
The Company shall cause its counsel to issue the written confirmation included in the Transfer
Agent Instructions to the Transfer Agent on the Effective Date.

          (c) On the basis of, and subject to, compliance by each Investor with the covenants set forth
in Section 4.1(a) above and elsewhere in this Agreement, upon the Effective Date, the Company shall
as soon as practicable (but not later than three Trading Days) after surrender of legended
certificates by each investor to the Company and notice of such surrender has been provided by such
investor pursuant to Section 7.4 below cause certificates evidencing Common Shares and Warrant
Shares previously issued to such Investor to be replaced with certificates which do not bear the
restrictive legends specified above in Section 4.1(b), and all Common Shares and Warrant Shares
subsequently issued shall not bear the restrictive legend specified above in Section 4.1(b). Each
Investor acknowledges that the removal of the restrictive legends from certificates representing
Common Shares and Warrant Shares is predicated upon the Company’s reliance on the Investor’s
compliance with its covenants in Section 4.1(a) above and elsewhere in this Agreement. The Company
may not make any notation on its records or give instructions to the Transfer Agent that enlarge
the restrictions on transfer set forth in this Section 4.1, except for stop orders provided for in
Section 6.5 below. Notwithstanding the foregoing, the Company shall have no obligation to cause
certificates evidencing Common Shares and Warrant Shares to be issued without, or replaced with
certificates which do not bear, the restrictive legends as set forth in this Section 4.1(c) during
any period that disposition of Registrable Securities is to be discontinued pursuant to Section 6.5
below.

     4.2 Furnishing of Information. As long as any Investor owns Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date hereof pursuant to the
Exchange Act.

     4.3 Integration. The Company shall not, and shall use its commercially reasonably
efforts to ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the Investors or that would
be integrated with the offer or sale of the Securities for purposes of the rules and regulations of
any Trading Market.

     4.4 Reservation of Securities. The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount
as may be required to fulfill its obligations in full under the Transaction Documents. In the
event that at any time the then authorized shares of Common Stock are insufficient for the Company
to satisfy its obligations in full under the Transaction Documents, the Company shall promptly take
such actions as may be required to increase the number of authorized shares.

     4.5 Securities Laws Disclosure; Publicity. The Company shall, on or before 8:30 a.m.,
New York time, on the first Trading Day following execution of this Agreement, issue a

17

 

press release acceptable to the Investors disclosing all material terms of the transactions
contemplated hereby (the “Press Release”). On the Closing Date, or earlier if required to comply
with applicable securities laws, including the requirements of Form 8-K, and the Company shall file
a Current Report on Form 8-K with the Commission (the “8-K Filing”) describing the terms of the
transactions contemplated by the Transaction Documents and including as exhibits to such Current
Report on Form 8-K this Agreement and the form of Warrants, in the form required by the Exchange
Act. Thereafter, the Company shall timely (or pursuant to a valid extension of such time of
filing) file any filings and notices required by the Commission or applicable law with respect to
the transactions contemplated hereby and provide copies thereof to the Investors promptly after
filing. Except with respect to the 8-K Filing and the Press Release referenced above (a copy of
which will be provided to the Investors for their review as early as practicable prior to its
filing), the Company shall, at least two Trading Days prior to the filing or dissemination of any
disclosure required by this paragraph, provide a copy thereof to the Investors for their review.
The Company and the Investors shall consult with each other in issuing any press releases or
otherwise making public statements or filings and other communications with the Commission or any
regulatory agency or Trading Market with respect to the transactions contemplated hereby, and
neither party shall issue any such press release or otherwise make any such public statement,
filing or other communication without the prior consent of the other, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the other party with
prior notice of such public statement, filing or other communication. The Company shall not
publicly disclose the name of any Investor, or include the name of any Investor in any press
release without the prior written consent of such Investor. Notwithstanding the foregoing, the
Company may make any securities filings regarding the transactions contemplated hereby, including
the names of the Investors, to the extent the Company reasonably believes the same to be prudent in
connection with its disclosure obligations, its past practices and as otherwise required by law or
any securities exchange upon which the Company’s securities may be listed. The Company shall not,
and shall cause each of its Subsidiaries and its and each of their respective officers, directors,
employees and agents not to, provide any Investor with any material nonpublic information regarding
the Company or any of its Subsidiaries from and after the issuance of the above referenced Press
Release without the express written consent of such Investor.

     4.6 Use of Proceeds. The Company intends to use the net proceeds from the sale of the
Securities for general corporate purposes. The Company also may use a portion of the net proceeds,
currently intended for general corporate purposes, to acquire or invest in technologies, products
or services that complement its business, although the Company has no present plans or commitments
and is not currently engaged in any material negotiations with respect to these types of
transactions. Pending these uses, the Company intends to invest the net proceeds from this
offering in short-term, interest-bearing, investment-grade securities, or as otherwise pursuant to
the Company’s customary investment policies.

     4.7 Certain Existing Rights. The Investors hereby acknowledge that the Company has
previously granted certain rights to the Holders of Existing Rights, including, among other rights,
registration rights, rights to acquire Common Stock and rights to receive dividends (in cash or
Common Stock), as disclosed in the SEC Reports. The Investors hereby agree that, notwithstanding
any other representations, warranties, covenants or agreements set forth in the Transaction
Documents, none of the existing rights of any of the Holders of Existing Rights shall

18

 

breach, negate or conflict with any of the representations, warranties, covenants or
agreements set forth in the Transaction Documents. The Investors further agree that the Company,
in its sole discretion, has the right to renegotiate, settle, payoff or retire any of the existing
rights or obligations to the Holders of Existing Rights and that such actions shall not breach,
negate or conflict with any of the representations, warranties, covenants or agreements set forth
in the Transaction Documents.

     4.8 Market Stand-Off. Such Investor agrees that from the time such Investor was first
contacted by the Agent regarding the transactions contemplated hereby, until the issuance of the
Press Release pursuant to Section 4.5 above, such Investor has not and shall not, directly or
indirectly, through related parties or otherwise, sell or purchase or otherwise deal in or with any
equity security of the Company.

     4.9 Prohibited Transactions. The Investors will not use any of the Shares acquired
pursuant to this Agreement, or the Warrant Shares acquired pursuant to the Warrant, to cover any
short position in the Common Stock of the Company if doing so would be in violation of applicable
Current Securities Laws. The Investor will comply with all applicable Current Securities Laws in
the holding and sale of the Securities.

ARTICLE V

CONDITIONS

     5.1 Conditions Precedent to the Obligations of the Investors. The obligation of each
Investor to acquire Securities at the Closing is subject to the satisfaction or waiver by such
Investor, at or before the Closing, of each of the following conditions:

          (a) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct in all material respects as of the date when made and as
of the Closing as though made on and as of such date; and

          (b) Performance. The Company and each other Investor shall have performed, satisfied
and complied in all material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing.

          (c) LaSalle Bank Waiver and Consent. The Company shall have received a waiver and
consent from LaSalle Bank to this Agreement and the transactions contemplated hereby.

          (d) Additional Listing Application. The Registrable Securities shall have been
approved for listing on AMEX.

     5.2 Conditions Precedent to the Obligations of the Company. The obligation of the
Company to sell the Securities at the Closing is subject to the satisfaction or waiver by the
Company, at or before the Closing, of each of the following conditions:

19

 

          (a) Representations and Warranties. The representations and warranties of the
Investors contained herein shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made on and as of such date; and

          (b) Performance. The Investors shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Investors at or prior to the Closing.

          (c) LaSalle Bank Waiver and Consent. The Company shall have received a waiver and
consent from LaSalle Bank to this Agreement and the transactions contemplated hereby.

          (d) Additional Listing Application. The Registrable Securities shall have been
approved for listing on AMEX.

ARTICLE VI

REGISTRATION RIGHTS

     6.1 Shelf Registration.

          (a) As promptly as possible, and in any event on or prior to the Filing Date, the Company
shall prepare and file with the Commission a “Shelf” Registration Statement covering the resale of
all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415.
The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form S-3, in which case such registration shall
be on another appropriate form in accordance with the Securities Act and the Exchange Act and as
consented to by the Investors) and shall contain (except if otherwise directed by the Investors or
the Commission) the Plan of Distribution.

          (b) The Company shall use its reasonable best efforts to cause the Registration Statement to
be declared effective by the Commission as promptly as possible after the filing thereof, but in
any event prior to the Required Effectiveness Date, and shall use its reasonable best efforts to
keep the Registration Statement continuously effective under the Securities Act until the earlier
of the date that all Registrable Securities covered by such Registration Statement have been sold
or can be sold publicly under Rule 144(k) (the “Effectiveness Period”).

          (c) The Company shall notify the Investors in writing promptly (and in any event within three
Business Days) after receiving notification from the Commission that the Registration Statement has
been declared effective.

          (d) Should an Event (as defined below) occur, then on every monthly anniversary thereof until
the applicable Event is cured and on the date of such cure, as total and complete relief for the
damages suffered therefrom by the Investors (which remedy shall be the exclusive remedy available
under this Agreement, at law or in equity), the Company shall pay to each Investor an amount in
cash, as liquidated damages and not as a penalty, equal to $0.045 per Common Share then owned. The
payments to which an Investor shall be entitled pursuant to this Section 6.1(d) are referred to
herein as “Event Payments”. Any Event Payments payable

20

 

pursuant to the terms hereof shall apply on a pro-rata basis for any portion of a month prior
to the cure of an Event. In the event the Company fails to make Event Payments in a timely manner,
such Event Payments shall bear interest at the rate of 1% per month (prorated for partial months)
until paid in full. All pro rated calculations made pursuant to this paragraph shall be based upon
the actual number of days in such pro rated month. In no event shall the Company be obligated to
pay aggregate Event Payments in an amount greater than the dollar amount equal to Ten percent of
total purchase price. For avoidance of doubt, the parties hereto agree that the Event Payments set
forth in this Section 6.1(d) relate solely to the Common Shares to be issued under this Agreement
and not to the Warrants or Warrant Shares issuable hereunder, for which there will be no damages
under this Section 6.1(d).

          For such purposes, each of the following shall constitute an “Event”:

               (i) the Registration Statement, insofar as it required to cover Common Shares, is not filed on
or prior to the Filing Date or is not declared effective on or prior to the Required Effectiveness
Date; provided, however, that the Company shall have no liability hereunder for a failure to meet
the deadlines set forth herein caused by a delay resulting from the actions or inactions of the
Investors;

               (ii) except (A) as provided for in Section 6.1(e), (B) if the Company is involved in a “Rule
13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (C) a merger or
consolidation of the Company or a sale of more than one-half of the assets of the Company in one or
a series of related transactions, unless following such transaction or series of transactions, the
holders of the Company’s securities prior to the first such transaction continue to hold at least
50% of the voting rights and equity interests of the surviving entity or acquirer (clauses (B) and
(C), collectively, the “Excluded Events”), the Common Stock is not listed or quoted, or is
suspended from trading, on an Eligible Market for a period of five Trading Days (which need not be
consecutive Trading Days) during the Effectiveness Period so long as any of the Investors hold any
Common Shares; or

               (iii) after the Registration Statement is filed with and declared effective by the Commission
and prior to the expiration of the Effectiveness Period so long as any of the Investors hold any
Common Shares, such Registration Statement ceases to be effective for 20 Trading Days in a 365 day
period without being succeeded within 15 trading days by an amendment to such Registration
Statement or by a subsequent Registration Statement filed with and declared effective by the
Commission.

          Notwithstanding the foregoing, the Company and each Investor hereby acknowledge that (i) the
Investor’s right to receive Event Payments in cash is subordinate to the Company’s obligations
under the Senior Credit Agreement as in effect on the date hereof, (ii) the Company cannot make any
Event Payments in cash to the Investors pursuant to this Section 6.1(d) without (x) the prior
written consent of the Required Senior Lenders or (y) unless the Company’s obligations under the
Senior Credit Agreement are satisfied.

          (e) Notwithstanding anything in this Agreement to the contrary, after 60 consecutive Trading
Days of continuous effectiveness of the initial Registration Statement filed and declared effective
pursuant to this Agreement, the Company may, by written notice to the

21

 

Investors, suspend sales under a Registration Statement after the Effective Date thereof
and/or require that the Investors immediately cease the sale of shares of Common Stock pursuant
thereto and/or defer the filing of any subsequent Registration Statement if the Company is engaged
in a material merger, acquisition or sale and the Board of Directors determines in good faith, by
appropriate resolutions, that, as a result of such activity, (A) it would be materially detrimental
to the Company (other than as relating solely to the price of the Common Stock) to maintain a
Registration Statement at such time and (B) it is in the best interests of the Company to defer
proceeding with such registration at such time. Upon receipt of such notice, each Investor shall
immediately discontinue any sales of Registrable Securities pursuant to such registration until
such Investor has received copies of a supplemented or amended Prospectus or until such Investor is
advised in writing by the Company that the then-current Prospectus may be used and has received
copies of any additional or supplemental filings that are incorporated or deemed incorporated by
reference in such Prospectus. In no event, however, shall this right be exercised to suspend sales
beyond the period during which (in the good faith determination of the Company’s Board of
Directors) the failure to require such suspension would be materially detrimental to the Company.
The Company’s rights under this Section 6(e) may be exercised for a period of no more than 20 days
at a time and not more than three times in any twelve-month period, without such suspension being
considered as part of an Event Payment determination. Immediately after the end of any suspension
period under this Section 6(e), the Company shall take all necessary actions (including filing any
required supplemental prospectus) to restore the effectiveness of the applicable Registration
Statement and the ability of the Investors to publicly resell their Registrable Securities pursuant
to such effective Registration Statement.

          (f) The Company shall not, from the date hereof until the Effective Date of the Registration
Statement, prepare and file with the Commission a registration statement relating to an offering
for its own account or the account of others under the Securities Act of any of its equity
securities.

     6.2 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:

          (a) Not less than three Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference), furnish to the Investors copies of
all such documents proposed to be filed, which documents (other than those incorporated or deemed
to be incorporated by reference) will be subject to the review of such Investors. The Company
shall reflect in each such document when so filed with the Commission such comments as the
Investors may reasonably propose. Notwithstanding any other provision of this Agreement, the
Company will have no obligation to deliver or make available to any Investor any Registration
Statement or Prospectus containing any material, nonpublic information unless such Investor
specifically consents in advance to receive such material, nonpublic information in writing and
such Investor has executed an agreement to keep such material, nonpublic information confidential
and refrain from trading in any Company security for so long as such information remains material,
nonpublic information.

          (b) (i) Subject to Section 6.1(e), prepare and file with the Commission such amendments,
including post-effective amendments, to each Registration Statement and the

22

 

Prospectus used in connection therewith as may be necessary to keep the Registration Statement
continuously effective, as to the applicable Registrable Securities for the Effectiveness Period
and prepare and file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities; (ii) cause the
related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably
possible, and in any event within 15 Trading Days (except to the extent that the Company reasonably
requires additional time to respond to accounting comments), to any comments received from the
Commission with respect to the Registration Statement or any amendment thereto and as promptly as
reasonably possible provide the Investors true and complete copies of all correspondence from and
to the Commission relating to the Registration Statement; and (iv) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Securities covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Investors thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.

          (c) Notify the Investors as promptly as reasonably possible, and (if requested by the
Investors confirm such notice in writing no later than two Trading Days thereafter, of any of the
following events: (i) any Registration Statement or any post-effective amendment is declared
effective; (ii) the Commission or any other Federal or state governmental authority requests any
amendment or supplement to any Registration Statement or Prospectus or requests additional
information related thereto; (iii) the Commission issues any stop order suspending the
effectiveness of any Registration Statement or initiates any Proceedings for that purpose; (iv) the
Company receives notice of any suspension of the qualification or exemption from qualification of
any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any
Proceeding for such purpose; or (v) the financial statements included in any Registration Statement
become ineligible for inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by reference is untrue
in any material respect or any revision to a Registration Statement, Prospectus or other document
is required so that it will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

          (d) Use its reasonable best efforts to avoid the issuance of or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as possible.

          (e) If requested by an Investor, provide such Investor, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including financial statements and
schedules, and all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such documents with the
Commission.

          (f) Subject to the limitations set forth in Section 6.2(a), promptly deliver to each Investor,
without charge, a reasonable number of copies of the Prospectus or Prospectuses

23

 

(including each form of prospectus) and each amendment or supplement thereto as such Persons
may reasonably request. The Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Investors in connection with the offering
and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement
thereto to the extent permitted by federal and state securities laws and regulations.

          (g) (i) In the time and manner required by each Trading Market, prepare and file with such
Trading Market an additional shares listing application covering all of the Registrable Securities;
(ii) take all steps necessary to cause such Registrable Securities to be approved for listing on
each Trading Market as soon as possible thereafter; (iii) provide to the Investors evidence of such
listing; and (iv) except as a result of the Excluded Events, during the Effectiveness Period,
maintain the listing of such Registrable Securities on each such Trading Market or another Eligible
Market.

          (h) Prior to any public offering of Registrable Securities, use its reasonable best efforts to
register or qualify or cooperate with the selling Investors in connection with the registration or
qualification (or exemption from such registration or qualification) of such Registrable Securities
for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United
States as any Investor requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective for so long as required, but not to exceed the duration of the
Effectiveness Period, and to do any and all other acts or things reasonably necessary or advisable
to enable the disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so subject.

          (i) Cooperate with the Investors to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee pursuant to a
Registration Statement, which certificates shall be free, to the extent permitted by this Agreement
and under law, of all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Investors may reasonably request.

          (j) Upon the occurrence of any event described in Section 6.2(c)(v), as promptly as reasonably
possible, prepare a supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.

          (k) Cooperate with any reasonable due diligence investigation undertaken by the Investors in
connection with the sale of Registrable Securities, including, without limitation, by making
available documents and information; provided that the Company will not deliver or

24

 

make available to any Investor material, nonpublic information unless such Investor
specifically requests in advance to receive material, nonpublic information in writing and such
Investor has executed an agreement to keep such material, nonpublic information confidential and
refrain from trading in any Company security for so long as such information remains material,
nonpublic information.

          (l) Comply with all rules and regulations of the Commission applicable to the registration of
the Registrable Securities.

     6.3 Expenses.

          (a) Registration Expenses. The Company shall pay all fees and expenses incident to
the performance of or compliance with Article VI of this Agreement by the Company, including
without limitation (a) all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in connection with applicable
state securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of
printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses,
(d) fees and disbursements of counsel for the Company and up to an aggregate of $5,000 for fees and
disbursements of counsel to the Investors, (e) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions contemplated by this Agreement,
and (f) all listing fees to be paid by the Company to the Trading Market.

          (b) Selling Expenses. All underwriting discounts and selling commissions applicable
to the sale of Registrable Securities and the aggregate fees and expenses of legal counsel for all
Investors relating to the sale of securities registered by or on behalf of Investors shall be borne
by such Investors pro rata on the basis of the number of securities so registered.

     6.4 Indemnification.

          (a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Investor, the officers, directors,
partners, members, agents and employees of each of them, each Person who controls any such Investor
(within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, partners, members, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all Losses, as incurred,
arising out of or relating to any untrue or alleged untrue statement of a material fact contained
in the Registration Statement, any Prospectus or any form of Company prospectus or in any amendment
or supplement thereto or in any Company preliminary prospectus, or arising out of or relating to
any omission or alleged omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that (A) such untrue statements, alleged untrue statements,
omissions or alleged omissions are based solely upon information regarding such Investor furnished
in writing to the Company by such Investor for use therein, or to the extent that such information
relates to such Investor or such Investor’s proposed method of distribution of Registrable
Securities, or (B) in the case of an occurrence of

25

 

an event of the type specified in Section 6.2(c)(iii)-(v), the use by such Investor of an
outdated or defective Prospectus after the Company has notified such Investor in writing that the
Prospectus is outdated or defective and prior to the receipt by such Investor of the Advice
contemplated in Section 6.5. The Company shall notify the Investors promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement. Notwithstanding the foregoing, the Company shall not
be liable to an Investor under this Section 6.4(a) to the extent that Losses giving rise to an
indemnification obligation hereunder are the result of fraud committed by such Investor.

          (b) Indemnification by Investors. Each Investor shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses (as determined by a
court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely
out of any untrue statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely
out of any omission of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in
the light of the circumstances under which they were made) not misleading to the extent, but only
to the extent, that such untrue statement or omission is contained in any information so furnished
by such Investor to the Company specifically for inclusion in such Registration Statement or such
Prospectus or to the extent that (i) such untrue statements or omissions are based solely upon
information regarding such Investor furnished to the Company by such Investor expressly for use
therein, or to the extent that such information relates to such Investor or such Investor’s
proposed method of distribution of Registrable Securities and was reviewed and expressly approved
by such Investor expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (ii) in the case of an occurrence of an
event of the type specified in Section 6.2(c)(iii)-(v), the use by such Investor of an outdated or
defective Prospectus after the Company has notified such Investor in writing that the Prospectus is
outdated or defective and prior to the receipt by such Investor of the Advice contemplated in
Section 6.5. In no event shall the liability of any selling Investor hereunder be greater in
amount than the dollar amount of the net proceeds received by such Investor upon the sale of the
Registrable Securities giving rise to such indemnification obligation, except in the event of fraud
by such Investor and such fraud gave rise in whole or in part to such Losses. Notwithstanding the
foregoing, no Investor shall be liable under this Section 6.4(b) to the extent that Losses giving
rise to such indemnification obligation are the result of fraud committed by the Company.

          (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof.

26

 

          An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding after prompt notice of such proceeding pursuant to the
preceding paragraph; or (iii) the named parties to any such Proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to immediately exist if
the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party). It being understood, however, that the Indemnifying Party shall not, in
connection with any one such Proceeding be liable for the fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Parties, which firm shall be appointed
by a majority (calculated by reference to the amount originally invested by each Investor) of the
Indemnified Parties if the Company is the Indemnifying Party. The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

          All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such Proceeding in a manner
not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten
Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party (i) shall have no obligation to pay such expenses should the
Indemnified Party fail to provide prompt notice of a claim for indemnification under this Section
and (ii) may require an Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).

          (d) Contribution. If a claim for indemnification under Section 6.4(a) or (b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,

27

 

access to information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall be deemed to
include, subject to the limitations set forth in Section 6.4(c), any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its terms.

          The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 6.4(d) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 6.4(d), no Investor shall be
required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds
actually received by such Investor from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Investor has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the
event of fraud by such Investor and such fraud gave rise in whole or in part to such Losses. In
addition, no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

          The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

     6.5 Dispositions. Each Investor agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement. Each Investor further agrees that,
upon receipt of a notice from the Company of the occurrence of any event of the kind described in
Sections 6.2(c)(iii), (iv) or (v), such Investor will discontinue disposition of such Registrable
Securities under the Registration Statement until such Investor’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by Section 6.2(j), or
until it is advised in writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce
the provisions of this paragraph.

     6.6 No Piggyback on Registrations. Except as disclosed in or contemplated by the SEC
Reports, neither the Company nor any of its security holders (other than the Investors in such
capacity pursuant hereto) may include securities of the Company in the Registration Statement other
than the Registrable Securities, and the Company shall not after the date hereof enter into any
agreement providing any such right to any of its security holders.

     6.7 Piggy-Back Registrations. If at any time during the Effectiveness Period there is
not an effective Registration Statement covering all of the Registrable Securities and the Company
shall determine to prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the

28

 

Securities Act) or their then equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company shall send to each
Investor written notice of such determination and if, within ten days after receipt of such notice,
any such Investor shall so request in writing, the Company shall include in such registration
statement all or any part of such Registrable Securities such Investor requests to be registered.

     6.8 No Restraint on Registration. The Investors shall have no right to take any
action to restrain, enjoin or otherwise delay any registration pursuant to this Agreement as a
result of any controversy that may arise with respect to the interpretation or implementation of
this Agreement

ARTICLE VII

MISCELLANEOUS

     7.1 Termination. This Agreement may be terminated by the (i) Company, (ii) any
Investor (but only with regards to such Investor), or (iii) a majority (calculated by reference to
the amount to be invested by each Investor) of the Investors, by written notice to the other
parties, if the Closing has not been consummated by the third Business Day following the date of
the Company’s receipt of the final notice of the approval or disapproval by AMEX of the listing of
the Registrable Securities pursuant to the Company’s additional listing application filed pursuant
to Section 6.2(g) above.

     7.2 Fees and Expenses. At the Closing, the Company shall pay to the Investors an
aggregate of $75,000 for legal fees and expenses incurred by the Investors in connection with their
due diligence and the preparation and negotiation of the Transaction Documents. Except as
expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all Transfer Agent fees, DWAC Fees (provided
the Transfer Agent is participating in the Depository Trust Company Fast Automated Securities
Transfer program), stamp taxes and other taxes and duties levied in connection with the sale and
issuance of their applicable Securities.

     7.3 Entire Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the Company will execute
and deliver to the Investors such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction Documents.

     7.4 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City

29

 

time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number specified in this
Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any
Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such notice is required
to be given. The addresses and facsimile numbers for such notices and communications are those set
forth on the signature pages hereof, or such other address or facsimile number as may be designated
in writing hereafter, in the same manner, by any such Person.

     7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the Company and each of the
Investors or, in the case of a waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair the exercise of any
such right. Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of Investors under Article
VI may be given by Investors holding at least a majority of the Registrable Securities to which
such waiver or consent relates.

     7.6 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.

     7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of the
Investors. Any Investor may assign its rights under this Agreement to any Person to whom such
Investor assigns or transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that apply to the
Investors and the assignor shall remain liable for the continued performance of all its obligations
under this Agreement. Notwithstanding anything to the contrary herein, Securities may be assigned
to any Person in connection with a bona fide margin account or other loan or financing arrangement
secured by such Securities.

     7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, except that each Indemnified Party
is an intended third party beneficiary of Section 6.4 and (in each case) may enforce the provisions
of such Sections directly against the parties with obligations thereunder.

     7.9 Governing Law; Venue; Waiver of Jury Trial. THE CORPORATE LAWS OF THE STATE OF
LOUISIANA SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND

30

 

INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF
MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH
RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND
AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS
AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH
PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE
SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW. THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

     7.10 Survival. The representations and warranties contained herein shall survive the
Closing for a period of one (1) year. All covenants in this Agreement shall survive the Closing
indefinitely (or for such shorter period as may be expressly set forth herein).

     7.11 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the same force and effect
as if such facsimile signature page were an original thereof.

     7.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.

     7.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction Documents, whenever
any Investor exercises a right, election, demand or option owed to such Investor by the Company
under a Transaction Document and the Company does not timely perform its related obligations within
the periods therein provided (including any applicable cure period), then, prior

31

 

to the performance by the Company of the Company’s related obligation, such Investor may
rescind or withdraw, in its sole discretion from time to time upon written notice to such Seller,
any relevant notice, demand or election in whole or in part without prejudice to its future actions
and rights.

     7.14 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and the execution by the holder
thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and
hold harmless the Company for any losses in connection therewith, including a customary and
reasonable bond, if requested. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with the issuance of such
replacement Securities.

     7.15 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Investors and the Company will be
entitled to seek specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation (other than in connection with any action for temporary
restraining order) the defense that a remedy at law would be adequate.

     7.16 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or other securities or
rights convertible into, or entitling the holder thereof to receive directly or indirectly shares
of Common Stock), combination or other similar recapitalization or event occurring after the date
hereof (except for dividends which accrue on the Company’s Series B Preferred Stock in accordance
with the Company’s Restated Articles of Incorporation), each reference in any Transaction Document
to a number of shares or a price per share shall be amended to appropriately account for such
event.

     7.17 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the obligations of any other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under any Transaction Document. The decision of each Investor to purchase
Securities pursuant to this Agreement has been made by such Investor independently of any other
Investor and independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of the Subsidiary which may have been made
or given by any other Investor or by any agent or employee of any other Investor, and no Investor
or any of its agents or employees shall have any liability to any other Investor (or any other
person) relating to or arising from any such information, materials, statements or opinions.
Nothing contained herein or in any Transaction Document, and no action taken by any Investor
pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption

32

 

that the Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each Investor
acknowledges that no other Investor has acted as agent for such Investor in connection with making
its investment hereunder and that no other Investor will be acting as agent of such Investor in
connection with monitoring its investment hereunder. Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation the rights arising out
of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any
other Investor to be joined as an additional party in any proceeding for such purpose.

[SIGNATURE PAGES TO FOLLOW]

33

 

          IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.

	 	 	 	 	 
	 	 	AKORN, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 	 	Name: Jeffrey A. Whitnell
	 	 	Title: Chief Financial Officer

	 	 	 
	 

	 	Address for Notice:
	 

	 	2500 Millbrook Drive
	 

	 	Buffalo Grove, Illinois 60089
	 
	 	 
	 

	 	Facsimile No.: (847) 279-6151
	 

	 	Telephone No.: (847) 279-6123
	 

	 	Attn: Chief Financial Officer
	 
	 	 
	 

	 	With a copy to: Luce, Forward, Hamilton & Scripps LLP
	 

	 	Facsimile: (619) 645-5339
	 

	 	Telephone: (619) 699-2526
	 

	 	Attn: Kurt L. Kicklighter, Esq

 

 

Investor Signature Page

By its execution and delivery of this signature page, the undersigned Investor hereby joins in and
agrees to be bound by the terms and conditions of the Securities Purchase Agreement dated as of
March 1, 2006 (the “Purchase Agreement”) by and among Akorn, Inc. and the Investors (as defined
therein), as to the number of shares of Common Stock and Warrants set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts thereof.

	 	 	 	 	 	 	 	 	 
	 	 	Name of Investor:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By: 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	     Name:	 	 
	 	 	     Title:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 
	 

	 	 	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Telephone No.:	 	 
	 

	 	 	 	 
	 	 
	 	 	Facsimile No.:	 	 
	 

	 	 	 	 
	 	 
	 	 	Number of Shares:	 	 
	 

	 	 	 	 
	 	 
	 	 	Number of Warrants:	 	 
	 

	 	 	 	 
	 	 
	 	 	Aggregate Purchase Price: $	 	 
	 

	 	 	 	 
	 	 

 

 

	 	 	 
	Exhibits:
	 	 
	 
	A

	 	Schedule of Investors
	B

	 	Instruction Sheet For Investors
	C

	 	Opinion of Company Corporate Counsel
	D

	 	Plan of Distribution
	E

	 	Company Transfer Agent Instructions
	F

	 	Form of Warrant

 

 

Exhibit A

Schedule of Investors

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Investor	 	Common Shares	 	Warrants	 	 	Purchase Price	 
	Atlas Master Fund, Ltd.
	 	 	67,892	 	 	 	23,762	 	 	$	305,514.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Visium Balanced Fund, LP
	 	 	140,257	 	 	 	49,090	 	 	$	631,156.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Visium Long Bias Offshore
Fund, LTD
	 	 	115,418	 	 	 	40,396	 	 	$	519,381.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Visium Long Bias Fund, LP
	 	 	21,452	 	 	 	7,508	 	 	$	96,534.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Visium Balanced Offshore
Fund, LTD
	 	 	154,981	 	 	 	54,244	 	 	$	697,414.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Capital Ventures
International
	 	 	225,000	 	 	 	78,750	 	 	$	1,012,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Jennison Health Sciences
Fund
	 	 	975,000	 	 	 	341,250	 	 	$	4,387,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Pacific Select Fund,
Health Sciences Portfolio
	 	 	145,000	 	 	 	50,750	 	 	$	652,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	LB I Group Inc.
	 	 	666,667	 	 	 	233,334	 	 	$	3,000,001.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Merlin Biomed Round Table
Fund, LP
	 	 	11,000	 	 	 	3,850	 	 	$	49,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Merlin Biomed II, LP
	 	 	45,000	 	 	 	15,750	 	 	$	202,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Merlin Biomed, LP
	 	 	155,000	 	 	 	54,250	 	 	$	697,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Merlin Biomed
International Limited
	 	 	189,000	 	 	 	66,150	 	 	$	850,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Nite Capital, L.P.
	 	 	222,223	 	 	 	77,779	 	 	$	1,000,003.50	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Investor	 	Common Shares	 	Warrants	 	 	Purchase Price	 
	UBS O’Connor LLC

	 	 	222,223	 	 	 	77,779	 	 	$	1,000,003.50	 
	FBO O’Connor

PIPES Corporate

Strategies Master Ltd.
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	H&Q Healthcare Investors
	 	 	577,778	 	 	 	202,223	 	 	$	2,600,001.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	H&Q Life
Sciences Investors
	 	 	311,111	 	 	 	108,889	 	 	$	1,399,999.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Broadfin Healthcare
Fund, LP
	 	 	66,667	 	 	 	23,334	 	 	$	300,001.50	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	 	4,311,669	 	 	 	1,509,088	 	 	$	19,402,510.50	 
	 
	 	 	 	 	 	 	 	 	 	 

 

 

Exhibit B

INSTRUCTION SHEET FOR INVESTOR

(to be read in conjunction with the entire Securities Purchase Agreement)

A. Complete the following items in the Securities Purchase Agreement:

	 	1.	 	Complete and execute the Investor Signature Page. The Agreement must be
executed by an individual authorized to bind the Investor.

	 	2.	 	Exhibit B-1 — Stock Certificate Questionnaire:

Provide the information requested by the Stock Certificate Questionnaire;

	 	3.	 	Exhibit B-2 — Registration Statement Questionnaire:

Provide the information requested by the Registration Statement Questionnaire.

	 	4.	 	Exhibit B-3 — Investor Certificate:

Provide the information requested by the Certificate for Corporate, Partnership, Trust,
Foundation and Joint Investors (B-3).

	 	5.	 	Return, via facsimile, the signed Securities Purchase Agreement including the
properly completed Exhibits B-1 through B-3, to:

Luce, Forward, Hamilton & Scripps LLP

Del Mar Gateway

11988 El Camino Real, Suite 200

San Diego, CA 92130-2592

Facsimile: (858) 523-4309

Telephone: (858) 720-6334

Attn: Jason A. Femrite

	 	6.	 	After completing instruction number five (5) above, deliver the original signed
Securities Purchase Agreement including the properly completed Exhibits B-1 through
B-3 to:

Luce, Forward, Hamilton & Scripps LLP

Del Mar Gateway

11988 El Camino Real, Suite 200

San Diego, CA 92130-2592

Facsimile: (858) 523-4309

Telephone: (858) 720-6334

Attn: Jason A. Femrite

 

 

B. Instructions regarding the transfer of funds for the purchase of Shares and Warrants will be
telecopied to the Investor by the Company at a later date.

C. Upon the resale of any Shares by the Investor after the Registration Statement covering any
Shares is effective, as described in the Purchase Agreement, the Investor:

	 	(i)	 	must deliver a current prospectus, and annual and quarterly reports of the
Company to the buyer (prospectuses, and annual and quarterly reports may be obtained
from the Company at the Investor’s request); and
	 
	 	(ii)	 	must send a letter in the form of Exhibit D to the Company and the Company’s
transfer agent so that the Shares may be properly transferred.

 

 

Exhibit B-1

AKORN, INC.

STOCK CERTIFICATE QUESTIONNAIRE

               Please provide us with the following information:

	 	 	 
	1. The exact name that the Securities are to be registered in (this is
the name that will appear on the stock certificate(s)). You may use a
nominee name if appropriate:
	 	 
	 

	 	 
	 
	 	 
	2. The relationship between the Investor of the Securities and the
Registered Holder listed in response to item 1 above:
	 	 
	 

	 	 
	 
	 	 
	3. The mailing address, telephone and telecopy number of the
Registered Holder listed in response to item 1 above:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	4. The Tax Identification Number of the Registered Holder listed in
response to item 1 above:
	 	 
	 

	 	 

 

 

Exhibit B-2

AKORN, INC.

REGISTRATION STATEMENT QUESTIONNAIRE

          The attached questionnaire requests information to be used to prepare a Registration
Statement on Form S-3 (the “Registration Statement”) to be filed with the Securities and Exchange
Commission in connection with a proposed public offering of common stock of Akorn, Inc. (the
“Company”). The questionnaire is being distributed to each person who holds or has rights to
securities being registered pursuant to the Registration Statement.

          The italicized terms in the questionnaire are defined in the Appendix to the questionnaire.
These definitions are important in assisting you to complete the questionnaire properly.

          Due to the compressed timeline required to file the Registration Statement, to be named as a
selling securityholder in the prospectus, beneficial owners shall complete and deliver the
questionnaire by no later than March 3, 2006. Beneficial owners that do not complete the
questionnaire and deliver it to the Company by such date may be delayed in being named as selling
securityholders in the prospectus and may not be permitted to sell any registrable securities
pursuant to the Registration Statement until they are named as selling securityholder.

          The information you supply in response to the questionnaire will be used to assure that
certain data to be included in the Registration Statement will be correct. Please exercise great
care in completing the questionnaire. Under certain circumstances, selling security holders are
subject to personal liability if the Registration Statement misrepresents a material fact or omits
a material fact. Your best defense, if the Registration Statement is defective, is that you
exercised due diligence as to the accuracy of the Registration Statement. Certain legal
consequences arise from being named as a selling securityholder in the Registration Statement and
the related prospectus.

          All questions should be answered. If the answer to any question is “0” or “no” or “none,”
please so state. Should you fail to provide any answer, we will assume such answer is negative.
Unless a question otherwise states, answers should be given as of the date you complete the
questionnaire.

 

 

QUESTIONNAIRE

          The undersigned beneficial owner (the “Selling Securityholder” or “you”) of registrable
securities hereby gives notice to the Company of its intention to sell or otherwise dispose of
registrable securities beneficially owned by it and listed below in Question 3 pursuant to the
Registration Statement.

          If the Selling Securityholder transfers all or any portion of the registrable securities
listed in Question 3 after the date on which such information is provided to the Company, the
Selling Securityholder agrees to notify the Company at the time of the transfer.

          If the Selling Securityholder receives any information from the Company regarding the
Registration Statement or the related prospectus, including copies and drafts thereof, the Selling
Securityholder acknowledges that such material may contain material non-public information. The
Selling Securityholder understands that the Company shall request the Selling Securityholder’s
prior written consent to provide such information, including copies and drafts of the Registration
Statement and the related prospectus, and that the Company shall be under no obligation to provide
such information to the Selling Securityholder unless such Selling Securityholder agrees to (i)
receive such information and (ii) refrain from trading in any Company security for so long as such
information remains material, nonpublic information. The Selling Securityholder accepts that,
should the Selling Securityholder agree to receive such information, Selling Securityholder waives
any obligations, representations or covenants of the Company which would prevent it, or any of its
respective officers, directors, employees and agents, from providing Selling Securityholder with
any material, nonpublic information regarding the Company.

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

	 	 	 	 	 	 	 
	 

	 	 	1.	 	 	(a) Full name of the Selling Securityholder exactly as it should appear in the
Registration Statement:
	 
	 	 	 	 	 	 
	 	 	 

	 	(b)	 	Full legal name of registered holder (if not the same as (a) above) through
which registrable securities listed in Question 3 below are held:

	 	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	2.	 	 	Address for notices to Selling Securityholder:
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 

	 	 	 	 	 
	 

	 	Telephone:	 	 
	 

	 	 

	 

	 	Fax:	 	 
	 

	 	 

	 

	 	Contact Person:	 	 
	 

	 	 

 

 

	 	 	 	 	 
	3.	 	Beneficial ownership of registrable securities [Source: Form S-3 Item 7; Reg. S-K Item 507]:
	 
	 	 	 	 
	 

	 	(a)
	 	Type and principal amount of registrable securities beneficially owned:
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	4.	 	(a)Identify the person or persons (a person may be an entity) who has voting
and/or investment control over the Selling Securityholder. In this context, a person
who has “voting control” includes a person who has or shares the power to vote, or
direct the voting of, securities issued by the Selling Securityholder. A person who has
“investment control” includes a person who has or shares the power to dispose, or
direct the disposition of, securities issued by the Selling Securityholder. In some
cases, the appropriate response may be that no person has voting and/or investment
control over the Selling Securityholder, in which case, please respond to (c) below.
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	(b)
	 	If the person identified above does not file periodic reports
with the SEC, identify the natural person with voting and/or investment control
over such person identified above.
	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 

	 	(c)
	 	If there is no person or persons (a person may be an entity) who has voting
and/or investment control over the Selling Securityholder, indicate whether
there is a committee or board of directors that holds the voting and/or
investment control over the Selling Securityholder, and name the natural
persons that comprise such committee or board.
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 

	 	 	 	 	 
	5.

	 	(a)
	 	Is the Selling Securityholder a registered broker-dealer?
	 
	 	 	 	 
	 	 	                     Yes                                No
	 
	 	 	 	 
	 

	 	(b)
	 	Is the Selling Securityholder directly or indirectly an affiliate or
associate of any member firm of the National Association of Securities Dealers,
Inc. (the “NASD”)?
	 
	 	 	 	 
	 	 	                     Yes                                No
	 
	 	 	 	 
	 	 	If “Yes,” identify the affiliated registered broker-dealer.

 

 

	 	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	(c)
	 	Have you made any subordinated loan to any member firm of the NASD?
	 
	 	 	 	 
	 	 	Yes                               No                    
	 
	 	 	 	 
	                    If the answer is “Yes,” please set forth the details of such loan, including the
original amount(s), date(s), interest rate(s), other material terms, and amount(s)
outstanding as of March 1, 2006.

	 
	 	 	 	 
	 

	 	(d)
	 	Are you aware of any holder of securities of the Company or any subsidiary,
other than the officers and directors of the Company, who is, or directly or
indirectly is an affiliate or associate of, a member firm of the NASD?
	 
	 	 	 	 
	 	 	Yes                               No                    

                    If the answer is “Yes,” please set forth below the name of such person, the number and
class of securities held, the date such securities were acquired, the price paid, and the
nature of the affiliation or association (all to the extent known to you).

	6.	 	Please list the number of shares of Common Stock of the Company beneficially
owned, directly or indirectly, as of March 1, 2006, by the persons named below (other
than any shares which the persons named below have the right to acquire through the
exercise of any option, warrant, or other right or the conversion of a security).
Please note that the answers stated below should include the shares listed in Question
4. [Source: Form S-3 Item 7; Reg. S-K Item 507].

	 	 	 
	Person	 	Number of Shares Beneficially Owned
	Selling Securityholder
	 	 
	 

	 	 
	 
	 	 
	Selling Securityholder’s spouse*
	 	 
	 

	 	 
	 
	 	 
	Selling Securityholder’s minor children*
	 	 
	 

	 	 
	 
	 	 
	Any other relative of Selling
Securityholder or of Selling
Securityholder’s spouse who shares
Selling Securityholder’s home (naming
each such relative)*
	 	 
	 

	 	 
	 
	 	 
	Any other associate of Selling Securityholder (naming each such associate)
	 	 
	 

	 	 

 

* Please refer to the definition of beneficial ownership in the Appendix regarding the views of
the Securities and Exchange Commission and some courts with respect to securities held by family
members.

 

 

	 	7.	 	Please list below the indicated information concerning any option, warrant, or other
right to acquire, or any security convertible into, shares of Common Stock of the
Company, or of any subsidiary of the Company, or any stock appreciation or similar
right, beneficially owned, directly or indirectly, as of March 1, 2006, by each
person listed in Question 6. Please list each option, warrant, right, or
convertible security separately. [Source: Form S-3 Item 7; Reg. S-K Item 507].

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Description	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	of Option,	 	 	Number of Shares	 	 	 	 	 	 	 	 	 	 
	 	 	Warrant,	 	 	which may be	 	 	 	 	 	 	 	 	 	 
	 	 	Right, or	 	 	Acquired on	 	 	Exercise or	 	 	Date First	 	 	 	 
	 	 	Convertible	 	 	Exercise or	 	 	Conversion	 	 	Exercisable or	 	 	Termination	 
	Person	 	Security	 	 	Conversion	 	 	Price	 	 	Convertible	 	 	Date	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	8.	 	Was any security included in answer to Question 6 or 7 because the beneficial owner
had the right to acquire beneficial ownership pursuant to the power to revoke, or the
automatic termination of, a trust, discretionary account, or similar arrangement?

Yes                                No                    

               If the answer is “Yes,” please set forth the affected number of securities and the details
concerning the right to acquire beneficial ownership, including exact dates when the right first
comes into existence and number of shares as to which the right relates. [Source: Form S-3 Item 7;
Reg. S-K Item 507].

	 	9.	 	Do you know of any person or entity other than such persons or entities listed
in the Company’s Proxy Statement for the 2005 Annual Meeting of Shareholders, which
owns beneficially (including by virtue of any right to acquire securities) more than 5%
of the shares of the outstanding Common Stock of the Company?

Yes                                No                    

               If the answer is “Yes,” please state the name of such person or entity, identify the class of
voting security, state the number of shares beneficially owned, and provide details concerning any
right to acquire beneficial ownership. When two or more persons act as a partnership, limited
partnership,

 

 

syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of
the Company, such partnership, syndicate, or group must be considered as one “person.”
[Source: Form S-3 Item 7; Reg. S-K Item 507].

	10.	 	As to the securities indicated as being beneficially owned in answer to Question 6,
7, 8, or 9, does any person other than the person identified as the beneficial owner
have

	 	(a)	 	the sole or shared power to vote or to direct the vote of any of such securities?
	 
	 	 	 	Yes                                No                    

or

	 	(b)	 	the sole or shared power to dispose or to direct the disposition of any of such
securities?
	 
	 	 	 	Yes                                No                    

               If the answer is “Yes” to either of the foregoing questions, please set forth below the name
and address of each person who has either such power or with whom the indicated beneficial owner
shares either such power, together with the number of shares to which such right relates. [Source:
Form S-3 Item 7; Reg. S-K Item 507].

	 	11.	 	Except as set forth below, neither the Selling Securityholder nor any of its
affiliates, officers, directors or principal equity holders (owners of 5% of more of
the equity securities of the Selling Securityholder) now has, proposes to have, or has
held any position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years. [Source: Form S-3
Item 7; Reg. S-K Item 507].
	 
	 	 	 	State any exceptions here:

      

      

	 	12.	 	Except as set forth below, when distributed pursuant to the Registration
Statement, the Selling Securityholder (including its donees or pledgees) intends to
distribute its registrable securities listed above in Question 3 only as follows (if at
all): (1)·On any national securities exchange or quotation service at which our Common
Stock may be listed or quoted at the time of sale; (2) In the over-the-counter market;
(3) In private transactions; (4) Through options; (5) By pledge to secure debts and
other obligations; (6) In ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchases; (7) In block trades in which the broker-dealer will
attempt to sell the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction; (8) Through purchases by a broker-dealer as
principal and resale by the

 

 

	 	 	 	broker-dealer for its account; (9) In settlement of short sales; (10)Through the
sale of a specified number of shares at a stipulated price per share by agreement
between broker-dealers and the selling shareholders; (11) or a combination of any of
the above methods. [Source: Form S-3 Item 8; Reg. S-K Item 508].
	 
	 	 	 	State any exceptions here:

      

      

	 	13.	 	Do you intend to sell any shares of Common Stock pursuant to a registration
statement other than the Registration Statement to which this questionnaire relates?
	 
	 	 	 	Yes                               No                    

If the answer is “Yes,” please state the number of shares of Common Stock, the expected
manner of sale, and the estimated date of the sale.

	 	14.	 	Did you pay any premium on any insurance policy obtained in connection with the
proposed offering which insures or indemnifies directors or officers of the Company
against any liability they may incur in connection with the registration, offering, or
sale of the Common Stock to be registered?
	 
	 	 	 	Yes                               No                    

If the answer is “Yes,” please state the premium paid. [Source: Form S-3 Item 14; Reg. S-K
Item 5011 Instr.].

 

 

THE REMAINING QUESTIONS NEED ONLY BE ANSWERED IF YOU BELIEVE YOU

MAY BENEFICIALLY OWN 5% OR MORE OF THE COMPANY’S SHARES OF COMMON

STOCK. IF YOU DO NOT NEED TO ANSWER THE FOLLOWING QUESTIONS, PLEASE

TURN TO THE FINAL PAGE OF THIS QUESTIONNAIRE.

	 	15.	 	Please describe any transaction since January 1, 2003, or any proposed transaction
to which the Company or any subsidiary was, is, or is to be a party and in which

               (a) you,

               (b) any immediate family member, or

               (c) any firm, corporation, or other entity in which you or any immediate family member had,
have, or will have a position or relationship

had, have, or will have any direct or indirect interest, and indicate the nature and amount of such
interest and the amount of such transaction.

               This question applies to any transaction with the Company or any subsidiary, whether or not in
the ordinary course of business, other than transactions which arise solely out of a person’s
status with respect to the Company or to a subsidiary and such person receives no extra or special
benefit (e.g., dividends in the case of a stockholder or salaries or stock options in the case of a
director, officer, or employee). [Source: Form S-3 Item 7; Reg. S-K Item 507].

	 	16.	 	Do you know of any arrangement whereby more than 5% of the shares of the
outstanding Common Stock of the Company is held or is to be held subject to any voting
trust or similar agreement?
	 
	 	 	 	Yes                                No                     
	 

If the answer is “Yes,” please describe such arrangement.

 

 

The answers I have supplied to the questions in this questionnaire are true, complete, and correct
to the best of my knowledge after reasonable inquiry. I will promptly notify Jeffrey A. Whitnell,
the Company’s Chief Financial Officer, if any event of which I become aware should occur between
now and the termination of the distribution of securities pursuant to the proposed public offering
that would cause the answer to any question to change or cause the Registration Statement to
contain a misrepresentation or omission of a material fact.

By signing below, the undersigned consents to the disclosure of the information contained herein,
and in any corrected, amended or supplemental responses thereto, and the inclusion of such
information in the Registration Statement and the related prospectus. The undersigned understands
that such information will be relied upon by the Company in connection with the preparation or
amendment of the Registration Statement and the related prospectus.

By signing below, the undersigned acknowledges and agrees to maintain any information it
receives from the Company relating to the Registration Statement or the related prospectus, or any
amendment or supplement thereto, including drafts and copies thereof, confidential, and that it
will not trade in the Company’s common stock based upon such information between the date any
information it receives from the Company relating to the Registration Statement or the related
prospectus, or any amendment or supplement thereto, including drafts and copies thereof, is
provided to it and 72 hours after the date the Registration Statement or the applicable amendment
or supplement thereto is filed with the SEC.

	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 

	 	 

	 	 

	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	Its:
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

PLEASE RETURN THE COMPLETED AND EXECUTED QUESTIONNAIRE TO:

Akorn, Inc.

2500 Millbrook Drive

Buffalo Grove, IL 60089

Attention: CFO

Fax: 847.279.6123

Email: jeff.whitnell@akorn.com

with a copy to:

Luce, Forward, Hamilton & Scripps LLP

600 West Broadway, Suite 2600

San Diego, CA 92101

Attention: Edwin Astudillo

Fax: 619.645.5397

Email: eastudillo@luce.com

 

 

APPENDIX

Affiliate–An “affiliate” of a specified person is a person that directly, or through one or more
intermediaries, controls, or is controlled by, or is under common control with, the person
specified.

Associate–The term “associate” means (1) any corporation or organization (except the Company and
subsidiaries) of which you are an officer or partner, or of which you are, directly or indirectly,
the owner beneficially of 10% or more of any class of equity securities, (2) any trust or other
estate in which you have a beneficial interest or as to which you serve as trustee or in a similar
fiduciary capacity, or (3) your spouse, or any relative of yours or of your spouse who shares your
home or who is a director or officer of the Company or of any subsidiary.

Beneficially–The term “beneficially” as applied to an interest in securities describes any interest
in the securities in question which entitles you to any of the rights or benefits of ownership,
even though you are not the holder or owner of record. Interests in securities held in an estate,
trust, or partnership, or by a nominee, are examples of beneficial interests.

If you have any contract, understanding, relationship, agreement, or other arrangement with any
other person with respect to securities, pursuant to which you obtain benefits substantially
equivalent to the ownership of securities, you should consider such securities as “beneficially
owned” by you. For purposes of this questionnaire, you will be regarded as having benefits
substantially equivalent to ownership of securities if:

     (a) directly or indirectly, through any contract, arrangement, understanding, relationship, or
otherwise you have or share: (i) voting power, which includes the power to vote, or to direct the
voting of, the security; or (ii)investment power, which includes the power to dispose of, or to
direct the disposition of, the security; or

     (b) you have the right to acquire beneficial ownership of the security, including but not
limited to any right to acquire: (i) through the exercise of any option, warrant, or right; (ii)
through the conversion of a security; (iii) pursuant to a power to revoke a trust, discretionary
account, or similar arrangement; or (iv) pursuant to the automatic termination of a trust,
discretionary account, or similar arrangement; or

     (c) you can apply income from securities to meet expenses which you otherwise would meet from
other sources.

You are also considered to be the beneficial owner of a security if you, directly or indirectly,
create or use a trust, proxy, power of attorney, pooling arrangement, or any other contract,
arrangement, or device with the purpose or effect of divesting yourself of beneficial ownership of
such security or preventing the vesting of such beneficial ownership as part of a plan or scheme to
evade the reporting requirements pf Section 13(d) or 13(g) of the Securities Exchange Act. If you
have any reason to believe that any interest you have in securities, however remote, might be
described as a beneficial interest, please describe such interest.

The Securities and Exchange Commission has taken the view, with which some courts have agreed, that
a person may be regarded as the beneficial owner of securities held in the name of the person’s
spouse, minor children, or other relatives of the person or the person’s spouse who share the
person’s home, if such relationship results in such person obtaining benefits substantially
equivalent to ownership of such securities. We will assume, however, that you do not consider that
you beneficially own any securities you list in answer to Questions 1, 2, and 3 as being owned by
such persons. If you do consider that you are the beneficial owner of such securities, please list
them as being owned by both you and such other person, and indicate that such securities are listed
more than once.

Immediate Family Member–The term “immediate family member” includes your spouse, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and
sisters-in-law.

Subsidiary–The term “subsidiary” includes: Akorn (New Jersey), Inc.

 

 

Exhibit B-3

AKORN, INC.

CERTIFICATE FOR CORPORATE, PARTNERSHIP,

TRUST, FOUNDATION AND JOINT INVESTORS

          If the investor is a corporation, partnership, trust, pension plan, foundation, joint Investor
(other than a married couple) or other entity, an authorized officer, partner, or trustee must
complete, date and sign this Certificate.

CERTIFICATE

          The undersigned certifies that the representations and responses below are true and accurate:

          (a) The investor has been duly formed and is validly existing and has full power and authority
to invest in the Company. The person signing on behalf of the undersigned has the authority to
execute and deliver the Securities Purchase Agreement on behalf of the Investor and to take other
actions with respect thereto.

          (b) Indicate the form of entity of the undersigned:

               ___ Limited Partnership

               ___ General Partnership

               ___ Corporation

          ___ Revocable Trust (identify each grantor and indicate under what circumstances the trust is
revocable by the grantor):

 

 

 

 

(Continue on a separate piece of paper, if necessary.)

          ___ Other type of Trust (indicate type of trust and, for trusts other than pension trusts,
name the grantors and beneficiaries):

 

 

 

 

(Continue on a separate piece of paper, if necessary.)

          ___ Other form of organization (indicate form of organization (___).

          (c) Indicate the approximate date the undersigned entity was formed: ___.

 

 

          (d) In order for the Company to offer and sell the Units in conformance with state and federal
securities laws, the following information must be obtained regarding your investor status. Please
initial each category applicable to you as an investor in the Company.

	 	 	 	 	 
	 

	 	___
	 	1. A bank as defined in Section 3(a)(2) of the Securities Act, or any savings
and loan association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act whether acting in its individual or fiduciary capacity;
	 
	 	 	 	 
	 

	 	___
	 	2. A broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934;
	 
	 	 	 	 
	 

	 	___
	 	3. An insurance company as defined in Section 2(13) of the Securities Act;
	 
	 	 	 	 
	 

	 	___
	 	4. An investment company registered under the Investment Company Act of 1940 or
a business development company as defined in Section 2(a)(48) of that Act;
	 
	 	 	 	 
	 

	 	___
	 	5. A Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act of
1958;
	 
	 	 	 	 
	 

	 	___
	 	6. A plan established and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political subdivisions, for the benefit
of its employees, if such plan has total assets in excess of $5,000,000;
	 
	 	 	 	 
	 

	 	___
	 	7. An employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;
	 
	 	 	 	 
	 

	 	___
	 	8. A private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940;
	 
	 	 	 	 
	 

	 	___
	 	9. An organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed for
the specific purpose of acquiring the Shares, with total assets in excess of
$5,000,000;
	 
	 	 	 	 
	 

	 	___
	 	10. A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated
person as described in Rule 506(b)(2)(ii) of the Exchange Act;
	 
	 	 	 	 
	 

	 	___
	 	11. An entity in which all of the equity owners qualify under any of the above
subparagraphs. If the undersigned belongs to this investor category only, list the
equity owners of the undersigned, and the investor category which each such

 

 

	 	 	 	 	 
	 

	 	 	 	equity owner satisfies:
	 

	 	 	 	 

	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(Continue on a separate piece of paper, if necessary.)

               Please set forth in the space provided below the (i) states, if any, in the U.S. in which you
maintained your principal office during the past two years and the dates during which you
maintained your office in each state, (ii) state(s), if any, in which you are incorporated or
otherwise organized and (iii) state(s), if any, in which you pay income taxes.

 

 

 

Dated: ___________________________________________________________, 2006

	 	 	 
	 

Name of investor

	 	 
	 
	 	 
	 

Signature and title of authorized officer, partner or trustee

	 	 

 

 

Exhibit C

OPINION OF COMPANY CORPORATE COUNSEL

 

 

Exhibit C-1

FORM OF LUCE FORWARD OPINION

 

 

DRAFT

THE FOLLOWING IS A DISCUSSION DRAFT OF AN OPINION BEING CONSIDERED FOR ISSUANCE
BY LUCE, FORWARD, HAMILTON & SCRIPPS LLP. ISSUANCE OF ANY FINAL OPINION IS SUBJECT
TO: (A) SATISFACTION OF ALL NECESSARY TRANSACTION CONDITIONS; (B) SATISFACTORY
COMPLETION OF ALL NECESSARY DUE DILIGENCE INQUIRIES; (C) REVIEW OF FINAL DRAFTS OF
DOCUMENTS OPINED UPON; (D) CONSENT BY THE FIRM’S CLIENT; AND (E) REVIEW AND FORMAL
APPROVAL OF THE FINAL OPINION BY AUTHORIZED MEMBERS OF THE FIRM. THIS DRAFT HAS
NOT BEEN APPROVED FOR ISSUANCE AS A FINAL OPINION.

March ____, 2006

To the Investors (as defined in the Securities Purchase Agreement (as defined below))

c/o Banc of America Securities LLC

9 West 57th Street

New York, NY 10019

Banc of America Securities LLC

9 West 57th Street

New York, NY 10019

     Re: Offering of Common Stock and Warrants of Akorn, Inc.

Ladies and Gentlemen:

We have acted as counsel to Akorn, Inc., a Louisiana corporation (“Akorn”), and special counsel to
Akorn (New Jersey), Inc., an Illinois corporation (“Akorn-NJ” and together with Akorn, the
“Companies”), for the purpose of rendering certain opinions, set forth herein, in connection with
the offering (the “Offering”) by Akorn in a private placement to certain accredited investors
(each, an “Investor”) of an aggregate of (i) 4,311,669 shares of Akorn’s common stock, no par value
(“Common Stock”), and (ii) warrants to purchase shares of Akorn’s Common Stock (“Warrants”). Akorn
has engaged Banc of America Securities LLC (the “Placement Agent”) as placement agent for the
Offering on a “best efforts” basis. This opinion letter is being delivered pursuant to Section 2.2
(iii) of the Securities Purchase Agreement (as defined below).

We understand that in this transaction, and in the review and acceptance of this opinion letter,
you are represented by independent counsel of your choosing with expertise in the relevant subject
matter.

	1.	 	Factual Examination.

	 	1.1	 	Documents

 

 

          (a) Transaction Documents. In connection with this opinion, we have examined and
relied upon copies of the following documents (collectively, the “Transaction Documents”):

               (i) Securities Purchase Agreement dated March 1, 2006 executed by Akorn and each Investor (the
“Securities Purchase Agreement”);

               (ii) Form of Warrant to be executed by Akorn with respect to each Investor (the “Warrant”);
and

               (iii) Placement Agent Letter dated February 1, 2006 executed by Akorn and the Placement Agent
(the “Placement Agent Letter”).

          (b) Company Documents. In connection with this opinion we have also examined and
relied upon the following documents (collectively, the “Company Documents”):

               (i) Restated Articles of Incorporation of Akorn as certified by the Louisiana Secretary of
State as of February 21, 2006 (“Akorn Articles”);

               (ii) Articles of Incorporation of Akorn-NJ, certified by the Illinois Secretary of State as of
February 21, 2006 (“Akorn-NJ Articles”);

               (iii) Amended and Restated Bylaws of Akorn, as certified by the Secretary of Akorn (“Akorn
Bylaws”);

               (iv) Bylaws of Akorn-NJ, as certified by the Secretary of Akorn-NJ (“Akorn-NJ Bylaws”);

               (v) Certificate of Good Standing from the Louisiana Secretary of State for Akorn dated
February 21, 2006;

               (vi) Certificate of Good Standing from the Illinois Secretary of State for Akorn-NJ dated
February 21, 2006;

               (vii) Certificate of Good Standing from the Illinois Secretary of State for Akorn dated
February 21, 2006;

               (viii) Short Form Standing Certificate from the Treasurer of New Jersey for Akorn-NJ dated
February 22, 2006;

               (ix) Certificate of Officers of Akorn dated March ___, 2006 (“Akorn Officers’ Certificate”);

               (x) Certificate of Officers of Akorn-NJ dated March ___, 2006 (“Akorn-NJ Officers’
Certificate” and together with the Akorn Officers’ Certificate, the “Officers’ Certificates”);

 

 

               (xi) Certificate of Secretary of Akorn dated March ___, 2006 (“Akorn Secretary’s
Certificate”);

               (xii) Certificate of Secretary of Akorn-NJ dated March ___, 2006 (“Akorn-NJ Secretary’s
Certificate” and together with the Akorn Secretary’s Certificate, the “Secretaries’ Certificates”);

               (xiii) Resolutions of the Board of Directors of Akorn dated February 28, 2006, as certified by
the Secretary of Akorn;

               (xiv) the Stock Ledger of Akorn-NJ, as certified by the Secretary of Akorn-NJ (the “Stock
Ledger”); and

               (xv) Akorn’s Annual Report on Form 10-K for the period ended December 31, 2004, filed on March
31, 2005 (“Form 10-K”), and Akorn’s Quarterly Report on Form 10-Q for the period ended September
30, 2005, filed on November 7, 2005 (“Form 10-Q”), with the Securities and Exchange Commission (the
“SEC”).

	 	1.2	 	Scope of Inquiry; Certain Assumptions.

          (a) For purposes of this opinion, we have examined only the Transaction Documents and the
Company Documents. We have assumed the correctness of all factual matters set forth therein. We
have not conducted any: (i) investigation or examination of factual matters; (ii) investigation or
examination of the title to, or nature or extent of, any real or personal property, or inspection
of any such property; or (iii) docket or other search of the records of any court, administrative
tribunal, recording or filing office, or other public entity.

          (b) In rendering this opinion, we have assumed: (i) the genuineness of all signatures (if any)
on all documents reviewed by us; (ii) that the Transaction Documents have been executed by Akorn
and delivered by Akorn to the Placement Agent and/or Investors, as applicable; (iii) that the
Transaction Documents have been or will be duly authorized, executed, and delivered by and on
behalf of all the parties thereto and will be the legal, valid and binding obligations of all the
parties (other than Akorn) once executed and delivered; (iv) the conformity to authentic original
documents of all documents submitted to us as copies; (v) that the copies of the Transaction
Documents and the Company Documents provided to us are complete and correct copies which conform to
authentic original documents, and contain the entire agreement of the parties thereto, that there
are no other documents or oral agreements or other circumstances that would in any way alter the
provisions of the Transaction Documents and/or the Company Documents, and that there has not been
any mutual mistake of fact or misunderstanding, fraud, duress or undue influence with respect
thereto; (vi) that each natural person executing or who has executed the Transaction Documents or
the Company Documents is or was competent to do so; (vii) that receipt of a facsimile copy or other
electronic or physical copy of Akorn’s signature pages to the Transaction Documents which contain
the signature of Akorn’s respective authorized officers shall constitute due execution of the
Transaction Documents; (viii) that the act of faxing copies of Akorn’s duly executed signature
pages to the Transaction Documents to the Investor’s independent counsel shall constitute delivery
of the Transaction Documents; (ix) the accuracy, completeness and authenticity of all certificates
on

 

 

which we have relied, and that any such certificates dated as of an earlier date are still accurate
as of the date hereof; (x) that Akorn has filed all required franchise tax returns, if any, and
paid all required taxes, if any, under the applicable statutes and under any other applicable
governmental rule; (xi) all statutes, judicial and administrative decisions, and rules and
regulations of governmental agencies constituting the laws which are the subject of this opinion
letter, as set forth in Section 4, are generally available (i.e., in terms of access and
distribution following publication or other release) to lawyers practicing in the State of
California, and are in a format that makes legal research reasonably feasible; (xii) the
constitutionality or validity of a relevant statute, rule, regulation or agency action is not in
issue unless a reported decision in the jurisdiction(s) whose laws are the subject of this opinion
letter, as set forth in Section 4, has specifically addressed but not resolved, or has established,
its unconstitutionality or invalidity; (xiii) Akorn will obtain all permits and governmental
approvals required in the future, and take all actions similarly required, relevant to the
performance of the Transaction Documents; and (xiv) all parties to the Transaction Documents will
act in accordance with, and will refrain from taking action that is forbidden by, the terms and
conditions of the Transaction Documents.

          (e) In rendering the opinions set forth in Paragraphs 2.1 and 2.2, we have relied exclusively
with your permission upon the Officers’ Certificate and certificates referred to in Sections
1.1(b)(v-viii).

          (f) We have also assumed: (i) that the Placement Agent and the Investors (collectively, the
“Other Parties”), if applicable, are duly formed, validly existing and in good standing under the
laws of the jurisdiction of its formation; (ii) that each of the Other Parties is fully authorized
and qualified under its charter, organizational documents and all applicable laws and regulations
of the jurisdiction of its formation to transact business generally and to purchase stock and enter
into transactions of the nature provided for in the Transaction Documents; (iii) if required by
California law or the law of any other jurisdiction because of its connection to this transaction,
that each of the Other Parties is properly qualified to do business within the State of California
and each such other jurisdiction; (iv) that each of the Other Parties has the organizational power
and authority to execute, deliver and carry out the terms of the Transaction Documents and has duly
and validly authorized the execution, delivery and performance by it of the Transaction Documents
to which each of the Other Parties is a party; (v) that the execution, delivery and performance of
the Transaction Documents by each of the Other Parties will not violate any law, rule, regulation,
writ or order to which it is subject; (vi) that each of the Other Parties has extended
consideration and value under the Transaction Documents to which it is a party; and (vii) that all
other conditions precedent to the execution, effectiveness and performance under the Transaction
Documents to which each of the Other Parties is subject or by which each of the Other Parties is
benefited have been or will be satisfied or waived and that each of the Other Parties will fulfill
its obligations under the Transaction Documents to which it is a party.

          (g) We have also assumed: (i) that Akorn is and was at all relevant times a legal entity duly
formed, validly existing and in good standing under the laws of the jurisdiction of its formation,
with full power, authority and legal capacity to execute, deliver and perform its obligations under
the Transaction Documents to which it is or is to become a party, and to own, lease and operate its
properties and to carry on its business as now conducted; (ii) the individuals

 

 

executing the Transaction Documents on behalf of Akorn have been duly authorized and empowered to
do so; (iii) all of the outstanding shares of capital stock of Akorn has been duly authorized and
validly issued and are fully paid and nonassessable and are not subject to any enforceable
preemptive or similar rights granted by law; (iv) Akorn’s execution, delivery and performance of
the Transaction Documents and the actions required thereunder do not and will not result in the
violation of any existing Louisiana corporate law; (v) no consent approval, authorization or order
of, or registration or filing with any Louisiana corporate governmental authority is required by
Akorn for the performance of its obligations at the closing of transactions contemplated by the
Transaction Documents as may be required under the state securities or blue sky laws governing the
purchase and distribution of securities; and (vi) that the Transaction Documents do not and at all
relevant times did not violate any provision of Akorn’s organizational documents or otherwise cause
a default under any document or agreement to which Akorn is or was a party. We understand that you
will be receiving or have received an opinion from independent counsel for Akorn with regard to the
above matters related to Akorn.

          (h) Where we render an opinion “to our knowledge” or concerning an item “known to us” or our
opinion otherwise refers to our knowledge, it means that: (i) we have conducted no independent
investigation of the matters set forth in connection therewith; (ii) we have not conducted a
litigation search or other search or investigation with respect to any pending items of litigation
or orders or decrees; (iii) with respect to factual matters we have relied solely upon the
statements, representations and warranties set forth in the Officers’ Certificates and Transaction
Documents; (iv) by your acceptance of this opinion letter you acknowledge that you have also relied
upon certifications of Akorn or other due diligence conducted by you and you have not relied solely
on this opinion letter as to such matters; and (v) no inference as to our knowledge of the
existence or absence of facts or other matters is to be drawn from the fact of our representation
or any other matter; but that, during and in the course of our representation of Akorn in
connection with this transaction, no information has come to the attention of the attorneys who
rendered legal services in connection with that representation (namely, Kurt L. Kicklighter, Jason
A. Femrite and Chad R. Ensz) as of the date hereof which gives us current actual knowledge to the
contrary.

2. Opinion. On the basis of the foregoing, but subject to the additional qualifications,
assumptions and limitations set forth below, we are of the opinion that, as of the date hereof:

     2.1 Based solely upon the good standing certificate referred to in Section 1.1(b)(vii) above,
Akorn is duly qualified to do business and is in good standing as a foreign corporation in
Illinois.

     2.2 Based solely upon the Akorn-NJ Articles and the good standing certificate referred to in
Section 1.1(b)(vi) above, Akorn-NJ was incorporated under the laws of the State of Illinois on June
3, 1999, and is validly existing and in good standing under the laws of the State of Illinois.
Based solely upon the short form standing certificate referred to in Section 1.1 (b) (viii) above,
Akorn-NJ is duly qualified to do business and is in good standing as a foreign corporation in the
State of New Jersey.

 

 

     2.3 Akorn-NJ has the corporate power and corporate authority under the Illinois Business
Corporation Act to own, pledge, mortgage and operate its properties, to lease any properties it
operates under lease and to conduct its business as described in the Form 10-K.

     2.4 The authorized capital stock of Akorn consists of one hundred fifty million (150,000,000)
shares of common stock, no par value per share, and five million (5,000,000) shares of Preferred
Stock, $1.00 par value per share. Akorn has not issued any capital stock since November 7, 2005,
the date on which the Form 10-Q was filed with the SEC, other than as disclosed in or contemplated
by any materials filed in the twelve months preceding the date hereof by Akorn with the SEC under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Securities Act of
1933, as amended (the “Securities Act”), including exhibits incorporated by reference to previous
filings, whether or not required (the foregoing materials collectively referred to herein as “SEC
Reports”).

     2.5 Based solely upon our review of the Stock Ledger and Akorn-NJ Officers’ Certificate, Akorn
is the holder of record of 100% of the issued and outstanding shares of common stock of Akorn-NJ.
All of the issued and outstanding shares of common stock of Akorn-NJ are, to our knowledge, (i)
validly issued, fully paid and non-assessable, and (ii) were not issued in violation of or subject
to any preemptive or similar rights.

     2.6 Upon execution and delivery, each of the Transaction Documents executed by Akorn will
constitute the legal, valid and binding obligation of Akorn, enforceable against Akorn in
accordance with its terms.

     2.7 The execution, delivery, performance of, and compliance with the Transaction Documents by
Akorn and the consummation by Akorn of the transactions contemplated by such agreements do not and
will not either by itself or upon notice or the passage of time or both (i) to our knowledge, (A)
result in any violation of, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under any agreement, indenture or lease or other instrument to
which Akorn is a party which is attached as an exhibit to Form 10-K or any Current Report on Form
8-K filed by Akorn subsequent to the filing of the Form 10-K, or (B) result in the creation of any
lien, security interest or encumbrance on the assets or properties of Akorn pursuant to, any
contract, agreement, instrument, judgment or decree binding upon Akorn which, individually or in
the aggregate, would have a material adverse effect on the business, assets, financial condition,
prospects or results of operation of Akorn, (ii) assuming compliance with all applicable federal
and state securities laws, result in a violation of any federal law, rule or regulation to which
Akorn is subject, or by which any property or asset of Akorn is bound or affected, or (iii)
result in any violation of any order, judgment, injunction or decree of which we have knowledge of
any court or governmental authority.

     2.8 No approval, authorization, consent, registration, or filing with any federal court,
regulatory, administrative or other governmental body is required for the execution and delivery of
the Transaction Documents or the consummation of the transactions contemplated thereby, except
which have been received, and except under the Securities Act, and such as may be required under
applicable “Blue Sky” laws in connection with the issuance of the shares of Common Stock, the
Warrants, the shares of Common Stock underlying the Warrants, or the

 

 

shares of Common Stock issued as Replacement Common Stock (as defined in Section 6.1 of the
Securities Purchase Agreement) (collectively, the “Securities”).

     2.9 To our knowledge, except as disclosed in the SEC Reports, there are no actions, suits or
proceedings pending or threatened against or affecting Akorn, in any court of law or in equity, or
before any arbitrator, administrative agency or other governmental authority, which challenge the
validity of any action taken or to be taken by Akorn pursuant to the Transaction Documents or the
transactions contemplated thereby.

     2.10 To our knowledge, there are no agreements or arrangements, which have not been waived or
complied with, under which Akorn is obligated to register the sale of any of its securities under
the Securities Act because of the transactions contemplated by the Transaction Documents, except as
contained in the Transaction Documents.

     2.11 Assuming the accuracy of the representations and warranties of Akorn set forth in Section
3.1 of the Securities Purchase Agreement and of the Investors in Section 3.2 of the Securities
Purchase Agreement, the offer, issuance and sale of the Securities are exempt from the registration
requirements of the Securities Act.

3. Qualifications, Assumptions and Limitations. Our opinion above is subject to and
limited by the following qualifications, assumptions and limitations, in addition to those set
forth elsewhere in this letter:

     3.1 The effect of bankruptcy, insolvency, reorganization, moratorium, liquidation,
receivership, assignment for the benefit of creditors, fraudulent conveyance or transfer,
marshaling and other laws relating to or affecting the rights and remedies of creditors generally.

     3.2 The effect of general principles of equity, whether considered in a proceeding in equity
or at law, including concepts of materiality, reasonableness, good faith and fair dealing, and the
discretion of the court before which a proceeding is brought, and including limitations of law or
equity upon the availability of specific enforcement, injunctive relief, other equitable remedies
or any particular remedy at law.

     3.3 The unenforceability or ineffectiveness under certain circumstances of contractual
provisions relating to: severability; self-help; summary remedies without notice or opportunity
for hearing or correction; penalties, forfeitures, late payment charges, increased interest rates
upon default, liquidated damages, prepayment charges and acceleration of future amounts due (other
than principal) without appropriate discount to present value (and in connection with these matters
we also draw your attention to the provisions of California Civil Code § 1671 (liquidated damages);
attorneys’ fees to the extent inconsistent with California Civil Code Section 1717; indemnity and
release, limitations upon liability, exculpation and related provisions, to the extent contrary to
public policy or prohibited by law or providing for indemnity, release, limitations upon liability
or exculpation of a party against or with respect to its own wrongful or negligent acts;
cumulation, election or non-exclusivity of remedies, or non-waiver of remedies by a failure or
delay of exercise; waiver of defense, setoff, counterclaim, recoupment or marshaling rights;
integration, and ineffectiveness of oral modifications; restraints on trade; survival of terms,

 

 

provisions or agreements after termination of agreements or satisfaction of obligations; or waiver
or relinquishment of (i) broadly or vaguely stated rights, (ii) unknown future rights or defenses,
(iii) defenses to obligations, including, but not limited to, statutes of limitation, rights of
redemption, notices of acceleration and default, or (iv) the benefits of statutory, regulatory or
constitutional law or other rights granted by law, where any of the foregoing is contrary to public
policy or otherwise prohibited, limited or made unenforceable by law.

     3.4 The unenforceability of contractual provisions or contracts found by a court to be or to
have been unconscionable or against public policy.

     3.5 The assumption that all rights and remedies under the Transaction Documents will be
enforced in good faith and in a commercially reasonable manner and in accordance with applicable
California law, notwithstanding any contrary provision in the Transaction Documents, which contrary
provisions may be unenforceable.

     3.6 We advise you that an opinion as to enforceability of remedies means only that some
remedies are available under the agreement in question, and not necessarily that every provision in
the agreement will be enforced by a court in all circumstances.

     3.7 We render no opinion as to the effect on the enforceability of rights and/or remedies
under the Transaction Documents or the enforcement of rights and/or remedies of the Transaction
Documents under the laws of states or other jurisdictions other than California.

     3.8 We express no opinion as to the enforceability of any provision relating to: (a) consent
to, establishment of, or waiver of objections to, jurisdiction or venue; (b) choice of law; (c)
mandatory arbitration; (d) consent to, waiver of, establishment of a method for, or irrevocable
appointment of an agent for, service of process; (e) waiver of rights to attack or appeal a
judgment; (f) establishment of, changes in, or waiver of, measures or methods of proof or rules of
evidence or judicial or arbitration procedure; or (g) waiver of jury trial.

     3.9 We express no opinion as to (a) your compliance with any state or federal law, rule or
regulation that may, because of the nature of your business, be applicable to the Offering; (b)
compliance with or the effect of any federal or state laws, rules or regulations applicable to
Akorn or Akorn-NJ by virtue of the nature or extent of the business or operations of Akorn or
Akorn-NJ or their affiliates, including any state or federal pharmaceutical or drug-related laws,
rules or regulations; (c) the accuracy or effect of any matter of fact set forth in the Transaction
Documents, except to such extent that any such matter is also set forth as part of our opinion
above; (d) compliance with or the effect of any (i) income or franchise tax or other laws, rules or
regulations relating to taxation, (ii) export control, trade regulation or antitrust laws, (iii)
Federal Reserve Board margin regulations, (iv) pension and employee benefit laws and regulations,
(v) laws and regulations on filing and notice requirements such as Hart-Scott-Rodino and
Exon-Florio, (vi) fiduciary duty requirements, (vii) statutes, ordinances, administrative
decisions, and rules and regulations of counties, towns, municipalities and special political
subdivisions, and judicial decisions to the extent that they deal with any thereof, (viii)
racketeering laws and regulations and criminal and civil forfeiture laws, and other laws of general
application providing for criminal prosecution, (ix) health and safety laws and regulations, or (x)
labor laws and

 

 

regulations; (e) any documents (including exhibits to the Transaction Documents) or the effect
thereof other than the enumerated Transaction Documents, or (f) the effect of laws relating to
permissible rates of interest.

     3.10 Our opinion set forth in Section 2.7 is based upon our consideration of only those
statutes, rules and regulations known to us which, in our experience, are normally applicable to
companies in transactions such as those contemplated by the Transaction Documents.

     3.11 In rendering the opinions set forth in Section 2.5 relating to the fully paid status of
the issued and outstanding shares of capital stock of Akorn-NJ, we have relied, without independent
verification, solely on the Akorn-NJ Officers’ Certificate to the effect that Akorn-NJ has received
the full consideration approved by the Board of Directors for all issued shares of the capital
stock of Akorn-NJ.

     3.12 In rendering the opinion set forth in Section 2.5 relating to the validity of the
issuance of the issued and outstanding capital stock of Akorn-NJ, we have relied, without further
investigation, solely on our review of the Stock Ledger provided to us by Akorn-NJ and statements
in the Akorn-NJ Officers’ Certificate relating to the capitalization of Akorn-NJ.

     3.13 We express no opinion with respect to any matters which require us to perform a
mathematical calculation or make a financial or accounting determination.

     3.14 In rendering the opinion expressed in Section 2.10 relating to obligations to register
the sale of any of Akorn’s other securities because of the transactions contemplated by the
Transaction Documents, we have assumed that notice of the registration statement to be filed in
connection with the Transaction Documents has been or will timely be sent to (i) the Holders of
Registrable Securities (as those terms are defined in the Registration Rights Agreement between
Akorn and certain purchasers, dated October 7, 2003); (ii) AEG Partners LLC (“AEG”), in connection
with the Warrant Purchase and Registration Agreement between Akorn and AEG, dated June 18, 2003;
(iii) the John N. Kapoor Trust Dated September 20, 1989 (the “Trust”), in connection with the
Registration Rights Agreement between Akorn and the Trust, dated July 12, 2001; and (iv) the Trust,
in connection with the Stock Registration Rights Agreement between Akorn and the Trust, dated
November 15, 1990.

4. Laws Relevant to Opinion; Matters Post-Dating Opinion

     4.1 This opinion letter relates solely to the laws of the State of California (other than laws
relating to conflicts or choice of law and applicable federal law in effect on the date hereof (but
subject, however, to the exclusion of certain laws as set forth elsewhere herein). Other than with
respect to our opinions referenced in Sections 2.2 and 2.3 (implicating Illinois general
corporation law), we have not examined and do not opine with respect to the applicability or effect
of any other laws.

     4.2 We have assumed, but do not opine, that the Transaction Documents are governed entirely by
and would be interpreted and enforced under the internal laws of the State of California, without
regard to principles of conflict of laws. We express no opinion as to which

 

 

state’s law governs any aspect of any Transaction Document. We call your attention to the fact
that some of the Transaction Documents provide that they are governed by the laws of a state or
states other than California. We express no opinion as to the effect of such provisions or such
laws. In light of such provisions, however, we advise you that California law may not apply. We
also advise you that to the extent that the Transaction Documents are not legal, valid, binding and
enforceable in accordance with the laws of the state(s) referred to therein, they may not be legal,
valid, binding and enforceable in, or under the laws of, the State of California.

     4.3 We express no opinion with respect to laws becoming effective after the date hereof. This
opinion relates only to matters as of the date hereof, and we express no opinion with respect to
any transaction, transfer, conveyance, obligation or performance occurring after the date hereof.
We disclaim any obligation to advise you of any events occurring or coming to our attention or any
developments in areas covered by this opinion that occur after the date of this opinion.

5. Use and Reliance

This opinion is provided at your request and solely to you for use in connection with the Offering.
This opinion may not be relied upon or used by any other person or for any other purpose, nor may
it be exhibited, quoted from or referred to, or copies delivered to any other person, without our
prior written consent.

Very truly yours,

Luce, Forward, Hamilton & Scripps LLP

LFHS/KLK

 

 

Exhibit C-2

FORM OF JONES WALKER OPINION

 

 

March ___, 2006

To the Investors (as defined in the Securities Purchase Agreement (as defined below))

c/o Bank of America Securities LLC

9 West 57th Street

New York, NY 10019

Banc of America Securities LLC

9 West 57th Street

New York, NY 10019

     Re: Offering of Common Stock and Warrants of Akorn, Inc.

Ladies and Gentlemen:

     We have acted as special Louisiana counsel to Akorn, Inc., a Louisiana corporation (“Akorn”),
for the limited purpose of rendering certain opinions as to matters of Louisiana law set forth
below in connection with the offering (the “Offering”) by Akorn in a private placement to certain
accredited investors (each, an “Investor”) of an aggregate of (i) up to 10,000,000 shares of
Akorn’s common stock, no par value (“Common Stock”), and (ii) warrants to purchase shares of
Akorn’s Common Stock (“Warrants”). Akorn has engaged Banc of America Securities LLC (the
“Placement Agent”) as placement agent for the Offering on a “best efforts” basis. This opinion
letter is being delivered pursuant to Section 2.2 (iii) of the Securities Purchase Agreement (as
defined below). Capitalized terms used but not defined herein have the meanings given to them in
the Securities Purchase Agreement.

     In connection with rendering these opinions, we have examined and relied upon photocopies or
electronically transmitted copies of the following documents (collectively, the “Transaction
Documents”):

     Securities Purchase Agreement dated ___ 2006, executed by Akorn and each Investor
(the “Securities Purchase Agreement”);

 

 

Banc of America Securities LLC

February 23, 2006

Page 2

     Form of Warrant to be executed by Akorn with respect to each Investor pursuant to the
Securities Purchase Agreement (the “Warrant”); and

     Placement Agent Letter dated February 1, 2006 executed by Akorn and the Placement Agent
(the “Placement Agent Letter”).

     In connection with rendering these opinions we have also examined and relied upon photocopies
or electronically transmitted copies of the following documents (collectively, the “Company
Documents”):

     Restated Articles of Incorporation of Akorn as certified by the Louisiana Secretary of
State as of ___, 2006 (“Akorn Articles”);

     Amended and Restated Bylaws of Akorn, as certified by the Secretary of Akorn (“Akorn
Bylaws”);

     Certificate of Good Standing from the Louisiana Secretary of State for Akorn dated
February 22, 2006;

     Certificate of Officers of Akorn dated ___, 2006 (“Akorn Officers’ Certificate”);

     Certificate of Secretary of Akorn dated ___, 2006 (“Akorn Secretary’s
Certificate”);

     Resolutions of the Board of Directors of Akorn dated ___, 2006, as certified by
the Secretary of Akorn;

     Akorn’s Annual Report on Form 10-K for the period ended December 31, 2004, filed on
March 31, 2005 (“Form 10-K”).

     For purposes of these opinions, we have examined only the Transaction Documents and the
Company Documents. We have assumed the correctness of all factual matters set forth in the
Transaction Documents and the Company Documents, and we have conducted no independent investigation
or examination of factual matters, including, but not limited to, factual matters contained in
representations, warranties and acknowledgments in any documents.

     In rendering these opinions, we have assumed without independent verification (i) the
genuineness of all signatures on all documents reviewed by us; (ii) the conformity to authentic
original documents of all documents submitted to us as copies; (iii) that the Transaction Documents
executed and delivered by the parties today are the same in all respects material to the opinions
delivered herein as the versions thereof furnished to us on ___, 2006 by Luce, Forward,
Hamilton & Scripps LLP and identified by them as the final execution versions of the Transaction
Documents and are complete and correct copies and contain the entire

 

 

Banc of America Securities LLC

February 23, 2006

Page 3

agreement of the parties thereto necessary for us to render the opinions contemplated herein,
and that there are no other documents nor any oral agreements or other circumstances that would in
any way alter or vary the provisions of the Transaction Documents; (iv) that each natural person
executing or who has executed the Transaction Documents or the Company Documents is or was
competent to do so; (v) the accuracy, completeness and authenticity of certificates of public
officials; (vi) that the certificates of public officials dated as of an earlier date are still
accurate as of the date hereof; (vii) that Akorn has filed all required franchise tax returns, if
any, and paid all required taxes, if any, under the applicable statutes and under any other
applicable governmental rule; (viii) Akorn will obtain all permits and governmental approvals
required in the future, and take all actions similarly required, relevant to the performance of the
Transaction Documents; and (ix) all parties to the Transaction Documents will act in accordance
with, and will refrain from taking action that is forbidden by, the terms and conditions of the
Transaction Documents.

     On the basis of the foregoing, but subject to the additional qualifications and assumptions
set forth below, we are of the opinion that, as of the date hereof:

     1. Akorn is a corporation, duly incorporated, validly existing and in good standing under the
laws of Louisiana, the state of its incorporation.

     2. Akorn has corporate power and corporate authority to own, lease, license and operate its
properties and assets and to conduct its business, as such properties, assets and businesses are
described in the Form 10-K.

     3. The authorized capital stock of Akorn consists of one hundred fifty million shares of
common stock, no par value per share, and five million shares of preferred stock, $1.00 par value
per share. No securities of Akorn are entitled to any enforceable preemptive or similar rights
granted by law.

     4. The Common Shares to be sold pursuant to the Purchase Agreement have been duly authorized
and, when issued and delivered to the Investors against payment therefor in accordance with the
terms of the Securities Purchase Agreement, will be validly issued, fully paid and nonassessable
and free of any enforceable preemptive or similar rights granted by law.

     5. Akorn has full corporate power and authority to enter into the Securities Purchase
Agreement and the Placement Agent Letter and to issue, sell and deliver the Common Shares to the
Investors as provided in the Securities Purchase Agreement.

     6. The Securities Purchase Agreement and the Placement Agent Letter have been duly authorized
by Akorn.

     7. Akorn’s execution, delivery and performance of the Securities Purchase Agreement and the
Placement Agent Letter do not and will not (i) violate the Articles of Incorporation or Bylaws of
Akorn, (ii) result in any violation of any existing Louisiana corporate

 

 

Banc of America Securities LLC

February 23, 2006

Page 4

law, applicable to Akorn (assuming compliance with all applicable state securities and blue
sky laws).

     8. No consent, approval, authorization or order of, or registration or filing with any
Louisiana corporate governmental authority is required on the part of Akorn for the performance by
Akorn of its obligations at the closing of the transactions contemplated by the Securities Purchase
Agreement, except as may be required under the state securities or blue sky laws governing the
purchase and distribution of the Shares in connection with the purchase and sale of the Shares.

     Our opinions above are subject to and limited by the following qualifications and assumptions,
in addition to those set forth above:

     (a) This opinion relates solely to the internal laws of the State of Louisiana (other than (i)
laws relating to conflicts of law or choice of law, (ii) parish, city or other local laws or
ordinances, and (iii) the Louisiana Securities Law) in effect on the date hereof (“Louisiana Law”)
and no opinion is given herein as to the effect of any other law.

     (b) The opinions given in paragraphs 4, 5, 7 and 8 above do not address the effect of Section
9 of the Warrants.

     (c) We express no opinion as to (a) your compliance with any state or federal law, rule or
regulation that may, because of the nature of your business, be applicable to the Offering; (b)
compliance with or the effect of any federal laws, rules or regulations or any state pharmaceutical
or drug-related laws, rules or regulations applicable to Akorn by virtue of the nature of extent of
the business or operations of Akorn or its affiliates; (c) the accuracy or effect of any matter of
fact set forth in the Transaction Documents, except to such extent that any such matter is also set
forth as part of our opinion above; (d) compliance with or the effect of any (i) income or
franchise tax or other laws, rules or regulations relating to taxation, (ii) export control, trade
regulation or antitrust laws, (iii) pension and employee benefit laws and regulations, (iv) laws
and regulations on filing and notice requirements such as Hart-Scott-Rodino and Exon-Florio, (v)
fiduciary duty requirements, (vi) racketeering laws, and regulations and criminal and civil
forfeiture laws, and other laws of general application providing for criminal prosecution, (vii)
health and safety laws and regulations, or (viii) labor laws and regulations; or (e) any documents
(including exhibits to the Transaction Documents) or the effect thereof other than the enumerated
Transaction Documents.

     This opinion is provided at your request and solely to you for use for the purpose expressed
in the first paragraph hereof. This opinion may not be relied upon or used by any

 

 

Banc of America Securities LLC

February 23, 2006

Page 5

other person or for any other purpose, nor may it be exhibited, quoted from or referred to, or
copies delivered to any other person, without our prior written consent.

 

 

Exhibit D

PLAN OF DISTRIBUTION

The selling stockholders, and any of their pledgees, assignees and successors-in-interest
(including successors by gift, partnership distribution or other non-sale-related transfer effected
after the date of this prospectus), may, from time to time, sell any or all of their shares of
common stock on any stock exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed prices, at market prices at the time of sale, at
varying prices determined at the time of sale or at negotiated prices. The selling stockholders
may use any one or more of the following methods when selling shares:

	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;

	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

	•	 	an exchange distribution in accordance with the rules of the applicable exchange;

	•	 	privately negotiated transactions;

	•	 	short sales;

	•	 	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price
per share;

	•	 	a combination of any such methods of sale; and

	•	 	any other method permitted pursuant to applicable law.

          The selling stockholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus. The selling stockholders are not obligated to, and
there is no assurance that the selling stockholders will, sell all or any of the shares we are
registering. The selling stockholders may transfer, devise or gift such shares by other means not
described in this prospectus.

          The selling stockholders may also engage in short sales against the box, puts and calls and
other transactions in our securities or derivatives of our securities and may sell or deliver
shares in connection with these trades.

          Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions involved. Any profits on
the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be
underwriting discounts or commissions under the Securities Act. Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale of shares will be borne
by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act. The selling stockholders that are

 

 

also
broker-dealers are “underwriters” within the meaning of the
Securities Act. LBI Group Inc. and Capital Ventures International,
each a selling stockholder, is an affiliate of a broker-dealer. LBI
Group Inc. and Capital Ventures International purchased the securities convertible or exercisable into the shares of common stock
being offered by it under this prospectus in the ordinary course of business, and at the time of
the purchase of such securities that are convertible or exercisable into the shares of common stock
being offered for resale under this prospectus, neither LBI Group
Inc. nor Capital Ventures International had any agreement or understanding,
directly or indirectly, with any person to distribute such securities or the shares of common stock
issuable upon conversion or exercise.

          The selling stockholders may from time to time pledge or grant a security interest in some or
all of the shares of common stock owned by them and, if they default in the performance of any of
their secured obligations, the pledgees or secured parties may offer and sell the shares of common
stock from time to time under this prospectus as it may be supplemented from time to time, or under
an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.

          The selling stockholders also may transfer the shares of common stock in other circumstances,
in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.

          The selling stockholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding the sale of their
shares of common stock, nor is there an underwriter or coordinating broker acting in connection
with a proposed sale of shares of common stock by any selling stockholder. If we are notified by
any selling stockholder that any material arrangement has been entered into with a broker-dealer
for the sale of shares of common stock, if required, we will file a supplement to this prospectus.
If the selling stockholders use this prospectus for any sale of the shares of common stock, they
will be subject to the prospectus delivery requirements of the Securities Act.

          The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may
apply to sales of our common stock and activities of the selling stockholders.

 

 

Exhibit E

COMPANY TRANSFER AGENT INSTRUCTIONS

Computershare Investor Services LLC

2 North LaSalle Street

Chicago, IL 60602

Attention: Ladies and Gentlemen:

          Reference is made to that certain Securities Purchase Agreement, dated as of March 1, 2006
(the “Agreement”), by and among Akorn, Inc., a Louisiana corporation (the “Company”), and the
investors named on the Schedule of Investors attached thereto (collectively, the “Holders”),
pursuant to which the Company is issuing to the Holders shares (the “Common Shares”) of Common
Stock of the Company, no par value per share (the “Common Stock”), and Warrants (the “Warrants”),
which are exercisable into shares of Common Stock.

          This letter shall serve as our irrevocable authorization and direction to you (provided that
you are the transfer agent of the Company at such time) to issue shares of Common Stock upon
transfer or resale of the Common Shares.

          You acknowledge and agree that so long as you have previously received (a) written
confirmation from the Company’s legal counsel that either (i) a registration statement covering
resales of the Common Shares and the Warrant Shares has been declared effective by the Securities
and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”)
and such confirmation has not been rescinded, or (ii) sales of the Common Shares and the Warrant
Shares may be made in conformity with Rule 144 under the 1933 Act (“Rule 144”), (b) if applicable,
a copy of such registration statement, and (c) either (x) notice from the Company of the surrender
of stock certificates for the purpose of having such certificates replaced with certificates which
do not bear the restrictive legends pursuant to Section 4.1(c) of the Agreement, or (y) notice from
legal counsel to the Company or any Holder that a transfer of Common Shares and/or Warrant Shares
has been effected either pursuant to the registration statement (and a prospectus delivered to the
transferee) or pursuant to Rule 144, then, unless otherwise required by law, within three (3)
Business Days of your receipt of the notice referred to in (c), you shall issue the certificates
representing the Common Shares and the Warrant Shares to the Holders (in the case of (c)(x)) or to
the transferees registered in the names of such transferees (in the case of (c)(y)), and such
certificates shall not bear any legend restricting transfer of the Common Shares and the Warrant
Shares thereby and should not be subject to any stop-transfer restriction, except as set forth in
Section 6.5 of the Agreement.

          A form of written confirmation (to be used in connection with any sale) from the Company’s
outside legal counsel that a registration statement covering resales of the Common Shares and the
Warrant Shares has been declared effective by the SEC under the 1933 Act is attached hereto as
Exhibit A.

 

 

          Please be advised that the Holders are relying upon this letter as an inducement to enter into
the Agreement and, accordingly, each Holder is a third party beneficiary to these instructions.

     Please execute this letter in the space indicated to acknowledge your agreement to act in
accordance with these instructions. Should you have any questions concerning this matter, please
contact me at (847) 279-6151.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	AKORN, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 
	 	 
	 	 	     Name: Jeffrey A. Whitenell
	 	 	     Title: Chief Financial Officer

THE FOREGOING INSTRUCTIONS ARE

ACKNOWLEDGED AND AGREED TO

this ___ day of ___ 2006

COMPUTERSHARE INVESTOR SERVICES LLC

	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	     Name:	 	 	 	 
	 

	 	 

	 	 
	 

	 	     Title:	 	 	 	 
	 

	 	 
	 	 

Enclosures

 

 

Exhibit A

Form of Written Confirmation

Computershare Investor Services, LLC

2 North LaSalle Street

Chicago, IL 60602

RE: Akorn, Inc.

Ladies and Gentlemen:

We are counsel to Akorn, Inc., a Louisiana corporation (the “Company”), and we understand that each
of the investors listed on Exhibit A attached hereto and incorporated herein by reference
(collectively, the “Holders”) holds equity securities of the Company as further described on
Exhibit A.

In connection with the Company’s obligations under a Securities Purchase Agreement, dated as of
___, 2006, by and among the Company and certain of the Holders (the “Securities Purchase
Agreement”), on ___, 2006, the Company filed a Registration Statement on Form S-3 (File No.
___) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Securities (as defined below), which names the Holders as selling
stockholders thereunder.

For purposes of this letter, the term “Registrable Securities” shall mean ___; provided,
however, that securities shall only be treated as Registrable Securities if and only for so long as
they (A) have not been disposed of pursuant to a registration statement declared effective by the
Commission, and (B) have not been sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”), so that all
transfer restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale.

In connection with the foregoing, we advise you that a member of the SEC’s staff has advised us by
telephone that the SEC has entered into an order declaring the Registration Statement effective
under the Securities Act at _:00 p.m. PDT on ___, 2006, and we have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness
has been issued or that any proceedings for that purpose are pending before, or threatened by, the
SEC.

Based on the foregoing, we are of the opinion that the Registrable Securities are available for
resale under the Securities Act pursuant to the Registration Statement.

Very truly yours,

 

 

Exhibit F

FORM OF WARRANT

 

 

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

Akorn, Inc.

WARRANT

			
	Warrant No. [ ]
	 	Dated: March___, 2006

     Akorn, Inc., a Louisiana corporation (the “Company”), hereby certifies that, for value
received, [Name of Holder] or its registered assigns (the “Holder”), is entitled to purchase from
the Company up to a total of [___]1 shares of common stock, no par value per share
(the “Common Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the
“Warrant Shares”) at an exercise price equal to $5.40 per share (as adjusted from time to time as
provided in Section 9, the “Exercise Price”), at any time and from 180 days from the date hereof
and through and including the date that is five years from the date of issuance hereof (the
“Expiration Date”), and subject to the following terms and conditions. This Warrant (this
“Warrant”) is one of a series of similar warrants issued pursuant to that certain Securities
Purchase Agreement, dated as of the date hereof, by and among the Company and the Purchasers
identified therein (the “Purchase Agreement”). All such warrants are referred to herein,
collectively, as the “Warrants.”

     1. Definitions. In addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the meanings given to such terms in
the Purchase Agreement.

     2. Registration of Warrant. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record
Holder hereof from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary.

     3. Registration of Transfers. Subject to the restrictions on transfer set forth on
the first page hereof and in Section 16(a) below, the Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of
Assignment attached hereto duly completed and signed, to the Transfer Agent or to the Company at
its address specified herein. Upon any such registration or transfer, a new warrant to purchase

 

			
	1	 	35% warrant coverage

 

 

Common Stock, in substantially the form of this Warrant (any such new warrant, a “New
Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee
and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a
holder of a Warrant.

     4. Exercise and Duration of Warrants.

          (a) This Warrant shall be exercisable by the registered Holder at any time and from time to
time on or after the date that is 180 days from the date hereof to and including the Expiration
Date. At 6:30 P.M., New York City time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value; provided that, if the average of
the Closing Prices for the five Trading Days immediately prior to (but not including) the
Expiration Date exceeds the Exercise Price on the Expiration Date, provided further that, if on the
Expiration date, there is no effective Registration Statement covering the resale of the Warrant
Shares, then this Warrant shall be deemed to have been exercised in full (to the extent not
previously exercised) on a “cashless exercise” basis at 6:30 P.M. New York City time on the
Expiration Date. Notwithstanding anything to the contrary herein, the Expiration Date shall be
extended for each day following the Effective Date that the Registration Statement is not
effective.

          (b) A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in
the form attached hereto (the “Exercise Notice”), appropriately completed and duly signed, and (ii)
payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being
exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice
only if a “cashless exercise” may occur at such time pursuant to Section 10 below), and the date
such items are delivered to the Company (as determined in accordance with the notice provisions
hereof) is an “Exercise Date.” The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have
the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing
the right to purchase the remaining number of Warrant Shares.

     5. Delivery of Warrant Shares.

          (a) Upon exercise of this Warrant, the Company shall promptly (but in no event later than
three Trading Days after the Exercise Date) issue or cause to be issued and cause to be delivered
to or upon the written order of the Holder and in such name or names as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise, which certificate shall bear
restrictive legends as required under the Purchase Agreement. The Holder shall be deemed to have
become holder of record of such Warrant Shares as of the Exercise Date. In lieu of delivering
physical certificates for the Warrant Shares issuable upon any exercise of this Warrant, provided
the Company’s Transfer Agent is participating in the Depository Trust Company (“DTC”) Fast
Automated Securities Transfer (“FAST”) program, and that any legend upon the certificates for the
Warrant Shares shall have been removed pursuant to the Purchase Agreement, upon request of the
Holder, the Company shall use commercially reasonable efforts

2

 

to cause its transfer agent to electronically transmit such Warrant Shares by crediting the
account of the Holder’s broker with DTC through its Deposit Withdrawal Agent Commission system
(provided that the same time limitations herein as for stock certificates shall apply).

          (b) This Warrant is exercisable, either in its entirety or, from time to time, for a portion
of the number of Warrant Shares. Upon surrender of this Warrant following one or more partial
exercises, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing
the right to purchase the remaining number of Warrant Shares.

          (c) In addition to any other rights available to a Holder, if the Company fails to deliver to
the Holder a certificate representing Warrant Shares by the third Trading Day after the date on
which delivery of such certificate is required by this Warrant, and if after such third Trading Day
the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Shares that the Holder anticipated receiving
from the Company (a “Buy-In”), then the Company shall, within three Trading Days after the Holder’s
request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation
to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash
to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A)
such number of shares of Common Stock, times (B) the Closing Price on the date of the event giving
rise to the Company’s obligation to deliver such certificate.

          (d) The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of law by the Holder
or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of Warrant Shares;
provided, however, that that the Company shall be under no obligation to issue and deliver Warrant
Shares to any transferee of Holder if the transferee is an individual or entity to whom the Warrant
or Warrant Shares could not be sold under applicable securities laws or an exemption therefrom.
Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

     6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue
or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect
of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which may

3

 

be payable in respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be
responsible for all other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.

     7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable bond or indemnity, if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and procedures and pay such
other reasonable third-party costs as the Company may prescribe.

     8. Reservation of Warrant Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable
and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (after giving effect to the adjustments
and restrictions of Section 9, if any). The Company covenants that all Warrant Shares so issuable
and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.
The Company will take all such action as may be necessary to assure that such shares of Common
Stock may be issued as provided herein without violation of any applicable law or regulation, or of
any requirements of any securities exchange or automated quotation system upon which the Common
Stock may be listed.

     9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set forth in this Section
9.

          (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding
shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of
Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to
clause (i) of this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution, and any adjustment
pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.

          (b) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) any
security (other than a distribution of Common Stock covered by the preceding paragraph),

4

 

(iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset (in each
case, “Distributed Property”), then in each such case the Holder shall be entitled upon exercise of
this Warrant for the purchase of any or all of the Warrant Shares, to receive the amount of
Distributed Property which would have been payable to the Holder had such Holder been the holder of
such Warrant Shares on the record date for the determination of stockholders entitled to such
Distributed Property. The Company will at all times set aside in escrow and keep available for
distribution to such holder upon exercise of this Warrant a portion of the Distributed Property to
satisfy the distribution to which such Holder is entitled pursuant to the preceding sentence.

          (c) Fundamental Transactions. If, at any time while this Warrant is outstanding, (i)
the Company effects any merger or consolidation of the Company with or into another Person, (ii)
the Company effects any sale of all or substantially all of its assets in one or a series of
related transactions, (iii) any tender offer or exchange offer approved by the Company’s Board of
Directors (whether by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other securities, cash or
property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property (other than as a result of a subdivision or combination of
shares of Common Stock covered by Section 9(a) above) (in any such case, a “Fundamental
Transaction”), then the Holder shall have the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or property as it would have been entitled to
receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon
exercise in full of this Warrant (the “Alternate Consideration”). The aggregate Exercise Price for
this Warrant will not be affected by any such Fundamental Transaction, but the Company shall
apportion such aggregate Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.
At the Holder’s request, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and
evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise
Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or surviving entity to
comply with the provisions of this paragraph (c) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction. If any Fundamental Transaction constitutes or results in (a) a “going
private” transaction as defined in Rule 13e-3 under the Exchange Act, or (b) an acquisition
primarily for cash, or (c) an acquisition, merger or sale with or into a Person not traded on an
Eligible Market, then the Company (or any such successor or surviving entity) will redeem this
Warrant from the Holder for a purchase price, payable in cash on the closing date of such “going
private” transaction, equal to the Black Scholes value of the remaining unexercised portion of this
Warrant on the closing date of such “going private” transaction.

5

 

          (d) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to paragraph (a) of this Section, the number of Warrant Shares that may be purchased
upon exercise of this Warrant shall be increased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the increased number of Warrant Shares shall be the
same as the aggregate Exercise Price in effect immediately prior to such adjustment.

          (e) Calculations. All calculations under this Section 9 shall be made to the nearest
cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.

          (f) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will promptly compute such adjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment, including a
statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing the transactions
giving rise to such adjustments and showing in detail the facts upon which such adjustment is
based. Upon written request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Company’s Transfer Agent.

          (g) Notice of Corporate Events. If the Company (i) declares a dividend or any other
distribution of cash, securities or other property in respect of its Common Stock, including
without limitation any granting of rights or warrants to subscribe for or purchase any capital
stock of the Company or any Subsidiary (other than warrants, options, restricted stock or other
stock awards granted to officers, employees or directors of the Company), (ii) authorizes or
approves, enters into any agreement contemplating or solicits stockholder approval for any
Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of
the affairs of the Company, then the Company shall deliver to the Holder a notice describing the
material terms and conditions of such transaction, at least ten calendar days prior to the
applicable record or effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will take all steps
reasonably necessary in order to insure that the Holder is given the practical opportunity to
exercise this Warrant prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any defect therein shall
not affect the validity of the corporate action required to be described in such notice.

     10. Payment of Exercise Price. The Holder shall pay the Exercise Price by: (i)
delivery of immediately available funds, or (ii) notifying the Company in an Exercise Notice of its
election to utilize cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:

	 	 	 	 	 
	 

	 	 	 	X = Y [(A-B)/A]
	 
	 	 	 	 
	 

	 	where:
	 	X = the number of Warrant Shares to be issued to the Holder.

6

 

	 	 	 	 	 
	 

	 	 	 	Y = the number of Warrant Shares with respect to which this Warrant
is being exercised.
	 
	 	 	 	 
	 

	 	 	 	A = the average of the Closing Prices for the five Trading Days
immediately prior to (but not including) the Exercise Date.
	 
	 	 	 	 
	 

	 	 	 	B = the Exercise Price.

     For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to
have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to
have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement.

     11. Limitation on Exercise.

          (a) Notwithstanding anything to the contrary contained herein, the number of shares of Common
Stock that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect
hereof) shall be limited to the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by such Holder and
its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% (the
“Maximum Percentage”) of the total number of issued and outstanding shares of Common Stock
(including for such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. Each delivery of an Exercise Notice
hereunder will constitute a representation by the Holder that it has evaluated the limitation set
forth in this paragraph and determined that issuance of the full number of Warrant Shares requested
in such Exercise Notice is permitted under this paragraph. The Company’s obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section shall be suspended
(and shall not terminate or expire notwithstanding any contrary provisions hereof) until such time,
if any, as such shares of Common Stock may be issued in compliance with such limitation, but in no
event later than the Expiration Date. By written notice to the Company, the Holder may waive the
provisions of this Section or increase or decrease the Maximum Percentage to any other percentage
specified in such notice, but (i) any such waiver or increase will not be effective until the 61st
day after such notice is delivered to the Company, and (ii) any such waiver or increase or decrease
will apply only to the Holder and not to any other holder of Warrants.

     12. Fractional Shares. The Company shall not be required to issue or cause to be
issued fractional Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant
Share would, except for the provisions of this Section, be issuable upon exercise of this Warrant,
the number of Warrant Shares to be issued will be rounded up to the nearest whole share.

7

 

     13. Notices. Any and all notices or other communications or deliveries hereunder
(including without limitation any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in the Purchase Agreement prior to 6:30
p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number
specified in the Purchase Agreement on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices or communications shall be as
set forth in the Purchase Agreement.

     14. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon
30 days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into
which the Company or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its corporate trust or
stockholders services business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s
last address as shown on the Warrant Register.

     15. No Voting Rights. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company until the Warrant shall have been exercised
and the Warrant Shares purchasable upon the exercise hereof shall have become deliverable, as
provided herein.

     16. Miscellaneous.

          (a) Subject to the restrictions on transfer set forth on the first page hereof and in this
Section 16(a), this Warrant may be assigned by the Holder; provided, however, that that the Holder
may not transfer this Warrant to any transferee if such transferee is an individual or entity to
whom the Warrant and/or Warrant Shares could not be sold under applicable securities laws or an
exemption therefrom. This Warrant may not be assigned by the Company except to a successor in the
event of a Fundamental Transaction. This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the Company and the
Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant
may be amended only in writing signed by the Company and the Holder and their successors and
assigns.

          (b) The Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder against impairment. Without limiting the generality of the

8

 

foregoing, the Company (i) will not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, (ii) will take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its
stockholder books or records in any manner which interferes with the timely exercise of this
Warrant.

          (c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW
YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE
ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO
ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY
ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO
A TRIAL BY JURY.

          (d) The headings herein are for convenience only, do not constitute a part of this Warrant and
shall not be deemed to limit or affect any of the provisions hereof.

          (e) In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt
in good faith to agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision
in this Warrant.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above.

	 	 	 
	 

	 	AKORN, INC.

9

 

	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

10

 

FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of Common Stock under the
foregoing Warrant)

To: Akorn, Inc.

The undersigned is the Holder of Warrant No.                      (the “Warrant”) issued by Akorn, Inc., a
Louisiana corporation (the “Company”). Capitalized terms used herein and not otherwise defined
have the respective meanings set forth in the Warrant.

     1. The Warrant is currently exercisable to purchase a total of                      Warrant Shares.

     2. The undersigned Holder hereby exercises its right to purchase                      Warrant
Shares pursuant to the Warrant.

     3. The Holder intends that payment of the Exercise Price shall be made as (check one):

	 	 	 	 	 
	 

	 	 	 	“Cash Exercise” under Section 10
	 

	 	 	 	 
	 

	 	 	 	“Cashless Exercise” under Section 10
	 

	 	 	 	 

     4. If the holder has elected a Cash Exercise, the holder shall pay the sum of $                     to
the Company in accordance with the terms of the Warrant.

     5. Pursuant to this exercise, the Company shall deliver to the holder                      Warrant
Shares in accordance with the terms of the Warrant.

     6. Following this exercise, the Warrant shall be exercisable to purchase a total of
                     Warrant Shares.

	 	 	 	 	 	 	 	 	 
	Dated:	 	 	 	,	 	Name of Holder:
	 

	 	 	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	(Print)	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Signature must conform in all respects to name of holder as
specified on the face of the Warrant)

11

 

FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant]

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                         the right represented by the within Warrant to purchase                      shares
of Common Stock of Akorn, Inc. to which the within Warrant relates and appoints                     
attorney to transfer said right on the books of Akorn, Inc. with full power of substitution in the
premises.

Dated: _________, ______

	 	 	 
	 

	 	 
	 

	 	(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
	 
	 	 
	 

	 	 
	 

	 	Address of transferee
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	In the presence of:
	 	 
	 
	 	 
	 

	 	 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}]]