Document:

PURCHASE AND SALE CONTRACT

Exhibit 10.6

 

 

 

 

 

PURCHASE AND SALE
CONTRACT

 

 

 

BETWEEN

 

 

 

HCW PENSION REAL ESTATE FUND
LIMITED PARTNERSHIP,

a Massachusetts limited
partnership

 

 

 

AS SELLER

 

 

 

 

 

 

AND

 

 

 

 

CH 18, LLC,

a Delaware limited liability
company

 

 

 

AS PURCHASER

 

 

 

 

 

LEWIS PARK
APARTMENTS

 

	
    
Article I
	
DEFINED
TERMS
	
1

	
    
Article II
	
PURCHASE
AND SALE, PURCHASE PRICE & DEPOSIT
	
1

	
 
	
2.1
	
Purchase
and Sale
	
1

	
 
	
2.2
	
Purchase
Price and Deposit
	
1

	
 
	
2.3
	
Escrow
Provisions Regarding Deposit
	
2

	
    
Article III
	
FEASIBILITY
PERIOD
	
3

	
 
	
3.1
	
Feasibility
Period
	
3

	
 
	
3.2
	
Expiration
of Feasibility Period
	
3

	
 
	
3.3
	
Conduct
of Investigation
	
3

	
 
	
3.4
	
Purchaser
Indemnification
	
3

	
 
	
3.5
	
Property
Materials
	
4

	
 
	
3.6
	
Property
Contracts
	
5

	
    
Article IV
	
TITLE
	
6

	
 
	
4.1
	
Title
Documents
	
6

	
 
	
4.2
	
Survey
	
6

	
 
	
4.3
	
Objection
and Response Process
	
7

	
 
	
4.4
	
Permitted
Exceptions
	
7

	
 
	
4.5
	
Existing
Deed of Trust and Mechanic’s Liens
	
7

	
 
	
4.6
	
Subsequently
Disclosed Exceptions
	
7

	
 
	
4.7
	
Purchaser
Financing
	
8

	
    
Article V
	
CLOSING
	
11

	
 
	
5.1
	
Closing
Date
	
11

	
 
	
5.2
	
Seller
Closing Deliveries
	
12

	
 
	
5.3
	
Purchaser
Closing Deliveries
	
13

	
 
	
5.4
	
Closing
Prorations and Adjustments
	
13

	
 
	
5.5
	
Post
Closing Adjustments
	
16

	
    
Article VI
	
REPRESENTATIONS
AND WARRANTIES OF SELLER AND PURCHASER
	
 

17

	
 
	
6.1
	
Seller's
Representations
	
17

	
 
	
6.2
	
AS-IS
	
18

	
 
	
6.3
	
Survival
of Seller's Representations
	
19

	
 
	
6.4
	
Definition
of Seller's Knowledge
	
19

	
 
	
6.5
	
Representations
and Warranties of Purchaser
	
19

	
    
Article VII
	
OPERATION
OF THE PROPERTY
	
20

	
 
	
7.1
	
Leases
and Property Contracts
	
20

	
 
	
7.2
	
General
Operation of Property
	
21

	
 
	
7.3
	
Liens
	
21

	
    
Article VIII
	
CONDITIONS
PRECEDENT TO CLOSING
	
22

	
 
	
8.1
	
Purchaser's
Conditions to Closing
	
22

	
 
	
8.2
	
Seller's
Conditions to Closing
	
22

	
    
Article IX
	
BROKERAGE
	
23

	
 
	
9.1
	
Indemnity
	
23

	
 
	
9.2
	
Broker
Commission
	
23

	
    
Article X
	
DEFAULTS
AND REMEDIES
	
24

	
 
	
10.1
	
Purchaser
Default
	
24

	
 
	
10.2
	
Seller
Default
	
24

	
    
Article XI
	
RISK
OF LOSS OR CASUALTY
	
25

	
 
	
11.1
	
Major
Damage
	
25

	
 
	
11.2
	
Minor
Damage
	
25

	
 
	
11.3
	
Closing
	
26

	
 
	
11.4
	
Repairs
	
26

	
    
Article XII
	
EMINENT
DOMAIN
	
26

	
 
	
12.1
	
Eminent
Domain
	
26

	
    
Article XIII
	
MISCELLANEOUS
	
26

	
 
	
13.1
	
Binding
Effect of Contract
	
26

	
 
	
13.2
	
Exhibits
and Schedules
	
27

	
 
	
13.3
	
Assignability
	
27

	
 
	
13.4
	
Captions
	
27

	
 
	
13.5
	
Number
and Gender of Words
	
27

	
 
	
13.6
	
Notices
	
27

	
 
	
13.7
	
Governing
Law and Venue
	
29

	
 
	
13.8
	
Entire
Agreement
	
29

	
 
	
13.9
	
Amendments
	
29

	
 
	
13.10
	
Severability
	
29

	
 
	
13.11
	
Multiple
Counterparts/Facsimile Signatures
	
30

	
 
	
13.12
	
Construction
	
30

	
 
	
13.13
	
Confidentiality
	
30

	
 
	
13.14
	
Time
of the Essence
	
30

	
 
	
13.15
	
Waiver
	
30

	
 
	
13.16
	
Attorneys'
Fees
	
30

	
 
	
13.17
	
Time
Zone/Time Periods
	
30

	
 
	
13.18
	
1031
Exchange
	
31

	
 
	
13.19
	
No
Personal Liability of Officers, Trustees or Directors
	
31

	
 
	
13.20
	
ADA
Disclosure
	
31

	
 
	
13.21
	
No
Recording
	
31

	
 
	
13.22
	
Relationship
of Parties
	
32

	
 
	
13.23
	
AIMCO
Marks
	
32

	
 
	
13.24
	
Non-Solicitation
of Employees
	
32

	
 
	
13.25
	
Survival
	
32

	
 
	
13.26
	
Multiple
Purchasers
	
32

	
 
	
13.27
	
WAIVER
OF JURY TRIAL
	
32

	
    
Article XIV
	
LEAD–BASED
PAINT DISCLOSURE
	
32

	
 
	
14.1
	
Disclosure
	
32

	
 
	
14.2
	
Consent
Agreement
	
33

					

EXHIBITS AND SCHEDULES

 

EXHIBITS

 

Exhibit
A          Legal Description

Exhibit
B          Form of Special Warranty
Deed

Exhibit
C          Form of Bill of Sale

Exhibit
D          Form of General
Assignment and Assumption

Exhibit
E           Form of Assignment
and Assumption of Leases and Security Deposits

Exhibit
F           Form of Notice to
Vendor regarding Termination of Contract

Exhibit
G          Form of Tenant
Notification

Exhibit
H          Form of Lead Paint
Disclosure

Exhibit
I            Form of Bulk
Sales Indemnity

 

 

SCHEDULES

 

Schedule
1       Defined Terms

 

PURCHASE AND SALE CONTRACT

 

THIS
PURCHASE AND SALE CONTRACT (this “Contract”) is entered
into as of the 26th day of January, 2011 (the “Effective
Date”), by and between HCW
Pension Real Estate Fund Limited Partnership, a Massachusetts limited
partnership, having an address at 4582 South Ulster Street Parkway, Suite 1100,
Denver, Colorado 80237 (“Seller”), and CH 18, LLC, a Delaware
limited liability company, having a principal address at 145 Madison Ave.,
6th Floor, New York, New York  10016
(“Purchaser”).

           
NOW, THEREFORE, in consideration of mutual covenants set forth herein, Seller
and Purchaser hereby agree as follows:

RECITALS

 

A.       
Seller owns the real estate located in Jackson County, Illinois, as more
particularly described in Exhibit A attached hereto and made a part
hereof, and the improvements thereon, commonly known as LEWIS PARK
APARTMENTS.

B.        
Purchaser desires to purchase, and Seller desires to sell, such land,
improvements and certain associated property, on the terms and conditions set
forth below.

Article I
DEFINED
TERMS

Unless
otherwise defined herein, any term with its initial letter capitalized in this
Contract shall have the meaning set forth in Schedule 1 attached hereto
and made a part hereof. 

Article
II
PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT

2.1             
Purchase and Sale.  Seller agrees to
sell and convey the Property to Purchaser and Purchaser agrees to purchase the
Property from Seller, all in accordance with the terms and conditions set forth
in this Contract.

2.2             
Purchase Price and Deposit.  The total purchase price
(“Purchase Price”) for the Property shall be an amount equal to
$9,400,000.00, payable by Purchaser, as follows:

2.2.1       
Within 2 Business Days following the Effective Date, Purchaser shall
deliver to First American Title Insurance Company, 633 Third Avenue, 16th Floor,
New York, New York 10017, Attention: Terry L. Outz, Telephone (212) 850-0665,
Facsimile (212) 331-1485, E-mail teoutz@firstam.com (“Escrow
Agent” or “Title Insurer”) an initial deposit (the
“Initial Deposit”) of $250,000.00 by wire transfer of immediately
available funds (“Good Funds”).  

2.2.2       
On or before the day that the Feasibility Period expires, Purchaser shall
deliver to Escrow Agent an additional deposit (the "Additional
Deposit") of $50,000.00 by wire transfer of Good Funds.

2.2.3       
The balance of the Purchase Price for the Property shall be paid to and
received by Escrow Agent by wire transfer of Good Funds no later than 10:00 a.m.
on the Closing Date.

2.3             
Escrow Provisions Regarding Deposit.

2.3.1       
Escrow Agent shall hold the Deposit and make delivery of the Deposit to
the party entitled thereto under the terms of this Contract.  Escrow Agent
shall invest the Deposit in an FDIC-insured, interest-bearing bank account or
FDIC-insured money market fund reasonably approved by Purchaser and Seller, and
all interest and income thereon shall become part of the Deposit and shall be
remitted to the party entitled to the Deposit pursuant to this Contract.

2.3.2       
Escrow Agent shall hold and apply the Deposit in strict accordance with
the terms of this Contract.  The tax identification numbers of the parties
shall be furnished to Escrow Agent upon request.

2.3.3       
Except for the return of the Deposit to Purchaser as a result of
Purchaser exercising its termination right under Section 3.2 below (in which
event Escrow Agent shall promptly release the Deposit to Purchaser on demand),
if prior to the Closing Date either party makes a written demand upon Escrow
Agent for payment of the Deposit, Escrow Agent shall give written notice to the
other party of such demand.  If Escrow Agent does not receive a written
objection from the other party to the proposed payment within 5 Business Days
after the giving of such notice, Escrow Agent is hereby authorized to make such
payment.  If Escrow Agent does receive such written objection within such
5-Business Day period, Escrow Agent shall continue to hold such amount until
otherwise directed by written instructions from the parties to this Contract or
a final judgment or arbitrator's decision.  However, Escrow Agent shall
have the right at any time to deliver the Deposit and interest thereon, if any,
with a court of competent jurisdiction in the state in which the Property is
located.  Escrow Agent shall give written notice of such deposit to Seller
and Purchaser.  Upon such deposit, Escrow Agent shall be relieved and
discharged of all further obligations and responsibilities hereunder.  Any
return of the Deposit to Purchaser provided for in this Contract shall be
subject to Purchaser’s obligations set forth in Section 3.5.2.

2.3.4       
The parties acknowledge that Escrow Agent is acting solely as a
stakeholder at their request and for their convenience, and that Escrow Agent
shall not be deemed to be the agent of either of the parties and shall not be
liable for any act or omission on its part unless taken or suffered in bad faith
in willful disregard of this Contract or involving gross negligence. 
Seller and Purchaser jointly and severally shall indemnify and hold Escrow Agent
harmless from and against all costs, claims and expenses, including reasonable
attorney's fees, incurred in connection with the performance of Escrow Agent's
duties hereunder, except with respect to actions or omissions taken or suffered
by Escrow Agent in bad faith, in willful disregard of this Contract or involving
gross negligence on the part of the Escrow Agent.

2.3.5       
The parties shall deliver to Escrow Agent an executed copy of this
Contract.  Escrow Agent shall execute the signature page for Escrow Agent
attached hereto which shall confirm Escrow Agent's
agreement to comply with the terms of Seller's closing instruction letter
delivered at Closing and the provisions of this Section 2.3.

2.3.6       
Escrow Agent, as the person responsible for closing the transaction
within the meaning of Section 6045(e)(2)(A) of the Internal Revenue Code of
1986, as amended (the “Code”), shall file all necessary
information, reports, returns, and statements regarding the transaction required
by the Code including, but not limited to, the tax reports required pursuant to
Section 6045 of the Code.  Further, Escrow Agent agrees to indemnify and
hold Purchaser, Seller, and their respective attorneys and brokers harmless from
and against any Losses resulting from Escrow Agent's failure to file the reports
Escrow Agent is required to file pursuant to this section.

Article
III
FEASIBILITY PERIOD

3.1             
Feasibility Period.  Subject to the terms of
Sections 3.3 and 3.4 and the rights of Tenants under the
Leases, from the Effective Date to and including the date which is 30 days after
the Effective Date (the “Feasibility Period”), Purchaser, and its
agents, contractors, engineers, surveyors, attorneys, and employees
(collectively, “Consultants”) shall, at no cost or expense to
Seller, have the right from time to time to enter onto the Property to conduct
and make any and all customary studies, tests, examinations, inquiries,
inspections and investigations  of or concerning the Property, review the
Materials and otherwise confirm any and all matters which Purchaser may
reasonably desire to confirm with respect to the Property and Purchaser’s
intended use thereof (collectively, the “Inspections”).

3.2             
Expiration of Feasibility Period.  If any of the
matters in Section 3.1 or any
title or survey matters are unsatisfactory to Purchaser for any reason, or for
no reason whatsoever, in Purchaser's sole and absolute discretion, then
Purchaser shall have the right to terminate this Contract by giving written
notice to that effect to Seller and Escrow Agent no later than 5:00 p.m. on or
before the date of expiration of the Feasibility Period.  If Purchaser
provides such notice, this Contract shall terminate and be of no further force
and effect subject to and except for the Survival Provisions, and Escrow Agent
shall return the Deposit to Purchaser.  If Purchaser fails to provide
Seller with written notice of termination prior to the expiration of the
Feasibility Period, Purchaser's right to terminate under this Section 3.2 shall be permanently waived and this
Contract shall remain in full force and effect, the Deposit shall be
non-refundable except as otherwise expressly set forth in this Contract, and
Purchaser's obligation to purchase the Property shall be conditional only as
provided in Section 8.1.

3.3             
Conduct of Investigation.  Purchaser shall not permit
any mechanics' or materialmen's liens or any other liens to attach to the
Property by reason of the performance of any work or the purchase of any
materials by Purchaser or any other party in connection with any Inspections
conducted by or for Purchaser.  Purchaser shall give reasonable advance
notice to Seller prior to any entry onto the Property and shall permit Seller to
have a representative present during all Inspections conducted at the
Property.  Purchaser shall take all reasonable actions and implement all
protections necessary to ensure that all actions taken in connection with the
Inspections, and all equipment, materials and substances generated, used or
brought onto the Property pose no material threat to the safety of persons,
property or the environment.  

3.4             
Purchaser Indemnification.

3.4.1       
Purchaser shall indemnify, hold harmless and, if requested by Seller (in
Seller's sole discretion), defend (with counsel approved by Seller) Seller,
together with Seller's affiliates, parent and subsidiary entities, successors,
assigns, partners, managers, members, employees, officers, directors, trustees,
shareholders, counsel, representatives, agents, Property Manager, Regional
Property Manager, and AIMCO (collectively, including Seller, “Seller's
Indemnified Parties”), from and against any and all damages, mechanics'
liens, materialmen's liens, liabilities, penalties, interest, losses, demands,
actions, causes of action, claims, costs and expenses (including reasonable
attorneys' fees, including the cost of in-house counsel and appeals)
(collectively, “Losses”) to the extent arising from or related to
Purchaser's or its Consultants' entry onto the Property, and any Inspections or
other acts by Purchaser or Purchaser’s Consultants with respect to the Property
during the Feasibility Period or otherwise.

3.4.2       
Notwithstanding anything in this Contract to the contrary, Purchaser
shall not be permitted to perform any invasive tests on the Property without
Seller's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed.  If Purchaser desires to perform any
invasive tests, Purchaser shall give prior written notice thereof to Seller,
which notice shall be accompanied by a detailed description and plan of the
invasive tests Purchaser desires to perform.  Further, Seller shall have
the right, without limitation, to disapprove any and all entries, surveys, tests
(including, without limitation, a Phase II environmental study of the Property),
investigations and other matters that in Seller's reasonable judgment could
result in any injury to the Property or breach of any contract, or expose Seller
to any Losses or violation of applicable law, or otherwise adversely affect the
Property or Seller's interest therein.  Purchaser shall, at Purchaser's
sole cost and expense, and in accordance with all applicable environmental laws,
dispose of any hazardous materials which have been specifically removed from or
at the Property by Purchaser or its agents, representatives, employees or
designees in connection with Purchaser's environmental studies.  Purchaser
shall use reasonable efforts to minimize disruption to Tenants in connection
with Purchaser's or its Consultants' activities pursuant to this Section. 
No consent by Seller to any such activity shall be deemed to constitute a waiver
by Seller or assumption of liability or risk by Seller.  Purchaser hereby
agrees to restore, at Purchaser's sole cost and expense, the Property to the
same condition existing immediately prior to Purchaser's exercise of its rights
pursuant to this Article
III.  Purchaser shall maintain or cause Campus Habitat, LLC or Pilot
Real Estate Group (whichever of them enters onto the Property) and their third
party consultants to maintain (a) casualty insurance and commercial general
liability insurance with coverages of not less than $1,000,000.00 for injury or
death to any one person and $3,000,000.00 for injury or death to more than one
person and $1,000,000.00 with respect to property damage, and (b) worker's
compensation insurance for all of their respective employees in accordance with
the law of the state in which the Property is located.  Purchaser shall
deliver proof of the insurance coverage required pursuant to this Section 3.4.2 to Seller (in the form of a
certificate of insurance) prior to the earlier to occur of (i) Purchaser's or
Purchaser's Consultants' entry onto the Property, or (ii) the expiration of 5
days after the Effective Date.

3.5             
Property Materials.

3.5.1       
Within 3 Business Days after the Effective Date, and to the extent the
same have not already been provided by Seller to Purchaser, Seller agrees to
use reasonable efforts to deliver to Purchaser, or at Seller's option make
available at the Property, copies of such documents and information concerning
the Property, including without limitation any environmental and engineering
documents, reports or studies, that are in Seller's possession or reasonable
control, other than such documents and information that Seller deems to be
confidential or proprietary (collectively, the “Materials”).

3.5.2       
Except as expressly set forth in Seller's Representations, Seller makes
no representations or warranties, express, written, oral, statutory, or implied,
and all such representations and warranties are hereby expressly excluded and
disclaimed.  All Materials are provided for informational purposes only,
and Purchaser shall not in any way be entitled to rely upon the completeness or
accuracy of the Materials, and will instead in all instances rely exclusively on
its own Inspections and Consultants with respect to all matters which it deems
relevant to its decision to acquire, own and operate the Property.  All
Materials and Third-Party Reports shall either be returned to Seller or
destroyed by Purchaser (with such destruction being evidenced by Purchaser’s
e-mail to Seller certifying the same) if this Contract is terminated for any
reason.

3.5.3       
Not later than 3 Business Days after the Effective Date, and to the
extent the same has not already been provided by Seller to Purchaser, Seller
shall deliver to Purchaser (or otherwise make available to Purchaser as provided
under Section 3.5.1) the most
recent rent roll for the Property, which is the rent roll Seller uses in the
ordinary course of operating the Property (the “Rent Roll”). 
Seller makes no representations or warranties regarding the Rent Roll other than
the express representation set forth in Section 6.1.6.

3.5.4       
Not later than 3 Business Days after the Effective Date, and to the
extent the same has not already been provided by Seller to Purchaser, Seller
shall deliver to Purchaser (or otherwise make available to Purchaser as provided
under Section 3.5.1) a list
of all current Property Contracts (the “Property Contracts
List”).  Seller makes no representations or warranties regarding
the Property Contracts List other than the express representations set forth in
Section 6.1.7.  

3.6             
Property Contracts.  On or before the expiration of
the Feasibility Period, Purchaser may deliver written notice to Seller (the
“Property Contracts Notice”) specifying any Property Contracts
which Purchaser desires to terminate at the Closing (the “Terminated
Contracts”); provided that (a) the effective date of such termination on
or after Closing shall be subject to the express terms of such Terminated
Contracts, (b) if any such Property Contract cannot by its terms be terminated
at Closing, it shall be assumed by Purchaser and not be a Terminated Contract,
and (c) to the extent that any such Terminated Contract requires payment of a
penalty, premium, or damages, including liquidated damages, for cancellation,
Purchaser shall be solely responsible for the payment of any such cancellation
fees, penalties, or damages, including liquidated damages.  If Purchaser
fails to deliver the Property Contracts Notice on or before the expiration of
the Feasibility Period, then there shall be no Terminated Contracts and
Purchaser shall assume all Property Contracts at the Closing.  If Purchaser
delivers the Property Contracts Notice to Seller on or
before the expiration of the Feasibility Period, then Seller shall execute and
deliver, on or before Closing, a vendor termination notice (in the form attached
hereto as Exhibit F) for each Terminated Contract
informing the vendor(s) of the termination of such Terminated Contract as of the
Closing Date (subject to any delay in the effectiveness of such termination
pursuant to the express terms of each applicable Terminated Contract) (the
“Vendor Terminations”).  To the extent that any Property
Contract to be assigned to Purchaser requires vendor consent, then, prior to the
Closing, Purchaser and Seller shall attempt to obtain from each applicable
vendor a consent (each a “Required Assignment Consent”) to such
assignment, and Purchaser shall indemnify, hold harmless and, if requested by
Seller (in Seller's sole discretion), defend (with counsel approved by Seller)
Seller's Indemnified Parties from and against any and all Losses arising from or
related to a failure to obtain such consents.

Article
IV
TITLE

4.1             
Title Documents.  Within 5 days after the
Effective Date, Seller shall cause to be delivered to Purchaser a standard form
commitment or preliminary title report (“Title Commitment”) to
provide a standard American Land Title Association owner’s title insurance
policy for the Land and Improvements, using the current policy jacket
customarily provided by the Title Insurer, in an amount equal to the Purchase
Price (the “Title Policy”), together with copies of all
instruments identified as exceptions therein (together with the Title
Commitment, referred to herein as the “Title Documents”). 
Seller shall be responsible only for payment of the base premium for the Title
Policy.  Purchaser shall be solely responsible for payment of all other
costs relating to procurement of the Title Commitment, the Title Policy, and any
requested endorsements.

4.2             
Survey.  Subject to Section 3.5.2, within 2 Business Days after the
Effective Date, Seller shall deliver to Purchaser that certain survey of the
Property dated as of March 10, 2008 and prepared by Millman Surveyors (the
“Existing Survey”).  Purchaser may, at its sole cost and
expense, order a new or updated survey of the Property either before or after
the Effective Date (such new or updated survey, together with the Existing
Survey, is referred to herein as the “Survey”).  

4.3             
Objection and Response Process.  On or before the date
which is 20 days after the Effective Date (the “Objection
Deadline”), Purchaser shall give written notice (the “Objection
Notice”) to the attorneys for Seller of any matter set forth in the
Title Documents and the Survey to which Purchaser objects (the
“Objections”).  If Purchaser fails to tender an Objection
Notice on or before the Objection Deadline, Purchaser shall be deemed to have
approved and irrevocably waived any objections to any matters covered by the
Title Documents and the Survey.  On or before 25 days after the Effective
Date (the “Response Deadline”), Seller may, in Seller's sole
discretion, give Purchaser notice (the “Response Notice”) of those
Objections which Seller is willing to cure, if any.  Seller shall be
entitled to reasonable adjournments of the Closing Date to cure the Objections,
not to exceed 30 days in the aggregate.  If Seller fails to deliver a
Response Notice by the Response Deadline, Seller shall be deemed to have elected
not to cure or otherwise resolve any matter set forth in the Objection
Notice.  If Purchaser is dissatisfied with the Response Notice or the lack
of Response Notice, Purchaser may, as its exclusive remedy, exercise its right
to terminate this Contract prior to the expiration of
the Feasibility Period in accordance with the provisions of Section 3.2.  If Purchaser fails to timely
exercise such right, Purchaser shall be deemed to accept the Title Documents and
Survey with resolution, if any, of the Objections set forth in the Response
Notice (or if no Response Notice is tendered, without any resolution of the
Objections) and without any reduction or abatement of the Purchase Price.

4.4             
Permitted Exceptions.  The Deed delivered pursuant to
this Contract shall be subject to the following, all of which shall be deemed
“Permitted Exceptions”:

4.4.1       
All matters shown in the Title Documents and the Survey, other than (a)
those Objections, if any, which Seller has agreed to cure pursuant to the
Response Notice under Section 4.3, (b) mechanics' liens, (c) taxes due and
payable with respect to the period preceding Closing, (d) the standard exception
regarding the rights of parties in possession, which shall be modified to be
limited to those parties in possession pursuant to the Leases, and (e) the
standard exception pertaining to taxes and assessments, which shall be limited
to taxes and assessments not yet due and payable as of the Closing Date; 

4.4.2       
All Leases;

4.4.3       
Applicable zoning and governmental regulations and ordinances;

4.4.4       
Any defects in or objections to title to the Property, or title
exceptions or encumbrances, arising by, through or under Purchaser.

4.5             
Existing Deed of Trust and Mechanic’s Liens.  It is
understood and agreed that, whether or not Purchaser gives an Objection Notice
with respect thereto, any deeds of trust and/or mortgages which secure the Note
shall not be deemed Permitted Exceptions, whether Purchaser gives further
written notice of such or not, and shall be paid off, satisfied, discharged
and/or cured from proceeds of the Purchase Price at Closing.  Further,
it is understood and agreed that, whether or not Purchaser gives an Objection
Notice with respect thereto, any mechanic’s liens (except those arising by,
through or under Purchaser) shall not be deemed Permitted Encumbrances, whether
Purchaser gives further written notice of such or not, and shall be paid off,
satisfied, discharged and/or cured from the proceeds of the Purchase Price at
Closing or, at Seller’s option and sole cost, otherwise removed from the Title
Policy through an indemnity and/or bond for the benefit of the Title Company or
otherwise.

4.6             
Subsequently Disclosed Exceptions.  If at any time
after the expiration of the Feasibility Period, any update to the Title
Commitment or Existing Survey discloses any additional item that materially
adversely affects title to the Property which was not disclosed on any version
of or update to the Title Commitment or the Existing Survey delivered to
Purchaser during the Feasibility Period (the “New Exception”),
Purchaser shall have a period of 5 days from the date of its receipt of such
update (the “New Exception Review Period”) to review and notify
Seller in writing of Purchaser's approval or disapproval of the New
Exception.  If Purchaser disapproves of the New Exception, Seller may, in
Seller's sole discretion, notify Purchaser as to whether it is willing to cure
the New Exception.  If Seller elects to cure the New Exception, Seller
shall be entitled to reasonable adjournments of the Closing Date to cure the New
Exception, not to exceed 30 days in the aggregate.  If Seller fails to
deliver a notice to Purchaser within 3 days after the
expiration of the New Exception Review Period, Seller shall be deemed to have
elected not to cure the New Exception.  If Purchaser is dissatisfied with
Seller's response, or lack thereof, Purchaser may, as its exclusive remedy elect
either:  (i) to terminate this Contract, in which event the Deposit shall
be promptly returned to Purchaser or (ii) to waive the New Exception and proceed
with the transactions contemplated by this Contract, in which event Purchaser
shall be deemed to have approved the New Exception.  If Purchaser fails to
notify Seller of its election to terminate this Contract in accordance with the
foregoing sentence within 6 days after the expiration of the New Exception
Review Period, Purchaser shall be deemed to have elected to approve and
irrevocably waive any objections to the New Exception.

4.7             
Financing Period. 

4.7.1       
Subject to the terms and conditions of this Section 4.7, Purchaser
shall use good faith, diligent efforts to obtain mortgage financing for
Purchaser’s purchase of the Property on terms which are commercially reasonable
and which are market standard (including standard or customary reserves,
guarantees and capital expenditure requirements and for a loan amount of no less
than $5,640,000.00 and an interest rate of no greater than 6% per annum), on or
prior to the date which is sixty (60) days after the Loan Application Deadline
(as the same may be extended in accordance with Purchaser’s rights under
Section 4.7.1.7) (such period, the “Financing
Period”).  Purchaser further agrees to first and primarily pursue
mortgage financing with the Federal Home Loan Mortgage Corporation
(“Freddie Mac”) through Freddie Mac’s Capital Markets Execution
(“CME”) program in accordance with the following:

4.7.1.1           
Purchaser, at its sole cost and expense and within 10 Business Days after
the Effective Date (the “Loan Application Deadline”), shall submit
an application for terms which Purchaser believes in good faith to be complete
to Freddie Mac for mortgage financing through the CME program using Freddie
Mac’s standard forms and templates, together with all documents and information
required in connection therewith (the “Application for
Terms”).  Simultaneously with Purchaser’s delivery of the
Application for Terms to Freddie Mac, Purchaser agrees to provide Seller with a
copy of the Application for Terms (which copy may be redacted to omit any
confidential information of Purchaser).  Purchaser acknowledges and agrees
that Purchaser is solely responsible for the preparation and submittal of the
Application for Terms, including the collection of all materials, documents,
certificates, financials, signatures, and other items required to be submitted
to Freddie Mac in connection with the Application for Terms.

4.7.1.2           
Purchaser shall promptly, at its sole cost and expense, correct and
re-submit any deficiencies noted by Freddie Mac in connection with the
Application for Terms after notification from Freddie Mac of such
deficiency.  Purchaser shall comply with Freddie Mac’s CME loan application
guidelines in connection with obtaining CME mortgage financing and Purchaser
shall promptly deliver to Freddie Mac all documents and information required by
Freddie Mac, and such other information or documentation as Freddie Mac
reasonably may request, including, without limitation, financial statements,
income tax returns and other financial information for Purchaser and any
required guarantor.  

4.7.1.3           
Upon Seller’s written request, Purchaser shall provide Seller with a copy
of any material correspondence from Freddie Mac with respect to the status of
the Application for Terms (which may be redacted to
omit any confidential information of Purchaser) no later than 2 Business Days
after receipt of Seller’s written request.  Purchaser acknowledges that
Freddie Mac’s loan guidelines may not be consistent with the provisions of the
loan documents for the existing financing on the Property.  

4.7.1.4           
Purchaser shall be responsible for and shall pay all fees and expenses
(including, without limitation, all servicing fees and charges, transfer fees,
assumption fees, title fees and endorsement fees) imposed or charged by Freddie
Mac, any other lender or its counsel (such fees and expenses collectively being
referred to as the “Lender Fees”), in connection with the
Application for Terms and any financing for Purchaser’s financing of its
purchase of the Property.

4.7.1.5           
Purchaser and Seller acknowledge and agree that if Freddie Mac provides
the Financing Commitment for Purchaser’s purchase of the Property and, in
connection with such new financing, provides a discount to any prepayment
penalty applicable to the Loan Payoff (the “Payoff Discount”),
then Seller shall receive the full benefit of any such Payoff Discount.
 Seller may, in its sole and absolute discretion, terminate this Contract
by written notice to Purchaser and Escrow Agent if, either (i) the Payoff
Discount specified in Freddie Mac’s first initial written estimate of the same
is less than 35% of the prepayment penalty, or (ii) the final Payoff Discount
granted by Freddie Mac as of Closing is less than 25% of the prepayment
penalty.  Seller shall have until ten (10) days after Seller’s receipt of
Freddie Mac’s first initial written estimate of the Payoff Discount to terminate
pursuant to clause (i) of the preceding sentence.  If Seller timely
provides such notice, this Contract shall terminate and be of no further force
and effect subject to and except for the Survival Provisions, Escrow Agent shall
return the Deposit to Purchaser and Seller shall reimburse Purchaser for
Purchaser’s actual, out-of-pocket expenses and costs (documented by paid
invoices to third parties), which expenses and costs shall not exceed $50,000 in
the aggregate.  Seller’s obligation to reimburse Purchaser for actual
out-of-pocket expenses and costs as set forth in the preceding sentence shall
survive the termination of this Contract.  If Purchaser obtains financing
for the transaction contemplated hereunder from any lender or loan program other
than Freddie Mac’s CME program, then Purchaser shall pay to Freddie Mac at
Closing a portion of the prepayment penalty due in connection with the Loan
Payoff equal to 35% of the total prepayment penalty.

4.7.1.6           
Purchaser shall be in default hereunder if Purchaser fails to submit the
Application for Terms (in a form which Purchaser believes in good faith to be
complete) by the Loan Application Deadline, in which event Seller may terminate
this Contract and the Deposit shall be immediately released by the Escrow Agent
to Seller.

4.7.1.7           
Provided that (a) Purchaser is not in default of the terms of this
Contract, and (b) Purchaser has used diligent, good faith efforts to obtain the
Financing Commitment but has failed to do so as of the expiration of the
Financing Period, Purchaser shall be permitted up to two consecutive 15-day
extensions of the Financing Period each exercisable by (i) delivering to Seller
written notice of each such extension on or prior to then-current expiration of
the Financing Period, and (ii) simultaneously with such notice to Seller,
delivering to Escrow Agent the amount of $25,000.00 by wire transfer of Good
Funds in accordance with Seller’s wiring instructions (each such amount, a
“Financing Period Extension Fee”).  The Financing Period Extension Fee(s) shall be deemed part of the
Deposit and shall be credited, held and/or disbursed as part of the Deposit in
accordance with the terms of this Contract.

4.7.2       
  Purchaser shall notify Seller of Purchaser’s receipt of a
binding commitment for mortgage financing on commercially reasonable terms to
Purchaser, with a minimum loan amount of $5,640,000.00 and an interest rate of
no greater than 6% per annum, (the “Financing Commitment”)
promptly (in no event more than one (1) Business Day) after Purchaser’s receipt
of the Financing Commitment.  Upon Purchaser’s receipt of the Financing
Commitment, the Deposit shall be non-refundable, except as expressly provided
otherwise in this Contract.  If Purchaser has not obtained the Financing
Commitment on or prior to the expiration of the Financing Period (and for no
other reason), then Purchaser shall have the right to terminate this Contract by
giving written notice to that effect to Seller and Escrow Agent on or before
5:00 p.m. (Central Time) on the date of expiration of the Financing
Period.  If Purchaser exercises such right to terminate, this Contract
shall terminate and be of no further force and effect subject to and except for
the Survival Provisions, and Escrow Agent shall promptly return the Deposit to
Purchaser (subject to Purchaser’s obligation under Section 3.5.2 to
return or certify the destruction of all Third-Party Reports and information and
Materials provided to Purchaser as a pre-condition to the return of the
Deposit).  If Purchaser fails to provide Seller with written notice of
termination prior to the expiration of the Financing Period in strict accordance
with the notice provisions of this Contract, Purchaser’s right to terminate
under this Section 4.7.2 shall be permanently waived, the Deposit shall
be non-refundable, except as expressly provided otherwise in this Contract, and
this Contract shall remain in full force and effect.  

Article
V
CLOSING

5.1             
Closing Date.  The Closing shall occur on the date
which is 10 Business Days after receipt of the Financing Commitment (the
“Closing Date”) through an escrow with Escrow Agent, whereby
Seller, Purchaser and their attorneys need not be physically present at the
Closing and may deliver documents by overnight air courier or other means;
provided, however, that Purchaser shall have the one-time right to
extend the Closing Date by up to 10 Business Days upon written notice to Seller
delivered no later than 5 days prior to the initial Closing Date. 
Notwithstanding the foregoing to the contrary, Seller shall have the option, by
delivering written notice to Purchaser, to extend the Closing Date to the last
Business Day of the month in which the Closing Date otherwise would occur
pursuant to the preceding sentence if Freddie Mac permits prepayment only on the
last Business Day of the month (except with the payment of additional interest,
fees or costs).

5.2             
Seller Closing Deliveries.  Except for the closing
statement which shall be delivered on or before the Closing Date, Seller shall
deliver to Escrow Agent, each of the following items, executed by Seller as
appropriate, no later than 1 Business Day prior to the Closing Date:

5.2.1       
Special Warranty Deed (the “Deed”) in the form attached as
Exhibit B to Purchaser, subject to the Permitted Exceptions.

5.2.2       
A Bill of Sale in the form attached as Exhibit C.

5.2.3       
A General Assignment in the form attached as Exhibit D (the
“General Assignment”).

5.2.4       
An Assignment of Leases and Security Deposits in the form attached as
Exhibit E (the “Leases Assignment”).

5.2.5       
Seller's counterpart signature to the closing statement prepared by Title
Insurer.

5.2.6       
A title affidavit or an indemnity form reasonably acceptable to Seller,
which is sufficient to enable Title Insurer to delete the standard pre-printed
exceptions to the title insurance policy to be issued pursuant to the Title
Commitment.

5.2.7       
A certification of Seller's non-foreign status pursuant to Section 1445
of the Internal Revenue Code of 1986, as amended.

5.2.8       
Resolutions, certificates of good standing, and such other organizational
documents as Title Insurer shall reasonably require evidencing Seller's
authority to consummate this transaction.

5.2.9       
An updated Rent Roll effective as of a date no more than 3 Business Days
prior to the Closing Date; provided, however, that the content of such updated
Rent Roll shall in no event expand or modify the conditions to Purchaser's
obligation to close as specified under Section 8.1.

5.2.10    An updated
Property Contracts List effective as of a date no more than 3 Business Days
prior to the Closing Date; provided, however, that the content of such updated
Property Contracts List shall in no event expand or modify the conditions to
Purchaser's obligation to close as specified under Section 8.1.

5.2.11    A completed Real
Estate Transfer Declaration (on Form P-Tax 203 or such other form required by
the Real Estate Transfer Act of the State of Illinois) and such other state,
county or local real property tax transfer forms as required by Applicable
Law.

5.2.12    An indemnity, in
the form of Exhibit I attached hereto and incorporated herein by this
reference (“Bulk Sales Indemnity”), executed by Seller, pursuant
to which Seller agrees to indemnify, defend and hold harmless Purchaser from and
against liability incurred by Purchaser as result of any amounts which may be
payable (a) by Seller to the Illinois Department of Revenue pursuant to Section
9-902(d) of the Illinois Income Tax Act (35 ILCS 5/902(d)) or 35 ILCS 120/5j, or
(b) by Purchaser as a result of Seller’s failure to make the payments required
under clause (a).

5.2.13    Such notices,
transfer disclosures, affidavits or other similar documents that are required by
applicable laws to be executed by Seller or otherwise reasonably necessary in
order to consummate the transactions contemplated under terms of the
Contract.

5.3             
Purchaser Closing Deliveries.  Except for:
(i) the closing statement which shall be delivered on or before the Closing
Date, and (ii) the balance of the Purchase Price (with credit for the Deposit), plus or minus the adjustments or prorations
required by this Contract, which is to be delivered at the time specified in
Section 2.2.3, Purchaser shall
deliver to Escrow Agent, each of the following items, executed by Purchaser as
appropriate, no later than 1 Business Day prior to the Closing Date:

5.3.1       
Intentionally omitted.

5.3.2       
Purchaser’s counterpart signature to the closing statement prepared by
Title Insurer.

5.3.3       
A countersigned counterpart of the General Assignment.

5.3.4       
A countersigned counterpart of the Leases Assignment.

5.3.5       
A notification letter to all Tenants prepared and executed by Purchaser
in the form attached hereto as Exhibit G, which shall be dated as of the
Closing Date and delivered by Purchaser to all Tenants immediately after
Closing.

5.3.6       
Any cancellation fees or penalties due to any vendor under any Terminated
Contract as a result of the termination thereof.

5.3.7       
Resolutions, certificates of good standing, and such other organizational
documents as Title Insurer shall reasonably require evidencing Purchaser's
authority to consummate this transaction.

5.3.8       
Countersigned counterparts to the completed Real Estate Transfer
Declaration (on Form P-Tax 203 or such other form required by the Real Estate
Transfer Act of the State of Illinois) and such other state, county or local
real property tax transfer forms as required by Applicable Law.

5.3.9       
A countersigned counterpart to the Bulk Sales Indemnity.

5.3.10    Such notices,
transfer disclosures, affidavits or other similar documents that are required by
applicable law to be executed by Purchaser or otherwise reasonably necessary in
order to consummate the transactions contemplated under this Contract.

5.4             
Closing Prorations and Adjustments.

5.4.1       
General.  All normal and customarily proratable items,
including, without limitation, collected rents, operating expenses, personal
property taxes, other operating expenses and fees, shall be prorated as of the
Closing Date, Seller being charged or credited, as appropriate, for all of same
attributable to the period up to (but not including) the Closing Date (and
credited for any amounts paid by Seller attributable to the period on or after
the Closing Date, if assumed by Purchaser) and Purchaser being responsible for,
and credited or charged, as the case may be, for all of the same attributable to
the period on and after the Closing Date.  Seller shall prepare a proration
schedule (the “Proration Schedule”) of the adjustments described
in this Section 5.4 prior to
Closing and shall use good faith efforts to deliver such Proration Schedule 2
days prior to Closing.  

5.4.2       
Operating Expenses.  All of the operating, maintenance, taxes
(other than real estate taxes), and other expenses incurred in operating the
Property that Seller customarily pays, and any other costs incurred in the
ordinary course of business for the management and operation of the Property,
shall be prorated on an accrual basis.  Seller shall pay all such expenses
that accrue prior to the Closing Date and Purchaser shall pay all such expenses
that accrue from and after the Closing Date.

5.4.3       
Utilities.  The final readings and final billings for
utilities will be made if possible as of the Closing Date, in which case Seller
shall pay all such bills as of the Closing Date and no proration shall be made
at the Closing with respect to utility bills.  Otherwise, a proration shall
be made based upon the parties' reasonable good faith estimate.  Seller
shall be entitled to the return of any deposit(s) posted by it with any utility
company, and Seller shall notify each utility company serving the Property to
terminate Seller's account, effective as of noon on the Closing Date. 
Seller shall have no responsibility or liability for Purchaser's failure to
arrange utility service for the Property as of the Closing Date.  Purchaser
shall indemnify, hold harmless and, if requested by Seller (in Seller's sole
discretion), defend (with counsel approved by Seller) Seller's Indemnified
Parties from and against any and all Losses arising from or related to
Purchaser's failure to arrange utility service as of the Closing Date.

5.4.4       
Real Estate Taxes.  Any real estate ad valorem or similar
taxes for the Property, or any installment of assessments payable in
installments which installment is applicable to, as opposed to payable in, the
calendar year of Closing, shall be prorated to the date of Closing, based upon
actual days involved.  The proration of real property taxes or installments
of assessments shall be based upon 103% of the most recent assessed valuation
and tax rate figures (assuming payment at the earliest time to allow for the
maximum possible discount); provided, however, that in the event that actual
figures (whether for the assessed value of the Property or for the tax rate) for
the year of Closing are not available at the Closing Date, the proration shall
be made using figures from the preceding year (assuming payment at the earliest
time to allow for the maximum possible discount).  The proration of real
property taxes or installments of assessments shall be final and not subject to
re-adjustment after Closing.  

5.4.5       
Property Contracts.  Purchaser shall assume at Closing the
obligations under the Property Contracts assumed by Purchaser; however,
operating expenses shall be prorated under Section 5.4.2.

5.4.6       
Leases.

5.4.6.1           
All collected rent (whether fixed monthly rentals, additional rentals,
escalation rentals, retroactive rentals, operating cost pass-throughs or other
sums and charges payable by Tenants under the Leases), income and expenses from
any portion of the Property shall be prorated as of the Closing Date. 
Purchaser shall receive all collected rent and income attributable to dates from
and after the Closing Date.  Seller shall receive all collected rent and
income attributable to dates prior to the Closing Date.  Notwithstanding
the foregoing, no prorations shall be made in relation to either (a)
non-delinquent rents which have not been collected as of the Closing Date, or
(b) delinquent rents existing, if any, as of the Closing Date (the foregoing (a)
and (b) referred to herein as the “Uncollected Rents”).  In
adjusting for Uncollected Rents, no adjustments shall be made in Seller's favor
for rents which have accrued and are unpaid as of the
Closing, but Purchaser shall pay Seller such accrued Uncollected Rents as and
when collected by Purchaser pursuant to the provisions of this Section
5.4.6.1.  For a period of 90 days following Closing, Purchaser agrees
to bill Tenants of the Property for all Uncollected Rents and to take reasonable
actions (which shall not include an obligation to commence legal action) to
collect Uncollected Rents.  Notwithstanding the foregoing, Purchaser's
obligation to collect Uncollected Rents shall be limited to Uncollected Rents of
not more than 90 days past due, and Purchaser's collection of rents shall be
applied, first, towards Purchaser’s reasonable third-party costs of such
collection; second, towards rent due and owing under the Leases for the month in
which Closing occurs; third, to rents due and owing under the Leases for periods
after the month in which Closing occurs; and fourth, to Uncollected Rents. 
After the Closing, Seller shall continue to have the right, but not the
obligation, in its own name, to demand payment of and to collect Uncollected
Rents owed to Seller by any Tenant, which right shall include, without
limitation, the right to continue or commence legal actions or proceedings
against any Tenant and the delivery of the Leases Assignment shall not
constitute a waiver by Seller of such right; provided however, that the
foregoing right of Seller shall be limited to actions seeking monetary damages
and, in no event, shall Seller seek to evict any Tenants in any action to
collect Uncollected Rents.  Purchaser agrees to cooperate with Seller in
connection with all efforts by Seller to collect such Uncollected Rents and to
take all steps, whether before or after the Closing Date, as may be necessary to
carry out the intention of the foregoing; provided, however, that Purchaser's
obligation to cooperate with Seller pursuant to this sentence shall not obligate
Purchaser to terminate any Tenant lease with an existing Tenant or evict any
existing Tenant from the Property.

5.4.6.2           
At Closing, Purchaser shall receive a credit against the Purchase Price
in an amount equal to the received and unapplied balance of all cash (or cash
equivalent) Tenant Deposits, including, but not limited to, security, damage,
pet or other refundable deposits paid by any of the Tenants to secure their
respective obligations under the Leases, together, in all cases, with any
interest payable to the Tenants thereunder as may be required by their
respective Tenant Lease or state law (the “Tenant Security Deposit
Balance”).  Any cash (or cash equivalents) held by Seller which
constitutes the Tenant Security Deposit Balance shall be retained by Seller in
exchange for the foregoing credit against the Purchase Price and shall not be
transferred by Seller pursuant to this Contract (or any of the documents
delivered at Closing), but the obligation with respect to the Tenant Security
Deposit Balance nonetheless shall be assumed by Purchaser.  The Tenant
Security Deposit Balance shall not include any non-refundable deposits or fees
paid by Tenants to Seller, either pursuant to the Leases or otherwise.

5.4.7       
Insurance.  No proration shall be made in relation to
insurance premiums and insurance policies will not be assigned to
Purchaser.  Seller shall have the risk of loss of the Property until 11:59
p.m. the day prior to Closing Date (“Risk of Loss Transfer”),
after which time the risk of loss shall pass to Purchaser and Purchaser shall be
responsible for obtaining its own insurance thereafter.

5.4.8       
Employees.  All of Seller's and Seller's manager's on-site
employees shall have their employment at the Property terminated as of the
Closing Date.

5.4.9       
Closing Costs.  Purchaser shall pay any city or local
transfer taxes, mortgage assumption, sales, use, gross receipts or similar
taxes, any premiums or fees required to be paid by
Purchaser with respect to the Title Policy pursuant to Section 4.1, and one-half of the customary closing
costs of the Escrow Agent.  Seller shall pay the base premium for the Title
Policy to the extent required by Section 4.1, the cost of recording any instruments
required to discharge any liens or encumbrances against the Property not caused
by Purchaser's actions, Illinois and county real property transfer taxes and
one-half of the customary closing costs of the Escrow Agent.  

5.4.10    Utility
Contracts.  If Seller has entered into an agreement for the
purchase of electricity, gas or other utility service for the Property or a
group of properties (including the Property) (a “Utility
Contract”), or an affiliate of Seller has entered into a Utility
Contract, then Seller shall assign and Purchaser shall assume the Utility
Contract with respect to the Property, and if required by the terms of such
Utility Contract, Purchaser shall attempt to obtain consent to such assignment
and assumption, and Purchaser shall hold
harmless and, if requested by Seller (in Seller's sole discretion), defend (with
counsel approved by Seller) Seller's Indemnified Parties from and against any
and all Losses arising from or related to Purchaser's failure to obtain such
consent.  Notwithstanding the foregoing, Seller may instead elect to
receive a credit at Closing equal to the reasonably calculated costs of the
Utility Contract attributable to the Property from and after the Closing, and
Seller shall remain responsible for payments under the Utility Contract.

5.4.11   
Possession.  Possession of the Property, subject to the
Leases, Property Contracts, other than Terminated Contracts, and Permitted
Exceptions, shall be delivered to Purchaser at the Closing upon release from
escrow of all items to be delivered by Purchaser pursuant to Section 5.3. 
To the extent reasonably available to Seller, originals or copies of the Leases
and Property Contracts, lease files, warranties, guaranties, operating manuals,
keys to the property, and Seller's books and records (other than proprietary
information) (collectively, “Seller's Property-Related Files and
Records”) regarding the Property shall be made available to Purchaser at
the Property after the Closing.  Purchaser acknowledges and agrees that
Seller may make copies, at Seller’s discretion and at Seller’s sole cost, of any
or all of Seller’s Property-Related Files and Records prior to the Closing Date
for Seller’s retention after Closing.

5.5             
Post Closing Adjustments.  Purchaser or Seller may
request that Purchaser and Seller undertake to re-adjust any item on the
Proration Schedule (or any item omitted therefrom), with the exception of real
property taxes which shall be final and not subject to readjustment, in
accordance with the provisions of Section 5.4 of this Contract; provided, however, that
neither party shall have any obligation to re-adjust any items (a) after the
expiration of 60 days after Closing, or (b) subject to such 60-day period,
unless such items exceed $5,000.00 in the aggregate.

Article
VI
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER

6.1             
Seller's Representations.  Except, in all cases, for
any fact, information or condition disclosed in the Title Documents, the
Permitted Exceptions, the Property Contracts, or the Materials, or which is
otherwise known by Purchaser prior to the Closing, Seller represents and
warrants to Purchaser the following (collectively, the “Seller's
Representations”) as of the Effective Date and
as of the Closing Date; provided that Purchaser's remedies if any such Seller's
Representations are untrue as of the Closing Date are limited to those set forth
in Section 8.1.

6.1.1       
Seller is duly organized, validly existing and in good standing under the
laws of the state of its formation set forth in the initial paragraph of this
Contract; and, has or at the Closing shall have the entity power and authority
to sell and convey the Property and to execute the documents to be executed by
Seller and prior to the Closing will have taken as applicable, all corporate,
partnership, limited liability company or equivalent entity actions required for
the execution and delivery of this Contract, and the consummation of the
transactions contemplated by this Contract.  The compliance with or
fulfillment of the terms and conditions hereof will not conflict with, or result
in a breach of, the terms, conditions or provisions of, or constitute a default
under, any contract to which Seller is a party or by which Seller is otherwise
bound, which conflict, breach or default would have a material adverse affect on
Seller's ability to consummate the transaction contemplated by this Contract or
on the Property.  This Contract is a valid and binding agreement against
Seller in accordance with its terms;

6.1.2       
Seller is not a “foreign person,” as that term is used and defined in the
Internal Revenue Code, Section 1445, as amended;

6.1.3       
Seller is not a Prohibited Person.

6.1.4       
Except for (a) any actions by Seller to evict Tenants under the Leases,
or (b) any matter covered by Seller's current insurance policy(ies), to Seller's
knowledge, there are no material actions, proceedings, litigation or
governmental investigations or condemnation actions either pending or threatened
in writing against the Property, which (i) affects the Property, or (ii) affects
Seller and will adversely impact Seller’s ability to convey the
Property;

6.1.5       
To Seller's knowledge, Seller has not received any written notice of any
material default by Seller under any of the Property Contracts that will not be
terminated on the Closing Date;

6.1.6       
To Seller's knowledge, the Rent Roll (as updated pursuant to Section
5.2.9) is accurate in all
material respects and, to Seller’s knowledge, there are no unrecorded leases or
occupancy agreements affecting the Property except as shown on the Rent Roll (as
updated pursuant to Section 5.2.9); and

6.1.7       
To Seller's knowledge, the Property Contracts List (as updated pursuant
to Section 5.2.10) is
accurate in all material respects. 

6.1.8       
To Seller's knowledge, Seller has not received any written notice from a
governmental agency of any uncured material violations of any federal, state,
county or municipal law, ordinance, order, regulation or requirement affecting
the Property;

6.1.9       
No Bankruptcy/Dissolution Event (as defined herein) has occurred with
respect to (i) Seller; or (ii) to Seller's knowledge, any general partner of
Seller.  “Bankruptcy/Dissolution Event” means the occurrence
of any of the following:  (a) the commencement of a case under Title 11 of
the U.S. Code, as now constituted or hereafter amended, or under any other applicable federal or state
bankruptcy law or other similar law; (b) the appointment of a trustee or
receiver of any property interest; (c) an assignment for the benefit of
creditors; (d) an attachment, execution or other judicial seizure of a
substantial property interest; (e) the taking of, failure to take, or submission
or any action indicating an inability to meet its financial obligations as they
accrue; or (f) a dissolution or liquidation, death or incapacity;

6.1.10    To Seller’s
knowledge, Seller has not intentionally omitted or eliminated any items which
otherwise would be required to be delivered by Seller as part of the
Materials;

6.1.11    To Seller's
knowledge:  (a) no hazardous or toxic materials or other substances
regulated by applicable federal or state environmental laws are stored by Seller
on, in or under the Property in quantities which violate applicable laws
governing such materials or substances, and (b) the Property is not used by
Seller for the storage, treatment, generation or manufacture of any hazardous or
toxic materials or other substances in a manner which would constitute a
violation of applicable federal or state environmental laws;

6.1.12    Except for any
employment agreements which would not be binding on Purchaser after the Closing,
there are no collective bargaining or other employment agreements with respect
to the personnel employed by Seller in the operation and maintenance of the
Property.

6.1.13    To Seller’s
knowledge, there are no assessed but unpaid taxes, penalties or interest for the
Property or for Seller under the Illinois Income Tax Act or under the Retailer’s
Occupation Tax Act.

6.2             
AS-IS.  Except as otherwise expressly set forth in
Seller's Representations:

6.2.1       
The Property is expressly purchased and sold “AS IS,” “WHERE IS,” and
“WITH ALL FAULTS.”  

6.2.2       
The Purchase Price and the terms and conditions set forth herein are the
result of arm's-length bargaining between entities familiar with transactions of
this kind, and said price, terms and conditions reflect the fact that Purchaser
shall have the benefit of, but is not relying upon, any information provided by
Seller or Broker or statements, representations or warranties, express or
implied, made by or enforceable directly against Seller or Broker, including,
without limitation, any relating to the value of the Property, the physical or
environmental condition of the Property, any state, federal, county or local
law, ordinance, order or permit; or the suitability, compliance or lack of
compliance of the Property with any regulation, or any other attribute or matter
of or relating to the Property (other than any covenants of title contained in
the Deed conveying the Property and Seller's Representations).  Purchaser
agrees that Seller shall not be responsible or liable to Purchaser for any
defects, errors or omissions in the Materials, or on account of any conditions
affecting the Property.  

6.2.3       
Purchaser, its successors and assigns, and anyone claiming by, through or
under Purchaser, hereby fully releases Seller's Indemnified Parties from, and
irrevocably waives its right to maintain, any and all claims and causes of
action that it or they may now have or hereafter acquire against Seller's
Indemnified Parties with respect to any and all Losses arising from or related to any defects, errors, omissions in the
Materials or other conditions affecting the Property.  

6.2.4       
Purchaser represents and warrants that as of the Closing Date, it shall
have reviewed and conducted such independent analyses, studies (including,
without limitation, environmental studies and analyses concerning the presence
of lead, asbestos, water intrusion and/or fungal growth and any resulting
damage, PCBs and radon in and about the Property), reports, investigations and
inspections as it deems appropriate in connection with the Property.  If
Seller  provides or has provided any documents, summaries, opinions or work
product of consultants, surveyors, architects, engineers, title companies,
governmental authorities or any other person or entity with respect to the
Property, including, without limitation, the offering prepared by Broker,
Purchaser and Seller agree that Seller has done so or shall do so only for the
convenience of both parties, Purchaser shall not rely thereon and the reliance
by Purchaser upon any such documents, summaries, opinions or work product shall
not create or give rise to any liability of or against Seller's Indemnified
Parties.  Purchaser acknowledges and agrees that no representation has been
made and no responsibility is assumed by Seller with respect to current and
future applicable zoning or building code requirements or the compliance of the
Property with any other laws, rules, ordinances or regulations, the financial
earning capacity or expense history of the Property, the continuation of
contracts, continued occupancy levels of the Property, or any part thereof, or
the continued occupancy by tenants of any Leases or, without limiting any of the
foregoing, occupancy at Closing.  

6.2.5       
Prior to Closing, Seller shall have the right, but not the obligation, to
enforce its rights against any and all Property occupants, guests or
tenants.  Purchaser agrees that the departure or removal, prior to Closing,
of any of such guests, occupants or tenants shall not be the basis for, nor
shall it give rise to, any claim on the part of Purchaser, nor shall it affect
the obligations of Purchaser under this Contract in any manner whatsoever; and
Purchaser shall close title and accept delivery of the Deed with or without such
tenants in possession and without any allowance or reduction in the Purchase
Price under this Contract.

6.2.6       
Purchaser hereby releases Seller from any and all claims and liabilities
relating to the matters set forth in this Section.  

6.3             
Survival of Seller's Representations.  Seller and
Purchaser agree that Seller's Representations shall survive Closing for a period
of 9 months (the “Survival Period”).  Seller shall have no
liability after the Survival Period with respect to Seller's Representations
contained herein except to the extent that Purchaser has requested arbitration
against Seller during the Survival Period for breach of any of Seller's
Representations.  Under no circumstances shall Seller be liable to
Purchaser for more than $350,000 in any individual instance or in the aggregate
for all breaches of Seller's Representations, nor shall Purchaser be entitled to
bring any claim for a breach of Seller's Representations unless the claim for
damages (either in the aggregate or as to any individual claim) by Purchaser
exceeds $5,000.  In the event that Seller breaches any representation
contained in Section 6.1 and
Purchaser had knowledge of such breach prior to the Closing Date, and elected to
close regardless, Purchaser shall be deemed to have waived any right of
recovery, and Seller shall not have any liability in connection therewith.

6.4             
Definition of Seller's Knowledge.  Any representations
and warranties made “to the knowledge of Seller” shall not be deemed to imply
any duty of inquiry.  For purposes of this Contract, the term Seller's
“knowledge” shall mean and refer only to actual knowledge of the
Regional Property Manager and the Community Manager and shall not be construed
to refer to the knowledge of any other partner, officer, director, agent,
employee or representative of Seller, or any affiliate of Seller, or to impose
upon such Regional Property Manager and Community Manager any duty to
investigate the matter to which such actual knowledge or the absence thereof
pertains, or to impose upon such Regional Property Manager and Community Manager
any individual personal liability.  As used herein, the term
“Regional Property Manager” shall refer to Ken Sloma who is the
regional property manager handling this Property and the term “Community
Manager” shall refer to Michele Pender who is the community manager
handling this Property.

6.5             
Representations and Warranties of Purchaser.  For the
purpose of inducing Seller to enter into this Contract and to consummate the
sale and purchase of the Property in accordance herewith, Purchaser represents
and warrants to Seller the following as of the Effective Date and as of the
Closing Date:

6.5.1       
Purchaser is a limited liability company duly organized, validly existing
and in good standing under the laws of Delaware.

6.5.2       
Purchaser, acting through any of its or their duly empowered and
authorized officers or members, has all necessary entity power and authority to
own and use its properties and to transact the business in which it is engaged,
and has full power and authority to enter into this Contract, to execute and
deliver the documents and instruments required of Purchaser herein, and to
perform its obligations hereunder; and no consent of any of Purchaser's
partners, directors, officers or members are required to so empower or authorize
Purchaser.  The compliance with or fulfillment of the terms and conditions
hereof will not conflict with, or result in a breach of, the terms, conditions
or provisions of, or constitute a default under, any contract to which Purchaser
is a party or by which Purchaser is otherwise bound, which conflict, breach or
default would have a material adverse affect on Purchaser's ability to
consummate the transaction contemplated by this Contract.  This Contract is
a valid, binding and enforceable agreement against Purchaser in accordance with
its terms.

6.5.3       
No pending or, to the knowledge of Purchaser, threatened litigation
exists which if determined adversely would restrain the consummation of the
transactions contemplated by this Contract or would declare illegal, invalid or
non-binding any of Purchaser's obligations or covenants to Seller.

6.5.4       
Other than Seller's Representations, Purchaser has not relied on any
representation or warranty made by Seller or any representative of Seller
(including, without limitation, Broker) in connection with this Contract and the
acquisition of the Property.

6.5.5       
The Broker and its affiliates do not, and will not at the Closing, have
any direct or indirect legal, beneficial, economic or voting interest in
Purchaser (or in an assignee of Purchaser, which pursuant to Section
13.3, acquires the Property at the
Closing), nor has Purchaser or any affiliate of Purchaser granted (as of the
Effective Date or the Closing Date) the Broker or any of
its affiliates any right or option to acquire any direct or indirect legal,
beneficial, economic or voting interest in Purchaser.

6.5.6       
Purchaser is not a Prohibited Person.

6.5.7       
To Purchaser's knowledge, none of its investors, affiliates or brokers or
other agents (if any), acting or benefiting in any capacity in connection with
this Contract is a Prohibited Person.

6.5.8       
The funds or other assets Purchaser will transfer to Seller under this
Contract are not the property of, or beneficially owned, directly or indirectly,
by a Prohibited Person. 

6.5.9       
The funds or other assets Purchaser will transfer to Seller under this
Contract are not the proceeds of specified unlawful activity as defined by 18
U.S.C. § 1956(c)(7).

Article
VII
OPERATION OF THE PROPERTY

7.1             
Leases and Property Contracts.  During the period
of time from the Effective Date to the Closing Date, in the ordinary course of
business Seller may enter into new Property Contracts, new Leases, renew
existing Leases or modify, terminate or accept the surrender or forfeiture of
any of the Leases, modify any Property Contracts, or institute and prosecute any
available remedies for default under any Lease or Property Contract without
first obtaining the written consent of Purchaser; provided, however, Seller
agrees that, without the prior written consent of Purchaser, which consent shall
not be unreasonably withheld, conditioned or delayed, any new or renewed Leases
shall not have a term in excess of 1 year and any new Property Contract shall be
terminable upon 30 days notice without penalty.

7.2             
General Operation of Property.  Except as specifically
set forth in this Article VII,
Seller shall operate the Property after the Effective Date in the ordinary
course of business, and except as necessary in Seller's sole discretion to
address (a) any life or safety issue at the Property or (b) any other matter
which in Seller's reasonable discretion materially adversely affects the use,
operation or value of the Property, Seller will not make any material
alterations to the Property or remove any material Fixtures and Tangible
Personal Property without the prior written consent of Purchaser which consent
shall not be unreasonably withheld, denied or delayed.  Seller agrees to
maintain its existing insurance policies (or replacement policies on comparable
terms) covering the Property in full force and effect through the Closing
Date.

7.3             
Liens.  Other than utility easements and temporary
construction easements granted by Seller in the ordinary course of business that
do not materially and adversely affect the operation or use of the Property,
Seller covenants that it will not voluntarily create or cause any lien or
encumbrance to attach to the Property between the Effective Date and the Closing
Date (other than Leases and Property Contracts as provided in Section
7.1) unless Purchaser approves such
lien or encumbrance, which approval shall not be unreasonably withheld,
conditioned or delayed.  If Purchaser approves any such subsequent lien or
encumbrance, the same shall be deemed a Permitted Encumbrance for all purposes
hereunder.

Article VIII
CONDITIONS PRECEDENT TO CLOSING

8.1             
Purchaser's Conditions to Closing.  Purchaser's
obligation to close under this Contract shall be subject to and conditioned upon
the fulfillment of the following conditions precedent:

8.1.1       
All of the documents required to be delivered by Seller to Purchaser at
the Closing pursuant to the terms and conditions hereof shall have been
delivered;

8.1.2       
Each of Seller's Representations shall be true in all material respects
as of the Closing Date;

8.1.3       
Seller shall have complied with, fulfilled and performed in all material
respects each of the covenants, terms and conditions to be complied with,
fulfilled or performed by Seller hereunder; and

8.1.4       
Neither Seller nor Seller's general partner shall be a debtor in any
bankruptcy proceeding.

Notwithstanding
anything to the contrary, there are no other conditions to Purchaser's
obligation to Close except as expressly set forth in this Section 8.1.  If any condition set forth in
this Section 8.1 is not met,
Purchaser may (a) waive any of the foregoing conditions and proceed to Closing
on the Closing Date with no offset or deduction from the Purchase Price,
(b) terminate this Contract and receive a return of the Deposit from the
Escrow Agent, or (c) if such failure constitutes a default by Seller of its
covenants hereunder, exercise any of its remedies pursuant to Section 10.2.

8.2             
Seller's Conditions to Closing.  Without limiting any
of the rights of Seller elsewhere provided for in this Contract, Seller's
obligation to close with respect to conveyance of the Property under this
Contract shall be subject to and conditioned upon the fulfillment of the
following conditions precedent:

8.2.1       
All of the documents and funds required to be delivered by Purchaser to
Seller at the Closing pursuant to the terms and conditions hereof shall have
been delivered;

8.2.2       
Each of the representations, warranties and covenants of Purchaser
contained herein shall be true in all material respects as of the Closing
Date;

8.2.3       
Purchaser shall have complied with, fulfilled and performed in all
material respects each of the covenants, terms and conditions to be complied
with, fulfilled or performed by Purchaser hereunder;

8.2.4       
Neither Purchaser nor any of Purchaser's members shall be a debtor in any
bankruptcy proceeding; and

8.2.5       
[Intentionally omitted]

8.2.6       
There shall not be any pending litigation or, to the knowledge of either
Purchaser or Seller, any litigation threatened in writing, which, if adversely
determined, would restrain the consummation of any of the transactions
contemplated by this Contract or declare illegal, invalid or nonbinding any of
the covenants or obligations of the Purchaser.

If
any of the foregoing conditions to Seller's obligations to close with respect to
the conveyance of the Property under this Contract are not met, Seller may (a)
waive any of the foregoing conditions and proceed to Closing on the Closing
Date, (b) terminate this Contract, or (c) if such failure constitutes a
default by Purchaser, exercise any of its remedies pursuant to
Section 10.1.

Article
IX
BROKERAGE

9.1             
Indemnity.  Seller represents and warrants to
Purchaser that it has dealt only with HFF, L.P., One Indiana Square, Suite
1330, Indianapolis, Indiana  46204, Attention: Brian Kelly, Telephone (317)
632-7501, Facsimile (317) 630-3190, E-mail bkelly@hfflp.com
(“Broker”) in connection with this Contract.  Seller and
Purchaser each represents and warrants to the other that, other than Broker, it
has not dealt with or utilized the services of any other real estate broker,
sales person or finder in connection with this Contract, and each party agrees
to indemnify, hold harmless, and, if requested in the sole and absolute
discretion of the indemnitee, defend (with counsel approved by the indemnitee)
the other party from and against all Losses relating to brokerage commissions
and finder's fees arising from or attributable to the acts or omissions of the
indemnifying party.  

9.2             
Broker Commission.  If Closing occurs, Seller agrees
to pay Broker a commission according to the terms of a separate contract. 
Broker shall not be deemed a party or third party beneficiary of this
Contract.  As a condition to Seller's obligation to pay the commission,
Broker shall execute the signature page for Broker attached hereto solely for
purposes of confirming the matters set forth therein.

Article
X
DEFAULTS AND REMEDIES

10.1         
Purchaser Default.  If Purchaser defaults on its
obligations hereunder to (a) deliver the Initial Deposit or Additional Deposit
(or any other deposit or payment required of Purchaser hereunder), (b) deliver
to Seller the deliveries specified under Section 5.3 on the date required thereunder, or (c)
deliver the Purchase Price in accordance with Article II and close on the
purchase of the Property on the Closing Date, then, immediately and without the
right to receive notice or to cure pursuant to Section 2.3.3, Purchaser shall forfeit the
Deposit, and the Escrow Agent shall deliver the Deposit to Seller, and neither
party shall be obligated to proceed with the purchase and sale of the
Property.  If Purchaser defaults on any of its other representations,
warranties or obligations under this Contract, and such default continues for
more than 10 days after written notice from Seller, then Purchaser shall forfeit
the Deposit, and the Escrow Agent shall deliver the Deposit to Seller, and
neither party shall be obligated to proceed with the purchase and sale of the
Property.  The Deposit is liquidated damages and recourse to the Deposit
is, except for Purchaser's indemnity and confidentiality obligations hereunder, Seller's sole and exclusive remedy for Purchaser's
failure to perform its obligation to purchase the Property or breach of a
representation or warranty.  Seller expressly waives the remedies of
specific performance and additional damages for such default by Purchaser. 
SELLER AND PURCHASER ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO
DETERMINE, AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES
RESULTING FROM A DEFAULT BY PURCHASER IN ITS OBLIGATION TO PURCHASE THE
PROPERTY.  SELLER AND PURCHASER FURTHER AGREE THAT THIS SECTION 10.1 IS INTENDED TO AND DOES LIQUIDATE
THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S EXCLUSIVE REMEDY AGAINST
PURCHASER, BOTH AT LAW AND IN EQUITY, ARISING FROM OR RELATED TO A BREACH BY
PURCHASER OF ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS
CONTRACT, OTHER THAN WITH RESPECT TO PURCHASER'S INDEMNITY AND CONFIDENTIALITY
OBLIGATIONS HEREUNDER.

10.2         
Seller Default.  If Seller (i) defaults on its
obligations hereunder to deliver to Escrow Agent the deliveries specified under
Section 5.2 on the date required
thereunder, or to close on the sale of the Property on the Closing Date, or (ii)
prior to the Closing defaults on its covenants or obligations under this
Contract, and such default continues for more than 10 days after written notice
from Purchaser, then, at Purchaser's election and as Purchaser's exclusive
remedy, Purchaser may either (a) terminate this Contract, and all payments and
things of value, including the Deposit, provided by Purchaser hereunder shall be
returned to Purchaser and Purchaser may recover, as its sole recoverable damages
(but without limiting its right to receive a refund of the Deposit), its direct
and actual out-of-pocket expenses and costs (documented by paid invoices to
third parties) in connection with this transaction, which damages shall not
exceed $50,000 in the aggregate, or (b) subject to the conditions below,
seek specific performance of Seller’s obligation to close on the sale of the
Property pursuant to this Contract (but not damages).  Purchaser may seek
specific performance of Seller's obligation to close on the sale of the Property
pursuant to this Contract only if, as a condition precedent to initiating such
litigation for specific performance, Purchaser shall (x) not otherwise be in
default under this Contract; and (y) file suit therefor with the court on or
before the 90th day after the Closing Date.  If Purchaser fails to file an
action for specific performance within 90 days after the Closing Date, then
Purchaser shall be deemed to have elected to terminate the Contract in
accordance with subsection (a) above.  Notwithstanding the foregoing, if
Seller transfers title to the Property to a third party prior to the termination
of this Contract such that Purchaser is unable to bring an action for specific
performance pursuant to this Section 10.2, then the Deposit shall be
returned to Purchaser and Seller shall pay Purchaser $500,000 in liquidated
damages (but no additional punitive, consequential, speculative or other
damages).  Purchaser agrees that it shall promptly deliver to Seller an
assignment of all of Purchaser's right, title and interest in and to (together
with possession of) all plans, studies, surveys, reports, and other materials
(other than Purchaser’s attorney’s work product) paid for with the out-of-pocket
expenses reimbursed by Seller pursuant to the foregoing sentence.  SELLER
AND PURCHASER FURTHER AGREE THAT THIS SECTION 10.2 IS
INTENDED TO AND DOES LIMIT THE AMOUNT OF DAMAGES DUE PURCHASER AND THE REMEDIES
AVAILABLE TO PURCHASER, AND SHALL BE PURCHASER'S EXCLUSIVE REMEDY AGAINST
SELLER, BOTH AT LAW AND IN EQUITY ARISING FROM OR RELATED TO A BREACH BY SELLER
OF ITS COVENANTS OR ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS CONTRACT.  UNDER NO CIRCUMSTANCES
MAY PURCHASER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL, CONSEQUENTIAL,
PUNITIVE, SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH PURCHASER SPECIFICALLY
WAIVES, FROM SELLER FOR ANY BREACH BY SELLER, OF ITS COVENANTS OR ITS
OBLIGATIONS UNDER THIS CONTRACT.  PURCHASER SPECIFICALLY WAIVES THE RIGHT
TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST THE PROPERTY UNLESS AND UNTIL IT HAS
IRREVOCABLY ELECTED TO SEEK SPECIFIC PERFORMANCE OF THIS CONTRACT AND HAS FILED
AND IS DILIGENTLY PURSUING AN ACTION SEEKING SUCH REMEDY.

Article
XI
RISK OF LOSS OR CASUALTY

11.1         
Major Damage.  In the event that the Property is
damaged or destroyed by fire or other casualty prior to Risk of Loss Transfer,
and the cost for demolition, site cleaning, restoration, replacement, or other
repairs (collectively, the “Repairs”) is more than $500,000.00 (a
“Major Damage”), then Seller shall have no obligation to make such
Repairs, and shall notify Purchaser in writing of such damage or destruction
(the “Damage Notice”).  If there is a Major Damage, then
Purchaser may elect, by delivering written notice to Seller on or before the
earlier of (x) Closing and (y) the date which is ten (10) days after Purchaser's
receipt of the Damage Notice, to terminate this Contract, in which event the
Deposit shall be returned to Purchaser.  In the event Purchaser fails to
timely terminate this Contract pursuant to this Section 11.1, this transaction shall be closed in
accordance with Section 11.3
below.

11.2         
Minor Damage.  In the event that the Property is
damaged or destroyed by fire or other casualty prior to Risk of Loss Transfer,
and the cost of Repairs is equal to or less than $500,000.00, then this
transaction shall be closed in accordance with Section 11.3, notwithstanding such
casualty.  In such event, Seller may at its election endeavor to make such
Repairs to the extent of any recovery from insurance carried on the Property, if
such Repairs can be reasonably effected before the Closing.  Regardless of
Seller's election to commence such Repairs, or Seller's ability to complete such
Repairs prior to Closing, this transaction shall be closed in accordance with
Section 11.3 below.

11.3         
Closing.  In the event Purchaser fails to terminate
this Contract following a casualty as set forth in Section 11.1, or in the event of a casualty as set
forth in Section 11.2, then this
transaction shall be closed in accordance with the terms of the Contract, at
Seller's election, either (i) for the full Purchase Price, notwithstanding
any such casualty, in which case Purchaser shall, at Closing, execute and
deliver an assignment and assumption (in a form reasonably required by Seller)
of Seller's rights and obligations with respect to the insurance claim related
to such casualty, and thereafter Purchaser shall receive all insurance proceeds
pertaining to such claim, less any amounts which may already have been spent by
Seller for Repairs (plus a credit against the Purchase Price at Closing in the
amount of any deductible payable by Seller in connection therewith); or (ii) for
the full Purchase Price less a credit to Purchaser in the amount necessary to
complete such Repairs (less any amounts which may already have been spent by
Seller for Repairs). 

11.4         
Repairs.  To the extent that Seller elects to commence
any Repairs prior to Closing, then Seller shall be entitled to receive and apply
available insurance proceeds to any portion of such Repairs completed or
installed prior to Closing, with Purchaser being responsible for completion of
such Repairs after Closing.  To the extent that any Repairs have been
commenced prior to Closing, then the Property Contracts shall include, and
Purchaser shall assume at Closing, (a) all construction and other contracts
entered into by Seller in connection with such Repairs prior to expiration of
the Feasibility Period, and (b) all construction and other contracts entered
into by Seller in connection with such Repairs after the expiration of the
Feasibility Period to the extent approved by Purchaser pursuant to this
Section 11.4.  In the event that, after the expiration of the
Feasibility Period, Seller desires to enter into any construction and other
contracts in connection with Repairs, then Seller will notify Purchaser of any
such contract(s) and Purchaser shall have the right to (i) reasonably accept
such contract(s) as part of the Property Contracts to be assumed by Purchaser at
Closing, or (ii) reasonably reject the same, in which event, Purchaser shall not
be obligated to assume such contract(s) as part of the Property Contracts. 
If Purchaser fails to reject any such contract(s) within the foregoing 5-day
period, then it shall be deemed to have approved such contract(s) and will
assume them at Closing as part of the Property Contracts.  Notwithstanding
the foregoing to the contrary, Seller retains the sole right and authority to
enter into any such contract.

Article
XII
EMINENT DOMAIN

12.1         
Eminent Domain.  In the event that, at the time of
Closing, any material part of the Property is (or previously has been) acquired,
or is about to be acquired, by any governmental agency by the powers of eminent
domain or transfer in lieu thereof (or in the event that at such time there is
any notice of any such acquisition or intent to acquire by any such governmental
agency), Purchaser shall have the right, at Purchaser's option, to terminate
this Contract by giving written notice within 10 days after Purchaser's receipt
from Seller of notice of the occurrence of such event, and if Purchaser so
terminates this Contract, Purchaser shall recover the Deposit hereunder. 
If Purchaser fails to terminate this Contract within such 10-day period, this
transaction shall be closed in accordance with the terms of this Contract for
the full Purchase Price and Purchaser shall receive the full benefit of any
condemnation award.  It is expressly agreed between the parties hereto that
this section shall in no way apply to customary dedications for public purposes
which may be necessary for the development of the Property.

Article
XIII
MISCELLANEOUS

13.1         
Binding Effect of Contract.  This Contract shall not
be binding on either party until executed by both Purchaser and Seller. 
Neither the Escrow Agent's nor the Broker's execution of this Contract shall be
a prerequisite to its effectiveness.  Subject to Section 13.3, this Contract shall be binding upon and
inure to the benefit of Seller and Purchaser, and their respective successors
and permitted assigns.

13.2         
Exhibits and Schedules.  All Exhibits and Schedules,
whether or not annexed hereto, are a part of this Contract for all
purposes.

13.3         
Assignability.  Except to the extent required to
comply with the provisions of Section 13.18 related to a 1031 Exchange, this
Contract is not assignable by Purchaser without first obtaining the prior
written approval of Seller.  Notwithstanding the foregoing, Purchaser may
assign this Contract, without first obtaining the prior written approval of
Seller, to one or more entities so long as (a) Purchaser, Pilot Real Estate
Group or Titan, LLC, is an affiliate of or has an ownership interest in the
purchasing entity(ies), (b) Purchaser is not released from its liability
hereunder, and (c) Purchaser provides written notice to Seller of any proposed
assignment no later than 10 days prior to the Closing Date.  As used
herein, an affiliate is a person or entity controlled by, under common control
with, or controlling another person or entity.

13.4         
Captions.  The captions, headings, and arrangements
used in this Contract are for convenience only and do not in any way affect,
limit, amplify, or modify the terms and provisions hereof.

13.5         
Number and Gender of Words.  Whenever herein the
singular number is used, the same shall include the plural where appropriate,
and words of any gender shall include each other gender where
appropriate.

13.6         
Notices.  All notices, demands, requests and other
communications required or permitted hereunder shall be in writing, and shall be
(a) personally delivered with a written receipt of delivery; (b) sent by a
nationally-recognized overnight delivery service requiring a written
acknowledgement of receipt or providing a certification of delivery or attempted
delivery; (c) sent by certified or registered mail, return receipt requested; or
(d) sent by confirmed facsimile transmission or electronic delivery with an
original copy thereof transmitted to the recipient by one of the means described
in subsections (a) through (c) no later than 3 Business Days thereafter. 
All notices shall be deemed effective when actually delivered as documented in a
delivery receipt; provided, however, that if the notice was sent by overnight
courier or mail as aforesaid and is affirmatively refused or cannot be delivered
during customary business hours by reason of the absence of a signatory to
acknowledge receipt, or by reason of a change of address with respect to which
the addressor did not have either knowledge or written notice delivered in
accordance with this paragraph, then the first attempted delivery shall be
deemed to constitute delivery.  Each party shall be entitled to change its
address for notices from time to time by delivering to the other party notice
thereof in the manner herein provided for the delivery of notices.  All
notices shall be sent to the addressee at its address set forth following its
name below: 

To
Purchaser:

 

CH
18, LLC

c/o
Campus Habitat, LLC

145
Madison Ave., 6th Floor

New
York, New York  10016

Attention:
Maximus Yaney and Anthony Vulpi

Telephone:  212-419-4466

Facsimile: 
866-375-8073

Email: 
myaney@campushabitat.com

and 

c/o
Pilot Real Estate Group

10
Glenville Street

Floor
3 

Greenwich,
Connecticut 06831

Attention: 
Justin O’Leary

Telephone: 
203-531-7480

Facsimile: 
203-531-8351

Email: 
justin@pilotregroup.com

with
a copy to:

Pircher,
Nichols & Meeks

900
North Michigan Avenue

Suite
1050

Chicago,
Illinois  60611

Attention: 
Real Estate Notices (EJML/JDL)

Telephone: 
312-915-3113

Facsimile: 
312-915-3348

Email: 
eleone@pircher.com and

           
jlevy@pircher.com 

 

and
a copy to:

 

Steven
Mann, Esq.

Steven
Mann Attorney at Law

645
5th Avenue

8th
Floor

New
York, New York  10022

Telephone: 
212-689-6588, Ext. 214

Facsimile: 
212-689-8490

Email: 
Stephen.Mann@USA.NET 

 

 

To
Seller:

c/o AIMCO
4582 South Ulster Street Parkway
Suite
1100
Denver, Colorado  80237
Attention:  Mark
Reoch
Telephone:  303-691-4337 

Facsimile: 
303-300-3261 

Email: 
mark.reoch@aimco.com 

And:

AIMCO

4582
South Ulster Street Parkway 

Suite
1100

Denver,
Colorado  80237

Attention: 
Trent Johnson

Telephone: 
303-691-4348

Facsimile: 
720-200-6881

Email: 
trent.johnson@aimco.com

with
copy to:

AIMCO
4582 South Ulster Street Parkway
Suite
1100
Denver, Colorado  80237
Attention:  John Spiegleman,
Esq.
Telephone: 303-691-4303
Facsimile:  720-200-6882
Email: 
john.spiegleman@aimco.com 

and
a copy to:

HFF, L.P.

One
Indiana Square

Suite
1330

Indianapolis
, Indiana  46204

Attention: 
Brian Kelly
Telephone:  317-632-7501
Facsimile: 
317-630-3190

Email: 
bkelly@hfflp.com

and
a copy to:

Ginsberg Jacobs LLC

300
S. Wacker Drive

Suite
2450

Chicago,
Illinois  60606

Attention: 
Steven F. Ginsberg
Telephone:  312-660-9614
Facsimile:
 312-660-9612
Email:  sginsberg@ginsbergjacobs.com

And

Attention:  Ana Acena
Telephone: 
312-660-9618
Facsimile:  312-660-9612
Email: 
aacena@ginsbergjacobs.com

Any
notice required hereunder to be delivered to the Escrow Agent shall be delivered
in accordance with above provisions as follows: 

First
American Title Insurance Company

633
Third Avenue

16th
Floor

New
York, New York 10017

Attention: 
Terry L. Outz

Telephone: 
(212) 850-0665

Facsimile: 
(212) 331-1485

Email: 
teoutz@firstam.com

 

Unless
specifically required to be delivered to the Escrow Agent pursuant to the terms
of this Contract, no notice hereunder must be delivered to the Escrow Agent in
order to be effective so long as it is delivered to the other party in
accordance with the above provisions.

13.7         
Governing Law and Venue.  The laws of the State of
Illinois shall govern the validity, construction, enforcement, and
interpretation of this Contract, unless otherwise specified herein except for
the conflict of laws provisions thereof.  All claims, disputes and other
matters in question arising out of or relating to this Contract, or the breach
thereof, shall be decided by proceedings instituted and litigated in a court of
competent jurisdiction in the state in which the Property is situated, and the
parties hereto expressly consent to the venue and jurisdiction of such
court.

13.8         
Entire Agreement.  This Contract embodies the entire
Contract between the parties hereto concerning the subject matter hereof and
supersedes all prior conversations, proposals, negotiations, understandings and
contracts, whether written or oral.

13.9         
Amendments.  This Contract shall not be amended,
altered, changed, modified, supplemented or rescinded in any manner except by a
written contract executed by all of the parties; provided, however, that, (a)
the signature of the Escrow Agent shall not be required as to any amendment of
this Contract other than an amendment of Section 2.3, and (b) the signature of the Broker shall
not be required as to any amendment of this Contract.

13.10     
Severability.  In the event that any part of this
Contract shall be held to be invalid or unenforceable by a court of competent
jurisdiction, such provision shall be reformed, and enforced to the maximum
extent permitted by law.  If such provision cannot be reformed, it shall be
severed from this Contract and the remaining portions of this Contract shall be
valid and enforceable.

13.11     
Multiple Counterparts/Facsimile Signatures.  This
Contract may be executed in a number of identical counterparts.  This
Contract may be executed by facsimile signatures or electronic delivery of signatures which shall be binding on
the parties hereto, with original signatures to be delivered as soon as
reasonably practical thereafter.

13.12     
Construction.  No provision of this Contract shall be
construed in favor of, or against, any particular party by reason of any
presumption with respect to the drafting of this Contract; both parties, being
represented by counsel, having fully participated in the negotiation of this
instrument.

13.13     
Confidentiality.  Seller and Purchaser shall not
disclose the terms and conditions contained in this Contract and shall keep the
same confidential, provided that each may disclose the terms and conditions of
this Contract (a) as required by law, (b) to consummate the terms of this
Contract, or any financing relating thereto, or (c) to its lenders, attorneys,
Consultants, partners and investors (either potential or actual) and
accountants.  Furthermore, Seller may disclose the terms and conditions of
this Contract as is necessary, in Seller's sole discretion, in order for Seller
to make any public disclosures required under federal or state securities laws
or regulations.  Any information obtained by Purchaser in the course of its
inspection of the Property (except to the extent already in the public domain),
and any Materials provided by Seller to Purchaser hereunder (except to the
extent already in the public domain), shall be confidential and Purchaser shall
be prohibited from making such information public to any other person or entity
other than its Consultants or as set forth above, without Seller's prior written
authorization, which may be granted or denied in Seller's sole discretion. 
In addition, each party shall use its reasonable efforts to prevent its
Consultants from divulging any such confidential information to any unrelated
third parties except for the limited purpose of analyzing and investigating such
information for the purpose of consummating the transaction contemplated by this
Contract.  Unless and until the Closing occurs, Purchaser shall not market
the Property (or any portion thereof) to any prospective purchaser or lessee
without the prior written consent of Seller, which consent may be withheld in
Seller's sole discretion.

13.14     
Time of the Essence.  It is expressly agreed by the
parties hereto that time is of the essence with respect to this Contract and any
aspect thereof.

13.15     
Waiver.  No delay or omission to exercise any right or
power accruing upon any default, omission, or failure of performance hereunder
shall impair any right or power or shall be construed to be a waiver thereof,
but any such right and power may be exercised from time to time and as often as
may be deemed expedient.  No waiver, amendment, release, or modification of
this Contract shall be established by conduct, custom, or course of dealing and
all waivers must be in writing and signed by the waiving party.

13.16     
Attorneys' Fees.  In the event either party hereto
commences litigation or arbitration against the other to enforce its rights
hereunder, the substantially prevailing party in such litigation shall be
entitled to recover from the other party its reasonable attorneys' fees and
expenses incidental to such litigation and arbitration, including the cost of
in-house counsel and any appeals.

13.17     
Time Zone/Time Periods.  Any reference in this
Contract to a specific time shall refer to the time in the time zone where the
Property is located.  (For example, a reference to 3:00 p.m. refers to 3:00
p.m. MST if the Property is located in Denver, Colorado.)  Should the
last day of a time period fall on a weekend or legal
holiday, the next Business Day thereafter shall be considered the end of the
time period.

13.18     
1031 Exchange.  Seller and Purchaser acknowledge
and agree that the purchase and sale of the Property may be part of a tax-free
exchange for either Purchaser or Seller pursuant to Section 1031 of the Code,
the regulations promulgated thereunder, revenue procedures, pronouncements and
other guidance issued by the Internal Revenue Service.  Each party hereby
agrees to cooperate with each other and take all reasonable steps on or before
the Closing Date to facilitate such exchange if requested by the other party,
provided that (a) no party making such accommodation shall be required to
acquire any substitute property, (b) such exchange shall not affect the
representations, warranties, liabilities and obligations of the parties to each
other under this Contract, (c) no party making such accommodation shall incur
any additional cost, expense or liability in connection with such exchange
(other than expenses of reviewing and executing documents required in connection
with such exchange), and (d) no dates in this Contract will be extended as a
result thereof, except as specifically provided herein.  

13.19     
No Personal Liability of Officers, Trustees or
Directors.  Purchaser acknowledges that this Contract is entered
into by Seller which is a Massachusetts limited partnership, and Purchaser
agrees that none of Seller's affiliates, parent and subsidiary entities,
successors, assigns, partners, managers, members, employees, officers,
directors, trustees, shareholders, counsel, representatives, agents, Property
Manager, Regional Property Manager, or AIMCO shall have any personal liability
under this Contract or any document executed in connection with the transactions
contemplated by this Contract.  Seller acknowledges that this Contract is
entered into by Purchaser which is a Delaware limited liability company, and
Seller agrees that none of Purchaser, or Purchaser’s partners, managers,
members, employees, officers, directors, trustees, shareholders, counsel,
representatives, or agents shall have any personal liability under this Contract
or any document executed in connection with the transactions contemplated by
this Contract.

13.20     
ADA Disclosure.  Purchaser
acknowledges that the Property may be subject to the federal Americans With
Disabilities Act (the “ADA”) and the federal Fair Housing Act (the
“FHA”).  The ADA requires, among other matters, that tenants
and/or owners of “public accommodations” remove barriers in order to make the
Property accessible to disabled persons and provide auxiliary aids and services
for hearing, vision or speech impaired persons.  Seller makes no warranty,
representation or guarantee of any type or kind with respect to the Property's
compliance with the ADA or the FHA (or any similar state or local law), and
Seller expressly disclaims any such representations.

13.21     
No Recording.  Purchaser shall not cause or allow this
Contract or any contract or other document related hereto, nor any memorandum or
other evidence hereof, to be recorded or become a public record without Seller's
prior written consent, which consent may be withheld at Seller's sole
discretion.  If Purchaser records this Contract or any other memorandum or
evidence thereof, Purchaser shall be in default of its obligations under this
Contract.  Purchaser hereby appoints Seller as Purchaser's attorney-in-fact
to prepare and record any documents necessary to effect the nullification and
release of the Contract or other memorandum or evidence thereof from the public
records.  This appointment shall be coupled with an interest and
irrevocable.

13.22     
Relationship of Parties.  Purchaser and Seller
acknowledge and agree that the relationship established between the parties
pursuant to this Contract is only that of a seller and a purchaser of
property.  Neither Purchaser nor Seller is, nor shall either hold itself
out to be, the agent, employee, joint venturer or partner of the other
party.

13.23     
AIMCO Marks.  Purchaser agrees that Seller, the
Property Manager or AIMCO, or their respective affiliates, are the sole owners
of all right, title and interest in and to the AIMCO Marks (or have the right to
use such AIMCO Marks pursuant to license agreements with third parties) and that
no right, title or interest in or to the AIMCO Marks is granted, transferred,
assigned or conveyed as a result of this Contract.  Purchaser further
agrees that Purchaser will not use the AIMCO Marks for any purpose.

13.24     
Non-Solicitation of Employees.  Prior to the
expiration of the Feasibility Period, Purchaser acknowledges and agrees that,
without the express written consent of Seller, neither Purchaser nor any of
Purchaser's employees, affiliates or agents shall solicit any of Seller's
employees or any employees located at the Property (or any of Seller's
affiliates' employees located at any property owned by such affiliates) for
potential employment.

13.25     
Survival.  Except for (a) all of the provisions of
this Article XIII (other
than Section 13.18); (b)
Sections 2.3, 3.3, 3.4, 3.5, 5.4, 5.5, 6.1 (subject to the limitations on
survival and liability set forth in Section 6.3), 6.2, 6.3, 6.5, 9.1, 9.2, 11.4, 13.1, 13.7, 13.27 and 14.2; (c) any other provisions in this
Contract, that by their express terms survive the termination of this Contract
or the Closing; and (d) any payment or indemnity obligation of Purchaser under
this Contract (the foregoing (a), (b), (c) and (d) referred to herein as the
“Survival Provisions”), none of the terms and provisions of this
Contract shall survive the termination of this Contract, and if the Contract is
not so terminated, all of the terms and provisions of this Contract (other than
the Survival Provisions, which shall survive the Closing) shall be merged into
the Closing documents and shall not survive Closing.

13.26     
Multiple Purchasers.  As used in this Contract, the
term “Purchaser” includes all entities acquiring any interest in
the Property at the Closing, including, without limitation, any assignee(s) of
the original Purchaser pursuant to Section 13.3 of this Contract.  In the event
that “Purchaser” has any obligations or makes any covenants,
representations or warranties under this Contract, the same shall be made
jointly and severally by all entities being a Purchaser hereunder.  

13.27     
WAIVER OF JURY TRIAL.  THE PARTIES HERETO WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
CONTRACT.

13.28     
Press Releases.  Except for any public filings or
other statements or disclosures required of Seller or its affiliates by
applicable laws, any press release issued with respect to the transactions
contemplated by this Contract prior to Closing shall be subject to the prior
approval of Purchaser. 

13.29     
Exclusivity.  For as long as this Contract is in
effect, Seller shall not negotiate, solicit or accept offers regarding the
financing or purchase of all or any portion of the Property or the ownership
interests in Seller. 

Article
XIV
LEAD–BASED PAINT DISCLOSURE

14.1         
Disclosure.  Seller and Purchaser hereby acknowledge
delivery of the Lead Based Paint Disclosure attached as Exhibit H
hereto.  

14.2         
Consent Agreement.  

Testing
(the “Testing”) has been performed at the Property with respect to
lead-based paint.  Law Engineering and Environmental Services, Inc.
performed the Testing and reported its findings in the Lead Based Paint
Inspection Survey dated May 14, 2001, a copy of which has been provided to
Purchaser (the “Report”).  The Report certifies the Property
as lead-based paint free.  By execution hereof, Purchaser acknowledges
receipt of a copy of the Report, the Lead-Based Paint Disclosure Statement
attached hereto as Exhibit H, and acknowledges receipt of that certain
Consent Agreement (the “Consent Agreement”) by and among the
United States Environmental Protection Agency (executed December 19, 2001), the
United States Department of Housing and Urban Development (executed January 2,
2002), and AIMCO (executed December 18, 2001).  Because the Property has
been certified as lead based paint free, Seller is not required under the
Consent Agreement to remediate or abate any lead-based paint condition at the
Property prior to the Closing.  Purchaser acknowledges and agrees that (1)
after Closing, Purchaser and the Property shall be subject to the Consent
Agreement and the provisions contained herein related thereto and (2) that
Purchaser shall not be deemed to be a third party beneficiary to the Consent
Agreement.

 

[Remainder of Page Intentionally Left Blank]

           
NOW, THEREFORE, the parties hereto have executed this Contract as of the date
first set forth above.

 

Seller:

 

HCW Pension Real Estate Fund Limited
Partnership, a Massachusetts limited partnership

 

By:      
HCW GENERAL PARTNER, LIMITED PARTNERSHIP, a Texas limited partnership, its
general partner

 

By:      
IH, INC., a Delaware corporation,

its
general partner

 

 

By: 
/s/Trent A. Johnson

Name:
 Trent A. Johnson

Title: 
Vice President

 

 

Purchaser:

 

CH
18, LLC,

a
Delaware limited liability company

 

By: 
/s/Eric Schwartz

Eric
Schwartz

Authorized
Signatoryf8kexhibitcreditagreement.htm

Loan Number:  1003238

 

Execution Version

CREDIT AGREEMENT

Dated as of January 31, 2011

by and among

PARKWAY PROPERTIES LP,

                                   as Borrower,

PARKWAY PROPERTIES, INC.,

                                  as Parent,

THE FINANCIAL INSTITUTIONS PARTY HERETO

AND THEIR ASSIGNEES UNDER SECTION 12.6.,

                                  as Lenders,

WELLS FARGO SECURITIES, LLC,

and

J.P. MORGAN SECURITIES LLC,

                                  as Joint Lead Arrangers

                                  and

                                  Joint Bookrunners,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

                                  as Administrative Agent,

JPMORGAN CHASE BANK, N.A.,

                                  as Syndication Agent,

and

PNC BANK, NATIONAL ASSOCIATION,

BANK OF AMERICA, N.A.,

and

U.S. BANK NATIONAL ASSOCIATION,

                                  as Documentation Agents

  

  

  

	
TABLE OF CONTENTS

	  
	
Article I. Definitions

 

	
1

	
     Section 1.1.  Definitions

	
1

	
     Section 1.2.  General; References to Pacific Time

	
23

	
     Section 1.3.  Financial Attributes of Non-Wholly Owned Subsidiaries

 

	
23

	
Article II. Credit Facility

 

	
24

	
     Section 2.1.  Revolving Loans

	
24

	
     Section 2.2.  Letters of Credit

	
25

	
     Section 2.3.  Swingline Loans

	
29

	
     Section 2.4.  Rates and Payment of Interest on Loans

	
31

	
     Section 2.5.  Number of Interest Periods

	
32

	
     Section 2.6.  Repayment of Loans

	
32

	
     Section 2.7.  Prepayments

	
32

	
     Section 2.8.  Continuation

	
33

	
     Section 2.9.  Conversion

	
33

	
     Section 2.10.  Notes

	
33

	
     Section 2.11.  Voluntary Reductions of the Commitment

	
34

	
     Section 2.12.  Extension of Termination Date

	
34

	
     Section 2.13.  Expiration Date of Letters of Credit Past Commitment

     Termination

	
 

35

	
     Section 2.14.  Amount Limitations

	
35

	
     Section 2.15.  Increase in Commitments

	
35

	
     Section 2.16.  Funds Transfer Disbursements

 

	
36

	
Article III. Payments, Fees and Other General Provisions

 

	
37

	
     Section 3.1.  Payments

	
37

	
     Section 3.2.  Pro Rata Treatment

	
38

	
     Section 3.3.  Sharing of Payments, Etc.

	
38

	
     Section 3.4.  Several Obligations

	
39

	
     Section 3.5.  Fees

	
39

	
     Section 3.6.  Computations

	
40

	
     Section 3.7.  Usury

	
40

	
     Section 3.8.  Statements of Account

	
41

	
     Section 3.9.  Defaulting Lenders

	
41

	
     Section 3.10.  Taxes; Foreign Lenders

 

	
43

	
Article IV. Yield Protection, Etc.

 

	
45

	
     Section 4.1.  Additional Costs; Capital Adequacy

	
45

	
     Section 4.2.  Suspension of LIBOR Loans

	
46

	
     Section 4.3.  Illegality

	
47

	
     Section 4.4.  Compensation

	
47

	
     Section 4.5.  Treatment of Affected Loans

	
48

	
     Section 4.6.  Affected Lenders

	
48

	
     Section 4.7.  Change of Lending Office

	
49

	
     Section 4.8.  Assumptions Concerning Funding of LIBOR Loans

 

	
49

	
Article V. Conditions Precedent

 

	
49

	
     Section 5.1.  Initial Conditions Precedent.

	
49

	
     Section 5.2.  Conditions Precedent to All Loans and Letters of Credit

 

	
51

 

  

-i-

  

	
Article VI. Representations and Warranties

 

	
52

	
     Section 6.1.  Representations and Warranties

	
52

	
     Section 6.2.  Survival of Representations and Warranties, Etc

 

	
58

	
Article VII. Affirmative Covenants

 

	
58

	
     Section 7.1.  Preservation of Existence and Similar Matters

	
59

	
     Section 7.2.  Compliance with Applicable Law

	
59

	
     Section 7.3.  Maintenance of Property

	
59

	
     Section 7.4.  Conduct of Business

	
59

	
     Section 7.5.  Insurance

	
59

	
     Section 7.6.  Payment of Taxes and Claims

	
59

	
     Section 7.7.  Books and Records; Inspections

	
60

	
     Section 7.8.  Use of Proceeds

	
60

	
     Section 7.9.  Environmental Matters

	
60

	
     Section 7.10.  Further Assurances

	
61

	
     Section 7.11.  Material Contracts

	
61

	
     Section 7.12.  REIT Status

	
61

	
     Section 7.13.  Exchange Listing

	
61

	
     Section 7.14.  Guarantors

 

	
61

	
Article VIII. Information

 

	
62

	
     Section 8.1.  Quarterly Financial Statements

	
62

	
     Section 8.2.  Year-End Statements

	
62

	
     Section 8.3.  Compliance Certificate; Statement of Funds from Operations;

     Report of Acquired Properties

	
 

63

	
     Section 8.4.  Other Information

	
63

	
     Section 8.5.  Electronic Delivery of Certain Information

	
66

	
     Section 8.6.  Public/Private Information

	
66

	
     Section 8.7.  USA Patriot Act Notice; Compliance

 

	
66

	
Article IX. Negative Covenants

 

	
67

	
     Section 9.1.  Financial Covenants

	
67

	
     Section 9.2.  Liens; Negative Pledge

	
69

	
     Section 9.3.  Restrictions on Intercompany Transfers

	
70

	
     Section 9.4.  Merger, Consolidation, Sales of Assets and Other Arrangements

	
70

	
     Section 9.5.  Plans

	
71

	
     Section 9.6.  Fiscal Year

	
71

	
     Section 9.7.  Modifications of Organizational Documents and Material Contracts

	
71

	
     Section 9.8.  Transactions with Affiliates

	
71

	
     Section 9.9.  Environmental Matters

	
72

	
     Section 9.10.  Derivatives Contracts

 

	
72

	
Article X. Default

 

	
72

	
     Section 10.1.  Events of Default

	
72

	
     Section 10.2.  Remedies Upon Event of Default

	
76

	
     Section 10.3.  Remedies Upon Default

	
77

	
    Section 10.4.  Marshaling; Payments Set Aside

	
77

	
    Section 10.5.  Allocation of Proceeds

	
77

	
     Section 10.6.  Letter of Credit Collateral Account

	
78

	
     Section 10.7.  Performance by Administrative Agent

	
79

 

-ii-

  

  

	
     Section 10.8.  Rights Cumulative

 

	
79

	
Article XI. The Administrative Agent

 

	
79

	
     Section 11.1.  Appointment and Authorization

	
79

	
     Section 11.2.  Wells Fargo as Lender

	
80

	
     Section 11.3.  Approvals of Lenders

	
81

	
     Section 11.4.  Notice of Events of Default

	
81

	
     Section 11.5.  Administrative Agent’s Reliance

	
81

	
     Section 11.6.  Indemnification of Administrative Agent

	
82

	
     Section 11.7.  Lender Credit Decision, Etc

	
83

	
     Section 11.8.  Successor Administrative Agent

	
83

	
     Section 11.9.  Titled Agents

 

	
84

	
Article XII. Miscellaneous

 

	
84

	
     Section 12.1.  Notices

	
84

	
     Section 12.2.  Expenses

	
86

	
     Section 12.3.  Stamp, Intangible and Recording Taxes

	
86

	
     Section 12.4.  Setoff

	
86

	
     Section 12.5.  Litigation; Jurisdiction; Other Matters; Waivers

	
87

	
     Section 12.6.  Successors and Assigns

	
88

	
     Section 12.7.  Amendments and Waivers

	
91

	
     Section 12.8.  Nonliability of Administrative Agent and Lenders

	
92

	
     Section 12.9.  Confidentiality

	
93

	
     Section 12.10.  Indemnification

	
94

	
     Section 12.11.  Termination; Survival

	
95

	
     Section 12.12.  Severability of Provisions

	
96

	
     Section 12.13.  GOVERNING LAW

	
96

	
     Section 12.14.  Counterparts

	
96

	
    Section 12.15.  Obligations with Respect to Loan Parties

	
96

	
     Section 12.16.  Independence of Covenants

	
96

	
     Section 12.17.  Limitation of Liability

	
96

	
     Section 12.18.  Entire Agreement

	
97

	
     Section 12.19.  Construction

	
97

	
    Section 12.20.  Headings

	
97

	  	  
	  	  

	
SCHEDULE I

	
Commitments

	
SCHEDULE 1.1.

	
List of Loan Parties

	
SCHEDULE 6.1.(b)

	
Ownership Structure

	
SCHEDULE 6.1.(f)

	
Properties

	
SCHEDULE 6.1.(g)

	
Existing Indebtedness

	
SCHEDULE 6.1.(h)

	
Material Contacts

	
SCHEDULE 6.1.(i)

	
Litigation

	
SCHEDULE 6.1.(r)

	
Affiliate Transactions

	  	  
	  	  
	
EXHIBIT A

	
Form of Assignment and Assumption Agreement

	
EXHIBIT B

	
Form of Guaranty

	
EXHIBIT C

	
Form of Notice of Borrowing/Swingline Borrowing/Continuation or Conversion

	
EXHIBIT D

	
Form of Revolving Note

 

  

-iii-

  

	
EXHIBIT E

	
Form of Swingline Note

	
EXHIBIT F

	
Form of Transfer Authorizer Designation Form

	
EXHIBIT G

	
Form of Opinion of Counsel

	
EXHIBIT H

	
Form of Compliance Certificate

-iv-

LEGAL02/32205964v7

  

  

  

THIS CREDIT AGREEMENT (this “Agreement”) dated as of January 31, 2011 by and among PARKWAY PROPERTIES LP, a limited partnership formed under the laws of the State of Delaware (the “Borrower”), Parkway Properties, Inc., a corporation incorporated under the laws of the State of Maryland (the “Parent”), WELLS FARGO SECURITIES, LLC and J.P. MORGAN SECURITIES LLC, as Joint Lead Arrangers (each a “Joint Lead Arranger”) and Joint Bookrunners (each a “Joint Bookrunner”), each of the financial institutions initially a signatory hereto together with their successors and assignees under Section 12.6. (the “Lenders”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the “Administrative Agent”), JPMORGAN CHASE BANK, N.A., as Syndication Agent (the “Syndication Agent”) and PNC Bank, National Association, Bank of America, N.A. and U.S. Bank National Association, as Documentation Agents (the “Documentation Agents”).

WHEREAS, the Administrative Agent, the Issuing Bank and the Lenders desire to make available to the Borrower a revolving credit facility in the initial amount of $190,000,000 with a $20,000,000 swingline subfacility and a $20,000,000 letter of credit subfacility, on the terms and conditions contained herein.

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

Article I. Definitions

 

	
  

	
Section 1.1.  Definitions.

 

In addition to terms defined elsewhere herein, the following terms shall have the following meanings for the purposes of this Agreement:

“Accession Agreement” means an Accession Agreement substantially in the form of Annex I to the Guaranty.

“Additional Costs” has the meaning given that term in Section 4.1.(b).

“Adjusted EBITDA” means, for any given period, (a) the EBITDA of the Parent and its Subsidiaries determined on a consolidated basis for such period, minus (b) Capital Reserves.

 “Adjusted Total Asset Value” means Total Asset Value determined exclusive of assets that are owned by Excluded Subsidiaries or Unconsolidated Affiliates.

“Administrative Agent” means Wells Fargo Bank, National Association as contractual representative of the Lenders under this Agreement, or any successor Administrative Agent appointed pursuant to Section 11.8.

“Administrative Questionnaire” means the Administrative Questionnaire completed by each Lender and delivered to the Administrative Agent in a form supplied by the Administrative Agent to the Lenders from time to time.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.  In no event shall the Administrative Agent or any Lender be deemed to be an Affiliate of the Borrower.

  

1

  

“Agreement Date” means the date as of which this Agreement is dated.

“Applicable Law” means all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes, executive orders, and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“Applicable Margin” means the percentage rate set forth below corresponding to the ratio of Total Indebtedness to Total Asset Value as determined in accordance with Section 9.1.(a):

	
Level

	
Ratio of Total Indebtedness to Total Asset Value

	
Applicable Margin for all Loans

	
1

	
Less than or equal to

0.450 to 1.00

	
2.75%

	
2

	
Greater than 0.450 to 1.00 but equal to or less than 0.50 to 1.00

	
3.00%

	
3

	
Greater than 0.50 to 1.00 but equal to or less than 0.550 to 1.00

	
3.25%

	
4

	
Greater than 0.550 to 1.00

	
3.50%

The Applicable Margin for Loans shall be determined by the Administrative Agent from time to time, based on the ratio of Total Indebtedness to Total Asset Value as set forth in the Compliance Certificate most recently delivered by the Borrower pursuant to Section 8.3.  Any adjustment to the Applicable Margin shall be effective as of the first day of the calendar month immediately following the month during which the Borrower delivers to the Administrative Agent the applicable Compliance Certificate pursuant to Section 8.3.  If the Borrower fails to deliver a Compliance Certificate pursuant to Section 8.3., the Applicable Margin shall equal the percentages corresponding to Level 4 until the earlier of (i) the fifth Business Day after the Compliance Certificate required to be delivered pursuant to Section 8.3. is actually received by the Administrative Agent and (ii) the first day of the calendar month immediately following the month that the required Compliance Certificate is delivered.  Notwithstanding the foregoing, for the period from the Effective Date through but excluding the date on which the Administrative Agent first determines the Applicable Margin for Loans as set forth above, the Applicable Margin shall be determined based on Level 3.  Thereafter, such Applicable Margin shall be adjusted from time to time as set forth in this definition.  The provisions of this definition shall be subject to Section 2.4.(c).

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

“Assignment and Assumption” means an Assignment and Assumption Agreement among a Lender, an Eligible Assignee and the Administrative Agent, substantially in the form of Exhibit A.

“Bankruptcy Code” means the Bankruptcy Code of 1978, as amended.

“Base Rate” means the LIBOR Market Index Rate; provided, that if for any reason the LIBOR Market Index Rate is unavailable, Base Rate shall mean the per annum rate of interest equal to the Federal Funds Rate plus one percent (1.00%).

  

2

  

“Base Rate Loan” means a Revolving Loan bearing interest at a rate based on the Base Rate.

“Benefit Arrangement” means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.

“Borrower” has the meaning set forth in the introductory paragraph hereof and shall include the Borrower’s successors and permitted assigns.

“Borrower Information” has the meaning given that term in Section 2.4.(c).

“Business Day” means (a) a day of the week (but not a Saturday, Sunday or a banking holiday) on which the offices of the Administrative Agent in San Francisco, California are open to the public for carrying on substantially all of the Administrative Agent’s business functions, and (b) if such day relates to a LIBOR Loan, any such day that is also a day on which dealings in Dollars are carried on in the London interbank market.  Unless specifically referenced in this Agreement as a Business Day, all references to “days” shall be to calendar days.

“Capital Reserves” means, for any period and with respect to a Property, an amount equal to (a) $0.25 per square foot times (b) a fraction, the numerator of which is the number of days in such period and the denominator of which is 365.  If the term Capital Reserves is used without reference to any specific Property, then the amount shall be determined on an aggregate basis with respect to all Properties of the Parent, the Borrower and the other Subsidiaries and the applicable Ownership Share of all Properties of all Consolidated Affiliates and Unconsolidated Affiliates.

“Capitalization Rate” means 8.25%.

“Capitalized Lease Obligation” means obligations under a lease (to pay rent or other amounts under any lease or other arrangement conveying the right to use) that are required to be capitalized for financial reporting purposes in accordance with GAAP.  The amount of a Capitalized Lease Obligation is the capitalized amount of such obligation as would be required to be reflected on a balance sheet of the applicable Person prepared in accordance with GAAP as of the applicable date.

“Cash Equivalents” means: (a) securities issued, guaranteed or insured by the United States of America or any of its agencies with maturities of not more than one year from the date of determination; (b) certificates of deposit with maturities of not more than one year from the date of determination issued by a United States federal or state chartered commercial bank of recognized standing, or a commercial bank organized under the laws of any other country which is a member of the Organisation for Economic Cooperation and Development, or a political subdivision of any such country, acting through a branch or agency, which bank has capital and unimpaired surplus in excess of $500,000,000 and which bank or its holding company has a short-term commercial paper rating of at least A-2 or the equivalent by S&P or at least P-2 or the equivalent by Moody’s; (c) reverse repurchase agreements with terms of not more than seven days from the date acquired, for securities of the type described in clause (a) above and entered into only with commercial banks having the qualifications described in clause (b) above; (d) commercial paper issued by any Person incorporated under the laws of the United States of America or any State thereof and rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s, in each case with maturities of not more than one year from the date of determination; and (e) investments in money market funds registered under the Investment Company Act of 1940, as amended, which have net assets of at least $500,000,000 and at least 85% of whose assets consist of securities and other obligations of the type described in clauses (a) through (d) above.

  

3

  

“Commitment” means, as to each Lender (other than the Swingline Lender), such Lender’s obligation to make Revolving Loans pursuant to Section 2.1., to issue (in the case of the Issuing Bank) and to participate (in the case of the other Lenders) in Letters of Credit pursuant to Section 2.2.(i), and to participate in Swingline Loans pursuant to Section 2.3.(e), in an amount up to, but not exceeding the amount set forth for such Lender on Schedule I as such Lender’s “Commitment Amount” or as set forth in any applicable Assignment and Assumption or agreement execute by a Lender becoming a party hereto in accordance with Section 2.15., as the same may be reduced from time to time pursuant to Section 2.11. or increased or reduced as appropriate to reflect any assignments to or by such Lender effected in accordance with Section 12.6. or increased as appropriate to reflect any increase effected in accordance with Section 2.15.

“Commitment Percentage” means, as to each Revolving Lender, the ratio, expressed as a percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate amount of the Commitments of all Lenders hereunder; provided, however, that if at the time of determination the Commitments have been terminated or been reduced to zero, the “Commitment Percentage” of each Revolving Lender shall be the “Commitment Percentage” of such Revolving Lender in effect immediately prior to such termination or reduction.

“Compliance Certificate” has the meaning given that term in Section 8.3.

“Consolidated Affiliate” means, with respect to any Person (an “Investing Person”), any other Person in whom such Investing Person holds an Investment, and whose financial results would be consolidated under GAAP with the financial results of such Investing Person on the consolidated financial statements of such Investing Person, regardless of whether such Investing Person directly or indirectly owns less than a majority of the Equity Interests of such Person.

“Construction-in-Process” means cash expenditures for land and improvements (including indirect costs internally allocated and development costs) determined in accordance with GAAP on all Properties that are under development or are scheduled to commence development within twelve months from any date of determination. 

“Continue”, “Continuation” and “Continued” each refers to the continuation of a LIBOR Loan from one Interest Period to another Interest Period pursuant to Section 2.8.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

“Convert”, “Conversion” and “Converted” each refers to the conversion of a Loan of one Type into a Loan of another Type pursuant to Section 2.9.

“Credit Event” means any of the following: (a) the making (or deemed making) of any Loan, (b) the Conversion of a Base Rate Loan into a LIBOR Loan, (c) the Continuation of a LIBOR Loan and (d) the issuance of a Letter of Credit.

“Credit Rating” means the rating assigned by a Rating Agency to the senior unsecured long term Indebtedness of a Person.

“Default” means any of the events specified in Section 10.1., whether or not there has been satisfied any requirement for the giving of notice, the lapse of time, or both.

  

4

  

“Defaulting Lender” means any Lender that (a) has failed to fund (or has failed, within 2 Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund) any portion of a Loan, participations in Letter of Credit Liabilities under Section 2.2.(j) or participations in Swingline Loans under Section 2.3.(e), in each case required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless such amount is the subject of a good faith dispute, (c) has notified the Borrower, the Administrative Agent or any other Lender in writing that, or has made a public statement to the effect that, it does not intend to comply with any of its funding obligations under this Agreement, or (d) has become or is (i) insolvent or (ii) the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

“Defaulting Lender Excess” means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Commitment Percentage of the aggregate outstanding principal amount of Revolving Loans of all Lenders (calculated as if all Defaulting Lenders other than such Defaulting Lender had funded all of their respective Revolving Loans) over the aggregate outstanding principal amount of all Revolving Loans of such Defaulting Lender.

“Derivatives Contract” means (a) any transaction (including any master agreement, confirmation or other agreement with respect to any such transaction) now existing or hereafter entered into by the Borrower or any of its Subsidiaries (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, recurrently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, and (b) any combination of these transactions.  Not in limitation of the foregoing, the term “Derivatives Contract” includes any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations of liabilities under any such master agreement.

“Derivatives Termination Value” means, in respect of any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement or provision relating thereto, (a) for any date on or after the date such Derivatives Contracts have been terminated or closed out, the termination amount or value determined in accordance therewith, and (b) for any date prior to the date such Derivatives Contracts have been terminated or closed out, the then-current mark-to-market value for such Derivatives Contracts, determined based upon one or more mid-market quotations or estimates provided by any recognized dealer in Derivatives Contracts (which may include the Administrative Agent, any Lender or any Affiliate of any thereof).

  

5

  

“Development Property” means a Property currently under development that has not achieved an Occupancy Rate of 80% or more or, subject to the last sentence of this definition, on which the improvements (other than tenant improvements on unoccupied space) related to the development have not been completed.  The term “Development Property” shall include real property of the type described in the immediately preceding sentence that satisfies both of the following conditions:  (i) it is to be (but has not yet been) acquired by the Parent, the Borrower, any Subsidiary or any Unconsolidated Affiliate upon completion of construction pursuant to a contract in which the seller of such real property is required to develop or renovate prior to, and as a condition precedent to, such acquisition and (ii) a third party is developing such property using the proceeds of a loan that is Guaranteed by, or is otherwise recourse to, the Parent, the Borrower, any Subsidiary or any Unconsolidated Affiliate.  A Development Property on which all improvements (other than tenant improvements on unoccupied space) related to the development of such Property have been completed for at least 12 months shall cease to constitute a Development Property notwithstanding the fact that such Property has not achieved an Occupancy Rate of at least 80%.

“Dollars” or “$” means the lawful currency of the United States of America.

“EBITDA” means, with respect to a Person for any period and without duplication, the sum of (a) net income (loss) of such Person for such period determined on a consolidated basis excluding the following (but only to the extent included in determining net income (loss) for such period): (i) depreciation and amortization; (ii) Interest Expense; (iii) income tax expense; and (iv) extraordinary or nonrecurring gains and losses; plus (b) such Person’s Ownership Share of EBITDA of its Unconsolidated Affiliates.  EBITDA shall be adjusted to remove any impact from straight line rent leveling adjustments required under GAAP and amortization of intangibles pursuant to FASB ASC 805.  For purposes of this definition, nonrecurring items shall be deemed to include (w) gains and losses on early extinguishment of Indebtedness, (x)  non-cash severance and other non-cash restructuring charges, (y) transaction costs of acquisitions not permitted to be capitalized pursuant to GAAP and (z) lease termination fees.

“Effective Date” means the later of (a) the Agreement Date and (b) the date on which all of the conditions precedent set forth in Section 5.1. shall have been fulfilled or waived.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than a natural person) approved by the Administrative Agent  (such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Parent, the Borrower or any of the Parent’s Affiliates or Subsidiaries.

“Eligible Property” means a Property which satisfies all of the following requirements as confirmed by the Administrative Agent (such confirmation not to be unreasonably withheld): (a) such Property is fully developed primarily as an office Property; (b) such Property is 100% owned in fee simple, or leased under a Ground Lease, by the Borrower or a Guarantor; (c) regardless of whether such Property is owned by the Borrower or a Subsidiary, the Borrower has the right directly, or indirectly through a Subsidiary, to take the following actions without the need to obtain the consent of any Person: (i) to create Liens on such Property as security for Indebtedness of the Parent, the Borrower or such Subsidiary, as applicable, and (ii) to sell, transfer or otherwise dispose of such Property; (d) neither such Property, nor if such Property is owned by a Subsidiary, any of the Borrower’s direct or indirect ownership interest in such Subsidiary, is subject to (i) any Lien other than Permitted Liens of the types described in clauses (a) through (e) of the definition of “Permitted Lien” or (ii) any Negative Pledge; and (e) such Property is free of all structural defects or major architectural deficiencies, title defects, environmental conditions or other adverse matters except for defects, deficiencies, conditions or other matters individually or collectively which are not material to the profitable operation of such Property.

  

6

  

“Environmental Laws” means any Applicable Law relating to environmental protection or the manufacture, storage, remediation, disposal or clean-up of Hazardous Materials including, without limitation, the following: Clean Air Act, 42 U.S.C. § 7401 et seq.; Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; National Environmental Policy Act, 42 U.S.C. § 4321 et seq.; regulations of the Environmental Protection Agency, any applicable rule of common law and any judicial interpretation thereof relating primarily to the environment or Hazardous Materials, and any analogous or comparable state or local laws, regulations or ordinances that concern Hazardous Materials or protection of the environment.

“Equity Interest” means, with respect to any Person, any share of capital stock of (or other ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person whether or not certificated, any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.

“Equity Issuance” means any issuance or sale by a Person of any Equity Interest in such Person and shall in any event include the issuance of any Equity Interest upon the conversion or exchange of any security constituting Indebtedness that is convertible or exchangeable, or is being converted or exchanged, for Equity Interests.

“ERISA” means the Employee Retirement Income Security Act of 1974, as in effect from time to time.

“ERISA Event” means, with respect to the ERISA Group, (a) any “reportable event” as defined in Section 4043 of ERISA with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the withdrawal of a member of the ERISA Group from a Plan subject to Section 4063 of ERISA during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) the incurrence by a member of the ERISA Group of any liability with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (d) the incurrence by any member of the ERISA Group of any liability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan; (e) the institution of proceedings to terminate a Plan or Multiemployer Plan by the PBGC; (f) the failure by any member of the ERISA Group to make when due required contributions to a Multiemployer Plan or Plan unless such failure is cured within 30 days or the filing pursuant to Section 412(c) of the Internal Revenue Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard; (g) any other event or condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan or the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the receipt by any member of the ERISA Group of any notice or the  receipt by any Multiemployer Plan from any member of the ERISA Group of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent (within the meaning of Section 4245 of ERISA), in reorganization (within the meaning of Section 4241 of ERISA), or in “critical” status (within the meaning of Section 432 of the Internal Revenue Code or Section 305 of ERISA); (i)  the imposition of any liability under Title IV of ERISA, other  than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any member of the ERISA Group or the imposition of any Lien in favor of the PBGC under Title IV of ERISA; or (j) a determination that a Plan is, or is reasonably expected to be, in “at risk” status (within the meaning of Section 430 of the Internal Revenue Code or Section 303 of ERISA).

  

7

  

“ERISA Group” means the Parent, the Borrower, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control, which, together with the Borrower or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code.

“Event of Default” means any of the events specified in Section 10.1., provided that any requirement for notice or lapse of time or any other condition has been satisfied.

“Excluded Subsidiary” means any Subsidiary (a) holding title to assets that are or are to become collateral for any Secured Indebtedness of such Subsidiary and (b) that is prohibited from Guarantying the Indebtedness of any other Person pursuant to (i) any document, instrument, or agreement evidencing such Secured Indebtedness or (ii) a provision of such Subsidiary’s organizational documents which provision was included in such Subsidiary’s organizational documents as a condition to the extension of such Secured Indebtedness.

“Fair Market Value” means, (a) with respect to a security listed on a national securities exchange or the NASDAQ National Market, the price of such security as reported on such exchange or market by any widely recognized reporting method customarily relied upon by financial institutions and (b) with respect to any other property, the price which could be negotiated in an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction.

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

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

“Fee Income” means without duplication actual income earned by the Parent, the Borrower and their Subsidiaries in connection with management, leasing, construction or asset management of Properties owned by third parties and Properties not 100% owned in fee simple by the Parent, the Borrower or their Wholly Owned Subsidiaries for which the Parent, the Borrower or one of their Subsidiaries has entered a written binding agreement with the Property owner to provide such services.

“Fee Letter” means, collectively, (a) that certain fee letter dated as of January 7, 2011, by and among the Borrower, the Administrative Agent and Wells Fargo Securities, LLC and (b) that certain fee letter dated as of January 11, 2011, by and between the Borrower and J.P. Morgan Securities LLC.

  

8

  

“Fees” means the fees and commissions provided for or referred to in Section 3.5. and any other fees payable by the Borrower hereunder, under any other Loan Document or under the Fee Letter.

“Fixed Charges” means, with respect to a Person and for a given period, the sum of (a) the Interest Expense of such Person for such period, plus (b) the aggregate of all regularly scheduled principal payments on Indebtedness made by such Person during such period (excluding balloon, bullet or similar payments of principal  that repays such Indebtedness in full), plus (c) the aggregate of all dividends paid or accrued by such Person on any Preferred Stock during such pe­riod.  The Parent’s Ownership Share of the Fixed Charges of its Consolidated Affiliates and Unconsolidated Affiliates will be included in the calculation of “Fixed Charges”.

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

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“Funds From Operations” means, with respect to a Person and for a given period, (a) net income (loss) of such Person determined on a consolidated basis, excluding gains (or losses) from the restructuring of Indebtedness or the sales of property, plus (b) depreciation with respect to such Person’s real property assets and amortization (other than amortization of deferred financing costs), and after adjustments for Unconsolidated Affiliates. Adjustments for unconsolidated partnership and joint ventures will be calculated to reflect funds from operations on the same basis.  For purposes of this Agreement, Funds From Operations shall be calculated consistent with the White Paper on Funds from Operations dated April 2002 issued by National Association of Real Estate Investment Trusts, Inc., but without giving effect to any supplements, amendments or other modifications promulgated after the Agreement Date.

“GAAP” means generally accepted accounting principles in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (including Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification”) or in such other statements by such other entity as may be approved by a significant segment of the accounting profession in the United States of America, which are applicable to the circumstances as of the date of determination.

“Governmental Approvals” means all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities.

“Governmental Authority” means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, administrative, public or statutory instrumentality, authority, body, agency, bureau, commission, board, department or other entity (including, without limitation, the Federal Deposit Insurance Corporation, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law.

“Ground Lease” means a ground lease containing the following terms and conditions: (a) a remaining term (exclusive of any unexercised extension options) of 40 years or more from the Agreement Date; (b) the right of the lessee to mortgage and encumber its interest in the leased property without the consent of the lessor; (c) the obligation of the lessor to give the holder of any mortgage Lien on such leased property written notice of any defaults on the part of the lessee and agreement of such lessor that such lease will not be terminated until such holder has had a reasonable opportunity to cure or complete foreclosures, and fails to do so; (d) reasonable transferability of the lessee’s interest under such lease, including ability to sublease; and (e) such other rights customarily required by mortgagees making a loan secured by the interest of the holder of the leasehold estate demised pursuant to a ground lease.

  

9

  

“Guarantor” means any Person that is party to the Guaranty as a “Guarantor” and shall in any event include the Parent, each Material Subsidiary (unless an Excluded Subsidiary) and each Subsidiary that the Parent causes to become a Guarantor.

“Guaranty”, “Guaranteed” or to “Guarantee” as applied to any obligation means and includes:  (a) a guaranty (other than by endorsement of negotiable instruments for collection in the ordinary course of business), directly or indirectly, in any manner, of any part or all of such obligation, or (b) an agreement, direct or indirect, contingent or otherwise, and whether or not constituting a guaranty, the practical effect of which is to assure the payment or performance (or payment of damages in the event of nonperformance) of any part or all of such obligation whether by: (i) the purchase of securities or obligations, (ii) the purchase, sale or lease (as lessee or lessor) of property or the purchase or sale of services primarily for the purpose of enabling the obligor with respect to such obligation to make any payment or performance (or payment of damages in the event of nonperformance) of or on account of any part or all of such obligation, or to assure the owner of such obligation against loss, (iii) the supplying of funds to or in any other manner investing in the obligor with respect to such obligation, (iv) repayment of amounts drawn down by beneficiaries of letters of credit (including Letters of Credit), or (v) the supplying of funds to or investing in a Person on account of all or any part of such Person’s obligation under a Guaranty of any obligation or indemnifying or holding harmless, in any way, such Person against any part or all of such obligation.  As the context requires, “Guaranty” shall also mean the guaranty executed and delivered pursuant to Section 5.1. or 7.14. and substantially in the form of Exhibit B.

“Hazardous Materials” means all or any of the following: (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable Environmental Laws as “hazardous substances”, “hazardous materials”, “hazardous wastes”, “toxic substances” or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, “TCLP” toxicity, or “EP toxicity”; (b) oil, petroleum or petroleum derived substances, natural gas, natural gas liquids or synthetic gas and drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (c) any flammable substances or explosives or any radioactive materials; (d) asbestos in any form; (e) toxic mold; and (f) electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million.

“Indebtedness” means, with respect to a Person, at the time of computation thereof, all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed; (b) all obligations of such Person, whether or not for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property or for services rendered; (c) accounts payable and accruals, the aggregate amount of which is greater than 5% of Total Asset Value (calculated without taking into account any accounts payable or accruals) as of any date of determination (d) Capitalized Lease Obligations of such Person (including obligations with respect to Ground Leases to the extent such obligations are required to be reported as liabilities under GAAP); (e) all reimbursement obligations (contingent or otherwise) of such Person under or in respect of any letters

  

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of credit or acceptances (whether or not the same have been presented for payment); (f) all Off-Balance Sheet Obligations of such Person; (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Mandatorily Redeemable Stock issued by such Person or any other Person, valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (h) all obligations of such Person in respect of any purchase obligation, repurchase obligation, takeout commitment or forward equity commitment, in each case evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be satisfied by the issuance of Equity Interests (other than Mandatorily Redeemable Stock)); (i) net obligations under any Derivative Contract that have not been entered into as a hedge against existing Indebtedness (which shall be deemed to have an amount equal to the Derivatives Termination Value thereof at such time); (j) all Indebtedness of other Persons which such Person has Guaranteed or is otherwise recourse to such Person (except for guaranties of customary exceptions for fraud, misapplication of funds, environmental indemnities, voluntary bankruptcy, collusive involuntary bankruptcy and other similar exceptions to non-recourse liability); (k) all Indebtedness of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness or other payment obligation; and (l) such Person’s Ownership Share of the Indebtedness of any Consolidated Affiliate or Unconsolidated Affiliate of such Person.  All Loans and Letter of Credit Liabilities shall constitute Indebtedness of the Borrower.  Notwithstanding anything to the contrary in this Agreement or any other Loan Document, the calculation of Indebtedness shall not include any fair value adjustments to the carrying value of liabilities to record such liabilities at fair value pursuant to electing the fair value option election under FASB ASC 825-10-25 (formerly known as FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities) or other FASB standards allowing entities to elect fair value option for financial liabilities.

“Intellectual Property” has the meaning given that term in Section 6.1.(s).

“Interest Expense” means, with respect to a Person and for any period without duplication, (a) total interest expense (including, without limitation, capitalized interest expense (other than capitalized interest funded from a construction loan interest reserve account held by another lender and not included in the calculation of cash for balance sheet reporting purposes)) of such Person, plus (b) to the extent not already included in the foregoing clause (a), such Person’s Ownership Share of all Interest Expense of Consolidated Affiliates and Unconsolidated Affiliates of such Person.

“Interest Period” means, with respect to each LIBOR Loan, each period commencing on the date such LIBOR Loan is made, or in the case of the Continuation of a LIBOR Loan the last day of the preceding Interest Period for such Loan, and ending on the numerically corresponding day in the first, second, third or sixth calendar month thereafter, as the Borrower may select in a Notice of Borrowing, Notice of Continuation or Notice of Conversion, as the case may be, except that each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month.  Notwithstanding the foregoing: (i) if any Interest Period for a Revolving Loan would otherwise end after the Termination Date, such Interest Period shall end on the Termination Date; and (ii) each Interest Period that would otherwise end on a day which is not a Business Day shall end on the immediately following Business Day (or, if such immediately following Business Day falls in the next calendar month, on the immediately preceding Business Day).

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

  

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“Investment” means, with respect to any Person, any acquisition or investment (whether or not of a controlling interest) by such Person, by means of any of the following: (a) the purchase or other acquisition of any Equity Interest in another Person, (b) a loan, advance or extension of credit to, capital contribution to, Guaranty of Indebtedness of, or purchase or other acquisition of any Indebtedness of, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute the business or a division or operating unit of another Person.  Any commitment to make an Investment in any other Person, as well as any option of another Person to require an Investment in such Person, shall constitute an Investment.  Except as expressly provided otherwise, for purposes of determining compliance with any covenant contained in a Loan Document, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“Issuing Bank” means Wells Fargo or any other Lender, each in its capacity as an issuer of Letters of Credit pursuant to Section 2.2.

“L/C Commitment Amount” has the meaning given to that term in Section 2.2.(a).

“Lender” means each financial institution from time to time party hereto as a “Lender”, together with its respective successors and permitted assigns, and, as the context requires, includes the Swingline Lender; provided, however, that the term “Lender”, except as otherwise expressly provided herein, shall exclude any Lender (or its Affiliates) in its capacity as a Specified Derivatives Provider.

“Lending Office” means, for each Lender and for each Type of Loan, the office of such Lender specified in such Lender’s Administrative Questionnaire or in the applicable Assignment and Assumption, or such other office of such Lender as such Lender may notify the Administrative Agent in writing from time to time.

“Letter of Credit” has the meaning given that term in Section 2.2.(a).

“Letter of Credit Collateral Account” means a special deposit account maintained by the Administrative Agent and under its sole dominion and control.

“Letter of Credit Documents” means, with respect to any Letter of Credit, collectively, any application therefor, any certificate or other document presented in connection with a drawing under such Letter of Credit and any other agreement, instrument or other document governing or providing for (a) the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b) any collateral security for any of such obligations.

“Letter of Credit Liabilities” means, without duplication, at any time and in respect of any Letter of Credit, the sum of (a) the Stated Amount of such Letter of Credit plus (b) the aggregate unpaid principal amount of all Reimbursement Obligations of the Borrower at such time due and payable in respect of all drawings made under such Letter of Credit.  For purposes of this Agreement, a Lender (other than the Lender then acting as Issuing Bank) shall be deemed to hold a Letter of Credit Liability in an amount equal to its participation interest under Section 2.2. in the related Letter of Credit, and the Lender then acting as the Issuing Bank shall be deemed to hold a Letter of Credit Liability in an amount equal to its retained interest in the related Letter of Credit after giving effect to the acquisition by the Lenders (other than the Lender then acting as the Issuing Bank) of their participation interests under such Section.

  

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“Level” has the meaning given that term in the definition of the term “Applicable Margin.”

“LIBOR” means, for the Interest Period for any LIBOR Loan, the rate of interest, rounded up to the nearest whole multiple of one-hundredth of one percent (0.01%), obtained by dividing (i) the rate of interest, rounded upward to the nearest whole multiple of one-sixteenth of one percent (0.0625%), referred to as the BBA (British Bankers’ Association) LIBOR rate as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rate for deposits in Dollars at approximately 9:00 a.m. Pacific time, two (2) Business Days prior to the date of commencement of such Interest Period for purposes of calculating effective rates of interest for loans or obligations making reference thereto, for an amount approximately equal to the applicable LIBOR Loan and for a period of time approximately equal to such Interest Period by (ii) a percentage equal to 1 minus the stated maximum rate (stated as a decimal) of all reserves, if any, required to be maintained with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) as specified in Regulation D of the Board of Governors of the Federal Reserve System (or against any other category of liabilities which includes deposits by reference to which the interest rate on LIBOR Loans is determined or any applicable category of extensions of credit or other assets which includes loans by an office of any Lender outside of the United States of America).  Any change in such maximum rate shall result in a change in LIBOR on the date on which such change in such maximum rate becomes effective.

“LIBOR Loan” means a Revolving Loan (other than a Base Rate Loan) bearing interest at a rate based on LIBOR.

“LIBOR Market Index Rate” means, for any day, LIBOR as of that day that would be applicable for a LIBOR Loan having a one-month Interest Period determined at approximately 9:00 a.m. Pacific time for such day (or if such day is not a Business Day, the immediately preceding Business Day).  The LIBOR Market Index Rate shall be determined on a daily basis.

“Lien” as applied to the property of any Person means:  (a) any security interest, encumbrance, mortgage, deed to secure debt, deed of trust, assignment of leases and rents, pledge, lien, hypothecation, assignment, charge or lease constituting a Capitalized Lease Obligation, conditional sale or other title retention agreement, or other security title or encumbrance of any kind in respect of any property of such Person, or upon the income, rents or profits therefrom; (b) any arrangement, express or implied, under which any property of such Person is transferred, sequestered or otherwise identified for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to the payment of the general, unsecured creditors of such Person; and (c) the filing of any financing statement under the UCC or its equivalent in any jurisdiction, other than any precautionary filing not otherwise constituting or giving rise to a Lien, including a financing statement filed (i) in respect of a lease not constituting a Capitalized Lease Obligation pursuant to Section 9-505 (or a successor provision) of the Uniform Commercial Code or its equivalent as in effect in an applicable jurisdiction or (ii) in connection with a sale or other disposition of accounts or other assets not prohibited by this Agreement in a transaction not otherwise constituting or giving rise to a Lien.

“Loan” means a Revolving Loan or a Swingline Loan.

“Loan Document” means this Agreement, each Note, each Letter of Credit Document and each other document or instrument now or hereafter executed and delivered by a Loan Party in connection with, pursuant to or relating to this Agreement (other than the Fee Letter and any Specified Derivatives Contract).

  

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“Loan Party” means each of the Parent, the Borrower, each other Person who guarantees all or a portion of the Obligations and/or who pledges any collateral to secure all or a portion of the Obligations.  Schedule 1.1. sets forth the Loan Parties in addition to the Borrower as of the Agreement Date.

“Mandatorily Redeemable Stock” means, with respect to any Person, any Equity Interest of such Person which by the terms of such Equity Interest (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable), upon the happening of any event or otherwise, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than an Equity Interest to the extent redeemable in exchange for common stock or other equivalent common Equity Interests at the option of the issuer of such Equity Interest), (b) is convertible into or exchangeable or exercisable for Indebtedness or Mandatorily Redeemable Stock, or (c) is redeemable at the option of the holder thereof, in whole or in part (other than an Equity Interest which is redeemable solely in exchange for common stock or other equivalent common Equity Interests), in each case on or prior to the date on which all Loans are scheduled to be due and payable in full.

“Material Adverse Effect” means a materially adverse effect on (a) the business, assets, liabilities, condition (financial or otherwise), results of operations or business prospects of the Parent, the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Parent, the Borrower or any other Loan Party to perform its obligations under any Loan Document to which it is a party, (c) the validity or enforceability of any of the Loan Documents, (d) the rights and remedies of the Lenders, the Issuing Bank and the Administrative Agent under any of the Loan Documents or (e) the timely payment of the principal of or interest on the Loans or other amounts payable in connection therewith or the timely payment of all Reimbursement Obligations.

“Material Contract” means any contract or other arrangement (other than Loan Documents and Specified Derivatives Contracts), whether written or oral, to which the Parent, the Borrower, any Subsidiary or any other Loan Party is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could reasonably be expected to have a Material Adverse Effect.

“Material Subsidiary” means any Subsidiary to which more than 5.0% of Adjusted Total Asset Value (excluding cash and cash equivalents) is attributable on an individual basis.

“Maximum Loan Availability” means, at any time, the aggregate amount of the Commitments at such time, or, if the Commitments have been terminated or reduced to zero, the outstanding principal amount of the Loans and the Letter of Credit Liabilities.

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

“Mortgage” means a mortgage, deed of trust, deed to secure debt or similar security instrument made by a Person owning an interest in real estate granting a Lien on such interest in real estate as security for the payment of Indebtedness.

“Mortgage Receivable” means a promissory note secured by a Mortgage of which the Parent, the Borrower or another Subsidiary is the holder and retains the rights of collection of all payments thereunder.

“Multiemployer Plan” means at any time a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding six plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such six-year period.

  

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“Negative Pledge” means, with respect to a given asset, any provision of a document, instrument or agreement (other than any Loan Document or Specified Derivatives Contract) which prohibits or purports to prohibit the creation or assumption of any Lien on such asset as security for Indebtedness of the Person owning such asset or any other Person; provided, however, that an agreement that conditions a Person’s ability to encumber its assets upon the maintenance of one or more specified ratios that limit a Person’s ability to encumber its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific assets, shall not constitute a Negative Pledge.

“Net Operating Income” means, for any Property and for a given period, the sum of the following (without duplication and determined on a consistent basis with prior periods): (a) cash rents and other revenues received in the ordinary course from such Property (including proceeds of rent loss insurance or business interruption insurance but excluding pre-paid rents and revenues, lease termination fees and security deposits except to the extent applied in satisfaction of tenants’ obligations for rent) minus (b) all cash expenses paid (excluding Interest Expenses but including an appropriate accrual for property taxes and property insurance) related to the ownership, operation or maintenance of such Property, including but not limited to, property taxes, assessments and the like, insurance, utilities, payroll costs, maintenance, repair and landscaping expenses, marketing expenses, and general and administrative expenses (including an appropriate allocation for legal, accounting, advertising, marketing and other expenses incurred in connection with such Property, but specifically excluding general overhead expenses of the Borrower or any Subsidiary and any property management fees) minus (c) the Capital Reserves for such Property as of the end of such period minus (d) the greater of (i) the actual property management fee paid during such period with respect to such Property and (ii) an imputed management fee in an amount equal to 3% of the gross revenues for such Property for such period.

“Net Proceeds” means with respect to an Equity Issuance by a Person, the aggregate amount of all cash and the Fair Market Value of all other property (other than securities of such Person being converted or exchanged in connection with such Equity Issuance) received by such Person in respect of such Equity Issuance net of investment banking fees, legal fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred by such Person in connection with such Equity Issuance.

“Non-Core Property” means a Property that is not primarily used for office space, but that otherwise satisfies the requirements of an Eligible Property.

“Nonrecourse Indebtedness” means, with respect to a Person, Indebtedness for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, voluntary bankruptcy, collusive involuntary bankruptcy and other similar exceptions to nonrecourse liability) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness.

“Note” means a Revolving Note or a Swingline Note.

“Notice of Borrowing” means a notice substantially in the form of Exhibit C (or such other form reasonably acceptable to the Administrative Agent and containing the information required in such Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.1.(b) evidencing the Borrower’s request for a borrowing of Revolving Loans.

“Notice of Continuation” means a notice substantially in the form of Exhibit C (or such other form reasonably acceptable to the Administrative Agent and containing the information required in such Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.8. evidencing the Borrower’s request for the Continuation of a LIBOR Loan.

  

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“Notice of Conversion” means a notice substantially in the form of Exhibit C (or such other form reasonably acceptable to the Administrative Agent and containing the information required in such Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.9. evidencing the Borrower’s request for the Conversion of a Loan from one Type to another Type.

“Notice of Swingline Borrowing” means a notice substantially in the form of Exhibit C (or such other form reasonably acceptable to the Administrative Agent and containing the information required in such Exhibit) to be delivered to the Swingline Lender pursuant to Section 2.3.(b) evidencing the Borrower’s request for a Swingline Loan.

“Obligations” means, individually and collectively: (a) the aggregate principal balance of, and all accrued and unpaid interest on, all Loans; (b) all Reimbursement Obligations and all other Letter of Credit Liabilities; and (c) all other indebtedness, liabilities, obligations, covenants and duties of the Borrower and the other Loan Parties owing to the Administrative Agent, the Issuing Bank or any Lender of every kind, nature and description, under or in respect of this Agreement or any of the other Loan Documents, including, without limitation, the Fees and indemnification obligations, whether direct or indirect, absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any promissory note.  For the avoidance of doubt, “Obligations” shall not include Specified Derivatives Obligations.

“Occupancy Rate” means, with respect to a Property at any time, the ratio, expressed as a percentage, of (a) the net rentable square footage of such Property actually occupied by tenants that are not Affiliates of the Parent or its Subsidiaries and paying rent at rates not materially less than rates generally prevailing at the time the applicable lease was entered into, pursuant to binding leases as to which no monetary default has occurred and has continued unremedied for 60 or more days to (b) the aggregate net rentable square footage of such Property (excluding areas used as management offices, building engineer offices or similar areas used for the administration, management or the physical plant and mechanical facilities of such Property).

“Off-Balance Sheet Obligations” means liabilities and obligations of the Parent, the Borrower, any Subsidiary or any other Person in respect of “off-balance sheet arrangements” (as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act) which the Parent would be required to disclose in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Parent’s report on Form 10-Q or Form 10-K (or their equivalents) which the Parent is required to file with the Securities and Exchange Commission (or any Governmental Authority substituted therefor).

“OFAC” has the meaning given that term in Section 6.1.(x).

“Ownership Share” means, with respect to any Subsidiary of a Person (other than a Wholly Owned Subsidiary) or any Consolidated Affiliate or Unconsolidated Affiliate of a Person, the greater of (a) such Person’s relative nominal direct and indirect ownership interest (expressed as a percentage) in such Subsidiary, Consolidated Affiliate or Unconsolidated Affiliate or (b) subject to compliance with Section 8.4.(q), such Person’s relative direct and indirect economic interest (calculated as a percentage) in such Subsidiary, Consolidated Affiliate or Unconsolidated Affiliate determined in accordance with the applicable provisions of the declaration of trust, articles or certificate of incorporation, articles of organization, partnership agreement, joint venture agreement or other applicable organizational document of such Subsidiary, Consolidated Affiliate or Unconsolidated Affiliate.  Notwithstanding the foregoing, the Parent’s Ownership Share of (x) RubiconPark I, LLC, (y) RubiconPark II, LLC and (z) a Consolidated Affiliate or Unconsolidated Affiliate (but in the case of this clause (z) only if the Administrative Agent has given its prior written consent), shall in each case be limited to its share of the assets and liabilities of such Person, determined in accordance with the clause (b) of this definition.

  

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“Participant” has the meaning given that term in Section 12.6.(d).

“PBGC” means the Pension Benefit Guaranty Corporation and any successor agency.

“Permitted Liens” means, with respect to any asset or property of a Person, (a)(i) Liens securing taxes, assessments and other charges or levies imposed by any Governmental Authority (excluding any Lien imposed pursuant to any of the provisions of ERISA or pursuant to any Environmental Laws) or (ii) the claims of materialmen, mechanics, carriers, warehousemen or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, which, in each case, are not at the time required to be paid or discharged under Section 7.6.; (b) Liens consisting of deposits or pledges made, in the ordinary course of business, in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance or similar Applicable Laws; (c) Liens consisting of encumbrances in the nature of zoning restrictions, easements, and rights or restrictions of record on the use of real property, which do not materially detract from the value of such property or impair the intended use thereof in the business of such Person; (d) the rights of tenants under leases or subleases not interfering with the ordinary conduct of business of such Person; (e) Liens in favor of the Administrative Agent for its benefit and the benefit of the Lenders and the Issuing Bank; (f) Liens in favor of the Borrower or a Guarantor securing Indebtedness owing by a Subsidiary to the Borrower or a Guarantor; and (g) Liens in existence on the Agreement Date and disclosed on Schedule 6.1.(g).

“Person” means any natural person, corporation, limited partnership, general partnership, joint stock company, limited liability company, limited liability partnership, joint venture, association, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, or any other nongovernmental entity, or any Governmental Authority.

“Plan” means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (a) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (b) has at any time within the preceding six years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.

“Post-Default Rate” means, in respect of any principal of any Loan or any Reimbursement Obligation and other Obligation that is not paid when due (whether at stated maturity, by acceleration, by optional or mandatory prepayment or otherwise), a rate per annum equal to the Base Rate as in effect from time to time plus the Applicable Margin plus four percent (4.0%).

“Potential Defaulting Lender” means any Lender that: (a) has failed to comply with, or has made a public statement to the effect that it does not intend to comply with, its funding obligations under one or more syndicated credit facilities or other agreements in which it commits or is obligated to extend credit (other than this Agreement); (b)  has a parent corporation or other Affiliate that is subject to any condition or event described in the immediately preceding clause (a); or (c) has, or whose parent corporation has, a Credit Rating of less than BBB-/Baa3 (or equivalent) from either S&P or Moody’s.  As used in this definition, the term “parent corporation” means, with respect to a Lender, any Person Controlling such Lender, including without limitation, the bank holding company (as defined in Regulation Y of the Board of Governors of the Federal Reserve System), if any, of such Lender.

  

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“Preferred Dividends” means, for any period and without duplication, all Restricted Payments paid during such period on Preferred Stock issued by the Parent, the Borrower or a Subsidiary.  Preferred Dividends shall not include dividends or distributions (a) paid or payable solely in Equity Interests (other than Mandatorily Redeemable Stock) payable to holders of such class of Equity Interests, (b) paid or payable to the Parent, the Borrower or a Subsidiary, or (c) constituting or resulting in the redemption of Preferred Stock, other than scheduled redemptions not constituting balloon, bullet or similar redemptions in full.

“Preferred Stock” means, with respect to any Person, shares of capital stock of, or other Equity Interests in, such Person which are entitled to preference or priority over any other capital stock of, or other Equity Interest in, such Person in respect of the payment of dividends or distribution of assets upon liquidation or both.

“Principal Office” means the office of the Administrative Agent located at 733 Marquette Avenue, 10th Floor, Minneapolis, Minnesota 55402, or any other subsequent office that the Administrative Agent shall have specified as the Principal Office by written notice to the Borrower and the Lenders.

“Property” means a parcel of real property that is (a) owned or leased (in whole or in part) or operated by the Borrower, any Subsidiary, any Consolidated Affiliate or any Unconsolidated Affiliate of the Borrower and (b) such Property is located in a State of the United States of America or in the District of Columbia.

“Qualified Plan” means a Benefit Arrangement that is intended to be tax-qualified under Section 401(a) of the Internal Revenue Code.

“Rating Agency” means S&P, Moody’s or any other nationally recognized securities rating agency selected by the Borrower and approved of by the Administrative Agent in writing.

“Recourse Indebtedness” means any Indebtedness other than Nonrecourse Indebtedness.

“Register” has the meaning given that term in Section 12.6.(c).

“Regulatory Change” means, with respect to any Lender, any change effective after the Agreement Date in Applicable Law (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks, including such Lender, of or under any Applicable Law (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any Governmental Authority or monetary authority charged with the interpretation or administration thereof or compliance by any Lender with any request or directive regarding capital adequacy; provided, however, that notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a “Regulatory Change”, regardless of the date enacted, adopted or issued.

“Reimbursement Obligation” means the absolute, unconditional and irrevocable obligation of the Borrower to reimburse the Issuing Bank for any drawing honored by the Issuing Bank under a Letter of Credit.

  

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“REIT” means a Person qualifying for treatment as a “real estate investment trust” under the Internal Revenue Code.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

“Requisite Lenders” means, as of any date, (a) Lenders having at least 66-2/3% of the aggregate amount of the Commitments, or (b) if the Commitments have been terminated or reduced to zero, Lenders holding at least 66-2/3% of the principal amount of the aggregate outstanding Loans and Letter of Credit Liabilities; provided that (i) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and (ii) at all times when two or more Lenders (excluding Defaulting Lenders) are party to this Agreement, the term “Requisite Lenders” shall in no event mean less than two Lenders.  For purposes of this definition, a Lender shall be deemed to hold a Swingline Loan or a Letter of Credit Liability to the extent such Lender has acquired a participation therein under the terms of this Agreement and has not failed to perform its obligations in respect of such participation.

“Responsible Officer” means with respect to the Borrower, any other Loan Party or any other Subsidiary, the chief executive officer, the chief financial officer, chief accounting officer, president, any senior or executive vice president, treasurer and the general counsel or chief legal officer of the Parent, the Borrower, such Loan Party or such Subsidiary.

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

“Revolving Lender” means a Lender having a Commitment.

“Revolving Loan” means a loan made by a Revolving Lender to the Borrower pursuant to Section 2.1.(a).

“Revolving Note” means a promissory note of the Borrower substantially in the form of Exhibit D, payable to the order of a Lender in a principal amount equal to the amount of such Lender’s Commitment.

“Secured Indebtedness” means, with respect to a Person as of a given date, the aggregate principal amount of all Indebtedness of such Person outstanding on such date that is secured in any manner by any Lien on any property and, in the case of the Parent and any of its Subsidiaries, shall include (without duplication) the Parent’s and its Subsidiaries’ Ownership Share of the Secured Indebtedness of any of its Consolidated Affiliates and Unconsolidated Affiliates.

“Secured Recourse Indebtedness” means, with respect to a Person as of a given date, Secured Indebtedness that is also Recourse Indebtedness.

“Securities Act” means the Securities Act of 1933, as amended from time to time, together with all rules and regulations issued thereunder.

  

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“Significant Subsidiary” means any Subsidiary to which 5.0% or more of Total Asset Value is attributable.

“Solvent” means, when used with respect to any Person, that (a) the fair value and the fair salable value of its assets (excluding any Indebtedness due from any Affiliate of such Person) are each in excess of the fair valuation of its total liabilities (including all contingent liabilities computed at the amount which, in light of all facts and circumstances existing at such time, represents the amount that could reasonably be expected to become an actual and matured liability); (b) such Person is able to pay its debts or other obligations in the ordinary course as they mature; and (c) such Person has capital not unreasonably small to carry on its business and all business in which it proposes to be engaged.

“Specified Derivatives Contract” means any Derivatives Contract, together with any Derivatives Support Document relating thereto, that is made or entered into at any time, or in effect at any time now or hereafter, whether as a result of an assignment or transfer or otherwise, between the Parent, the Borrower, any Subsidiary or any other Loan Party and any Specified Derivatives Provider.

“Specified Derivatives Obligations” means all indebtedness, liabilities, obligations, covenants and duties of the Parent, the Borrower, any Subsidiary or any other Loan Party under or in respect of any Specified Derivatives Contract, whether direct or indirect, absolute or contingent, due or not due, liquidated or unliquidated, and whether or not evidenced by any written confirmation.

“Specified Derivatives Provider” means any Lender, or any Affiliate of a Lender that is a party to a Derivatives Contract at the time such Derivatives Contract is entered into.

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. and its successors.

“Stated Amount” means the amount available to be drawn by a beneficiary under a Letter of Credit from time to time, as such amount may be increased or reduced from time to time in accordance with the terms of such Letter of Credit.

“Subsidiary” means, for any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other individuals performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.  For the avoidance of doubt, (a) as they are structured on the Agreement Date, neither Parkway Properties Office Fund, L.P. nor Parkway Properties Office Fund II, L.P. is a Subsidiary of the Parent or the Borrower and (b) the Parent’s or the Borrower’s ownership of a majority of the Equity Interests of the general partner, managing member or administrative member of a Person shall not necessarily make such Person a Subsidiary of the Parent or the Borrower.

“Substantial Amount” means, at the time of determination thereof, an amount in excess of 5.0% of total consolidated assets (exclusive of depreciation) at such time of the Borrower and its Subsidiaries determined on a consolidated basis.

“Swingline Commitment” means the Swingline Lender’s obligation to make Swingline Loans pursuant to Section 2.3. in an amount up to, but not exceeding the amount set forth in the first sentence of Section 2.3.(a), as such amount may be reduced from time to time in accordance with the terms hereof.

  

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“Swingline Lender” means Wells Fargo Bank, National Association, together with its respective successors and assigns.

“Swingline Loan” means a loan made by the Swingline Lender to the Borrower pursuant to Section 2.3.

“Swingline Maturity Date” means the date which is seven (7) Business Days prior to the Termination Date.

“Swingline Note” means the promissory note of the Borrower substantially in the form of Exhibit E, payable to the order of the Swingline Lender in a principal amount equal to the amount of the Swingline Commitment as originally in effect and otherwise duly completed.

“Tangible Net Worth” means, as of a given date, stockholders’ equity of the Parent, the Borrower and their Subsidiaries determined on a consolidated basis plus increases in accumulated depreciation and amortization accrued after the Agreement Date, minus (to the extent included when determining stockholders’ equity of the Parent, the Borrower and their Subsidiaries): (a) the amount of any write-up in the book value of any assets reflected in any balance sheet resulting from revaluation thereof or any write-up in excess of the cost of such assets acquired, and (b)  all amounts appearing on the assets side of any such balance sheet for assets which would be classified as intangible assets under GAAP, all determined on a consolidated basis.

“Taxes” has the meaning given that term in Section 3.10.

“Termination Date” means January 31, 2014, or such later date to which the Termination Date may be extended pursuant to Section 2.12.

“Total Asset Value” means, at a given time, the sum (without duplication) of all of the following of the Parent and its Subsidiaries determined on a consolidated basis in accordance with GAAP applied on a consistent basis: (a) cash and Cash Equivalents; plus (b), the quotient of (i) the Net Operating Income of all Properties owned by the Borrower or any of its Subsidiaries for the two consecutive fiscal quarters most recently ended multiplied by 2, divided by (ii) the Capitalization Rate; provided that, for purposes of calculating Total Asset Value only, “Net Operating Income” may be calculated in accordance with GAAP and may include straight line rent leveling adjustments required under GAAP; plus (c) the GAAP book value of Properties acquired during the two fiscal quarters most recently ended; plus (d) the GAAP book value of all Development Properties; plus (e) the GAAP book value of Unimproved Land; plus (f) the quotient of (i) the product of (x) Fee Income for the immediately preceding two consecutive fiscal quarters multiplied by (y) 2 divided by (ii) 15%; plus (g) the GAAP book value of all Mortgage Receivables owing by Persons other than Affiliates.  The Borrower’s Ownership Share of assets held by Consolidated Affiliates and Unconsolidated Affiliates (excluding, only in the case of Unconsolidated Affiliates, assets of the type described in the immediately preceding clause (a)) will be included in the calculation of Total Asset Value consistent with the above described treatment for wholly owned assets.  Notwithstanding the foregoing, (1) Net Operating Income attributable to Properties acquired or disposed of during the two fiscal quarters most recently ended shall be excluded from the calculation of Total Asset Value, (2) the amount of Total Asset Value attributable to clause (e) above shall be limited to 5.0% of Total Asset Value and (3) the amount of Total Asset Value attributable to clause (f) above shall be limited to 7.50% of Total Asset Value.

  

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“Total Budgeted Cost” means, with respect to a Development Property, and at any time, the aggregate amount of all costs budgeted to be paid, incurred or otherwise expended or accrued by the Borrower, a Subsidiary or an Unconsolidated Affiliate with respect to such Property to achieve an Occupancy Rate of 100%, including without limitation, all amounts budgeted with respect to all of the following:  (a) acquisition of land and any related improvements; (b) a reasonable and appropriate reserve for construction interest; (c) a reasonable and appropriate operating deficit reserve; (d) tenant improvements; (e) leasing commissions and (f) other hard and soft costs associated with the development or redevelopment of such Property.  With respect to any Property to be developed in more than one phase, the Total Budgeted Cost shall exclude budgeted costs (other than costs relating to acquisition of land and related improvements) to the extent relating to any phase for which (i) construction has not yet commenced and (ii) a binding construction contract has not been entered into by the Parent, the Borrower, any other Subsidiary or any Unconsolidated Affiliate, as the case may be.

“Total Indebtedness” means all Indebtedness of the Parent and its Subsidiaries, determined on a consolidated basis, plus the Parent’s Ownership Share of all Indebtedness of its Consolidated Affiliates and Unconsolidated Affiliates.

“Transfer Authorizer Designation Form” means a form substantially in the form of Exhibit F to be delivered to the Administrative Agent pursuant to Section 5.1.(a), as the same may be amended, restated or modified from time to time with the prior written approval of the Administrative Agent.

“Type” with respect to any Revolving Loan, refers to whether such Loan or portion thereof is a LIBOR Loan or a Base Rate Loan.

“UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.

“Unconsolidated Affiliate” means, with respect to any Person, any other Person in whom such Person holds an Investment, which Investment is accounted for in the financial statements of such Person on an equity basis of accounting and whose financial results would not be consolidated under GAAP with the financial results of such Person on the consolidated financial statements of such Person.

“Unencumbered Adjusted NOI” means, for any period, Net Operating Income from all Eligible Properties and Non-Core Properties that have an aggregate Occupancy Rate of not less than 80%.  Notwithstanding the foregoing, (x) Net Operating Income attributable to Non-Core Properties that is included in the calculation of Unencumbered Adjusted NOI shall be limited to 5.0% of Unencumbered Adjusted NOI and (y) Net Operating Income attributable to Eligible Properties that are leased pursuant to a Ground Lease that is included in the calculation of Unencumbered Adjusted NOI shall be limited to 10.0% of Unencumbered Adjusted NOI.

“Unfunded Liabilities” means, with respect to any Plan at any time, the amount (if any) by which (a) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.

“Unimproved Land” means, as of any date, land on which no development (other than improvements that are not material and that are temporary in nature) has occurred and for which no development is scheduled in the 12 months following any such date.

  

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“Unsecured Indebtedness” means, with respect to a Person as of a given date, Indebtedness that is not Secured Indebtedness; provided, however, that any Indebtedness that is secured only by a pledge of Equity Interests shall be deemed to be Unsecured Indebtedness.

“Wells Fargo” means Wells Fargo Bank, National Association, and its successors and assigns.

“Wholly Owned Subsidiary” means any Subsidiary of a Person in respect of which all of the Equity Interests (other than, in the case of a corporation, directors’ qualifying shares) are at the time directly or indirectly owned or controlled by such Person or one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of such Person.

“Withdrawal Liability” means any liability as a result of a complete or partial withdrawal from a Multiemployer Plan as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

	
  

	
Section 1.2.  General; References to Pacific Time.

 

Unless otherwise indicated, all accounting terms, ratios and measurements shall be interpreted or determined in accordance with GAAP as in effect as of the Agreement Date.  Notwithstanding the preceding sentence, the calculation of liabilities shall not include any fair value adjustments to the carrying value of liabilities to record such liabilities at fair value pursuant to electing the fair value option election under FASB ASC 825-10-25 (formerly known as FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities) or other FASB standards allowing entities to elect fair value option for financial liabilities. Accordingly, the amount of liabilities shall be the historical cost basis, which generally is the contractual amount owed adjusted for amortization or accretion of any premium or discount.  References in this Agreement to “Sections”, “Articles”, “Exhibits” and “Schedules” are to sections, articles, exhibits and schedules herein and hereto unless otherwise indicated.  References in this Agreement to any document, instrument or agreement (a) shall include all exhibits, schedules and other attachments thereto, (b) shall include all documents, instruments or agreements issued or executed in replacement thereof, to the extent permitted hereby and (c) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, supplemented, restated or otherwise modified from time to time to the extent not otherwise stated herein or prohibited hereby and in effect at any given time.  Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter.  Unless explicitly set forth to the contrary, a reference to “Subsidiary” means a Subsidiary of the Parent or a Subsidiary of such Subsidiary and a reference to an “Affiliate” means a reference to an Affiliate of the Borrower.  Titles and captions of Articles, Sections, subsections and clauses in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement.  Unless otherwise indicated, all references to time are references to Pacific time.

	
  

	
Section 1.3.  Financial Attributes of Non-Wholly Owned Subsidiaries.

 

When determining compliance by the Borrower or the Parent with any financial covenant contained in any of the Loan Documents (a) only the Ownership Share of the Borrower or the Parent, as applicable, of the financial attributes of a Subsidiary that is not a Wholly Owned Subsidiary or of a Consolidated Affiliate shall be included and (b) the Borrower shall be considered a Wholly Owned Subsidiary of the Parent.

  

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Article II. Credit Facility

 

	
  

	
Section 2.1.  Revolving Loans.

 

(a)           Making of Revolving Loans.  Subject to the terms and conditions set forth in this Agreement, including without limitation, Section 2.14., each Lender severally and not jointly agrees to make Revolving Loans to the Borrower during the period from and including the Effective Date to but excluding the Termination Date, in an aggregate principal amount at any one time outstanding up to, but not exceeding, such Lender’s Commitment.  Each borrowing of Base Rate Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $250,000 in excess thereof.  Each borrowing and Continuation under Section 2.8. of, and each Conversion under Section 2.9. of Base Rate Loans into, LIBOR Loans shall be in an aggregate minimum of $1,000,000 and integral multiples of $250,000 in excess of that amount.  Notwithstanding the immediately preceding two sentences but subject to Section 2.14., a borrowing of Revolving Loans may be in the aggregate amount of the unused Commitments.  Within the foregoing limits and subject to the terms and conditions of this Agreement, the Borrower may borrow, repay and reborrow Revolving Loans.

(b)           Requests for Revolving Loans. Not later than 9:00 a.m. Pacific time at least one (1) Business Day prior to a borrowing of Revolving Loans that are to be Base Rate Loans and not later than 9:00 a.m. Pacific time at least three (3) Business Days prior to a borrowing of Revolving Loans that are to be LIBOR Loans, the Borrower shall deliver to the Administrative Agent a Notice of Borrowing.  Each Notice of Borrowing shall specify the aggregate principal amount of the Revolving Loans to be borrowed, the date such Revolving Loans are to be borrowed (which must be a Business Day), the use of the proceeds of such Revolving Loans, the Type of the requested Revolving Loans, and if such Revolving Loans are to be LIBOR Loans, the initial Interest Period for such Revolving Loans.  Each Notice of Borrowing shall be irrevocable once given and binding on the Borrower.  Prior to delivering a Notice of Borrowing, the Borrower may (without specifying whether a Revolving Loan will be a Base Rate Loan or a LIBOR Loan) request that the Administrative Agent provide the Borrower with the most recent LIBOR available to the Administrative Agent.  The Administrative Agent shall provide such quoted rate to the Borrower on the date of such request or as soon as possible thereafter.

(c)           Funding of Revolving Loans.  Promptly after receipt of a Notice of Borrowing under the immediately preceding subsection (b), the Administrative Agent shall notify each Lender of the proposed borrowing.  Each Lender shall deposit an amount equal to the Revolving Loan to be made by such Lender to the Borrower with the Administrative Agent at the Principal Office, in immediately available funds not later than 9:00 a.m. Pacific time on the date of such proposed Revolving Loans.  Subject to fulfillment of all applicable conditions set forth herein, the Administrative Agent shall make available to the Borrower in the account specified in the Transfer Authorizer Designation Form, not later than 12:00 noon Pacific time on the date of the requested borrowing of Revolving Loans, the proceeds of such amounts received by the Administrative Agent.

(d)           Assumptions Regarding Funding by Lenders.  With respect to Revolving Loans to be made after the Effective Date, unless the Administrative Agent shall have been notified by any Lender that such Lender will not make available to the Administrative Agent a Revolving Loan to be made by such Lender in connection with any borrowing, the Administrative Agent may assume that such Lender will make the proceeds of such Revolving Loan available to the Administrative Agent in accordance with this Section, and the Administrative Agent may (but shall not be obligated to), in reliance upon such assumption, make available to the Borrower the amount of such Revolving Loan to be provided by such Lender.  In such event, if such Lender does not make available to the Administrative Agent the proceeds of such Revolving Loan, then such Lender and the Borrower severally agree to pay to the

  

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Administrative Agent on demand the amount of such Revolving Loan with interest thereon, for each day from and including the date such Revolving Loan is made available to the Borrower but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay the amount of such interest to the Administrative Agent for the same or overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays to the Administrative Agent the amount of such Revolving Loan, the amount so paid shall constitute such Lender’s Revolving Loan included in the borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make available the proceeds of a Revolving Loan to be made by such Lender.

	
  

	
Section 2.2.  Letters of Credit.

 

(a)           Letters of Credit.  Subject to the terms and conditions of this Agreement, including without limitation, Section 2.14., the Issuing Bank, on behalf of the Lenders, agrees to issue for the account of the Borrower during the period from and including the Effective Date to, but excluding, the date thirty (30) days prior to the Termination Date, one or more standby letters of credit (each a “Letter of Credit”) up to a maximum aggregate Stated Amount at any one time outstanding not to exceed $20,000,000 as such amount may be reduced from time to time in accordance with the terms hereof (the “L/C Commitment Amount”).

(b)           Terms of Letters of Credit.  At the time of issuance, the amount, form, terms and conditions of each Letter of Credit, and of any drafts or acceptances thereunder, shall be subject to approval by the Issuing Bank and the Borrower.  Notwithstanding the foregoing, in no event may (i) the expiration date of any Letter of Credit extend beyond the date that is thirty (30) days prior to the Termination Date, or (ii) any Letter of Credit have an initial duration in excess of one year; provided, however, a Letter of Credit may contain a provision providing for the automatic extension of the expiration date in the absence of a notice of non-renewal from the Issuing Bank but in no event shall any such provision permit the extension of the expiration date of such Letter of Credit beyond the date that is thirty (30) days prior to the Termination Date.  The initial Stated Amount of each Letter of Credit shall be at least $300,000 (or such lesser amount as may be acceptable to the Borrower, the Issuing Bank and the Administrative Agent).

(c)           Requests for Issuance of Letters of Credit.  The Borrower shall give the Issuing Bank and the Administrative Agent written notice at least five (5) Business Days prior to the requested date of issuance of a Letter of Credit, such notice to describe in reasonable detail the proposed terms of such Letter of Credit and the nature of the transactions or obligations proposed to be supported by such Letter of Credit, and in any event shall set forth with respect to such Letter of Credit the proposed (i) initial Stated Amount, (ii) beneficiary, and (iii) expiration date. The Borrower shall also execute and deliver such customary applications and agreements for standby letters of credit, and other forms as requested from time to time by the Issuing Bank.  Provided the Borrower has given the notice prescribed by the first sentence of this subsection and delivered such applications and agreements referred to in the preceding sentence, subject to the other terms and conditions of this Agreement, including the satisfaction of any applicable conditions precedent set forth in Section 5.2., the Issuing Bank shall issue the requested Letter of Credit on the requested date of issuance for the benefit of the stipulated beneficiary but in no event prior to the date five (5) Business Days following the date after which the Issuing Bank has received all of the items required to be delivered to it under this subsection.  The Issuing Bank shall not at any time be obligated to issue any Letter of Credit if such issuance would conflict

  

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with, or cause the Administrative Agent or any Lender to exceed any limits imposed by, any Applicable Law.  References herein to “issue” and derivations thereof with respect to Letters of Credit shall also include extensions or modifications of any outstanding Letters of Credit, unless the context otherwise requires.  Upon the written request of the Borrower, the Issuing Bank shall deliver to the Borrower a copy of each issued Letter of Credit within a reasonable time after the date of issuance thereof.  To the extent any term of a Letter of Credit Document is inconsistent with a term of any Loan Document, the term of such Loan Document shall control.

(d)           Reimbursement Obligations.  Upon receipt by the Issuing Bank from the beneficiary of a Letter of Credit of any demand for payment under such Letter of Credit, the Issuing Bank shall promptly notify the Borrower and the Administrative Agent of the amount to be paid by the Issuing Bank as a result of such demand and the date on which payment is to be made by the Issuing Bank to such beneficiary in respect of such demand; provided, however, that the Issuing Bank’s failure to give, or delay in giving, such notice shall not discharge the Borrower in any respect from the applicable Reimbursement Obligation.  The Borrower hereby absolutely, unconditionally and irrevocably agrees to pay and reimburse the Issuing Bank for the amount of each demand for payment under such Letter of Credit at or prior to the date on which payment is to be made by the Issuing Bank to the beneficiary thereunder, without presentment, demand, protest or other formalities of any kind.  Upon receipt by the Issuing Bank of any payment in respect of any Reimbursement Obligation, the Issuing Bank shall promptly pay to each Lender that has acquired a participation therein under the second sentence of the immediately following subsection (i) such Lender’s Commitment Percentage of such payment.

(e)           Manner of Reimbursement.  Upon its receipt of a notice referred to in the immediately preceding subsection (d), the Borrower shall advise the Administrative Agent and the Issuing Bank whether or not the Borrower intends to borrow hereunder to finance its obligation to reimburse the Issuing Bank for the amount of the related demand for payment and, if it does, the Borrower shall submit a timely request for such borrowing as provided in the applicable provisions of this Agreement.  If the Borrower fails to so advise the Administrative Agent and the Issuing Bank, or if the Borrower fails to reimburse the Issuing Bank for a demand for payment under a Letter of Credit by the date of such payment, the failure of which the Issuing Bank shall promptly notify the Administrative Agent, then (i) if the applicable conditions contained in Article V. would permit the making of Revolving Loans, the Borrower shall be deemed to have requested a borrowing of Revolving Loans (which shall be Base Rate Loans) in an amount equal to the unpaid Reimbursement Obligation and the Administrative Agent shall give each Revolving Lender prompt notice of the amount of the Revolving Loan to be made available to the Administrative Agent not later than 10:00 a.m. Pacific time and (ii) if such conditions would not permit the making of Revolving Loans, the provisions of subsection (j) of this Section shall apply.  The limitations set forth in the second sentence of Section 2.1.(a) shall not apply to any borrowing of Base Rate Loans under this subsection.

(f)           Effect of Letters of Credit on Commitments.  Upon the issuance by the Issuing Bank of any Letter of Credit and until such Letter of Credit shall have expired or been cancelled, the Commitment of each Lender shall be deemed to be utilized for all purposes of this Agreement in an amount equal to the product of (i) such Lender’s Commitment Percentage and (ii) the sum of (A) the Stated Amount of such Letter of Credit plus (B) any related Reimbursement Obligations then outstanding.

(g)           Issuing Bank’s Duties Regarding Letters of Credit; Unconditional Nature of Reimbursement Obligations.  In examining documents presented in connection with drawings under Letters of Credit and making payments under such Letters of Credit against such documents, the Issuing Bank shall only be required to use the same standard of care as it uses in connection with examining documents presented in connection with drawings under letters of credit in which it has not sold participations and making payments under such letters of credit.  The Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the foregoing, none of the Issuing Bank, Administrative Agent or any of the Lenders shall be responsible for, and the Borrower’s obligations in respect of Letters of Credit shall not be affected in any manner by, (i) the form, validity, sufficiency, accuracy, genuineness or legal effects of any document submitted by any party in connection with the application for and issuance of or any drawing honored under any Letter of Credit even if such document should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit, or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be

  

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invalid or ineffective for any reason; (iii) failure of the beneficiary of any Letter of Credit to comply fully with conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, electronic mail, telecopy or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit, or of the proceeds thereof; (vii) the misapplication by the beneficiary of any Letter of Credit, or of the proceeds of any drawing under any Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Issuing Bank, Administrative Agent or the Lenders.  None of the above shall affect, impair or prevent the vesting of any of the Issuing Bank’s or Administrative Agent’s rights or powers hereunder.  Any action taken or omitted to be taken by the Issuing Bank under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final, non-appealable judgment), shall not create against the Issuing Bank any liability to the Borrower, the Administrative Agent or any Lender.  In this connection, the obligation of the Borrower to reimburse the Issuing Bank for any drawing made under any Letter of Credit, and to repay any Revolving Loan made pursuant to the second sentence of the immediately preceding subsection (e), shall be absolute, unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement and any other applicable Letter of Credit Document under all circumstances whatsoever, including without limitation, the following circumstances: (A) any lack of validity or enforceability of any Letter of Credit Document or any term or provisions therein; (B) any amendment or waiver of or any consent to departure from all or any of the Letter of Credit Documents; (C) the existence of any claim, setoff, defense or other right which the Borrower may have at any time against the Issuing Bank, the Administrative Agent or any Lender, any beneficiary of a Letter of Credit or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or in the Letter of Credit Documents or any unrelated transaction; (D) any breach of contract or dispute between the Borrower, the Issuing Bank, the Administrative Agent, any Lender or any other Person; (E) any demand, statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein or made in connection therewith being untrue or inaccurate in any respect whatsoever; (F) any non-application or misapplication by the beneficiary of a Letter of Credit or of the proceeds of any drawing under such Letter of Credit; (G) payment by the Issuing Bank under any Letter of Credit against presentation of a draft or certificate which does not strictly comply with the terms of such Letter of Credit; and (H) any other act, omission to act, delay or circumstance whatsoever that might, but for the provisions of this Section, constitute a legal or equitable defense to or discharge of the Borrower’s Reimbursement Obligations.  Notwithstanding anything to the contrary contained in this Section or Section 12.10., but not in limitation of the Borrower’s unconditional obligation to reimburse the Issuing Bank for any drawing made under a Letter of Credit as provided in this Section and to repay any Revolving Loan made pursuant to the second sentence of the immediately preceding subsection (e), the Borrower shall have no obligation to indemnify the Administrative Agent, the Issuing Bank or any Lender in respect of any liability incurred by the Administrative Agent, the Issuing Bank or such Lender arising solely out of the gross negligence or willful misconduct of the Administrative Agent, the Issuing Bank or such Lender in respect of a Letter of Credit as determined by a court of competent jurisdiction in a final, non-appealable judgment.  Except as otherwise provided in this Section, nothing in this Section shall affect any rights the Borrower may have with respect to the gross negligence or willful misconduct of the Administrative Agent, the Issuing Bank or any Lender with respect to any Letter of Credit.

  

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(h)           Amendments, Etc.  The issuance by the Issuing Bank of any amendment, supplement or other modification to any Letter of Credit shall be subject to the same conditions applicable under this Agreement to the issuance of new Letters of Credit (including, without limitation, that the request therefor be made through the Issuing Bank), and no such amendment, supplement or other modification shall be issued unless either (i) the respective Letter of Credit affected thereby would have complied with such conditions had it originally been issued hereunder in such amended, supplemented or modified form or (ii) the Administrative Agent and Requisite Revolving Lenders (or all of the Revolving Lenders if required by Section 12.7.) shall have consented thereto.  In connection with any such amendment, supplement or other modification, the Borrower shall pay the fees, if any, payable under the last sentence of Section 3.5.(c).

(i)           Lenders’ Participation in Letters of Credit.  Immediately upon the issuance by the Issuing Bank of any Letter of Credit each Lender shall be deemed to have absolutely, irrevocably and unconditionally purchased and received from the Issuing Bank, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Commitment Percentage of the liability of the Issuing Bank with respect to such Letter of Credit and each Lender thereby shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and shall be unconditionally obligated to the Issuing Bank to pay and discharge when due, such Lender’s Commitment Percentage of the Issuing Bank’s liability under such Letter of Credit.  In addition, upon the making of each payment by a Lender to the Administrative Agent for the account of the Issuing Bank in respect of any Letter of Credit pursuant to the immediately following subsection (j), such Lender shall, automatically and without any further action on the part of the Issuing Bank, Administrative Agent or such Lender, acquire (i) a participation in an amount equal to such payment in the Reimbursement Obligation owing to the Issuing Bank by the Borrower in respect of such Letter of Credit and (ii) a participation in a percentage equal to such Lender’s Commitment Percentage in any interest or other amounts payable by the Borrower in respect of such Reimbursement Obligation (other than the Fees payable to the Issuing Bank pursuant to the second and the last sentences of Section 3.5.(c)).

(j)           Payment Obligation of Lenders.  Each Lender severally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, on demand in immediately available funds in Dollars the amount of such Lender’s Commitment Percentage of each drawing paid by the Issuing Bank under each Letter of Credit to the extent such amount is not reimbursed by the Borrower pursuant to the immediately preceding subsection (d); provided, however, that in respect of any drawing under any Letter of Credit, the maximum amount that any Lender shall be required to fund, whether as a Revolving Loan or as a participation, shall not exceed such Lender’s Commitment Percentage of such drawing.  If the notice referenced in the second sentence of Section 2.2.(e) is received by a Lender not later than 9:00 a.m. Pacific time, then such Lender shall make such payment available to the Administrative Agent not later than 12:00 p.m. Pacific time on the date of demand therefor; otherwise, such payment shall be made available to the Administrative Agent not later than 11:00 a.m. Pacific time on the next succeeding Business Day.  Each Lender’s obligation to make such payments to the Administrative Agent under this subsection, and the Administrative Agent’s right to receive the same for the account of the Issuing Bank, shall be absolute, irrevocable and unconditional and shall not be affected in any way by any circumstance whatsoever, including without limitation, (i) the failure of any other Lender to make its payment under this subsection, (ii) the financial condition of the Borrower or any other Loan Party, (iii) the existence of any Default or Event of Default, including any Event of Default described in Section 10.1.(e) or (f) or (iv) the termination of the Commitments.  Each such payment to the Administrative Agent for the account of the Issuing Bank shall be made without any offset, abatement, withholding or deduction whatsoever.

  

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(k)           Information to Lenders.  Promptly following any change in Letters of Credit outstanding, the Issuing Bank shall deliver to the Administrative Agent, who shall promptly deliver the same to each Lender and the Borrower, a notice describing the aggregate amount of all Letters of Credit outstanding at such time.  Upon the request of any Lender from time to time, the Issuing Bank shall deliver any other information reasonably requested by such Lender with respect to each Letter of Credit then outstanding.  Other than as set forth in this subsection, the Issuing Bank shall have no duty to notify the Lenders regarding the issuance or other matters regarding Letters of Credit issued hereunder.  The failure of the Issuing Bank to perform its requirements under this subsection shall not relieve any Lender from its obligations under the immediately preceding subsection (j).

(l)           Defaulting Lenders.  Upon demand by the Administrative Agent at any time while a Revolving Lender is a Defaulting Lender or a Potential Defaulting Lender, the Borrower shall deliver to the Administrative Agent, for the benefit of the Issuing Bank, within one Business Day of such demand, cash collateral or other credit support satisfactory to the Issuing Bank in its sole discretion in an amount equal to such Defaulting Lender’s or Potential Defaulting Lender’s Commitment Percentage of the Letter of Credit Liabilities then outstanding.

	
  

	
Section 2.3.  Swingline Loans.

 

(a)           Swingline Loans.  Subject to the terms and conditions hereof, including without limitation Section 2.14., the Swingline Lender agrees to make Swingline Loans to the Borrower, during the period from the Effective Date to but excluding the Swingline Maturity Date, in an aggregate principal amount at any one time outstanding up to, but not exceeding, $20,000,000, as such amount may be reduced from time to time in accordance with the terms hereof.  If at any time the aggregate principal amount of the Swingline Loans outstanding at such time exceeds the Swingline Commitment in effect at such time, the Borrower shall immediately pay the Administrative Agent for the account of the Swingline Lender the amount of such excess.  Subject to the terms and conditions of this Agreement, the Borrower may borrow, repay and reborrow Swingline Loans hereunder.  The borrowing of a Swingline Loan shall not constitute usage of any Lender’s Commitment for purposes of calculation of the fee payable under Section 3.5.(b).

(b)           Procedure for Borrowing Swingline Loans.  The Borrower shall give the Administrative Agent and the Swingline Lender notice pursuant to a Notice of Swingline Borrowing or telephonic notice of each borrowing of a Swingline Loan.  Each Notice of Swingline Borrowing shall be delivered to the Swingline Lender no later than 9:00 a.m. Pacific time on the proposed date of such borrowing.  Any telephonic notice shall include all information to be specified in a written Notice of Swingline Borrowing and shall be promptly confirmed in writing by the Borrower pursuant to a Notice of Swingline Borrowing sent to the Swingline Lender by telecopy on the same day of the giving of such telephonic notice.  Not later than 11:00 a.m. Pacific time on the date of the requested Swingline Loan and subject to satisfaction of the applicable conditions set forth in Section 5.2. for such borrowing, the Swingline Lender will make the proceeds of such Swingline Loan available to the Borrower in Dollars, in immediately available funds, at the account specified by the Borrower in the Notice of Swingline Borrowing.

(c)           Interest.  Swingline Loans shall bear interest at a per annum rate equal to the Base Rate as in effect from time to time plus the Applicable Margin or at such other rate or rates as the Borrower and the Swingline Lender may agree from time to time in writing.  Interest on Swingline Loans is solely for the account of the Swingline Lender (except to the extent a Revolving Lender acquires a participating interest in a Swingline Loan pursuant to the immediately following subsection (e)).  All accrued and unpaid interest on Swingline Loans shall be payable on the dates and in the manner provided in Section 2.4. with respect to interest on Base Rate Loans (except as the Swingline Lender and the Borrower may otherwise agree in writing in connection with any particular Swingline Loan).

  

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(d)           Swingline Loan Amounts, Etc.  Each Swingline Loan shall be in the minimum amount of $1,000,000 and integral multiples of $250,000 in excess thereof, or such other minimum amounts agreed to by the Swingline Lender and the Borrower.  Any voluntary prepayment of a Swingline Loan must be in integral multiples of $100,000 or the aggregate principal amount of all outstanding Swingline Loans (or such other minimum amounts upon which the Swingline Lender and the Borrower may agree) and in connection with any such prepayment, the Borrower must give the Swingline Lender and the Administrative Agent prior written notice thereof no later than 10:00 a.m. Pacific time on the date of such prepayment.  The Swingline Loans shall, in addition to this Agreement, be evidenced by the Swingline Note.

(e)           Repayment and Participations of Swingline Loans.  The Borrower agrees to repay each Swingline Loan within one Business Day of demand therefor by the Swingline Lender and, in any event, within five (5) Business Days after the date such Swingline Loan was made; provided, that the proceeds of a Swingline Loan may not be used to pay a Swingline Loan.  Notwithstanding the foregoing, the Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Swingline Loans on the Swingline Maturity Date (or such earlier date as the Swingline Lender and the Borrower may agree in writing).  In lieu of demanding repayment of any outstanding Swingline Loan from the Borrower, the Swingline Lender may, on behalf of the Borrower (which hereby irrevocably directs the Swingline Lender to act on its behalf), request a borrowing of Revolving Loans that are Base Rate Loans from the Lenders in an amount equal to the principal balance of such Swingline Loan.  The amount limitations contained in the second sentence of Section 2.1.(a) shall not apply to any borrowing of such Revolving Loans made pursuant to this subsection.  The Swingline Lender shall give notice to the Administrative Agent of any such borrowing of Revolving Loans not later than 9:00 a.m. Pacific time at least one Business Day prior to the proposed date of such borrowing.  Not later than 9:00 a.m. Pacific time on the proposed date of such borrowing, each Lender will make available to the Administrative Agent at the Principal Office for the account of the Swingline Lender, in immediately available funds, the proceeds of the Revolving Loan to be made by such Lender.  The Administrative Agent shall pay the proceeds of such Revolving Loans to the Swingline Lender, which shall apply such proceeds to repay such Swingline Loan.  If the Revolving Lenders are prohibited from making Revolving Loans required to be made under this subsection for any reason whatsoever, including without limitation, the occurrence of any of the Defaults or Events of Default described in Sections 10.1.(e) or (f)), each Revolving Lender shall purchase from the Swingline Lender, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Commitment Percentage of such Swingline Loan, by directly purchasing a participation in such Swingline Loan in such amount and paying the proceeds thereof to the Administrative Agent for the account of the Swingline Lender in Dollars and in immediately available funds.  A Lender’s obligation to purchase such a participation in a Swingline Loan shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including without limitation, (i) any claim of setoff, counterclaim, recoupment, defense or other right which such Lender or any other Person may have or claim against the Administrative Agent, the Swingline Lender or any other Person whatsoever, (ii) the occurrence or continuation of a Default or Event of Default (including without limitation, any of the Defaults or Events of Default described in Sections 10.1. (e) or (f)), or the termination of any Lender’s Commitment, (iii) the existence (or alleged existence) of an event or condition which has had or could have a Material Adverse Effect, (iv) any breach of any Loan Document by the Administrative Agent, any Lender, the Borrower or any other Loan Party, or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.  If such amount is not in fact made available to the Swingline Lender by any Lender, the Swingline Lender shall be entitled to recover such amount on demand from such Lender, together with accrued interest thereon for each day from the date of demand thereof, at the Federal Funds Rate.  If such Lender does not pay such amount forthwith upon the Swingline Lender’s demand therefor, and until such time as such Lender makes the required payment, the Swingline Lender shall be deemed to continue to have outstanding Swingline Loans in the amount of such unpaid participation obligation for all purposes of the Loan Documents (other than those provisions requiring the other Lenders to purchase a participation therein).  Further, such Lender shall be deemed to have assigned any and all payments made of principal and interest on its Revolving Loans, and any other amounts due it hereunder, to the Swingline Lender to fund Swingline Loans in the amount of the participation in Swingline Loans that such Lender failed to purchase pursuant to this Section until such amount has been purchased (as a result of such assignment or otherwise).

  

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(f)           Defaulting Lenders.  Upon demand by the Swingline Lender at any time while a Revolving Lender is a Defaulting Lender or a Potential Defaulting Lender, the Borrower shall deliver to the Administrative Agent for the benefit of the Swingline Lender within one Business Day of such demand, cash collateral or other credit support satisfactory to the Swingline Lender in its sole discretion in an amount equal to such Defaulting Lender’s or Potential Defaulting Lender’s Commitment Percentage of the aggregate principal amount of the Swingline Loans then outstanding.

	
  

	
Section 2.4.  Rates and Payment of Interest on Loans.

 

(a)           Rates.  The Borrower promises to pay to the Administrative Agent for the account of each Lender interest on the unpaid principal amount of each Loan made by such Lender for the period from and including the date of the making of such Loan to but excluding the date such Loan shall be paid in full, at the following per annum rates:

(i)           during such periods as such Loan is a Base Rate Loan, at the Base Rate (as in effect from time to time), plus the Applicable Margin; and

(ii)           during such periods as such Loan is a LIBOR Loan, at LIBOR for such Loan for the Interest Period therefor, plus the Applicable Margin.

Notwithstanding the foregoing, while an Event of Default exists, the Borrower shall pay to the Administrative Agent for the account of each Lender and the Issuing Bank, as the case may be, interest at the Post-Default Rate on the outstanding principal amount of any Loan made by such Lender, on all Reimbursement Obligations and on any other amount payable by the Borrower hereunder or under the Notes held by such Lender to or for the account of such Lender (including without limitation, accrued but unpaid interest to the extent permitted under Applicable Law).

(b)           Payment of Interest. All accrued and unpaid interest on the outstanding principal amount of each Loan shall be payable (i) monthly in arrears on the first day of each month, commencing with the first full calendar month occurring after the Effective Date and (ii) on any date on which the principal balance of such Loan is due and payable in full (whether at maturity, due to acceleration or otherwise).  Interest payable at the Post-Default Rate shall be payable from time to time on demand.  All determinations by the Administrative Agent of an interest rate hereunder shall be conclusive and binding on the Lenders and the Borrower for all purposes, absent manifest error.

(c)           Borrower Information Used to Determine Applicable Interest Rates.  The parties understand that the applicable interest rate for the Obligations and certain fees set forth herein may be determined and/or adjusted from time to time based upon certain financial ratios and/or other information to be provided or certified to the Lenders by the Borrower (the “Borrower Information”).  If it is subsequently determined that any such Borrower Information was incorrect (for whatever reason, including without limitation because of a subsequent restatement of earnings by the Borrower) at the time it was

  

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delivered to the Administrative Agent, and if the applicable interest rate or fees calculated for any period were lower than they should have been had the correct information been timely provided, then, such interest rate and such fees for such period shall be automatically recalculated using correct Borrower Information.  The Administrative Agent shall promptly notify the Borrower in writing of any additional interest and fees due because of such recalculation, and the Borrower shall pay such additional interest or fees due to the Administrative Agent, for the account of each Lender, within five (5) Business Days of receipt of such written notice.  Any recalculation of interest or fees required by this provision shall survive the termination of this Agreement, and this provision shall not in any way limit any of the Administrative Agent’s, the Issuing Bank’s, or any Lender’s other rights under this Agreement.

	
  

	
Section 2.5.  Number of Interest Periods.

 

There may be no more than 6 different Interest Periods for LIBOR Loans outstanding at the same time.

	
  

	
Section 2.6.  Repayment of Loans.

 

The Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Revolving Loans on the Termination Date.

	
  

	
Section 2.7.  Prepayments.

 

(a)           Optional.  Subject to Section 4.4., the Borrower may prepay any Loan at any time without premium or penalty.  The Borrower shall give the Administrative Agent at least three (3) Business Days prior written notice of the prepayment of any Loan.  Each voluntary prepayment of Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess thereof.

(b)           Mandatory.

(i)           Commitment Overadvance.  If at any time the aggregate principal amount of all outstanding Revolving Loans and Swingline Loans, together with the aggregate amount of all Letter of Credit Liabilities, exceeds the aggregate amount of the Commitments, the Borrower shall immediately upon demand pay to the Administrative Agent for the account of the Lenders then holding Commitments (or if the Commitments have been terminated, then holding outstanding Revolving Loans, Swingline Loans and/or Letter of Credit Liabilities), the amount of such excess.

(ii)           Application of Mandatory Prepayments.  Amounts paid under the preceding subsection (b)(i) shall be applied to pay all amounts of principal outstanding on the Loans and any Reimbursement Obligations pro rata in accordance with Section 3.2.; provided, however, that if no Default or Event of Default exists at the time such prepayment is made, and such prepayment would result in the Borrower being required to compensate Lenders pursuant to Section 4.4, then such prepayment shall be applied first to Base Rate Loans and then to LIBOR Loans and if any Letters of Credit are outstanding at such time, the remainder, if any, shall be deposited into the Letter of Credit Collateral Account for application to any Reimbursement Obligations.  If the Borrower is required to pay any outstanding LIBOR Loans by reason of this Section prior to the end of the applicable Interest Period therefor, the Borrower shall pay all amounts due under Section 4.4.

  

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Section 2.8.  Continuation.

 

So long as no Default or Event of Default exists, the Borrower may on any Business Day, with respect to any LIBOR Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by selecting a new Interest Period for such LIBOR Loan.  Each Continuation of a LIBOR Loan shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $250,000 in excess of that amount, and each new Interest Period selected under this Section shall commence on the last day of the immediately preceding Interest Period.  Each selection of a new Interest Period shall be made by the Borrower giving to the Administrative Agent a Notice of Continuation not later than 9:00 a.m. Pacific time three (3) Business Days prior to the date of any such Continuation.  Such notice by the Borrower of a Continuation shall be by telecopy, electronic mail or other similar form of communication in the form of a Notice of Continuation, specifying (a) the proposed date of such Continuation, (b) the LIBOR Loans and portions thereof subject to such Continuation and (c) the duration of the selected Interest Period, all of which shall be specified in such manner as is necessary to comply with all limitations on Loans outstanding hereunder.  Each Notice of Continuation shall be irrevocable by and binding on the Borrower once given.  Promptly after receipt of a Notice of Continuation, the Administrative Agent shall notify each Lender of the proposed Continuation.  If the Borrower shall fail to select in a timely manner a new Interest Period for any LIBOR Loan in accordance with this Section, such Loan will automatically, on the last day of the current Interest Period therefor, continue as a LIBOR Loan with an Interest Period of one month; provided, however that if a Default or Event of Default exists, such Loan will automatically, on the last day of the current Interest Period therefor, Convert into a Base Rate Loan notwithstanding the first sentence of Section 2.9. or the Borrower’s failure to comply with any of the terms of such Section.

	
  

	
Section 2.9.  Conversion.

 

The Borrower may on any Business Day, upon the Borrower’s giving of a Notice of Conversion to the Administrative Agent by telecopy, electronic mail or other similar form of communication, Convert all or a portion of a Loan of one Type into a Loan of another Type; provided, however, a Base Rate Loan may not be Converted into a LIBOR Loan if a Default or Event of Default exists.  Each Conversion of Base Rate Loans into LIBOR Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $250,000 in excess of that amount.  Each such Notice of Conversion shall be given not later than 9:00 a.m. Pacific time 3 Business Days prior to the date of any proposed Conversion.  Promptly after receipt of a Notice of Conversion, the Administrative Agent shall notify each Lender of the proposed Conversion.  Subject to the restrictions specified above, each Notice of Conversion shall be by telecopy, electronic mail or other similar form of communication in the form of a Notice of Conversion specifying (a) the requested date of such Conversion, (b) the Type of Loan to be Converted, (c) the portion of such Type of Loan to be Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if such Conversion is into a LIBOR Loan, the requested duration of the Interest Period of such Loan.  Each Notice of Conversion shall be irrevocable by and binding on the Borrower once given.

	
  

	
Section 2.10.  Notes.

 

(a)           Notes.  The Revolving Loans made by each Revolving Lender shall, in addition to this Agreement, also be evidenced by a Revolving Note, payable to the order of such Revolving Lender in a principal amount equal to the amount of its Commitment as originally in effect and otherwise duly completed.  The Swingline Loans made by the Swingline Lender to the Borrower shall, in addition to this Agreement, also be evidenced by a Swingline Note payable to the order of the Swingline Lender.

(b)           Records.  The date, amount, interest rate, Type and duration of Interest Periods (if applicable) of each Loan made by each Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by such Lender on its books and such entries shall be binding on the Borrower absent manifest error; provided, however, that (i) the failure of a Lender to make any such record shall not affect the obligations of the Borrower under any of the Loan Documents and (ii) if there is a discrepancy between such records of a Lender and the statements of accounts maintained by the Administrative Agent pursuant to Section 3.8., in the absence of manifest error, the statements of account maintained by the Administrative Agent pursuant to Section 3.8. shall be controlling.

  

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(c)           Lost, Stolen, Destroyed or Mutilated Notes.  Upon receipt by the Borrower of (i) written notice from a Lender that a Note of such Lender has been lost, stolen, destroyed or mutilated, and (ii)(A) in the case of loss, theft or destruction, an unsecured agreement of indemnity from such Lender in form reasonably satisfactory to the Borrower, or (B) in the case of mutilation, upon surrender and cancellation of such Note, the Borrower shall at its own expense execute and deliver to such Lender a new Note dated the date of such lost, stolen, destroyed or mutilated Note.

	
  

	
Section 2.11.  Voluntary Reductions of the Commitment.

 

The Borrower shall have the right to terminate or reduce the aggregate unused amount of the Commitments (for which purpose use of the Commitments shall be deemed to include the aggregate amount of all Letter of Credit Liabilities and the aggregate principal amount of all outstanding Swingline Loans) at any time and from time to time without penalty or premium upon not less than five (5) Business Days prior written notice to the Administrative Agent of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction (which in the case of any partial reduction of the Commitments shall not be less than $5,000,000 and integral multiples of $1,000,000 in excess of that amount in the aggregate) and shall be irrevocable once given and effective only upon receipt by the Administrative Agent (“Commitment Reduction Notice”); provided, however, the Borrower may not reduce the aggregate amount of the Commitments below $100,000,000 unless the Borrower is terminating the Commitments in full.  Promptly after receipt of a Commitment Reduction Notice the Administrative Agent shall notify each Lender of the proposed termination or Commitment reduction.  The Commitments, once reduced or terminated pursuant to this Section, may not be increased or reinstated.  The Borrower shall pay all interest and fees on the Revolving Loans accrued to the date of such reduction or termination of the Commitments to the Administrative Agent for the account of the Revolving Lenders, including but not limited to any applicable compensation due to each Revolving Lender in accordance with Section 4.4.

	
  

	
Section 2.12.  Extension of Termination Date.

 

The Borrower shall have the right, exercisable one time, to extend the Termination Date by one year.  The Borrower may exercise such right only by executing and delivering to the Administrative Agent at least 90 days but not more than 180 days prior to the current Termination Date, a written notice of such extension (an “Extension Notice”).  The Administrative Agent shall notify the Revolving Lenders if it receives an Extension Notice promptly upon receipt thereof.  Subject to satisfaction of the following conditions, the Termination Date shall be extended for one year effective upon receipt by the Administrative Agent of the Extension Notice and payment of the fee referred to in the following clause (y): (x) immediately prior to such extension and immediately after giving effect thereto, (A) no Default or Event of Default shall exist and (B) the representations and warranties made or deemed made by the Parent, the Borrower and each other Loan Party in the Loan Documents to which any of them is a party, shall be true and correct in all material respects on and as of the date of such extension with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Loan Documents and (y) the Borrower shall have paid the Fees payable under Section 3.5.(d).  At any time prior to the effectiveness of any such extension, upon the Administrative Agent’s request, the Borrower shall deliver to the Administrative Agent a certificate from either (i) any two of the following officers of the Parent (x) the chief executive officer, (y) the chief financial officer or (z) the chief accounting officer, or (ii) the treasurer of the Parent and any one of the following officers of the Parent (x) the chief executive officer, (y) the chief financial officer or (z) the chief accounting officer, certifying the matters referred to in the immediately preceding clauses (x)(A) and (x)(B).

  

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Section 2.13.  Expiration Date of Letters of Credit Past Commitment Termination.

 

If on the date the Commitments are terminated or reduced to zero (whether voluntarily, by reason of the occurrence of an Event of Default or otherwise), there are any Letters of Credit outstanding hereunder, the Borrower shall, on such date, pay to the Administrative Agent, for its benefit and the benefit of the Lenders and the Issuing Bank for deposit into the Letter of Credit Collateral Account, an amount of money sufficient to cause the balance of available funds on deposit in the Letter of Credit Collateral Account to equal the aggregate Stated Amount of such Letters of Credit.

	
  

	
Section 2.14.  Amount Limitations.

 

Notwithstanding any other term of this Agreement or any other Loan Document, no Lender shall be required to make a Loan, the Issuing Bank shall not be required to issue a Letter of Credit and no reduction of the Commitments pursuant to Section 2.11. shall take effect, if immediately after the making of such Loan, the issuance of such Letter of Credit or such reduction in the Commitments the aggregate principal amount of all outstanding Revolving Loans and Swingline Loans, together with the aggregate amount of all Letter of Credit Liabilities, would exceed the aggregate amount of the Commitments at such time.

	
  

	
Section 2.15.  Increase in Commitments.

 

The Borrower shall have the right to request increases in the aggregate amount of the Commitments by providing written notice to the Administrative Agent, which notice shall be irrevocable once given; provided, however, that after giving effect to any such increases the aggregate amount of the Commitments shall not exceed $240,000,000.  Each such increase in the Commitments must be an aggregate minimum amount of $20,000,000 and integral multiples of $1,000,000 in excess thereof.  The Administrative Agent, in consultation with the Borrower, shall manage all aspects of the syndication of such increase in the Commitments, including decisions as to the selection of the existing Lenders and/or other banks, financial institutions and other institutional lenders to be approached with respect to such increase and the allocations of the increase in the Commitments among such existing Lenders and/or other banks, financial institutions and other institutional lenders.  No Lender shall be obligated in any way whatsoever to increase its Commitment or provide a new Commitment, and any new Lender becoming a party to this Agreement in connection with any such requested increase must be an Eligible Assignee.  If a new Lender becomes a party to this Agreement, or if any existing Lender is increasing its Commitment, such Lender shall on the date it becomes a Lender hereunder (or in the case of an existing Lender, increases its Commitment) (and as a condition thereto) purchase from the other Lenders its Commitment Percentage (determined with respect to the Lenders’ respective Commitments and after giving effect to the increase of Commitments) of any outstanding Revolving Loans, by making available to the Administrative Agent for the account of such other Lenders, in same day funds, an amount equal to the sum of (A) the portion of the outstanding principal amount of such Revolving Loans to be purchased by such Lender, plus (B) the aggregate amount of payments previously made by the other Revolving Lenders under Section 2.2.(j) that have not been repaid, plus (C) interest accrued and unpaid to and as of such date on such portion of the outstanding principal amount of such Revolving Loans.  The Borrower shall pay to the Revolving Lenders amounts payable, if any, to such Revolving Lenders under Section 4.4. as a result of the prepayment of any such Revolving Loans.  Effecting the increase of the Commitments

  

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under this Section is subject to the following conditions precedent:  (x) no Default or Event of Default shall be in existence on the effective date of such increase, (y) the representations and warranties made or deemed made by the Borrower or any other Loan Party in any Loan Document to which such Loan Party is a party shall be true or correct on the effective date of such increase except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted hereunder, and (z)  the Administrative Agent shall have received each of the following, in form and substance satisfactory to the Administrative Agent:  (i) if not previously delivered to the Administrative Agent, copies certified by the Secretary or Assistant Secretary of (A) all partnership or other necessary action taken by the Borrower to authorize such increase and (B) all corporate, partnership, member or other necessary action taken by each Guarantor authorizing the guaranty of such increase; and (ii) an opinion of counsel to the Borrower and the Guarantors, and addressed to the Administrative Agent and the Lenders covering such matters as reasonably requested by the Administrative Agent, and (iii) new Revolving Notes executed by the Borrower, payable to any new Revolving Lenders and replacement Revolving Notes executed by the Borrower, payable to any existing Revolving Lenders increasing their Commitments, in the amount of such Revolving Lender’s Commitment at the time of the effectiveness of the applicable increase in the aggregate amount of the Commitments.  In connection with any increase in the aggregate amount of the Commitments pursuant to this Section 2.15. any Lender becoming a party hereto shall execute such documents and agreements as the Administrative Agent may reasonably request.

	
  

	
Section 2.16.  Funds Transfer Disbursements.

 

(a)           Generally.  The Borrower hereby authorizes the Administrative Agent to disburse the proceeds of any Loan made by the Lenders or any of their Affiliates pursuant to the Loan Documents as requested by an authorized representative of the Borrower to any of the accounts designated in the Transfer Authorizer Designation Form.  The Borrower agrees to be bound by any transfer request: (i) authorized or transmitted by the Borrower; or (ii) made in the Borrower’s name and accepted by the Administrative Agent in good faith and in compliance with these transfer instructions, even if not properly authorized by the Borrower.  The Borrower further agrees and acknowledges that the Administrative Agent may rely solely on any bank routing number or identifying bank account number or name provided by the Borrower to effect a wire of funds transfer even if the information provided by the Borrower identifies a different bank or account holder than named by the Borrower.  The Administrative Agent is not obligated or required in any way to take any actions to detect errors in information provided by the Borrower.  If the Administrative Agent takes any actions in an attempt to detect errors in the transmission or content of transfer requests or takes any actions in an attempt to detect unauthorized funds transfer requests, the Borrower agrees that no matter how many times the Administrative Agent takes these actions the Administrative Agent will not in any situation be liable for failing to take or correctly perform these actions in the future and such actions shall not become any part of the transfer disbursement procedures authorized under this provision, the Loan Documents, or any agreement between the Administrative Agent and the Borrower.  The Borrower agrees to notify the Administrative Agent of any errors in the transfer of any funds or of any unauthorized or improperly authorized transfer requests within fourteen (14) days after the Administrative Agent’s confirmation to the Borrower of such transfer.

(b)           Funds Transfer.  The Administrative Agent will, in its sole discretion, determine the funds transfer system and the means by which each transfer will be made.  The Administrative Agent may delay or refuse to accept a funds transfer request if the transfer would: (i) violate the terms of this authorization, (ii) require use of a bank unacceptable to the Administrative Agent or prohibited by any Governmental Authority, (iii) cause the Administrative Agent or any Lender to violate any Federal Reserve or other regulatory risk control program or guideline or (iv) otherwise cause the Administrative Agent or any Lender to violate any Applicable Law or regulation.

  

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(c)           Limitation of Liability.  None of the Administrative Agent, the Issuing Bank or any Lender shall be liable to the Borrower or any other parties for (i) errors, acts or failures to act of others, including other entities, banks, communications carriers or clearinghouses, through which the Borrower’s transfers may be made or information received or transmitted, and no such entity shall be deemed an agent of the Administrative Agent, the Issuing Bank or any Lender, (ii) any loss, liability or delay caused by fires, earthquakes, wars, civil disturbances, power surges or failures, acts of government, labor disputes, failures in communications networks, legal constraints or other events beyond Administrative Agent’s, Issuing Bank’s or any Lender’s control, or (iii) any special, consequential, indirect or punitive damages, whether or not (x) any claim for these damages is based on tort or contract or (y) the Administrative Agent, the Issuing Bank, any Lender or the Borrower knew or should have known the likelihood of these damages in any situation.  Neither the Administrative Agent, the Issuing Bank nor any Lender makes any representations or warranties other than those expressly made in this Agreement.

Article III. Payments, Fees and Other General Provisions

 

	
  

	
Section 3.1.  Payments.

 

(a)           Payments by Borrower.  Except to the extent otherwise provided herein, all payments of principal, interest, Fees and other amounts to be made by the Borrower under this Agreement, the Notes or any other Loan Document shall be made in Dollars, in immediately available funds, without setoff, deduction or counterclaim, to the Administrative Agent at the Principal Office, not later than 11:00 a.m. Pacific time on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).  Subject to Section 10.5., the Borrower shall, at the time of making each payment under this Agreement or any other Loan Document, specify to the Administrative Agent the amounts payable by the Borrower hereunder to which such payment is to be applied.  Each payment received by the Administrative Agent for the account of a Lender under this Agreement or any Note shall be paid to such Lender by wire transfer of immediately available funds in accordance with the wiring instructions provided by such Lender to the Administrative Agent from time to time, for the account of such Lender at the applicable Lending Office of such Lender.  Each payment received by the Administrative Agent for the account of the Issuing Bank under this Agreement shall be paid to the Issuing Bank by wire transfer of immediately available funds in accordance with the wiring instructions provided by the Issuing Bank to the Administrative Agent from time to time, for the account of the Issuing Bank.  In the event the Administrative Agent fails to pay such amounts to such Lender or the Issuing Bank, as the case may be, within one Business Day of receipt of such amounts, the Administrative Agent shall pay interest on such amount until paid at a rate per annum equal to the Federal Funds Rate from time to time in effect.  If the due date of any payment under this Agreement or any other Loan Document would otherwise fall on a day which is not a Business Day such date shall be extended to the next succeeding Business Day and interest shall continue to accrue at the rate, if any, applicable to such payment for the period of such extension.

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

  

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Section 3.2.  Pro Rata Treatment.

 

Except to the extent otherwise provided herein: (a) each borrowing from the Revolving Lenders under Sections 2.1.(a), 2.2.(e) and 2.3.(e) shall be made from the Revolving Lenders, each payment of the fees under Section 3.5.(b), the first sentence of Section 3.5.(c), and Section 3.5.(d) shall be made for the account of the Revolving Lenders, and each termination or reduction of the amount of the Commitments under Section 2.11. shall be applied to the respective Commitments of the Revolving Lenders, pro rata according to the amounts of their respective Commitments; (b) each payment or prepayment of principal of Revolving Loans shall be made for the account of the Revolving Lenders pro rata in accordance with the respective unpaid principal amounts of the Revolving Loans held by them, provided that, subject to Section 3.9., if immediately prior to giving effect to any such payment in respect of any Revolving Loans the outstanding principal amount of the Revolving Loans shall not be held by the Revolving Lenders pro rata in accordance with their respective Commitments in effect at the time such Revolving Loans were made, then such payment shall be applied to the Revolving Loans in such manner as shall result, as nearly as is practicable, in the outstanding principal amount of the Revolving Loans being held by the Revolving Lenders pro rata in accordance with their respective Commitments; (c) each payment of interest on Revolving Loans shall be made for the account of the Revolving Lenders pro rata in accordance with the amounts of interest on such Revolving Loans, then due and payable to the respective Lenders; (d) the making, Conversion and Continuation of Revolving Loans of a particular Type (other than Conversions provided for by Section 4.1.) shall be made pro rata among the Revolving Lenders according to the amounts of their respective Revolving Loans and the then current Interest Period for each Revolving Lender’s portion of each such Revolving Loan of such Type shall be coterminous; (e) the Revolving Lenders’ participation in, and payment obligations in respect of, Swingline Loans under Section 2.3., shall be in accordance with their respective Commitment Percentages; and (f) the Revolving Lenders’ participation in, and payment obligations in respect of, Letters of Credit under Section 2.2., shall be in accordance with their respective Commitment Percentages.  All payments of principal, interest, fees and other amounts in respect of the Swingline Loans shall be for the account of the Swingline Lender only (except to the extent any Lender shall have acquired a participating interest in any such Swingline Loan pursuant to Section 2.3.(e), in which case such payments shall be pro rata in accordance with such participating interests).

	
  

	
Section 3.3.  Sharing of Payments, Etc.

 

If a Lender shall obtain payment of any principal of, or interest on, any of its Loans under this Agreement or shall obtain payment on any other Obligation owing by the Borrower or any other Loan Party through the exercise of any right of set-off, banker’s lien, counterclaim or similar right or otherwise or through voluntary prepayments directly to a Lender or other payments made by the Borrower or any other Loan Party to a Lender (other than any payment in respect of Specified Derivatives Obligations)  not in accordance with the terms of  this Agreement and such payment should be distributed to the Lenders in accordance with Section 3.2. or Section 10.5., as applicable, such Lender shall promptly purchase from the other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Loans made by the other Lenders or other Obligations owed to such other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such payment (net of any reasonable expenses which may actually be incurred by such Lender in obtaining or preserving such benefit) in accordance with the

  

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requirements of Section 3.2. or Section 10.5., as applicable.  To such end, all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored.  The Borrower agrees that any Lender so purchasing a participation (or direct interest) in the Loans or other Obligations owed to such other Lenders may exercise all rights of set-off, banker’s lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans in the amount of such participation.  Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Borrower.

	
  

	
Section 3.4.  Several Obligations.

 

No Lender shall be responsible for the failure of any other Lender to make a Loan or to perform any other obligation to be made or performed by such other Lender hereunder, and the failure of any Lender to make a Loan or to perform any other obligation to be made or performed by it hereunder shall not relieve the obligation of any other Lender to make any Loan or to perform any other obligation to be made or performed by such other Lender.

	
  

	
Section 3.5.  Fees.

 

(a)           Closing Fee.  On the Effective Date, the Borrower agrees to pay to the Administrative Agent and each Lender all loan fees as have been agreed to in writing by the Borrower and the Administrative Agent.

(b)           Facility Fees. During the period from the Effective Date to but excluding the Termination Date, the Borrower agrees to pay to the Administrative Agent for the account of the Revolving Lenders an unused facility fee equal to the sum of the daily amount by which the aggregate amount of the Commitments exceeds the aggregate outstanding principal balance of Revolving Loans and Letter of Credit Liabilities set forth in the table below multiplied by the corresponding per annum rate:

	
Amount by Which Commitments Exceed Revolving Loans and Letter of Credit Liabilities

	
Unused Fee

	
$0 to and including an amount equal to 50% of the aggregate amount of Commitments

	
0.40%

	
Greater than an amount equal to 50% of the aggregate amount of Commitments

	
0.50%

Such fee shall be computed on a daily basis and payable quarterly in arrears on the first day of each January, April, July and October during the term of this Agreement and on the Termination Date or any earlier date of termination of the Commitments or reduction of the Commitments to zero.  For the avoidance of doubt, for purposes of calculating an unused facility fee, the outstanding principal balance of Swingline Loans shall not be factored into the computation.

(c)           Letter of Credit Fees.  The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a letter of credit fee at a rate per annum equal to the Applicable Margin times the daily average Stated Amount of each Letter of Credit for the period from and including the date of issuance of such Letter of Credit (x) to and including the date such Letter of Credit expires or is cancelled or (y) to but excluding the date such Letter of Credit is drawn in full.  In addition to such fees, the Borrower shall pay to the Issuing Bank solely for its own account, a fronting fee in respect of each Letter of Credit equal to 0.20% of the initial Stated Amount of such Letter of Credit; provided, however, in no event shall the aggregate amount of such fee in respect of any Letter of Credit be less than $1,000.  The fees provided for in this subsection shall be nonrefundable and payable, in the case of the

  

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fee provided for in the first sentence, in arrears (i) quarterly on the first day of January, April, July and October, (ii) on the Termination Date, (iii) on the date the Commitments are terminated or reduced to zero and (iv) thereafter from time to time on demand of the Administrative Agent and in the case of the fee provided for in the second sentence, at the time of issuance of such Letter of Credit.  The Borrower shall pay directly to the Issuing Bank from time to time on demand all commissions, charges, costs and expenses in the amounts customarily charged or incurred by the Issuing Bank from time to time in like circumstances with respect to the issuance, amendment, renewal or extension of any Letter of Credit or any other transaction relating thereto.

(d)           Revolving Credit Extension Fee.  If the Borrower exercises its right to extend the Termination Date in accordance with Section 2.12., the Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a fee equal to 0.35% of the amount of such Revolving Lender’s Commitment (whether or not utilized).  Such fee shall be due and payable in full on the date the Administrative Agent receives the Extension Notice pursuant to such Section.

(e)           Administrative and Other Fees.  The Borrower agrees to pay the administrative and other fees of the Administrative Agent and the Joint Lead Arrangers as provided in their respective Fee Letters and as may be otherwise agreed to in writing from time to time by the Borrower and the Administrative Agent.

	
  

	
Section 3.6.  Computations.

 

Unless otherwise expressly set forth herein, any accrued interest on any Loan, any Fees or any other Obligations due hereunder shall be computed on the basis of a year of 360 days and the actual number of days elapsed.

	
  

	
Section 3.7.  Usury.

 

In no event shall the amount of interest due or payable on the Loans or other Obligations exceed the maximum rate of interest allowed by Applicable Law and, if any such payment is paid by the Borrower or any other Loan Party or received by any Lender, then such excess sum shall be credited as a payment of principal, unless the Borrower shall notify the respective Lender in writing that the Borrower elects to have such excess sum returned to it forthwith.  It is the express intent of the parties hereto that the Borrower not pay and the Lenders not receive, directly or indirectly, in any manner whatsoever, interest in excess of that which may be lawfully paid by the Borrower under Applicable Law.  The parties hereto hereby agree and stipulate that the only charge imposed upon the Borrower for the use of money in connection with this Agreement is and shall be the interest specifically described in Section 2.4.(a)(i) and (ii) and, with respect to Swingline Loans, in Section 2.3.(c).  Notwithstanding the foregoing, the parties hereto further agree and stipulate that all agency fees, syndication fees, facility fees, closing fees, letter of credit fees, underwriting fees, default charges, late charges, funding or “breakage” charges, increased cost charges, attorneys’ fees and reimbursement for costs and expenses paid by the Administrative Agent or any Lender to third parties or for damages incurred by the Administrative Agent or any Lender, in each case, in connection with the transactions contemplated by this Agreement and the other Loan Documents, are charges made to compensate the Administrative Agent or any such Lender for underwriting or administrative services and costs or losses performed or incurred, and to be performed or incurred, by the Administrative Agent and the Lenders in connection with this Agreement and shall under no circumstances be deemed to be charges for the use of money.  All charges other than charges for the use of money shall be fully earned and nonrefundable when due.

	
  

	
Section 3.8.  Statements of Account.

 

The Administrative Agent will account to the Borrower monthly with a statement of Loans, accrued interest and Fees, charges and payments made pursuant to this Agreement and the other Loan Documents, and such account rendered by the Administrative Agent shall be deemed conclusive upon the Borrower absent manifest error.  The failure of the Administrative Agent to deliver such a statement of accounts shall not relieve or discharge the Borrower from any of its obligations hereunder.

  

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Section 3.9.  Defaulting Lenders.

 

(a)           Generally.  If any Lender shall become a Defaulting Lender, then such Defaulting Lender’s right to participate in the administration of the Loans, this Agreement and the other Loan Documents, including without limitation, any right to vote in respect of any amendment, consent or waiver of the terms of this Agreement or any other Loan Document, or to direct any action or inaction of the Administrative Agent or to be taken into account in the calculation of the Requisite Lenders shall be suspended while such Lender remains a Defaulting Lender; provided, however, that the foregoing shall not permit an increase in such Lender’s Commitment or an extension of the maturity date of such Lender’s Loans or other Obligations owing to such Lender, in each case, without such Lender’s consent.  If a Lender is a Defaulting Lender because it has failed to make timely payment to the Administrative Agent of any amount required to be paid to the Administrative Agent hereunder (without giving effect to any notice or cure periods), then the Administrative Agent shall be entitled (i) to collect interest from such Defaulting Lender on such delinquent payment for the period from the date on which the payment was due until the date on which the payment is made at the Federal Funds Rate, (ii) to withhold or setoff and to apply in satisfaction of the defaulted payment and any related interest, any amounts otherwise payable to such Defaulting Lender under this Agreement or any other Loan Document and (iii) to bring an action or suit against such Defaulting Lender in a court of competent jurisdiction to recover the defaulted amount and any related interest.  No Commitment of any Lender shall be increased or otherwise affected, and except as otherwise expressly provided in this Section, performance by the Borrower of its obligations hereunder and under the other Loan Documents shall not be excused or otherwise modified, as a result of the operation of this Section. The rights and remedies of the Borrower, the Administrative Agent, the Issuing Bank, the Swingline Lender and the other Lenders against a Defaulting Lender under this Section are in addition to any other rights and remedies the Borrower, the Administrative Agent, the Issuing Bank, the Swingline Lender and the other Lenders may have against such Defaulting Lender under this Agreement, any of the other Loan Documents, Applicable Law or otherwise.

(b)           Treatment of Payments.  Until the Defaulting Lender Excess of a Defaulting Lender has been reduced to zero, any payment of the principal of the Revolving Loans owing to the Defaulting Lender shall, unless the Requisite Lenders agree otherwise, be applied to the outstanding principal balance of the Revolving Loans of the applicable Revolving Lenders that are not Defaulting Lenders.  Any amount paid by the Borrower for the account of a Defaulting Lender under this Agreement or any other Loan Document will not be paid or distributed to such Defaulting Lender, but will instead be retained by the Administrative Agent in a segregated non-interest bearing account until such Defaulting Lender has ceased to be a Defaulting Lender in accordance with subsection (f) below or the termination of the Commitments and payment in full of all Obligations of the Borrower hereunder and the other Loan Documents, at which time such amounts will be applied by the Administrative Agent to the making of payments from time to time in the following order of priority:  first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent or the Swingline Lender under this Agreement; second, if determined by the Administrative Agent or requested by the Swingline Lender, held in such account as cash collateral for such Defaulting Lender’s Commitment Percentage of the Letter of Credit Liabilities then outstanding and for such Defaulting Lender’s Commitment Percentage of

  

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the aggregate principal amount of the Swingline Loans then outstanding; third, to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fourth, if so determined by the Administrative Agent and the Borrower, held in such account as cash collateral for future funding obligations of the Defaulting Lender in respect of any Loans under this Agreement.  If such Lender is still a Defaulting Lender and any amounts remain in such account on the date that the Commitments are terminated and all Obligations of the Borrower hereunder and under the other Loan Documents are paid in full, at which time such amounts will be applied by the Administrative Agent to the making of payments from time to time in the following order of priority:  first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent and the Swingline Lender under this Agreement; second, to the payment of interest then due and payable to the Lenders hereunder other than Defaulting Lenders, ratably among them in accordance with the amounts of such interest then due and payable to them; third, to the payment of Fees then due and payable to the Lenders other than Defaulting Lenders, ratably among them in accordance with the amounts of such Fees then due and payable to them; fourth, to pay principal of all Loans, Reimbursement Obligations and other Letter of Credit Liabilities then due and payable to the Lenders other than Defaulting Lenders hereunder ratably in accordance with the amounts thereof then due and payable to them; fifth, to the ratable payment of all other Obligations then due and payable to the Lenders other than Defaulting Lenders; and sixth, after the termination of the Commitments and payment in full of all obligations of the Borrower hereunder, to pay amounts owing under this Agreement to such Defaulting Lender or as a court of competent jurisdiction may otherwise direct.

(c)           Borrowing Requests.  While any Revolving Lender is a Defaulting Lender or a Potential Defaulting Lender, the Borrower authorizes each of the Administrative Agent, the Issuing Bank and the Swingline Lender (which authorization is irrevocable and coupled with an interest) to give, in such Person’s discretion, Notices of Revolving Borrowing pursuant to Section 2.1. in such amounts and at such times as may be required to (i) reimburse any Reimbursement Obligation that has become due and payable, (ii) repay an outstanding Swingline Loan or (iii) cash collateralize the Obligations of the Borrower in respect of outstanding Letters of Credit in an amount equal to the aggregate amount of the obligations (contingent or otherwise) of such Defaulting Lender or Potential Defaulting Lender in respect of such Letters of Credit.

(d)           Purchase of Defaulting Lender’s Commitment.  During any period that a Lender is a Defaulting Lender, the Borrower may, by giving written notice thereof to the Administrative Agent, such Defaulting Lender and the other Lenders, demand that such Defaulting Lender assign its Commitment to an Eligible Assignee subject to and in accordance with the provisions of Section 12.6.(b).  No party hereto shall have any obligation whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee.  In addition, any Lender who is not a Defaulting Lender may, but shall not be obligated, in its sole discretion, to acquire the face amount of all or a portion of such Defaulting Lender’s Commitment via an assignment subject to and in accordance with the provisions of Section 12.6.(b).  In connection with any such assignment, such Defaulting Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment and Acceptance and, notwithstanding Section 12.6.(b), shall pay to the Administrative Agent an assignment fee in the amount of $10,000.

(e)           Termination of Defaulting Revolving Lender’s Commitments.  During any period that a Lender is a Defaulting Lender, the Borrower may terminate in full the Commitments of such Defaulting Lender by giving notice to such Defaulting Lender and the Administrative Agent (such termination, a “Defaulting Lender Termination”) so long as on the effective date of such Defaulting Lender Termination and after giving effect thereto and to any repayment of Revolving Loans in connection therewith: (i) no Default or Event of Default exists (unless the Requisite Lenders otherwise consent to such Defaulting Lender Termination), (ii) no Revolving Loans shall be outstanding, and (iii) the sum of (x) the Letter of Credit Liabilities, (y) the amount of cash collateral or other credit support then held by the Administrative Agent pursuant to Section 2.2.(l) and (z) the outstanding principal amount of Swingline Loans shall not exceed the aggregate Commitments of all Lenders that are not Defaulting Lenders.  Each such notice shall specify the effective date of such Defaulting Lender Termination (the “Defaulting Lender Termination Date”), which shall be not less than 5 Business Days (or such shorter period as

  

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agreed to by the Administrative Agent and such Defaulting Lender) after the date on which such notice is delivered to such Defaulting Lender and the Administrative Agent.  On each such Defaulting Lender Termination Date, (i) the Commitments of such Defaulting Lender shall be reduced to zero, (ii) such Defaulting Lender shall cease to be a “Revolving Lender” hereunder (provided that any Defaulting Lender shall continue to be entitled to the indemnification provisions contained herein, but only with respect to matters arising prior to the applicable Defaulting Lender Termination Date), (iii) the Commitments of all other Lenders shall remain unchanged and (iv) the Commitment Percentages of outstanding Letter of Credit Liabilities and Swingline Loans will be reallocated by the Administrative Agent among the Revolving Lenders (other than the Defaulting Lender) in accordance with their Commitment Percentages after giving effect to the Defaulting Lender Termination.

(f)           Cure.  If the Borrower, the Administrative Agent, the Issuing Bank and the Swingline Lender agree in writing in their discretion that a Lender that is a Defaulting Lender or a Potential Defaulting Lender should no longer be deemed to be a Defaulting Lender or Potential Defaulting Lender, as the case may be, the Administrative Agent will so notify the Lenders, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Lender, if a Revolving Lender, will, to the extent applicable, purchase such portion of outstanding Revolving Loans of the other Lenders and make such other adjustments as the Administrative Agent may determine to be necessary to cause the interest of the Revolving Lenders in the Revolving Loans and Letter of Credit Liabilities to be on a pro rata basis in accordance with their respective Commitment Percentages, whereupon such Lender will cease to be a Defaulting Lender or Potential Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while such Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no cure by a Lender under this subsection of its status as a Defaulting Lender or Potential Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender or Potential Defaulting Lender.

	
  

	
Section 3.10.  Taxes; Foreign Lenders.

 

(a)           Taxes Generally.  All payments by the Borrower of principal of, and interest on, the Loans and all other Obligations shall be made free and clear of and without deduction for any present or future excise, stamp or other taxes, fees, duties, levies, imposts, charges, deductions, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding (i) franchise taxes, (ii) any taxes (other than withholding taxes) that would not be imposed but for a connection between the Administrative Agent, the Issuing Bank or a Lender and the jurisdiction imposing such taxes (other than a connection arising solely by virtue of the activities of the Administrative Agent, the Issuing Bank or such Lender pursuant to or in respect of this Agreement or any other Loan Document), (iii)  any taxes imposed on or measured by the Issuing Bank’s or any Lender’s assets, net income, receipts or branch profits, (iv) any taxes arising after the Agreement Date solely as a result of or attributable to a Lender changing its designated Lending Office after the date such Lender becomes a party hereto, and (v) any taxes imposed by Sections 1471 through Section 1474 of the Internal Revenue Code (including any official interpretations thereof, collectively “FATCA”) on any “withholdable payment” payable to the Administrative Agent, the Issuing Bank or any Lender as a result of the failure of such Person to satisfy the applicable requirements as set forth in FATCA after December 31, 2012 (such non-excluded items being collectively called “Taxes”).  If any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any Applicable Law, then the Borrower will:

(i)           pay directly to the relevant Governmental Authority the full amount required to be so withheld or deducted;

  

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(ii)           promptly forward to the Administrative Agent an official receipt or other documentation satisfactory to the Administrative Agent evidencing such payment to such Governmental Authority; and

(iii)           pay to the Administrative Agent for its account or the account of the applicable Lender or the Issuing Bank, as the case may be, such additional amount or amounts as is necessary to ensure that the net amount actually received by the Administrative Agent, the Issuing Bank or such Lender will equal the full amount that the Administrative Agent, the Issuing Bank or such Lender would have received had no such withholding or deduction been required.

(b)           Tax Indemnification.  If the Borrower fails to pay any Taxes when due to the appropriate Governmental Authority or fails to remit to the Administrative Agent, for its account or the account of the Issuing Bank or respective Lender, as the case may be, the required receipts or other required documentary evidence, the Borrower shall indemnify the Administrative Agent, the Issuing Bank and the Lenders for any incremental Taxes, interest or penalties that may become payable by the Administrative Agent, the Issuing Bank or any Lender as a result of any such failure.  For purposes of this Section, a distribution hereunder by the Administrative Agent or any Lender to or for the account of any Lender shall be deemed a payment by the Borrower.

(c)           Tax Forms. Prior to the date that any Lender or Participant organized under the laws of a jurisdiction other than that in which the Borrower is a resident for tax purposes becomes a party hereto, such Person shall deliver to the Borrower and the Administrative Agent such certificates, documents or other evidence, as required by the Internal Revenue Code or Treasury Regulations issued pursuant thereto (including Internal Revenue Service Forms W-8ECI and W-8BEN, as applicable, or appropriate successor forms), properly completed, currently effective and duly executed by such Lender or Participant establishing that payments to it hereunder and under the Notes are (i) not subject to United States Federal backup withholding tax and (ii) not subject to United States Federal withholding tax under the Internal Revenue Code.  Each such Lender or Participant shall, to the extent it may lawfully do so, (x) deliver further copies of such forms or other appropriate certifications on or before the date that any such forms expire or become obsolete and after the occurrence of any event requiring a change in the most recent form delivered to the Borrower or the Administrative Agent and (y) obtain such extensions of the time for filing, and renew such forms and certifications thereof, as may be reasonably requested by the Borrower or the Administrative Agent.  The Borrower shall not be required to pay any amount pursuant to the last sentence of subsection (a) above to any Lender or Participant that is organized under the laws of a jurisdiction other than that in which the Borrower is a resident for tax purposes or the Administrative Agent, if it is organized under the laws of a jurisdiction other than that in which the Borrower is a resident for tax purposes, if such Lender, such Participant or the Administrative Agent, as applicable, fails to comply with the requirements of this subsection.  If any such Lender or Participant, to the extent it may lawfully do so, fails to deliver the above forms or other documentation, then the Administrative Agent may withhold from such payment to such Lender such amounts as are required by the Internal Revenue Code. If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, and costs and expenses (including all reasonable fees and disbursements of any law firm or other external counsel and the allocated cost of internal legal services and all disbursements of internal counsel) of the Administrative Agent.  The obligation of the Lenders under this Section shall survive the termination of the Commitments, repayment of all Obligations and the resignation or replacement of the Administrative Agent.

  

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(d)           USA Patriot Act Notice; Compliance.  In order for the Administrative Agent to comply with the USA Patriot Act of 2001 (Public Law 107-56), prior to any Lender or Participant that is organized under the laws of a jurisdiction outside of the United States of America becoming a party hereto, the Administrative Agent may request, and such Lender or Participant shall provide to the Administrative Agent, its name, address, tax identification number and/or such other identification information as shall be necessary for the Administrative Agent to comply with federal law.

Article IV. Yield Protection, Etc.

 

	
  

	
Section 4.1.  Additional Costs; Capital Adequacy.

 

(a)           Capital Adequacy.  If any Lender or any Participant determines that compliance with any law or regulation or with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or such Participant, or any corporation controlling such Lender or such Participant, as a consequence of, or with reference to, such Lender’s Commitments or its making or maintaining Loans or participating in Letters of Credit below the rate which such Lender or such Participant or such corporation controlling such Lender or such Participant could have achieved but for such compliance (taking into account the policies of such Lender or such Participant or such corporation with regard to capital), then the Borrower shall, from time to time, within thirty (30) days after written demand by such Lender or such Participant, pay to such Lender or such Participant additional amounts sufficient to compensate such Lender or such Participant or such corporation controlling such Lender or such Participant to the extent that such Lender or such Participant determines such increase in capital is allocable to such Lender’s or such Participant’s obligations hereunder.

(b)           Additional Costs.  In addition to, and not in limitation of the immediately preceding subsection (a), the Borrower shall promptly pay to the Administrative Agent for the account of a Lender from time to time such amounts as such Lender may determine to be necessary to compensate such Lender for any costs incurred by such Lender that it determines are attributable to its making or maintaining of any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any reduction in any amount receivable by such Lender under this Agreement or any of the other Loan Documents in respect of any of such LIBOR Loans or such obligation or the maintenance by such Lender of capital in respect of its LIBOR Loans or its Commitments (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”), resulting from any Regulatory Change that:  (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement or any of the other Loan Documents in respect of any of such LIBOR Loans or its Commitments (other than taxes imposed on or measured by the overall net income of such Lender or of its Lending Office for any of such LIBOR Loans by the jurisdiction in which such Lender has its principal office or such Lending Office), or (ii) imposes or modifies any reserve, special deposit or similar requirements (other than Regulation D of the Board of Governors of the Federal Reserve System or other similar reserve requirement applicable to any other category of liabilities or category of extensions of credit or other assets by reference to which the interest rate on LIBOR Loans is determined to the extent utilized when determining LIBOR for such Loans) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, or other credit extended by, or any other acquisition of funds by such Lender (or its parent corporation), or any commitment of such Lender (including, without limitation, the Commitments of such Lender hereunder) or (iii) has or would have the effect of reducing the rate of return on capital of such Lender to a level below that which such Lender could have achieved but for such Regulatory Change (taking into consideration such Lender’s policies with respect to capital adequacy).

  

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(c)           Lender’s Suspension of LIBOR Loans.  Without limiting the effect of the provisions of the immediately preceding subsection (a) and (b), if by reason of any Regulatory Change, any Lender either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Lender that includes deposits by reference to which the interest rate on LIBOR Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Lender that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets that it may hold, then, if such Lender so elects by notice to the Borrower (with a copy to the Administrative Agent), the obligation of such Lender to make or Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended until such Regulatory Change ceases to be in effect (in which case the provisions of Section 4.5. shall apply).

(d)           Additional Costs in Respect of Letters of Credit.  Without limiting the obligations of the Borrower under the preceding subsections of this Section (but without duplication), if as a result of any Regulatory Change or any risk-based capital guideline or other requirement heretofore or hereafter issued by any Governmental Authority there shall be imposed, modified or deemed applicable any tax, reserve, special deposit, capital adequacy or similar requirement against or with respect to or measured by reference to Letters of Credit and the result shall be to increase the cost to the Issuing Bank of issuing (or any Lender of purchasing participations in) or maintaining its obligation hereunder to issue (or purchase participations in) any Letter of Credit or reduce any amount receivable by the Issuing Bank or any Lender hereunder in respect of any Letter of Credit, then, upon demand by the Issuing Bank or such Lender, the Borrower shall pay immediately to the Issuing Bank or, in the case of such Lender, to the Administrative Agent for the account of such Lender, from time to time as specified by the Issuing Bank or such Lender, such additional amounts as shall be sufficient to compensate the Issuing Bank or such Lender for such increased costs or reductions in amount.

(e)           Notification and Determination of Additional Costs.  Each of the Administrative Agent, Issuing Bank, each Lender, and each Participant, as the case may be, agrees to notify the Borrower of any event occurring after the Agreement Date entitling the Administrative Agent, the Issuing Bank, such Lender or such Participant to compensation under any of the preceding subsections of this Section as promptly as practicable; provided, however, that the failure of the Administrative Agent, the Issuing Bank, any Lender or any Participant to give such notice shall not release the Borrower from any of its obligations hereunder (and in the case of a Lender, to the Administrative Agent).  The Administrative Agent, the Issuing Bank, each Lender and each Participant, as the case may be, agrees to furnish to the Borrower (and in the case of the Issuing Bank, a Lender or a Participant to the Administrative Agent as well) a certificate setting forth the basis and amount of each request for compensation under this Section.  Determinations by the Administrative Agent, the Issuing Bank, such Lender, or such Participant, as the case may be, of the effect of any Regulatory Change shall be conclusive and binding for all purposes, absent manifest error.

	
  

	
Section 4.2.  Suspension of LIBOR Loans.

 

Anything herein to the contrary notwithstanding, if, on or prior to the determination of LIBOR for any Interest Period:

(a)           the Administrative Agent reasonably determines (which determination shall be conclusive) that quotations of interest rates for the relevant deposits referred to in the definition of LIBOR are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for LIBOR Loans as provided herein or is otherwise unable to determine LIBOR; or

(b)           the Administrative Agent reasonably determines (which determination shall be conclusive absent manifest error) that the relevant rates of interest referred to in the definition of LIBOR upon the basis of which the rate of interest for LIBOR Loans for such Interest Period is to be

  

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determined are not likely to adequately cover the cost to any Lender of making or maintaining LIBOR Loans for such Interest Period;

then the Administrative Agent shall give the Borrower and each Lender prompt notice thereof and, so long as such condition remains in effect, the Lenders shall be under no obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans or Convert Loans into LIBOR Loans and the Borrower shall, on the last day of each current Interest Period for each outstanding LIBOR Loan, either prepay such Loan or Convert such Loan into a Base Rate Loan.

	
  

	
Section 4.3.  Illegality.

 

Notwithstanding any other provision of this Agreement, if any Lender shall determine (which determination shall be conclusive and binding) that it is unlawful for such Lender to honor its obligation to make or maintain LIBOR Loans hereunder, then such Lender shall promptly notify the Borrower thereof (with a copy of such notice to the Administrative Agent) and such Lender’s obligation to make or Continue, or to Convert Loans of any other Type into, LIBOR Loans shall be suspended, in each case, until such time as such Lender may again make and maintain LIBOR Loans (in which case the provisions of Section 4.5. shall be applicable).

	
  

	
Section 4.4.  Compensation.

 

The Borrower shall pay to the Administrative Agent for the account of each Lender, upon the request of the Administrative Agent, such amount or amounts as the Administrative Agent shall determine in its sole discretion shall be sufficient to compensate such Lender for any loss, cost or expense attributable to:

(a)           any payment or prepayment (whether mandatory or optional) of a LIBOR Loan, or Conversion of a LIBOR Loan, made by such Lender for any reason (including, without limitation, acceleration) on a date other than the last day of the Interest Period for such Loan; or

(b)           any failure by the Borrower for any reason (including, without limitation, the failure of any of the applicable conditions precedent specified in Section 5.2. to be satisfied) to borrow a LIBOR Loan from such Lender on the date for such borrowing, or to Convert a Base Rate Loan into a LIBOR Loan or Continue a LIBOR Loan on the requested date of such Conversion or Continuation.

Not in limitation of the foregoing, such compensation shall include, without limitation, in the case of a LIBOR Loan, an amount equal to the then present value of (i) the amount of interest that would have accrued on such LIBOR Loan for the remainder of the Interest Period at the rate applicable to such LIBOR Loan, less (ii) the amount of interest that would accrue on the same LIBOR Loan for the same period if LIBOR were set on the date on which such LIBOR Loan was repaid, prepaid or Converted or the date on which the Borrower failed to borrow, Convert or Continue such LIBOR Loan, as applicable, calculating present value by using as a discount rate LIBOR quoted on such date.  Upon the Borrower’s request, the Administrative Agent shall provide the Borrower with a statement setting forth the basis for requesting such compensation and the method for determining the amount thereof.  Any such statement shall be conclusive absent manifest error.

	
  

	
Section 4.5.  Treatment of Affected Loans.

 

If the obligation of any Lender to make LIBOR Loans or to Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 4.1.(c), Section 4.2. or Section 4.3. then such Lender’s LIBOR Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion required by Section 4.1.(c), Section 4.2., or Section 4.3. on such earlier date as such Lender may specify to the Borrower with a copy to the Administrative Agent) and, unless and until such Lender gives notice as provided

  

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below that the circumstances specified in Section 4.1., Section 4.2. or Section 4.3. that gave rise to such Conversion no longer exist:

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

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

If such Lender gives notice to the Borrower (with a copy to the Administrative Agent) that the circumstances specified in Section 4.1.(c) or 4.3. that gave rise to the Conversion of such Lender’s LIBOR Loans pursuant to this Section no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when LIBOR Loans made by other Lenders are outstanding, then such Lender’s Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding LIBOR Loans, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding LIBOR Loans and by such Lender are held pro rata (as to principal amounts, Types and Interest Periods) in accordance with their respective Commitments.

	
  

	
Section 4.6.  Affected Lenders.

 

If (a) a Lender requests compensation pursuant to Section 3.10. or 4.1., and the Requisite Lenders are not also doing the same, or (b) the obligation of any Lender to make LIBOR Loans or to Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 4.1.(c) or 4.3. but the obligation of the Requisite Lenders shall not have been suspended under such Sections, then, so long as there does not then exist any Event of Default, the Borrower may demand that such Lender (the “Affected Lender”), and upon such demand the Affected Lender shall promptly, assign its Commitment to an Eligible Assignee subject to and in accordance with the provisions of Section 12.6.(b) for a purchase price equal to the aggregate principal balance of all Loans then owing to the Affected Lender plus any accrued but unpaid interest thereon and accrued but unpaid fees owing to the Affected Lender, or any other amount as may be mutually agreed upon by such Affected Lender and Eligible Assignee.  Each of the Administrative Agent and the Affected Lender shall reasonably cooperate in effectuating the replacement of such Affected Lender under this Section, but at no time shall the Administrative Agent, such Affected Lender nor any other Lender nor any Titled Agent be obligated in any way whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee.  The exercise by the Borrower of its rights under this Section shall be at the Borrower’s sole cost and expense and at no cost or expense to the Administrative Agent, the Affected Lender or any of the other Lenders.  The terms of this Section shall not in any way limit the Borrower’s obligation to pay to any Affected Lender compensation owing to such Affected Lender pursuant to this Agreement (including, without limitation, pursuant to Sections 3.10., 4.1. or 4.4.) with respect to any period up to the date of replacement.

	
  

	
Section 4.7.  Change of Lending Office.

 

Each Lender agrees that it will use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate an alternate Lending Office with respect to any of its Loans affected by the matters or circumstances described in Sections 3.10., 4.1. or 4.3. to reduce the liability of the Borrower or avoid the results provided thereunder, so long as such designation is not disadvantageous to such Lender as determined by such Lender in its sole discretion, except that such Lender shall have no obligation to designate a Lending Office located in the United States of America.

  

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Section 4.8.  Assumptions Concerning Funding of LIBOR Loans.

 

Calculation of all amounts payable to a Lender under this Article shall be made as though such Lender had actually funded LIBOR Loans through the purchase of deposits in the relevant market bearing interest at the rate applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having a maturity comparable to the relevant Interest Period; provided, however, that each Lender may fund each of its LIBOR Loans in any manner it sees fit and the foregoing assumption shall be used only for calculation of amounts payable under this Article.

 

 

Article V. Conditions Precedent

 

	
  

	
Section 5.1.  Initial Conditions Precedent.

 

The obligation of the Lenders to effect or permit the occurrence of the first Credit Event hereunder, whether as the making of a Loan or the issuance of a Letter of Credit, is subject to the satisfaction or waiver of the following conditions precedent:

(a)           The Administrative Agent shall have received each of the following, in form and substance satisfactory to the Administrative Agent:

(i)           counterparts of this Agreement executed by each of the parties hereto;

(ii)           Revolving Notes executed by the Borrower, payable to each applicable Lender and complying with the terms of Section 2.10.(a) and the Swingline Note executed by the Borrower;

(iii)           the Guaranty executed by the Parent and each of the other Guarantors initially to be a party thereto;

(iv)           an opinion of legal counsel to the Borrower and the other Loan Parties, reasonably satisfactory to the Administrative Agent, addressed to the Administrative Agent and the Lenders and covering the matters set forth in Exhibit G;

(v)           the certificate or articles of incorporation or formation, articles of organization, certificate of limited partnership, declaration of trust or other comparable organizational instrument (if any) of each Loan Party certified as of a recent date by the Secretary of State of the state of formation of such Loan Party;

(vi)           a certificate of good standing (or certificate of similar meaning) with respect to each Loan Party issued as of a recent date by the Secretary of State of the state of formation of each such Loan Party and certificates of qualification to transact business or other comparable certificates issued as of a recent date by each Secretary of State (and any state department of taxation, as applicable) of each state in which such Loan Party is required to be so qualified and where failure to be so qualified could reasonably be expected to have a Material Adverse Effect;

  

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(vii)           a certificate of incumbency signed by the Secretary or Assistant Secretary (or other individual performing similar functions) of each Loan Party with respect to each of the officers of such Loan Party authorized to execute and deliver the Loan Documents to which such Loan Party is a party, and in the case of the Borrower, authorized to execute and deliver on behalf of the Borrower Notices of Borrowing, Notices of Swingline Borrowing, requests for Letters of Credit, Notices of Conversion and Notices of Continuation;

(viii)           copies certified by the Secretary or Assistant Secretary (or other individual performing similar functions) of each Loan Party of (A) the by-laws of such Loan Party, if a corporation, the operating agreement, if a limited liability company, the partnership agreement, if a limited or general partnership, or other comparable document in the case of any other form of legal entity and (B) all corporate, partnership, member or other necessary action taken by such Loan Party to authorize the execution, delivery and performance of the Loan Documents to which it is a party;

(ix)           a Compliance Certificate calculated on a pro forma basis for the Parent’s fiscal quarter ending September 30, 2010;

(x)           a Transfer Authorizer Designation Form effective as of the Agreement Date;

(xi)           evidence that the Fees, if any, then due and payable under Section 3.5., together with all other fees, expenses and reimbursement amounts due and payable to the Administrative Agent and any of the Lenders, including without limitation, the fees and expenses of counsel to the Administrative Agent, have been paid;

(xii)           if required by the Administrative Agent, insurance certificates, or other evidence, providing that the insurance coverage required under Section 7.5. (including, without limitation, both property and liability insurance) is in full force and effect;

(xiii)           evidence that all indebtedness, liabilities or obligations owing by the Loan Parties under the First Amended and Restated Credit Agreement dated as of April 27, 2006 by and among the Borrower, the “Lenders” party thereto and Wells Fargo, as successor to Wachovia Bank, National Association, as agent for the “Lenders”, shall have been paid in full;

(xiv)           such other documents and instruments as the Administrative Agent may reasonably request; and

(b)           In the good faith judgment of the Administrative Agent:

(i)           there shall not have occurred or become known to the Administrative Agent or any of the Lenders any event, condition, situation or status since the date of the information contained in the financial and business projections, budgets, pro forma data and forecasts concerning the Parent, the Borrower and their respective Subsidiaries delivered to the Administrative Agent and the Lenders prior to the Agreement Date that has had or could reasonably be expected to result in a Material Adverse Effect;

(ii)           no litigation, action, suit, investigation or other arbitral, administrative or judicial proceeding shall be pending or threatened which could reasonably be expected to (A) result in a Material Adverse Effect, other than as previously disclosed to Administrative Agent and the Lenders in writing and approved by the Administrative Agent and Lenders in writing, or (B) restrain or enjoin, impose materially burdensome conditions on, or otherwise materially and adversely affect, the ability of the Parent, the Borrower or any other Loan Party to fulfill its obligations under the Loan Documents to which it is a party;

  

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(iii)           the Parent, the Borrower and their respective Subsidiaries shall have received all approvals, consents and waivers, and shall have made or given all necessary filings and notices as shall be required to consummate the transactions contemplated hereby without the occurrence of any default under, conflict with or violation of (A) any Applicable Law or (B) any agreement, document or instrument to which any Loan Party is a party or by which any of them or their respective properties is bound except for such approvals, consents, waivers, filings and notices the receipt, making or giving of which would not reasonably be likely to (A) have a Material Adverse Effect, or (B) restrain or enjoin, impose materially burdensome conditions on, or otherwise materially and adversely affect the ability of the Parent, the Borrower or any other Loan Party to fulfill their respective obligations under the Loan Documents to which it is a party;

(iv)           the Parent, the Borrower and each other Loan Party shall have provided all information requested by the Administrative Agent and each Lender may request in order to comply with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)); and

(v)           there shall not have occurred or exist any other material disruption of financial or capital markets that could reasonably be expected to materially and adversely affect the transactions contemplated by the Loan Documents.

	
  

	
Section 5.2.  Conditions Precedent to All Loans and Letters of Credit.

 

The obligations of (i) Lenders to make any Loans and (ii) the Issuing Bank to issue Letters of Credit are each subject to the further conditions precedent that: (a) no Default or Event of Default shall exist as of the date of the making of such Loan or date of issuance of such Letter of Credit or would exist immediately after giving effect thereto, and no violation of the limits described in Section 2.14. would occur after giving effect thereto; (b) the representations and warranties made or deemed made by the Parent, the Borrower and each other Loan Party in the Loan Documents to which any of them is a party, shall be true and correct in all material respects (except to the extent that any such representation and warranty is qualified by materiality, in which case such representation and warranty shall be true and correct without qualification) on and as of the date of the making of such Loan or date of issuance of such Letter of Credit with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted hereunder; (c) in the case of the borrowing of Revolving Loans, the Administrative Agent shall have received a timely Notice of Borrowing, or in the case of a Swingline Loan, the Swingline Lender shall have received a timely Notice of Swingline Borrowing and (d) in the case of the issuance of a Letter of Credit or the making of a Swingline Loan, no Lender shall be a Defaulting Lender or Potential Defaulting Lender; provided, however, in the case of the issuance of a Letter of Credit, the Issuing Bank may, in its sole and absolute discretion, waive this condition precedent on behalf of itself and all Lenders if cash collateral or other credit support satisfactory to the Issuing Bank has been pledged or otherwise provided to the Administrative Agent for the benefit of the Issuing Bank in respect of such Defaulting Lender’s or Potential Defaulting Lender’s participation in such Letter of Credit in accordance with Section 2.2.(l).  Each Credit Event shall constitute a certification by the Borrower to the effect set forth in the preceding sentence (both as of the date of the giving of notice relating to such Credit Event and, unless the Borrower otherwise notifies the Administrative Agent prior to the date of such Credit Event, as of the date of the occurrence of such Credit Event).  In addition, the Borrower shall be deemed to have represented to the Administrative Agent and the Lenders at the time any Loan is made or any Letter of Credit is issued that all conditions to the making of such Loan or issuing of such Letter of Credit contained in this Article V. have been satisfied.

  

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Article VI. Representations and Warranties

 

	
  

	
Section 6.1.  Representations and Warranties.

 

In order to induce the Administrative Agent and each Lender to enter into this Agreement and to make Loans and, in the case of the Issuing Bank, to issue Letters of Credit, each of the Parent and the Borrower represents and warrants to the Administrative Agent, the Issuing Bank and each Lender as follows:

(a)           Organization; Power; Qualification.  Each of the Parent, the Borrower, the other Loan Parties and the other Subsidiaries is a corporation, partnership or other legal entity, duly organized or formed, validly existing and in good standing under the jurisdiction of its incorporation or formation, has the power and authority to own or lease its respective properties and to carry on its respective business as now being and hereafter proposed to be conducted and is duly qualified and is in good standing as a foreign corporation, partnership or other legal entity, and authorized to do business, in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization and where the failure to be so qualified or authorized could reasonably be expected to have, in each instance, a Material Adverse Effect.

(b)           Ownership Structure.  Part I of Schedule 6.1.(b) is, as of the Agreement Date, a complete and correct list of all Subsidiaries of the Parent setting forth for each such Subsidiary, (i) the jurisdiction of organization of such Subsidiary, (ii) each Person holding any Equity Interest in such Subsidiary, (iii) the nature of the Equity Interests held by each such Person, (iv) the percentage of ownership of such Subsidiary represented by such Equity Interests and (v) whether such Subsidiary is a Material Subsidiary, Significant Subsidiary or an Excluded Subsidiary.  As of the Agreement Date, except as disclosed in such Schedule (A), each of the Parent, the Borrower and their respective Subsidiaries owns, free and clear of all Liens, and has the unencumbered right to vote, all outstanding Equity Interests in each Person shown to be held by it on such Schedule, (B) all of the issued and outstanding capital stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (C) there are no outstanding subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including, without limitation, any stockholders’ or voting trust agreements) for the issuance, sale, registration or voting of, or outstanding securities convertible into, any additional shares of capital stock of any class, or partnership or other ownership interests of any type in, any such Person.  As of the Agreement Date, Part II of Schedule 6.1.(b) correctly sets forth all Consolidated Affiliates and Unconsolidated Affiliates of the Parent, including the correct legal name of such Person, the type of legal entity which each such Person is, and all Equity Interests in such Person held directly or indirectly by the Parent.

(c)           Authorization of Loan Documents and Borrowings.  The Borrower has the right and power, and has taken all necessary action to authorize it, to borrow and obtain other extensions of credit hereunder.  The Parent, the Borrower and each other Loan Party has the right and power, and has taken all necessary action to authorize it, to execute, deliver and perform each of the Loan Documents and the Fee Letter to which it is a party in accordance with their respective terms and to consummate the transactions contemplated hereby and thereby.  The Loan Documents and the Fee Letter to which the Parent, the Borrower or any other Loan Party is a party have been duly executed and delivered by the duly authorized officers of such Person and each is a legal, valid and binding obligation of such Person enforceable against such Person in accordance with its respective terms, except as the same may be limited by bankruptcy, insolvency, and other similar laws affecting the rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations (other than the payment of principal) contained herein or therein and as may be limited by equitable principles generally.

  

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(d)           Compliance of Loan Documents with Laws.  The execution, delivery and performance of this Agreement,  the other Loan Documents to which any Loan Party is a party and of the Fee Letter in accordance with their respective terms and the borrowings and other extensions of credit hereunder do not and will not, by the passage of time, the giving of notice, or both:  (i) require any Governmental Approval or violate any Applicable Law (including all Environmental Laws) relating to the Parent, the Borrower or any other Loan Party; (ii) conflict with, result in a breach of or constitute a default under the organizational documents of the Parent, the Borrower or any Loan Party, or any indenture, agreement or other instrument to which the Parent, the Borrower or any other Loan Party is a party or by which it or any of its respective properties may be bound; or (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by any Loan Party other than in favor of the Administrative Agent for its benefit and the benefit of the Lenders and the Issuing Bank.

(e)           Compliance with Law; Governmental Approvals.  Each of the Parent, the Borrower, the other Loan Parties and the other Subsidiaries is in compliance with each Governmental Approval and all other Applicable Laws relating to the Parent, the Borrower, such other Loan Party or such other Subsidiary except for noncompliances which, and Governmental Approvals the failure to possess which, could not, individually or in the aggregate, reasonably be expected to cause a Default or Event of Default or have a Material Adverse Effect.

(f)           Title to Properties.  Schedule 6.1.(f) is, as of the Agreement Date, a complete and correct listing of all real estate assets of the Parent, the Borrower, each other Loan Party and each other Subsidiary, setting forth, for each such Property, the current occupancy status of such Property and whether such Property is a Development Property and, if such Property is a Development Property, the status of completion of such Property.  Each of the Parent, the Borrower, each other Loan Party and each other Subsidiary has good, marketable and legal title to, or a valid leasehold interest in, its respective assets.

(g)           Existing Indebtedness.  Schedule 6.1.(g) is, as of the Agreement Date, a complete and correct listing of all Indebtedness (including all Guarantees) with an outstanding principal amount of $5,000,000 or more of each of the Parent, the Borrower, the other Loan Parties, the other Subsidiaries, the Consolidated Affiliates and Unconsolidated Affiliates, and if such Indebtedness is secured by any Lien, a description of all of the property subject to such Lien. As of the Agreement Date, the Parent, the Borrower, the other Loan Parties, the other Subsidiaries, the Consolidated Affiliates and Unconsolidated Affiliates have performed and are in compliance with all of the terms of such Indebtedness and all instruments and agreements relating thereto, and no default or event of default, or event or condition which with the giving of notice, the lapse of time, or both, would constitute a default or event of default, exists with respect to any such Indebtedness.  As of the Agreement Date, the aggregate principal amount of Indebtedness of each of the Parent, the Borrower, the other Loan Parties, the other Subsidiaries, the Consolidated Affiliates and Unconsolidated Affiliates that is not set forth on Schedule 6.1.(g) does not exceed $5,000,000.

(h)           Material Contracts.  Schedule 6.1.(h) is, as of the Agreement Date, a true, correct and complete listing of all Material Contracts.  Each of the Parent, the Borrower, the other Loan Parties and the other Subsidiaries that is party to any Material Contract has performed and is in compliance with all of the terms of such Material Contract, and no default or event of default, or event or condition which with the giving of notice, the lapse of time, or both, would constitute such a default or event of default, exists with respect to any such Material Contract.

  

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(i)           Litigation.  Except as set forth on Schedule 6.1.(i), there are no actions, suits or proceedings pending (nor, to the knowledge of any Loan Party, are there any actions, suits or proceedings threatened, nor is there any basis therefor) against or in any other way relating adversely to or affecting the Parent, the Borrower, any other Loan Party, any other Subsidiary or any of their respective property in any court or before any arbitrator of any kind or before or by any other Governmental Authority which, (i) could reasonably be expected to have a Material Adverse Effect or (ii) in any manner draws into question the validity or enforceability of any Loan Documents or the Fee Letter.  There are no strikes, slow downs, work stoppages or walkouts or other labor disputes in progress or threatened relating to, any Loan Party or any other Subsidiary which could reasonably be expected to have a Material Adverse Effect.

(j)           Taxes.  All federal, state and other tax returns of the Parent, the Borrower, each other Loan Party and each other Subsidiary required by Applicable Law to be filed have been duly filed, and all federal, state and other taxes, assessments and other governmental charges or levies upon, each Loan Party, each other Subsidiary and their respective properties, income, profits and assets which are due and payable have been paid, except any such nonpayment or non-filing which is at the time permitted under Section 7.6.  As of the Agreement Date, none of the United States income tax returns of the Parent, the Borrower, any other Loan Party or any other Subsidiary is under audit.  All charges, accruals and reserves on the books of the Parent, the Borrower, the other Loan Parties and the other Subsidiaries in respect of any taxes or other governmental charges are in accordance with GAAP.

(k)           Financial Statements.  The Borrower has furnished to each Lender copies of (i) the audited consolidated balance sheet of the Parent and its consolidated Subsidiaries for the fiscal years ended December 31, 2008 and December 31, 2009, and the related audited consolidated statements of operations, shareholders’ equity and cash flow for the fiscal years ended on such dates, with the opinion thereon of KPMG LLP, and (ii) the unaudited consolidated balance sheet of the Parent and its consolidated Subsidiaries for the fiscal quarter ended September 30, 2010, and the related unaudited consolidated statements of operations, and cash flow of the Parent and its consolidated Subsidiaries for the three fiscal quarter period ended on such date.  Such financial statements (including in each case related schedules and notes) are complete and correct in all material respects and present fairly, in accordance with GAAP consistently applied throughout the periods involved, the consolidated financial position of the Parent and its consolidated Subsidiaries as at their respective dates and the results of operations and the cash flow for such periods (subject, as to interim statements, to changes resulting from normal year-end audit adjustments).  None of the Parent, the Borrower or any of their respective Subsidiaries has on the Agreement Date any material contingent liabilities, liabilities, liabilities for taxes, unusual or long-term commitments or unrealized or forward anticipated losses from any unfavorable commitments that would be required to be set forth in its financial statements or notes thereto, except as referred to or reflected or provided for in said financial statements.

(l)           No Material Adverse Change.  Since December 31, 2009, there has been no event, change, circumstance or occurrence that could reasonably be expected to have a Material Adverse Effect.  Each of the Parent, the Borrower, the other Loan Parties and the other Subsidiaries is Solvent.

(m)           ERISA.

(i)           Each Benefit Arrangement is in compliance with the applicable provisions of ERISA, the Internal Revenue Code and other Applicable Laws in all material respects.  Except with respect to Multiemployer Plans, each Qualified Plan (A) has received a favorable determination from the Internal Revenue Service applicable to such Qualified Plan’s current remedial amendment cycle (as defined in Revenue Procedure 2007-44 or “2007-44” for short), (B) has timely filed for a favorable determination letter from the Internal Revenue Service during its staggered remedial amendment cycle (as

  

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defined in 2007-44) and such application is currently being processed by the Internal Revenue Service, (C) had filed for a determination letter prior to its “GUST remedial amendment period” (as defined in 2007-44) and received such determination letter and the staggered remedial amendment cycle first following the GUST remedial amendment period for such Qualified Plan has not yet expired, or (D) is maintained under a prototype plan and may rely upon a favorable opinion letter issued by the Internal Revenue Service with respect to such prototype plan.  To the best knowledge of any Responsible Officer of the Parent and the Borrower, nothing has occurred which would cause the loss of its reliance on each Qualified Plan’s favorable determination letter or opinion letter.

(ii)           With respect to any Benefit Arrangement that is a retiree welfare benefit arrangement, all amounts have been accrued on the applicable ERISA Group’s financial statements in accordance with FASB ASC 715.  The “benefit obligation” of all Plans does not exceed the “fair market value of plan assets” for such Plans by more than $10,000,000 all as determined by and with such terms defined in accordance with FASB ASC 715.

(iii)           Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (i) no ERISA Event has occurred or is expected to occur; (ii) there are no pending, or to the best knowledge of the Parent and the Borrower, threatened, claims, actions or lawsuits or other action by any Governmental Authority, plan participant or beneficiary with respect to a Benefit Arrangement; (iii) there are no violations of the fiduciary responsibility rules with respect to any Benefit Arrangement; and (iv) no member of the ERISA Group has engaged in a non-exempt “prohibited transaction,” as defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code, in connection with any Plan, that would subject any member of the ERISA Group to a tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the Internal Revenue Code.

(n)           Absence of Default.  None of the Loan Parties or any of the other Subsidiaries is in default under its certificate or articles of incorporation or formation, bylaws, partnership agreement or other similar organizational documents, and no event has occurred, which has not been remedied, cured or waived:  (i) which constitutes a Default or an Event of Default; or (ii) which constitutes, or which with the passage of time, the giving of notice, or both, would constitute, a default or event of default by, any Loan Party or any other Subsidiary under any agreement (other than this Agreement) or judgment, decree or order to which any such Person is a party or by which any such Person or any of its respective properties may be bound where such default or event of default could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(o)           Environmental Laws.  In the ordinary course of business and from time to time each of the Parent, the Borrower, each other Loan Party and each other Subsidiary conducts reviews of the effect of Environmental Laws on its re­spective business, operations and properties, including without limitation, its respective Properties, in the course of which the Parent, the Borrower, such other Loan Party or such other Subsidiary identifies and evaluates associated actual and potential liabilities and costs.  Each of the Parent, the Borrower, each other Loan Party and the other Subsidiary: (i) is in compliance with all Environmental Laws applicable to its business, operations and the Properties, (ii) has obtained all Governmental Approvals which are required under Environmental Laws, and each such Governmental Approval is in full force and effect, and (iii) is in compliance with all terms and conditions of such Governmental Approvals, where with respect to each of the immediately preceding clauses (i) through (iii) the failure to obtain or to comply with could reasonably be expected to have a Material Adverse Effect.  Except for any of the following matters that could not reasonably be expected to have a Material Adverse Effect, no Loan Party has any knowledge of, or has received notice of, any past, present, or pending releases, events, conditions, circumstances, activities, practices, incidents, facts, occurrences, actions, or plans that, with respect to any Loan Party or any other Subsidiary, their respective businesses, operations or with respect to the Properties, may:  (i) cause or contribute to an actual or alleged violation of or noncompliance with Environmental Laws, (ii) cause or contribute to any other potential common-law or legal claim or other liability, or (iii) cause any of the Properties to become subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law or require the filing or recording of any notice, approval or disclosure document under any Environmental Law and, with respect to the immediately preceding clauses (i) through (iii) is based on or related to the on-site or off-site manufacture, generation, processing, distribution, use, treatment, storage, disposal, transport, removal, clean up or handling, or the emission, discharge, release or threatened release of any wastes or Hazardous Material, or any other requirement under Environmental Law.  There is no civil,

  

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criminal, or administrative action, suit, demand, claim, hearing, notice, or demand letter, mandate, order, lien, request, investigation, or proceeding pending or, to the Parent’s knowledge after due inquiry, threatened, against the Parent, the Borrower, any other Loan Party or any other Subsidiary relating in any way to Environmental Laws which, reasonably could be expected to have a Material Adverse Effect.  None of the Properties is listed on or proposed for listing on the National Priority List promulgated pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and its implementing regulations, or any state or local priority list promulgated pursuant to any analogous state or local law.  To the Parent’s knowledge, no Hazardous Materials generated at or transported from the Properties are or have been transported to, or disposed of at, any location that is listed or proposed for listing on the National Priority List or any analogous state or local priority list, or any other location that is or has been the subject of a clean-up, removal or remedial action pursuant to any Environmental Law, except to the extent that such transportation or disposal could not reasonably be expected to result in a Material Adverse Effect.

(p)           Investment Company.  None of the Parent, the Borrower, any other Loan Party or any other Subsidiary is (i) an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or (ii) subject to any other Applicable Law which purports to regulate or restrict its ability to borrow money or obtain other extensions of credit or to consummate the transactions contemplated by this Agreement or to perform its obligations under any Loan Document to which it is a party.

(q)           Margin Stock.  None of the Parent, the Borrower, any other Loan Party or any other Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

(r)           Affiliate Transactions.  Except as permitted by Section 9.8. or as otherwise set forth on Schedule 6.1.(r), none of the Parent, the Borrower, any other Loan Party or any other Subsidiary is a party to or bound by any agreement or arrangement with any Affiliate.

(s)           Intellectual Property.  Each of the Loan Parties and each other Subsidiary owns or has the right to use, under valid license agreements or otherwise, all patents, licenses, franchises, trademarks, trademark rights, service marks, service mark rights, trade names, trade name rights, trade secrets and copyrights (collectively, “Intellectual Property”) necessary to the conduct of its businesses, without known conflict with any patent, license, franchise, trademark, trademark right, service mark, service mark right, trade secret, trade name, copyright, or other proprietary right of any other Person.  Each of the Loan Parties and each other Subsidiary has taken all such steps as those deemed reasonably necessary to protect their respective rights under and with respect to such Intellectual Property.  No material claim has been asserted by any Person with respect to the use of any such Intellectual Property by the Parent, the Borrower, any other Loan Party or any other Subsidiary, or challenging or questioning the validity or effectiveness of any such Intellectual Property.  The use of such Intellectual Property by the Parent, the Borrower, the other Loan Parties and the other Subsidiaries does not infringe on the rights of any Person, subject to such claims and infringements as do not, in the aggregate, give rise to any liabilities on the part of the Parent, the Borrower, any other Loan Party or any other Subsidiary that could reasonably be expected to have a Material Adverse Effect.

  

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(t)           Business.  As of the Agreement Date, the Parent, the Borrower, the other Loan Parties and the other Subsidiaries are engaged in the business of the acquisition, disposition, financing, ownership, development rehabilitation, leasing, operation and management of office buildings, together with other business activities incidental thereto.

(u)           Broker’s Fees.  No broker’s or finder’s fee, commission or similar compensation will be payable with respect to the transactions contemplated hereby.  No other similar fees or commissions will be payable by any Loan Party for any other services rendered to the Parent, Borrower, any other Loan Party or any other Subsidiary ancillary to the transactions contemplated hereby.

(v)           Accuracy and Completeness of Information.  All written information, reports and other papers and data (other than financial projections and other forward looking statements) furnished to the Administrative Agent or any Lender by, on behalf of, or at the direction of, the Parent, the Borrower, any other Loan Party or any other Subsidiary in connection with or relating in any way to this Agreement or any other Loan Document were, at the time the same were so furnished, complete and correct in all material respects, to the extent necessary to give the recipient a true and accurate knowledge of the subject matter, or, in the case of financial statements, present fairly, in accordance with GAAP consistently applied throughout the periods involved, the financial position of the Persons involved as at the date thereof and the results of operations for such periods (subject, as to interim statements, to changes resulting from normal year end audit adjustments and absence of full footnote disclosure).  All financial projections and other forward looking statements prepared by or on behalf of the Parent, the Borrower, any other Loan Party or any other Subsidiary that have been or may hereafter be made available to the Agent or any Lender were or will be prepared in good faith based on reasonable assumptions.  No fact is known to any Loan Party which has had, or may in the future have (so far as any Loan Party can reasonably foresee), a Material Adverse Effect which has not been set forth in the financial statements referred to in Section 6.1.(k) or in such information, reports or other papers or data or otherwise disclosed in writing to the Administrative Agent and the Lenders.  No document furnished or written statement made to the Administrative Agent or any Lender in connection with the negotiation, preparation or execution of, or pursuant to, this Agreement or any of the other Loan Documents contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary in order to make the statements contained therein not misleading.

(w)           Not Plan Assets; No Prohibited Transactions.  None of the assets of the Parent, the Borrower, any other Loan Party or any other Subsidiary constitutes “plan assets” within the meaning of ERISA, the Internal Revenue Code and the respective regulations promulgated thereunder.  Assuming that no Lender funds any amount payable by it hereunder with “plan assets,” as that term is defined in 29 C.F.R. 2510.3-101, the execution, delivery and performance of this Agreement and the other Loan Documents, and the extensions of credit and repayment of amounts hereunder, do not and will not constitute “prohibited transactions” under ERISA or the Internal Revenue Code.

(x)           OFAC.  None of the Parent, the Borrower, any of the other Loan Parties, any of the other Subsidiaries, or any other Affiliate of the Parent: (i) is a person named on the list of Specially Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) available at http://www.treas.gov/offices/enforcement/ofac/index.shtml or as otherwise published from time to time; (ii) is (A) an agency of the government of a country, (B) an organization controlled by a country, or (C) a person resident in a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/index.shtml, or as otherwise published from time to time, as such program may be applicable to such agency, organization or person; or (iii) derives any of its assets or operating income

  

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from investments in or transactions with any such country, agency, organization or person; and none of the proceeds from any Loan and none of the Letters of Credit will be used to finance any operations, investments or activities in, or make any payments to, any such country, agency, organization, or person.

(y)           REIT Status.  The Parent qualifies as, and has elected to be treated as, a REIT and is in compliance with all requirements and conditions imposed under the Internal Revenue Code to allow the Parent to maintain its status as a REIT.

	
  

	
Section 6.2.  Survival of Representations and Warranties, Etc.

 

All statements contained in any certificate, financial statement or other instrument delivered by or on behalf of any Loan Party or any other Subsidiary to the Administrative Agent or any Lender pursuant to or in connection with this Agreement or any of the other Loan Documents (including, but not limited to, any such statement made in or in connection with any amendment thereto or any statement contained in any certificate, financial statement or other instrument delivered by or on behalf of any Loan Party prior to the Agreement Date and delivered to the Administrative Agent or any Lender in connection with the underwriting or closing the transactions contemplated hereby) shall constitute representations and warranties made by the Borrower under this Agreement.  All representations and warranties made under this Agreement and the other Loan Documents shall be deemed to be made at and as of the Agreement Date, the Effective Date, the date on which any extension of the Termination Date is effectuated pursuant to Section 2.12. and at and as of the date of the occurrence of each Credit Event, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances expressly and specifically permitted hereunder.  All such representations and warranties shall survive the effectiveness of this Agreement, the execution and delivery of the Loan Documents and the making of the Loans and the issuance of the Letters of Credit.

Article VII. Affirmative Covenants

 

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 12.7., all of the Lenders) shall otherwise consent in the manner provided for in Section 12.7., the Parent and the Borrower shall comply with the following covenants:

	
  

	
Section 7.1.  Preservation of Existence and Similar Matters.

 

Except as otherwise permitted under Section 9.4., the Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, preserve and maintain its respective existence, rights, franchises, licenses and privileges in the jurisdiction of its incorporation or formation and qualify and remain qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification and authorization and where the failure to be so authorized and qualified could reasonably be expected to have a Material Adverse Effect.

  

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Section 7.2.  Compliance with Applicable Law.

 

The Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, comply with all Applicable Law, including the obtaining of all Governmental Approvals, the failure with which to comply could reasonably be expected to have a Material Adverse Effect.

	
  

	
Section 7.3.  Maintenance of Property.

 

In addition to the requirements of any of the other Loan Documents, the Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, (a) protect and preserve all of its respective material properties, including, but not limited to, all Intellectual Property necessary to the conduct of its respective business, and maintain in good repair, working order and condition all tangible properties, ordinary wear and tear excepted, and (b) from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements and additions to such properties, so that the business carried on in connection therewith may be properly and advantageously conducted at all times.

	
  

	
Section 7.4.  Conduct of Business.

 

The Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, carry on its respective businesses as described in Section 6.1.(t) and not enter into any line of business not otherwise engaged in by such Person as of the Agreement Date.

	
  

	
Section 7.5.  Insurance.

 

In addition to the requirements of any of the other Loan Documents, the Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, maintain insurance (on a replacement cost basis) with financially sound and reputable insurance companies against such risks and in such amounts as is customarily maintained by Persons engaged in similar businesses or as may be required by Applicable Law. The Borrower shall from time to time deliver to the Administrative Agent upon request a detailed list, together with copies of all policies of the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby.

	
  

	
Section 7.6.  Payment of Taxes and Claims.

 

The Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, pay and discharge when due (a) all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, and (b) all lawful claims of materialmen, mechanics, carriers, warehousemen and landlords for labor, materials, supplies and rentals which, if unpaid, might become a Lien on any properties of such Person; provided, however, that this Section shall not require the payment or discharge of any such tax, assessment, charge, levy or claim which is being contested in good faith by appropriate proceedings which operate to suspend the collection thereof and for which adequate reserves have been established on the books of such Person in accordance with GAAP.

	
  

	
Section 7.7.  Books and Records; Inspections.

 

The Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities.  The Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, permit representatives of the Administrative Agent or any Lender to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective

  

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affairs, finances and accounts with their respective officers, employees and independent public accountants (in the presence of an officer of the Borrower if an Event of Default does not then exist), all at such reasonable times during business hours and as often as may reasonably be requested and so long as no Event of Default exists, with reasonable prior notice.  The Borrower shall be obligated to reimburse the Administrative Agent and the Lenders for their costs and expenses incurred in connection with the exercise of their rights under this Section only if such exercise occurs while a Default or Event of Default exists.  If requested by the Administrative Agent, the Parent and the Borrower shall execute an authorization letter addressed to its accountants authorizing the Administrative Agent or any Lender to discuss the financial affairs of the Parent, the Borrower, any other Loan Party or any other Subsidiary with the its accountants.

	
  

	
Section 7.8.  Use of Proceeds.

 

The Borrower will use the proceeds of Loans only (a) for the payment of pre-development and development costs incurred in connection with Properties owned by the Borrower or any Subsidiary; (b) to finance acquisitions and Investments in Equity Interests, in each case otherwise permitted under this Agreement; (c) to finance capital expenditures and the repayment of Indebtedness of the Borrower and its Subsidiaries; and (d) to provide for the general working capital needs of the Borrower and its Subsidiaries and for other general corporate purposes of the Borrower and its Subsidiaries. The Borrower shall only use Letters of Credit for the same purposes for which it may use the proceeds of Loans.  The Parent and the Borrower shall not, and shall not permit any other Loan Party or any other Subsidiary to, use any part of such proceeds to purchase or carry, or to reduce or retire or refinance any credit incurred to purchase or carry, any margin stock (within the meaning of Regulation U or Regulation X of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any such margin stock.

	
  

	
Section 7.9.  Environmental Matters.

 

The Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, comply with all Environmental Laws the failure with which to comply could reasonably be expected to have a Material Adverse Effect.  The Parent and the Borrower shall comply, and shall cause each other Loan Party and each other Subsidiary to comply, and the Parent and the Borrower shall use, and shall cause each other Loan Party and each other Subsidiary to use, commercially reasonable efforts to cause all other Persons occupying, using or present on the Properties to comply, with all Environmental Laws in all material respects.  The Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, promptly take all actions and pay or arrange to pay all costs necessary for it and for the Properties to comply in all material respects with all Environmental Laws and all Governmental Approvals, including actions to remove and dispose of all Hazardous Materials and to clean up the Properties as required under Environmental Laws where the failure to do so could reasonably be expected to have a Material Adverse Effect.  The Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, promptly take all actions necessary to prevent the imposition of any Liens on any of their respective properties arising out of or related to any Environmental Laws.  Nothing in this Section shall impose any obligation or liability whatsoever on the Administrative Agent or any Lender.

  

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Section 7.10.  Further Assurances.

 

At the Borrower’s cost and expense and upon request of the Administrative Agent, the Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, duly execute and deliver or cause to be duly executed and delivered, to the Administrative Agent such further instruments, documents and certificates, and do and cause to be done such further acts that may be reasonably necessary or advisable in the reasonable opinion of the Administrative Agent to carry out more effectively the provisions and purposes of this Agreement and the other Loan Documents.

	
  

	
Section 7.11.  Material Contracts.

 

The Parent and the Borrower shall, and shall cause each other Loan Party and each other Subsidiary to, duly and punctually perform and comply with any and all material representations, warranties, covenants and agreements expressed as binding upon any such Person under any Material Contract.  The Parent and the Borrower shall not, and shall not permit any other Loan Party or any other Subsidiary to, do or knowingly permit to be done anything to impair materially the value of the Material Contracts taken as a whole.

	
  

	
Section 7.12.  REIT Status.

 

The Parent shall maintain its status as a REIT and election to be treated as a REIT under the Internal Revenue Code.

	
  

	
Section 7.13.  Exchange Listing.

 

The Parent shall maintain at least one class of common shares of the Parent having trading privileges on the New York Stock Exchange or the American Stock Exchange or which is subject to price quotations on The NASDAQ Stock Market’s National Market System.

	
  

	
Section 7.14.  Guarantors.

 

(a)           Within 7 Business Days of any Person becoming a Material Subsidiary (other than an Excluded Subsidiary) after the Agreement Date, the Borrower shall deliver to the Administrative Agent each of the following in form and substance satisfactory to the Administrative Agent: (i) an Accession Agreement executed by such Subsidiary and (ii) the items that would have been delivered under subsections (iv) through (viii) and (xiv) of Section 5.1.(a) if such Subsidiary had been a Material Subsidiary on the Agreement Date; provided, however, promptly (and in any event within 7 Business Days) upon any Excluded Subsidiary ceasing to be subject to the restriction which prevented it from becoming a Guarantor on the Effective Date or delivering an Accession Agreement pursuant to this Section, as the case may be, such Subsidiary shall comply with the provisions of this Section.

(b)           The Borrower may request in writing that the Administrative Agent release, and upon receipt of such request the Administrative Agent shall release, a Guarantor (other than the Parent) from the Guaranty so long as: (i) such Guarantor is not otherwise required to be a party to the Guaranty under the immediately preceding subsection (a); (ii) no Default or Event of Default shall then be in existence or would occur as a result of such release, including without limitation, a Default or Event of Default resulting from a violation of any of the covenants contained in Section 9.1.; (iii) the representations and warranties made or deemed made by the Parent, the Borrower and each other Loan Party in the Loan Documents to which any of them is a party, shall be true and correct on and as of the date of such release with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances expressly permitted under the Loan Documents; and (iv) the Administrative Agent shall have received such written request at least 10 Business Days (or such shorter period as may be acceptable to the Administrative Agent) prior to the requested date of release.  Delivery by the Borrower to the Administrative Agent of any such request shall constitute a representation by the Borrower that the matters set forth in the preceding sentence (both as of the date of the giving of such request and as of the date of the effectiveness of such request) are true and correct with respect to such request.

  

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Article VIII. Information

 

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 12.7., all of the Lenders) shall otherwise consent in the manner set forth in Section 12.7., the Borrower shall furnish to the Administrative Agent for distribution to each of the Lenders:

	
  

	
Section 8.1.  Quarterly Financial Statements.

 

As soon as available and in any event within 5 days after the same is required to be filed with the Securities and Exchange Commission (but in no event later than 45 days after the close of each of the first, second and third fiscal quarters of the Parent), the unaudited consolidated balance sheet of the Parent and its Subsidiaries as at the end of such period and the related unaudited consolidated statements of operations, income and cash flows of the Parent and its Subsidiaries for such period, setting forth in each case in comparative form the figures as of the end of and for the corresponding periods of the previous fiscal year, all of which shall be certified by either (i) any two of the following officers of the Parent (x) the chief executive officer, (y) the chief financial officer or (z) the chief accounting officer, or (ii) the treasurer of the Parent and any one of the following officers of the Parent (x) the chief executive officer, (y) the chief financial officer or (z) the chief accounting officer, in their opinion, to present fairly, in accordance with GAAP and in all material respects, the consolidated financial position of the Parent and its Subsidiaries as at the date thereof and the results of operations for such period (subject to normal year-end audit adjustments).

	
  

	
Section 8.2.  Year-End Statements.

 

As soon as available and in any event within 5 days after the same is required to be filed with the Securities and Exchange Commission (but in no event later than 90 days after the end of each fiscal year of the Parent), the audited consolidated balance sheet of the Parent and its Subsidiaries as at the end of such fiscal year and the related audited consolidated statements of operations, stockholders’ equity, income and cash flows of the Parent and its Subsidiaries for such fiscal year, setting forth in comparative form the figures as at the end of and for the previous fiscal year, all of which shall be (a) certified by either (i) any two of the following officers of the Parent (x) the chief executive officer, (y) the chief financial officer or (z) the chief accounting officer, or (ii) the treasurer of the Parent and any one of the following officers of the Parent (x) the chief executive officer, (y) the chief financial officer or (z) the chief accounting officer, in their opinion, to present fairly, in accordance with GAAP and in all material respects, the financial position of the Parent and its Subsidiaries as at the date thereof and the result of operations for such period and (b) accompanied by the report thereon of KPMG LLP or any other independent certified public accountants of recognized national standing reasonably acceptable to the Administrative Agent, whose certificate shall be unqualified and in scope and substance satisfactory to the Requisite Lenders and who shall have authorized the Parent to deliver such financial statements and certification thereof to the Administrative Agent and the Lenders pursuant to this Agreement.

	
  

	
Section 8.3.  Compliance Certificate; Statement of Funds from Operations; Report of Acquired Properties.

 

(a)           At the time the financial statements are furnished pursuant to Sections 8.1. and 8.2., or within five (5) days of the Administrative Agent’s request if the Administrative Agent reasonably believes that an Event of Default may have occurred or may be about to occur, a certificate substantially in the form of Exhibit H (a “Compliance Certificate”) executed on behalf of the Borrower by the chief financial officer, chief accounting officer or treasurer of the Parent (i) setting forth in reasonable detail as of the end of such quarterly accounting period or fiscal year, as the case may be, the calculations required

  

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to establish whether the Borrower was in compliance with the covenants contained in Section 9.1.; and (ii) stating that no Default or Event of Default exists, or, if such is not the case, specifying such Default or Event of Default and its nature, when it occurred and the steps being taken by the Borrower with respect to such event, condition or failure.

(b)           At the time the financial statements are furnished pursuant to Sections 8.1. and 8.2., a statement of Funds From Operations certified by the chief financial officer, chief accounting officer or treasurer of the Parent in form and substance reasonably satisfactory to the Administrative Agent.

(c)           At the time the financial statements are furnished pursuant to Sections 8.1. and 8.2., a report of newly acquired Properties, in form and substance reasonably satisfactory to the Administrative Agent, which shall include, without limitation, the Net Operating Income of such Property, the cost of acquisition of such Property and the amount of Secured Indebtedness secured by a Lien on such Property.

	
  

	
Section 8.4.  Other Information.

 

(a)           Promptly upon receipt thereof, copies of all reports, if any, submitted to the Parent or its Board of Directors by its independent public accountants including, without limitation, any management report;

(b)           Within five (5) Business Days of the filing thereof, copies of all registration statements (excluding the exhibits thereto (unless requested by the Administrative Agent) and any registration statements on Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and all other periodic reports which any Loan Party or any other Subsidiary shall file with the Securities and Exchange Commission (or any Governmental Authority substituted therefor) or any national securities exchange;

(c)           Promptly upon the mailing thereof to the shareholders of the Parent generally, to the other partners of the Borrower, to any Subsidiary or to any other Loan Party, copies of all financial statements, reports and proxy statements so mailed and promptly upon the issuance thereof copies of all press releases issued by the Parent, the Borrower, any Subsidiary or any other Loan Party;

(d)           Prompt notice of the sale, transfer or other disposition of any material assets of the Parent, the Borrower, any other Loan Party or any other Subsidiary to any Person other than the Parent, the Borrower, any other Loan Party or any other Subsidiary;

(e)           Within 10 Business Days of the request of the Requisite Lenders, any financial information maintained with respect to the Parent, the Borrower or their real estate projects, including, without limitation, property cash flow projections, property budgets, operating statements, leasing status reports, contingent liability summaries, note receivable summaries, and summaries of cash and cash equivalents and overhead budgets, all in form and substance reasonably satisfactory to the Administrative Agent;

(f)           At the time the financial statements are furnished pursuant to Sections 8.1. or 8.2. cash flow projections, balance sheet projections and projected results of the covenants set forth in Section 9.1., in each case for the immediately following four fiscal quarters, broken out on a quarterly basis, all in form and substance reasonably satisfactory to the Administrative Agent;

  

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(g)           Within ten (10) Business Days of the Administrative Agent’s request therefor, a report in form and content satisfactory to the Administrative Agent detailing the Borrower’s, together with its Subsidiaries’, projected sources and uses of cash for the period of four consecutive fiscal quarters immediately following the date of the Administrative Agent’s request.  Such sources shall include but not be limited to excess operating cash flow, availability under this Agreement, unused availability under committed development loans, unfunded committed equity and any other committed sources of funds.  Such uses shall include but not be limited to cash obligations for binding acquisitions, unfunded development costs, capital expenditures, debt service, overhead, dividends, maturing Property loans, hedge settlements and other anticipated uses of cash;

(h)           If any ERISA Event shall occur that individually, or together with any other ERISA Event that has occurred, could reasonably be expected to have a Material Adverse Effect, a certificate of the chief executive officer or chief financial officer of the Parent setting forth details as to such occurrence and the action, if any, which the Parent, the Borrower or applicable member of the ERISA Group is required or proposes to take;

(i)           To the extent any Responsible Officer of any Loan Party or any other Subsidiary is aware of the same, prompt notice of the commencement of any proceeding or investigation by or before any Governmental Authority and any action or proceeding in any court or other tribunal or before any arbitrator against or in any other way relating adversely to, or adversely affecting any Loan Party or any other Subsidiary or any of their respective properties, assets or businesses which involve claims individually or in the aggregate of $10,000,000 or more, and prompt notice of the receipt of notice that any United States income tax returns of any Loan Party or any other Subsidiary are being audited;

(j)           A copy of any amendment to the certificate or articles of incorporation or formation, bylaws, partnership agreement or other similar organizational documents of the Parent, the Borrower or any other Loan Party within five (5) Business Days after the effectiveness thereof;

(k)           Prompt notice of any change in the senior management of the Parent, the Borrower, any Subsidiary or any other Loan Party and the occurrence of any event, or any change in the business, assets, liabilities, financial condition, results of operations or business prospects of any Loan Party or any other Subsidiary, which has had, or could reasonably be expected to have, a Material Adverse Effect;

(l)           Prompt notice of the occurrence of any Default or Event of Default or any event which constitutes or which with the passage of time, the giving of notice, or otherwise, would constitute a default or event of default by any Loan Party or any other Subsidiary under any Material Contract to which any such Person is a party or by which any such Person or any of its respective properties may be bound;

(m)           Promptly upon entering into any Material Contract or Specified Derivatives Contract after the Agreement Date, a copy of such contract;

(n)           Prompt notice of any order, judgment or decree in excess of $10,000,000 having been entered against any Loan Party or any other Subsidiary or any of their respective properties or assets;

(o)           To the extent any Responsible Officer of any Loan Party or any other Subsidiary is aware of same, any notification of a material violation of any Applicable Law or any inquiry shall have been received by any Loan Party or any other Subsidiary from any Governmental Authority;

  

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(p)           Prompt notice of the acquisition, incorporation or other creation of any Subsidiary, the purpose for such Subsidiary, the nature of the assets and liabilities thereof and whether such Subsidiary is a Wholly Owned Subsidiary of the Parent or the Borrower;

(q)           Promptly upon the request of the Administrative Agent, evidence of the Parent’s calculation of the Ownership Share with respect to a Subsidiary or a Consolidated Affiliate or an Unconsolidated Affiliate, such evidence to be in form and detail satisfactory to the Administrative Agent;

(r)           Promptly, upon each request, information identifying the Borrower as a Lender may request in order to comply with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001));

(s)           Promptly, and in any event within 3 Business Days after the Parent obtains knowledge thereof, written notice of the occurrence of any of the following:  (i) the Parent, the Borrower, any Loan Party or any other Subsidiary shall receive notice that any violation of or noncompliance with any Environmental Law has or may have been committed or is threatened; (ii) the Parent, the Borrower, any Loan Party or any other Subsidiary shall receive notice that any administrative or judicial complaint, order or petition has been filed or other proceeding has been initiated, or is about to be filed or initiated against any such Person alleging any violation of or noncompliance with any Environmental Law or requiring any such Person to take any action in connection with the release or threatened release of Hazardous Materials; (iii) the Parent, the Borrower, any Loan Party or any other Subsidiary shall receive any notice from a Governmental Authority or private party alleging that any such Person may be liable or responsible for any costs associated with a response to, or remediation or cleanup of, a release or threatened release of Hazardous Materials or any damages caused thereby; or (iv) the Parent, the Borrower, any Loan Party or any other Subsidiary shall receive notice of any other fact, circumstance or condition that could reasonably be expected to form the basis of an environmental claim, and the matters covered by such notice(s), whether individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;

(t)           Not later than three (3) Business Days after the Parent receives notice of the same from any Rating Agency or otherwise learns of the same, notice of the issuance of any change or withdrawal in the Credit Rating by any Rating Agency in respect of the Parent, together with the details thereof, and of any announcement by such Rating Agency that any such Credit Rating is “under review” or that any such Credit Rating has been placed on a watch list or that any similar action has been taking by such Rating Agency;

(u)           From time to time and promptly upon each request, such data, certificates, reports, statements, opinions of counsel, documents or further information regarding any Property or the business, assets, liabilities, financial condition, results of operations or business prospects of the Parent, the Borrower, any of its Subsidiaries, or any other Loan Party as the Administrative Agent or any Lender may reasonably request.

	
  

	
Section 8.5.  Electronic Delivery of Certain Information.

 

(a)           Documents required to be delivered pursuant to the Loan Documents shall be delivered by electronic communication and delivery, including, the Internet, e-mail or intranet websites to which the Administrative Agent and each Lender have access (including a commercial, third-party website such as www.Edgar.com <http://www.Edgar.com> or a website sponsored or hosted by the Administrative Agent or the Parent) provided that the foregoing shall not apply to (i) notices to any Lender (or the Issuing Bank) pursuant to Article II. and (ii) any Lender that has notified the Administrative Agent, the Parent or the Borrower that it cannot or does not want to receive electronic communications.  The Administrative Agent, the Parent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic delivery pursuant to procedures approved by it for all or

  

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particular notices or communications.  Documents or notices delivered electronically shall be deemed to have been delivered twenty-four (24) hours after the date and time on which the Administrative Agent, the Parent or the Borrower posts such documents or the documents become available on a commercial website and the Administrative Agent, the Parent or Borrower notifies each Lender of said posting and provides a link thereto provided if such notice or other communication is not sent or posted during the normal business hours of the recipient, said posting date and time shall be deemed to have commenced as of  9:00 a.m. Pacific time on the opening of business on the next Business Day for the recipient.  Notwithstanding anything contained herein, in every instance the Parent and the Borrower shall be required to provide paper copies of the certificates required by Section 8.3. to the Administrative Agent and shall deliver paper copies of any documents to the Administrative Agent or to any Lender that requests such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender.  Except for the certificates required by Section 8.3., the Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents delivered electronically, and in any event shall have no responsibility to monitor compliance by the Parent or Borrower with any such request for delivery.  Each Lender shall be solely responsible for requesting delivery to it of paper copies and maintaining its paper or electronic documents.

(b)           Documents required to be delivered pursuant to Article II. may be delivered electronically to a website provided for such purpose by the Administrative Agent pursuant to the procedures provided to the Parent or the Borrower by the Administrative Agent.

	
  

	
Section 8.6.  Public/Private Information.

 

The Parent and the Borrower shall cooperate with the Administrative Agent in connection with the publication of certain materials and/or information provided by or on behalf of the Parent or the Borrower.  Documents required to be delivered pursuant to the Loan Documents shall be delivered by or on behalf of the Parent or the Borrower to the Administrative Agent and the Lenders (collectively, “Information Materials”) pursuant to this Article and the Parent or the Borrower shall designate Information Materials (a) that are either available to the public or not material with respect to the Parent, the Borrower and the other Subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information” and (b) that are not Public Information as “Private Information”.

	
  

	
Section 8.7.  USA Patriot Act Notice; Compliance.

 

The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution.  Consequently, a Lender (for itself and/or as Administrative Agent for all Lenders hereunder) may from time-to-time request, and the Parent and the Borrower shall, and shall cause the other Loan Parties to, provide to such Lender, such Loan Party’s name, address, tax identification number and/or such other identification information as shall be necessary for such Lender to comply with federal law.  An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.

  

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Article IX. Negative Covenants

 

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 12.7., all of the Lenders) shall otherwise consent in the manner set forth in Section 12.7., the Parent and the Borrower, as applicable, shall comply with the following covenants:

	
  

	
Section 9.1.  Financial Covenants.

 

(a)           Ratio of Total Indebtedness to Total Asset Value.  The Parent shall not permit the ratio of (i) Total Indebtedness to (ii) Total Asset Value to exceed 0.60 to 1.00 at any time.

(b)           Ratio of Adjusted EBITDA to Fixed Charges.  The Parent shall not permit the ratio of (i) the product of (A) Adjusted EBITDA of the Parent and its Subsidiaries determined on a consolidated basis for the two consecutive fiscal quarters most recently ended multiplied by (B) 2 to (ii) the product of (A) Fixed Charges of the Parent and its Subsidiaries determined on a consolidated basis for the two consecutive fiscal quarters most recently ended multiplied by (B) 2, to be less than the applicable ratio set forth below as of the last day of the fiscal quarters set forth below:

	
Fiscal Quarter Ending

	
Ratio of Adjusted EBITDA to Fixed Charges

	
March 31, 2011 and June 30, 2011

	
1.40 to 1.00

	
September 30, 2011

	
1.45 to 1.00

	
December 31, 2011 and each fiscal quarter ending thereafter

	
1.50 to 1.00

(c)           Ratio of Secured Indebtedness to Total Asset Value.  The Parent shall not permit the ratio of (i) Secured Indebtedness of the Parent and its Subsidiaries determined on a consolidated basis to (ii) Total Asset Value, to exceed 0.50 to 1.00 at any time.

(d)           Ratio of Secured Recourse Indebtedness to Total Asset Value.  The Parent shall not permit the ratio of (i) Secured Recourse Indebtedness of the Parent and its Subsidiaries determined on a consolidated basis to (ii) Total Asset Value, to exceed 0.10 to 1.00 at any time.

(e)           Ratio of Unencumbered Adjusted NOI to Unsecured Indebtedness.  The Parent shall not permit the ratio of (i) the product of (A) Unencumbered Adjusted NOI for the two consecutive fiscal quarters most recently ended multiplied by (B) 2 to (ii)  Unsecured Indebtedness of the Parent and its Subsidiaries to be less than 0.13 to 1.00 at any time.  For the purpose of calculating the ratio set forth in this Subsection (e), if an Eligible Property or Non-Core Property has been acquired during the two consecutive fiscal quarters most recently ended, the Parent may include in such calculation the Unencumbered Adjusted NOI of such Property calculated on a proforma basis, so long as the Administrative Agent shall have given its prior written consent, which consent shall not be unreasonably withheld.

(f)           Minimum Tangible Net Worth.  The Parent shall not permit Tangible Net Worth at any time to be less than (i) $693,349,000 plus (ii) 85% of the Net Proceeds of all Equity Issuances effected at any time after the Agreement Date by the Parent, the Borrower or any of their Subsidiaries to any Person other than the Parent, the Borrower or any of their Subsidiaries.

  

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(g)           Dividends and Other Restricted Payments.   The Parent shall not, and shall not permit the Borrower or any of their Subsidiaries (other than Parkway Properties Office Fund, L.P., Parkway Properties Office Fund II, L.P. and any other Consolidated Affiliate (provided that the Administrative Agent has given its prior written consent to such Consolidated Affiliate being excluded from the restrictions of this subsection (g)) to, declare or make any Restricted Payment; provided, however, that the Parent, the Borrower and their respective Subsidiaries may declare and make the following Restricted Payments so long as no Default or Event of Default would result therefrom:

(i)           the Borrower may pay cash dividends to the Parent and other holders of partnership interests in the Borrower with respect to any fiscal year ending during the term of this Agreement to the extent necessary for the Parent to distribute, and the Parent may so distribute, cash dividends to its shareholders in an aggregate amount not to exceed the greater of (i) the amount required to be distributed for the Parent to remain in compliance with Section 7.12. or (ii) 90% of Funds From Operations;

(ii)           the Borrower may pay cash dividends to the Parent and other holders of partnership interests in the Borrower with respect to any fiscal year ending during the term of this Agreement to the extent necessary for the Parent to distribute, and the Parent may so distribute cash distributions to its shareholders of capital gains resulting from gains from certain asset sales to the extent necessary to avoid payment of taxes on such asset sales imposed under Sections 857(b)(3) and 4981 of the Internal Revenue Code;

(iii)           a Subsidiary that is not a Wholly Owned Subsidiary may make cash distributions to holders of Equity Interests issued by such Subsidiary; and

(iv)           Subsidiaries may pay Restricted Payments to the Borrower or any other Subsidiary.

Notwithstanding the foregoing, but subject to the following sentence, if a Default or Event of Default exists, the Borrower may only declare and make cash distributions to the Parent and other holders of partnership interests in the Borrower with respect to any fiscal year to the extent necessary for the Parent to distribute, and the Parent may so distribute, an aggregate amount not to exceed the minimum amount necessary for the Parent to remain in compliance with Section 7.12.  If a Default or Event of Default specified in Section 10.1.(a), Section 10.1.(b), Section 10.1.(e) or Section 10.1.(f) shall exist, or if as a result of the occurrence of any other Event of Default any of the Obligations have been accelerated pursuant to Section 10.2.(a), the Parent shall not, and shall not permit the Borrower or any Subsidiary to, make any Restricted Payments to any Person other than to the Parent, the Borrower or any Subsidiary.

(h)           Permitted Investments.  The Parent shall not, and shall not permit the Borrower, any Loan Party or any other Subsidiary to, make an Investment in or otherwise own the following items which would cause the aggregate value of such holdings of such Persons to exceed the following percentages of Total Asset Value at any time:

(i)           Investments (A) in Subsidiaries that are not Wholly Owned Subsidiaries, in Unconsolidated Affiliates and in Consolidated Affiliates, such that the aggregate book value of such Investments exceeds 35.0% of Total Asset Value and (B) in Unconsolidated Affiliates, such that the aggregate book value of such Investments exceeds 10.0% of Total Asset Value;

(ii)           Investments in Equity Interests in Persons that are not Subsidiaries or Unconsolidated Affiliates, such that the aggregate value of such Investments calculated on the basis of the lower of cost or market exceeds 5.0% of Total Asset Value;

  

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(iii)           Mortgage Receivables, such that the aggregate book value of such Mortgage Receivables exceeds 5.0% of Total Asset Value at any time; and

(iv)           the aggregate amount of Total Budgeted Costs for Development Properties in which the Parent either has a direct or indirect ownership interest such that the aggregate amount thereof exceeds 7.50% of Total Asset Value.  If a Development Property is owned by an Unconsolidated Affiliate of the Parent, the Borrower or any Subsidiary, then the product of (A) the Parent’s, the Borrower’s or such Subsidiary’s Ownership Share in such Unconsolidated Affiliate and (B) the amount of the Total Budgeted Costs for such Development Property, shall be used in calculating such investment limitation; and

(v)           Ownership of, or Investments in, Properties that are not office properties such that the aggregate GAAP book value thereof exceeds 5.0% of Total Asset Value.

In addition to the foregoing limitations, the aggregate value of all of the items subject to any of the limitations in the preceding clauses (ii) through (v) shall not exceed 15.0% of Total Asset Value.

(i)           Eligible Property Requirements.  The Parent and the Borrower shall not permit at any time (a) the product of Unencumbered Adjusted NOI determined on an aggregate basis for the two consecutive fiscal quarters most recently ended multiplied by 2 to be less than $13,000,000 or (b) the number of Eligible Properties to be less than 8.  For the purpose of calculating clause (a) of this Section 9.1.(i), if an Eligible Property or Non-Core Property has been acquired during the two consecutive fiscal quarters most recently ended, the Parent may include in such calculation the Unencumbered Adjusted NOI of such Property calculated on a proforma basis, so long as the Administrative Agent shall have given its prior written consent, which consent shall not be unreasonably withheld.

(j)           Assets Owned by Borrower and Guarantors.  The Parent shall not permit the amount of Adjusted Total Asset Value attributable to assets directly owned by the Borrower and the Guarantors to be less than 95.0% of Adjusted Total Asset Value at any time.

	
  

	
Section 9.2.  Liens; Negative Pledge.

 

 

           (a)           The Parent and the Borrower shall not, and shall not permit any Subsidiary or any other Loan Party to, create, assume, or incur any Lien (other than Permitted Liens) upon any of its properties, assets, income or profits of any character whether now owned or hereafter acquired if immediately prior to the creation, assumption or incurring of such Lien, or immediately thereafter, a Default or Event of Default is or would be in existence, including without limitation, a Default or Event of Default resulting from a violation of any of the covenants contained in Section 9.1.

 

 

(b)           The Parent and the Borrower shall not, and shall not permit any Subsidiary or any other Loan Party to, enter into, assume or otherwise be bound by any Negative Pledge except for a Negative Pledge contained in any agreement (i) evidencing Indebtedness of such Person, but only to the extent that neither a Default or Event of Default is in existence at the time such Indebtedness is created, incurred or assumed, nor would result from the creation, incurrence or assumption of such Indebtedness (including without limitation, a Default or Event of Default resulting from a violation of any of the covenants contained in Section 9.1.); (ii) which Indebtedness is secured by a Lien permitted to exist pursuant to this Agreement, and (iii) which prohibits the creation of any other Lien on only the property securing such Indebtedness as of the date such agreement was entered into.

  

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Section 9.3.  Restrictions on Intercompany Transfers.

 

The Parent and the Borrower shall not, and shall not permit any other Loan Party or any other Subsidiary (other than an Excluded Subsidiary) to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary (other than an Excluded Subsidiary) to: (a) pay dividends or make any other distribution on any of such Subsidiary’s capital stock or other equity interests owned by the Parent, the Borrower or any other Subsidiary; (b) pay any Indebtedness owed to the Parent, the Borrower or any other Subsidiary; (c) make loans or advances to the Parent, the Borrower or any other Subsidiary; or (d) transfer any of its property or assets to the Parent, the Borrower or any other Subsidiary; other than (i) with respect to clauses (a) through (d) those encumbrances or restrictions contained in  any Loan Document or, (ii) with respect to clause (d), customary provisions restricting assignment of any agreement entered into by the Parent, the Borrower, any other Loan Party or any Subsidiary in the ordinary course of business.

	
  

	
Section 9.4.  Merger, Consolidation, Sales of Assets and Other Arrangements.

 

The Parent and the Borrower shall not, and shall not permit any other Loan Party or any other Subsidiary to, (i) enter into any transaction of merger or consolidation; (ii) liquidate, windup or dissolve itself (or suffer any liquidation or dissolution); (iii) convey, sell, lease, sublease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its business or assets, or the capital stock of or other Equity Interests in any of its Subsidiaries, whether now owned or hereafter acquired; or (iv) acquire a Substantial Amount of the assets of, or make an Investment of a Substantial Amount in, any other Person; provided, however, that:

(a)           any of the actions described in the immediately preceding clauses (i), (ii) and (iii) (other than a conveyance, sale, transfer or other disposition subject to the immediately following subsection (d), in which case the provisions of such subsection shall apply) may be taken with respect to any Subsidiary or any other Loan Party (other than the Parent or the Borrower) so long as immediately prior to the taking of such action and after giving effect thereto, no Default or Event of Default exists or would result therefrom;

(b)           any Subsidiary may merge with a Loan Party so long as such Loan Party is the survivor;

(c)           any Subsidiary may sell, transfer or dispose of its assets to a Loan Party;

(d)           any Loan Party and any other Subsidiary may, directly or indirectly, (A) acquire (whether by purchase, acquisition of Equity Interests of a Person, or as a result of a merger or consolidation) a Substantial Amount of the assets of, or make an Investment of a Substantial Amount in, any other Person and (B) convey, sell, lease or otherwise transfer, whether by one or a series of transactions, a Substantial Amount of assets (including Equity Interests of Subsidiaries) to any other Person, so long as, in each case, (1) the Borrower shall have given the Administrative Agent and the Lenders at least thirty (30) days’ prior written notice of such acquisition, Investment, conveyance, sale, lease or other transfer; (2) immediately prior thereto, and immediately thereafter and after giving effect thereto, no Default or Event of Default is or would be in existence, including, without limitation, a Default or Event of Default resulting from a breach of Section 9.1.; (3) in the case of a consolidation or merger involving the Borrower, the Borrower shall be the survivor thereof and (4) at the time the Borrower gives notice pursuant to clause (1) of this subsection, the Borrower shall have delivered to the Administrative Agent for distribution to each of the Lenders a Compliance Certificate, calculated on a pro forma basis, evidencing the continued compliance by the Loan Parties with the terms and conditions of this Agreement and the other Loan Documents, including without limitation, the financial the covenants contained in Section 9.1. after giving effect to such acquisition, Investment, conveyance, sale, lease or other transfer; and

  

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(e)           the Parent, the Borrower, the other Loan Parties and the other Subsidiaries may lease and sublease their respective assets, as lessor or sublessor (as the case may be), in the ordinary course of their business.

Further, no Loan Party nor any Subsidiary, shall enter into any sale-leaseback transactions or other transaction by which such Person shall remain liable as lessee (or the economic equivalent thereof) of any real or personal property that it has sold or leased to another Person.

	
  

	
Section 9.5.  Plans.

 

The Parent and the Borrower shall not, and shall not permit any other Loan Party or any other Subsidiary to, permit any of its respective assets to become or be deemed to be “plan assets” within the meaning of ERISA, the Internal Revenue Code and the respective regulations promulgated thereunder.  The Parent and the Borrower shall not cause or permit to occur, and shall not permit any other member of the ERISA Group to cause or permit to occur, any ERISA Event if such ERISA Event could reasonably be expected to have a Material Adverse Effect.

	
  

	
Section 9.6.  Fiscal Year.

 

The Parent and the Borrower shall not, and shall not permit any other Loan Party or other Subsidiary to, change its fiscal year from that in effect as of the Agreement Date.

	
  

	
Section 9.7.  Modifications of Organizational Documents and Material Contracts.

 

The Parent and the Borrower shall not, and shall not permit any other Loan Party or any other Subsidiary to, amend, supplement, restate or otherwise modify its certificate or articles of incorporation or formation, by-laws, operating agreement, declaration of trust, partnership agreement or other applicable organizational document if such amendment, supplement, restatement or other modification (a) results in an Event of Default or (b) could reasonably be expected to have a Material Adverse Effect.  The Parent and the Borrower shall not enter into, and shall not permit any Subsidiary or other Loan Party to enter into, any amendment or modification to any Material Contract which could reasonably be expected to have a Material Adverse Effect or default in the performance of any obligations of any Loan Party or other Subsidiary in any Material Contract or permit any Material Contract to be canceled or terminated prior to its stated maturity.

	
  

	
Section 9.8.  Transactions with Affiliates.

 

The Parent and the Borrower shall not permit to exist or enter into, and shall not permit any other Loan Party or any other Subsidiary to permit to exist or enter into, any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate, except (a) as set forth on Schedule 6.1.(r) or (b) transactions in the ordinary course of and pursuant to the reasonable requirements of the business of the Parent, the Borrower, such other Loan Party or such other Subsidiary and upon fair and reasonable terms which are no less favorable to the Parent, the Borrower, such other Loan Party or such other Subsidiary than would be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate.  Notwithstanding the foregoing, no payments may be made with respect to any items set forth on such Schedule 6.1.(r) if a Default or Event of Default exists or would result therefrom.

  

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Section 9.9.  Environmental Matters.

 

The Parent, the Borrower shall not, and shall not permit any other Loan Party, any other Subsidiary or any other Person to, use, generate, discharge, emit, manufacture, handle, process, store, release, transport, remove, dispose of or clean up any Hazardous Materials on, under or from the Properties in material violation of any Environmental Law or in a manner that could reasonably be expected to lead to any material environmental claim or pose a material risk to human health, safety or the environment.  Nothing in this Section shall impose any obligation or liability whatsoever on the Administrative Agent or any Lender.

	
  

	
Section 9.10.  Derivatives Contracts.

 

The Parent and the Borrower shall not, and shall not permit any other Loan Party or any other Subsidiary to enter into or become obligated in respect of, Derivatives Contracts, other than Derivatives Contracts entered into by the Parent, the Borrower, any such Loan Party or any such Subsidiary in the ordinary course of business and which are established to hedge in respect of liabilities, commitments or assets held or reasonably anticipated by the Parent, the Borrower, such other Loan Party or such other Subsidiary.

Article X. Default

 

	
  

	
Section 10.1.  Events of Default.

 

Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of Applicable Law or pursuant to any judgment or order of any Governmental Authority:

(a)           Default in Payment.

(i)           The Borrower shall fail to pay when due under this Agreement or any other Loan Document (whether upon demand, at maturity, by reason of acceleration or otherwise) the principal of the Loans or any Reimbursement Obligation; or

(ii)           The Borrower shall fail to pay when due under this Agreement or any other Loan Document (whether upon demand, at maturity, by reason of acceleration or otherwise) any interest on any of the Loans or any of the other payment Obligations owing by the Borrower under this Agreement (other than described in subsection (a)(i) above), any other Loan Document or the Fee Letter, or any other Loan Party shall fail to pay when due any payment obligation owing by such Loan Party under any Loan Document to which it is a party; and, in the case of this subsection (a)(ii) only, such failure shall continue for a period of 5 Business Days after the date such payment becomes due.

(b)           Default in Performance.

(i)           Any Loan Party shall fail to perform or observe any term, covenant, condition or agreement on its part to be performed or observed and contained in Sections 7.7., 7.12. or 7.14., Article VIII. or Article IX.; or

(ii)           Any Loan Party shall fail to perform or observe any term, covenant, condition or agreement contained in this Agreement or any other Loan Document to which it is a party and not otherwise mentioned in this Section, and in the case of this subsection (b)(ii) only, such failure shall continue for a period of 30 days after the earlier of (x) the date upon which a Responsible Officer of the Parent, the Borrower or such other Loan Party obtains knowledge of such failure or (y) the date upon which the Parent, the Borrower has received written notice of such failure from the Administrative Agent.

  

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(c)           Misrepresentations.  Any written statement, representation or warranty made or deemed made by or on behalf of any Loan Party under this Agreement or under any other Loan Document, or any amendment hereto or thereto, or in any other writing or statement at any time furnished by, or at the direction of, any Loan Party to the Administrative Agent, the Issuing Bank or any Lender, shall at any time prove to have been incorrect or misleading in any material respect when furnished or made or deemed made.

(d)           Indebtedness Cross-Default.

(i)           The Parent, the Borrower, any other Loan Party or any other Subsidiary shall fail to make any payment when due and payable in respect of (either in a single instance or on a cumulative basis) (x) Recourse Indebtedness of the Parent, the Borrower or any Subsidiary (other than the Loans and Reimbursement Obligations) having an aggregate outstanding principal amount in excess of $20,000,000, (y) Nonrecourse Indebtedness of the Parent, the Borrower or any Subsidiary having an aggregate outstanding principal amount in excess of $75,000,000 or (z) an aggregate amount of Indebtedness with respect to Derivatives Contracts, having, without regard to the effect of any close-out netting provision, Derivatives Termination Values of $10,000,000 or more (each of the Indebtedness described in clauses (x), (y) and (z) above, “Material Indebtedness”); or

(ii)           (x) The maturity of any Material Indebtedness shall have been accelerated in accordance with the provisions of any indenture, contract or instrument evidencing, providing for the creation of or otherwise concerning such Material Indebtedness or (y) any Material Indebtedness shall have been required to be prepaid or repurchased prior to the stated maturity thereof; or 

 

(iii)           Any other event shall have occurred and be continuing which, with or without the passage of time, the giving of notice, or otherwise, would permit any holder or holders of any Material Indebtedness, any trustee or agent acting on behalf of such holder or holders or any other Person, to accelerate the maturity of any such Material Indebtedness or require any such Material Indebtedness to be prepaid or repurchased prior to its stated maturity; or

(iv)           There occurs an “Event of Default” under and as defined in any Derivatives Contract as to which the Parent, the Borrower, any Loan Party or any of other Subsidiary is a “Defaulting Party” (as defined therein), or there occurs an “Early Termination Date” (as defined therein) in respect of any Specified Derivatives Contract as a result of a “Termination Event” (as defined therein) as to which the Parent or any of its Subsidiaries is an “Affected Party” (as defined therein), in each case with respect to Material Indebtedness.

(e)           Voluntary Bankruptcy Proceeding.  The Parent, the Borrower, any other Loan Party or any Significant Subsidiary shall:  (i) commence a voluntary case under the Bankruptcy Code or other federal bankruptcy laws (as now or hereafter in effect); (ii) file a petition seeking to take advantage of any other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; (iii) consent to, or fail to contest in a timely and appropriate manner, any petition filed against it in an involuntary case under such bankruptcy laws or other Applicable Laws or consent to any proceeding or action described in the immediately following subsection (f); (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign; (v) admit in writing its inability to pay its debts as they become due; (vi) make a general assignment for the benefit of creditors; (vii) make a conveyance fraudulent as to creditors under any Applicable Law; or (viii) take any corporate or partnership action for the purpose of effecting any of the foregoing.

  

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(f)           Involuntary Bankruptcy Proceeding.  A case or other proceeding shall be commenced against the Parent, the Borrower, any other Loan Party or any Significant Subsidiary in any court of competent jurisdiction seeking:  (i) relief under the Bankruptcy Code or other federal bankruptcy laws (as now or hereafter in effect) or under any other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of such Person, or of all or any substantial part of the assets, domestic or foreign, of such Person, and in the case of either clause (i) or (ii) such case or proceeding shall continue undismissed or unstayed for a period of 60 consecutive days, or an order granting the remedy or other relief requested in such case or proceeding (including, but not limited to, an order for relief under such Bankruptcy Code or such other federal bankruptcy laws) shall be entered.

(g)           Revocation of Loan Documents.  Any Loan Party shall (or shall attempt to) disavow, revoke or terminate any Loan Document or the Fee Letter to which it is a party or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of any Loan Document or the Fee Letter or any Loan Document or the Fee Letter shall cease to be in full force and effect (except as a result of the express terms thereof).

(h)           Judgment.   A judgment or order for the payment of money or for an injunction or other non-monetary relief shall be entered against the Parent, the Borrower, any other Loan Party, or any other Subsidiary by any court or other tribunal and (i) such judgment or order shall continue for a period of thirty (30) days without being paid, stayed or dismissed through appropriate appellate proceedings and (ii) either (A) the amount such judgment or order for which insurance has not been acknowledged in writing by the applicable insurance carrier (or the amount as to which the insurer has denied liability) exceeds, individually or together with all other such judgments or orders entered against the Loan Parties, $10,000,000 or (B) in the case of an injunction or other non-monetary relief, such injunction or judgment or order could reasonably be expected to have a Material Adverse Effect.

(i)           Attachment.  A warrant, writ of attachment, execution or similar process shall be issued against any property of the Parent, the Borrower, any other Loan Party or any other Subsidiary, which exceeds, individually or together with all other such warrants, writs, executions and processes, $10,000,000 in amount and such warrant, writ, execution or process shall not be paid, discharged, vacated, stayed or bonded for a period of thirty (30) days; provided, however, that if a bond has been issued in favor of the claimant or other Person obtaining such warrant, writ, execution or process, the issuer of such bond shall execute a waiver or subordination agreement in form and substance satisfactory to the Administrative Agent pursuant to which the issuer of such bond subordinates its right of reimbursement, contribution or subrogation to the Obligations and waives or subordinates any Lien it may have on the assets of the Parent, the Borrower or any of their respective Subsidiaries.

(j)           ERISA.

(i)           Any ERISA Event shall have occurred that results or could reasonably be expected to result in liability to any member of the ERISA Group aggregating in excess of $10,000,000; or

  

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(ii)           The “benefit obligation” of all Plans exceeds the “fair market value of plan assets” for such Plans by more than $10,000,000, all as determined, and with such terms defined, in accordance with FASB ASC 715.

 

(k)           Loan Documents.  An Event of Default (as defined therein) shall occur under any of the other Loan Documents;

(l)           Change of Control.

(i)           Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person will be deemed to have “beneficial ownership” of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the then outstanding voting stock of the Parent; or

(ii)           During any period of 12 consecutive months ending after the Agreement Date, individuals who at the beginning of any such 12-month period constituted the Board of Directors of the Parent (together with any new directors whose election by such Board or whose nomination for election by the shareholders of the Parent was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved but excluding any director whose initial nomination for, or assumption of office as, a director occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the Board of Directors) cease for any reason to constitute two-thirds of the Board of Directors of the Parent then in office; or

(iii)           the Parent shall cease to own and control, directly or indirectly, at least 90% of the outstanding Equity Interests of the Borrower; or

(iv)           the Parent or a Wholly Owned Subsidiary of the Parent shall cease to be the sole general partner of the Borrower or shall cease to have the sole and exclusive power to exercise all management and control over the Borrower.

	
  

	
Section 10.2.  Remedies Upon Event of Default.

 

Upon the occurrence of an Event of Default the following provisions shall apply:

(a)           Acceleration; Termination of Facilities.

(i)           Automatic.  Upon the occurrence of an Event of Default specified in Sections 10.1.(e) or 10.1.(f), (1)(A) the principal of, and all accrued interest on, the Loans and the Notes at the time outstanding, (B) an amount equal to the Stated Amount of all Letters of Credit outstanding as of the date of the occurrence of such Event of Default for deposit into the Letter of Credit Collateral Account and (C) all of the other Obligations, including, but not limited to, the other amounts owed to the Lenders and the Administrative Agent under this Agreement, the Notes or any of the other Loan Documents shall become immediately and automatically due and payable without presentment, demand, protest, or other notice of any kind, all of which are expressly waived by the Parent and the Borrower on behalf of themselves and the other Loan Parties, and (2) the Commitments and the Swingline Commitment and the obligation of the Issuing Bank to issue Letters of Credit hereunder, shall all immediately and automatically terminate.

  

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(ii)           Optional.  If any other Event of Default shall exist, the Administrative Agent may, and at the direction of the Requisite Lenders shall:  (1) declare (A) the principal of, and accrued interest on, the Loans and the Notes at the time outstanding, (B) an amount equal to the Stated Amount of all Letters of Credit outstanding as of the date of the occurrence of such Event of Default for deposit into the Letter of Credit Collateral Account and (C) all of the other Obligations, including, but not limited to, the other amounts owed to the Lenders and the Administrative Agent under this Agreement, the Notes or any of the other Loan Documents to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Parent and the Borrower on behalf of themselves and the other Loan Parties, and (2) terminate the Commitments and the Swingline Commitment and the obligation of the Issuing Bank to issue Letters of Credit hereunder.

(b)           Loan Documents.  The Requisite Lenders may direct the Administrative Agent to, and the Administrative Agent if so directed shall, exercise any and all of its rights under any and all of the other Loan Documents.

(c)           Applicable Law.  The Requisite Lenders may direct the Administrative Agent to, and the Administrative Agent if so directed shall, exercise all other rights and remedies it may have under any Applicable Law.

(d)           Appointment of Receiver.  To the extent permitted by Applicable Law, the Administrative Agent and the Lenders shall be entitled to the appointment of a receiver for the assets and properties of the Parent, the Borrower and their respective Subsidiaries, without notice of any kind whatsoever and without regard to the adequacy of any security for the Obligations or the solvency of any party bound for its payment, to take possession of all or any portion of the collateral, the property and/or the business operations of the Parent, the Borrower and their respective Subsidiaries and to exercise such power as the court shall confer upon such receiver.

(e)           Specified Derivatives Contract Remedies.  Notwithstanding any other provision of this Agreement or other Loan Document, each Specified Derivatives Provider shall have the right, with prompt notice to the Administrative Agent, but without the approval or consent of or other action by the Administrative Agent or the Lenders, to take any action or avail itself of any remedies available to such Specified Derivatives Provider under any Specified Derivatives Contract.

	
  

	
Section 10.3.  Remedies Upon Default.

 

Upon the occurrence of a Default specified in Section 10.1.(f), the Commitments shall immediately and automatically terminate.

	
  

	
Section 10.4.  Marshaling; Payments Set Aside.

 

None of the Administrative Agent, the Issuing Bank, any Lender or any Specified Derivatives Provider shall be under any obligation to marshal any assets in favor of any Loan Party or any other party or against or in payment of any or all of the Obligations or the Specified Derivatives Obligations.  To the extent that any Loan Party makes a payment or payments to the Administrative Agent, the Issuing Bank, any Lender or any Specified Derivatives Provider, or the Administrative Agent, the Issuing Bank, any Lender or any Specified Derivatives Provider enforce their security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/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 recovery, the Obligations or Specified Derivatives Obligations, or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

  

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Section 10.5.  Allocation of Proceeds.

 

If an Event of Default exists and maturity of any of the Obligations has been accelerated, all payments received by the Administrative Agent under any of the Loan Documents, in respect of any principal of or interest on the Obligations or any other amounts payable by the Borrower hereunder or thereunder, shall be applied in the following order and priority:

(a)           amounts due to the Administrative Agent, the Issuing Bank and the Lenders in respect of expenses due under Section 12.2. until paid in full, and then Fees;

(b)           payments of interest on Swingline Loans;

(c)           payments of interest on all other Loans and Reimbursement Obligations to be applied for the ratable benefit of the Lenders;

(d)           payments of principal of Swingline Loans;

(e)           payments of principal of all other Loans, Reimbursement Obligations and other Letter of Credit Liabilities to be applied for the ratable benefit of the Lenders in such order and priority as the Lenders may determine in their sole discretion; provided, however, to the extent that any amounts available for distribution pursuant to this subsection are attributable to the issued but undrawn amount of an outstanding Letter of Credit, such amounts shall be paid to the Administrative Agent for deposit into the Letter of Credit Collateral Account;

(f)           amounts due to the Administrative Agent and the Lenders pursuant to Sections 11.6. and 12.10.;

(g)           payments of all other amounts due under any of the Loan Documents, if any, to be applied for the ratable benefit of the Lenders; and

(h)           any amount remaining after application as provided above, shall be paid to the Borrower or whomever else may be legally entitled thereto.

  

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Section 10.6.  Letter of Credit Collateral Account.

 

(a)           As collateral security for the prompt payment in full when due of all Letter of Credit Liabilities and the other Obligations, the Borrower hereby pledges and grants to the Administrative Agent, for the ratable benefit of the Administrative Agent, the Issuing Bank and the Lenders as provided herein, a security interest in all of its right, title and interest in and to the Letter of Credit Collateral Account and the balances from time to time in the Letter of Credit Collateral Account (including the investments and reinvestments therein provided for below).  The balances from time to time in the Letter of Credit Collateral Account shall not constitute payment of any Letter of Credit Liabilities until applied by the Issuing Bank as provided herein.  Anything in this Agreement to the contrary notwithstanding, funds held in the Letter of Credit Collateral Account shall be subject to withdrawal only as provided in this Section.

(b)           Amounts on deposit in the Letter of Credit Collateral Account shall be invested and reinvested by the Administrative Agent in such Cash Equivalents as the Administrative Agent shall determine in its sole discretion.  All such investments and reinvestments shall be held in the name of and be under the sole dominion and control of the Administrative Agent for the ratable benefit of the Administrative Agent, the Issuing Bank and the Lenders; provided, that all earnings on such investments will be credited to and retained in the Letter of Credit Collateral Account.  The Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the Letter of Credit Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Administrative Agent accords other funds deposited with the Administrative Agent, it being understood that the Administrative Agent shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any funds held in the Letter of Credit Collateral Account.

(c)           If a drawing pursuant to any Letter of Credit occurs on or prior to the expiration date of such Letter of Credit, the Borrower and the Lenders authorize the Administrative Agent to use the monies deposited in the Letter of Credit Collateral Account to reimburse the Issuing Bank for the payment made by the Issuing Bank to the beneficiary with respect to such drawing or the payee with respect to such presentment.

(d)           If an Event of Default exists, the Administrative Agent may (and, if instructed by the Requisite Lenders, shall) in its (or their) discretion at any time and from time to time elect to liquidate any such investments and reinvestments and apply the proceeds thereof to the Obligations in accordance with Section 10.5.

(e)           So long as no Default or Event of Default exists, and to the extent amounts on deposit in or credited to the Letter of Credit Collateral Account exceed the aggregate amount of the Letter of Credit Liabilities then due and owing, the Administrative Agent shall, from time to time, at the request of the Borrower, deliver to the Borrower within 10 Business Days after the Administrative Agent’s receipt of such request from the Borrower, against receipt but without any recourse, warranty or representation whatsoever, such amount of the credit balances in the Letter of Credit Collateral Account as exceeds the aggregate amount of Letter of Credit Liabilities at such time.  When this Agreement termination pursuant to Section 12.11., all of the Obligations shall have been indefeasibly paid in full and no Letters of Credit remain outstanding, the Administrative Agent shall deliver to the Borrower, against receipt but without any recourse, warranty or representation whatsoever, the balances remaining in the Letter of Credit Collateral Account.

(f)           The Borrower shall pay to the Administrative Agent from time to time such fees as the Administrative Agent normally charges for similar services in connection with the Administrative Agent’s administration of the Letter of Credit Collateral Account and investments and reinvestments of funds therein.

  

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Section 10.7.  Performance by Administrative Agent.

 

If the Parent, the Borrower or any other Loan Party shall fail to perform any covenant, duty or agreement contained in any of the Loan Documents, the Administrative Agent may, after notice to the Borrower, perform or attempt to perform such covenant, duty or agreement on behalf of the Parent, the Borrower or such other Loan Party, as applicable, after the expiration of any cure or grace periods set forth herein.  In such event, the Borrower shall, at the request of the Administrative Agent, promptly pay any amount reasonably expended by the Administrative Agent in such performance or attempted performance to the Administrative Agent, together with interest thereon at the applicable Post-Default Rate from the date of such expenditure until paid.  Notwithstanding the foregoing, neither the Administrative Agent nor any Lender shall have any liability or responsibility whatsoever for the performance of any obligation of the Borrower under this Agreement or any other Loan Document.

	
  

	
Section 10.8.  Rights Cumulative.

 

The rights and remedies of the Administrative Agent, the Lenders and the Issuing Bank under this Agreement, each of the other Loan Documents, the Fee Letter and Specified Derivatives Contracts shall be cumulative and not exclusive of any rights or remedies which any of them may otherwise have under Applicable Law.  In exercising their respective rights and remedies the Administrative Agent, the Lenders and the Issuing Bank may be selective and no failure or delay by the Administrative Agent, any of the Lenders or the Issuing Bank in exercising any right shall operate as a waiver of it, nor shall any single or partial exercise of any power or right preclude its other or further exercise or the exercise of any other power or right.

Article XI. The Administrative Agent

 

	
  

	
Section 11.1.  Appointment and Authorization.

 

Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to take such action as contractual representative on such Lender’s behalf and to exercise such powers under this Agreement and the other Loan Documents as are specifically delegated to the Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Not in limitation of the foregoing, each Lender authorizes and directs the Administrative Agent to enter into the Loan Documents for the benefit of the Lenders.  Each Lender hereby agrees that, except as otherwise set forth herein, any action taken by the Requisite Lenders in accordance with the provisions of this Agreement or the Loan Documents, and the exercise by the Requisite Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders.  Nothing herein shall be construed to deem the Administrative Agent a trustee or fiduciary for any Lender or to impose on the Administrative Agent duties or obligations other than those expressly provided for herein.  Without limiting the generality of the foregoing, the use of the terms “Agent”, “Administrative Agent”, “agent” and similar terms in the Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law.  Instead, use of such terms is merely a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.  The Administrative Agent shall deliver to each Lender, promptly upon receipt thereof by the Administrative Agent, copies of each of the financial statements, certificates, notices and other documents delivered to the Administrative Agent pursuant to Article VIII. that the Parent or the Borrower is not otherwise required to deliver directly to the Lenders.  The Administrative Agent will furnish to any Lender, upon the request of such Lender, a copy (or, where appropriate, an original) of any document, instrument, agreement, certificate or notice furnished to the Administrative Agent by the Parent, the Borrower, any other Loan Party or any other Affiliate of the Parent, pursuant to this Agreement or any other Loan Document not already delivered to such Lender pursuant to the terms of this Agreement or any such other Loan Document.  As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of any of the Obligations), the Administrative Agent shall not be required to exercise any discretion or take

  

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any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Requisite Lenders (or all of the Lenders if explicitly required under any other provision of this Agreement), and such instructions shall be binding upon all Lenders and all holders of any of the Obligations; provided, however, that, notwithstanding anything in this Agreement to the contrary, the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or any other Loan Document or Applicable Law.  Not in limitation of the foregoing, the Administrative Agent may exercise any right or remedy it or the Lenders may have under any Loan Document upon the occurrence of a Default or an Event of Default unless the Requisite Lenders have directed the Administrative Agent otherwise.  Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Requisite Lenders, or where applicable, all the Lenders.

	
  

	
Section 11.2.  Wells Fargo as Lender.

 

Wells Fargo, as a Lender or as a Specified Derivatives Provider, as the case may be, shall have the same rights and powers under this Agreement and any other Loan Document and under any Specified Derivatives Contract, as the case may be, as any other Lender or Specified Derivatives Provider and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Wells Fargo in each case in its individual capacity.  Wells Fargo and its affiliates may each accept deposits from, maintain deposits or credit balances for, invest in, lend money to, act as trustee under indentures of, serve as financial advisor to, and generally engage in any kind of business with the Parent, the Borrower, any other Loan Party or any other affiliate thereof as if it were any other bank and without any duty to account therefor to the Lenders.  Further, the Administrative Agent and any affiliate may accept fees and other consideration from the Parent, the Borrower, any other Loan Party or any other Subsidiary for services in connection with this Agreement or any Specified Derivatives Contract, or otherwise without having to account for the same to the Lenders.  The Issuing Bank and the Lenders acknowledge that, pursuant to such activities, Wells Fargo or its affiliates may receive information regarding the Parent, the Borrower, other Loan Parties, other Subsidiaries and other Affiliates (including information that may be subject to confidentiality obligations in favor of such Person) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them.

	
  

	
Section 11.3.  Approvals of Lenders.

 

All communications from the Administrative Agent to any Lender requesting such Lender’s determination, consent, approval or disapproval (a) shall be given in the form of a written notice to such Lender, (b) shall be accompanied by a description of the matter or issue as to which such determination, approval, consent or disapproval is requested, or shall advise such Lender where information, if any, regarding such matter or issue may be inspected, or shall otherwise describe the matter or issue to be resolved, (c) shall include, if reasonably requested by such Lender and to the extent not previously provided to such Lender, written materials and, as appropriate, a brief summary of all oral information provided to the Administrative Agent by the Parent or the Borrower in respect of the matter or issue to be resolved, and (d) shall include the Administrative Agent’s recommended course of action or determination in respect thereof.  Unless a Lender shall give written notice to the Administrative Agent that it specifically objects to the recommendation or determination of the Administrative Agent (together with a reasonable written explanation of the reasons behind such objection) within ten (10) Business Days (or such lesser or greater period as may be specifically required under the express terms of the Loan Documents) of receipt of such communication, such Lender shall be deemed to have conclusively approved of or consented to such recommendation or determination; provided, however, that this sentence shall not apply to amendments, waivers or consents that require the written consent of each Lender directly and adversely affected thereby pursuant to Section 12.7.(b).

  

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Section 11.4.  Notice of Events of Default.

 

The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing with reasonable specificity such Default or Event of Default and stating that such notice is a “notice of default.”  If any Lender (excluding the Lender which is also serving as the Administrative Agent) becomes aware of any Default or Event of Default, it shall promptly send to the Administrative Agent such a “notice of default”.  Further, if the Administrative Agent receives such a “notice of default,” the Administrative Agent shall give prompt notice thereof to the Lenders.

	
  

	
Section 11.5.  Administrative Agent’s Reliance.

 

Notwithstanding any other provisions of this Agreement or any other Loan Documents, neither the Administrative Agent nor any of its directors, officers, agents, employees or counsel shall be liable for any action taken or not taken by it under or in connection with this Agreement or any other Loan Document, except for its or their own gross negligence or willful misconduct in connection with its duties expressly set forth herein or therein as determined by a court of competent jurisdiction in a final non-appealable judgment.  Without limiting the generality of the foregoing, the Administrative Agent may consult with legal counsel (including its own counsel or counsel for the Borrower or any other Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts.  Neither the Administrative Agent nor any of its directors, officers, agents, employees or counsel: (a) makes any warranty or representation to any Lender, the Issuing Bank or any other Person, or shall be responsible to any Lender, the Issuing Bank or any other Person for any statement, warranty or representation made or deemed made by the Borrower, any other Loan Party or any other Person in or in connection with this Agreement or any other Loan Document; (b) shall have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Loan Document or the satisfaction of any conditions precedent under this Agreement or any Loan Document on the part of the Borrower or other Persons, or to inspect the property, books or records of the Borrower or any other Person; (c) shall be responsible to any Lender or the Issuing Bank for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document, any other instrument or document furnished pursuant thereto; (d) shall have any liability in respect of any recitals, statements, certifications, representations or warranties contained in any of the Loan Documents or any other document, instrument, agreement, certificate or statement delivered in connection therewith; and (e) shall incur any liability under or in respect of this Agreement or any other Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telephone, telecopy or electronic mail) believed by it to be genuine and signed, sent or given by the proper party or parties.  The Administrative Agent may execute any of its duties under the Loan Documents by or through agents, employees or attorneys-in-fact and shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final non-appealable judgment.

  

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Section 11.6.  Indemnification of Administrative Agent.

 

Each Lender agrees to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so) pro rata in accordance with such Lender’s respective Commitment Percentage, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, reasonable out-of-pocket costs and expenses or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against the Administrative Agent (in its capacity as Administrative Agent but not as a Lender) in any way relating to or arising out of the Loan Documents, any transaction contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under the Loan Documents (collectively, “Indemnifiable Amounts”); provided, however, that no Lender shall be liable for any portion of such Indemnifiable Amounts to the extent resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment; provided, however, that no action taken in accordance with the directions of the Requisite Lenders (or all of the Lenders, if expressly required hereunder) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section.  Without limiting the generality of the foregoing, each Lender agrees to reimburse the Administrative Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so) promptly upon demand for its ratable share of any out-of-pocket expenses (including the reasonable fees and expenses of the counsel to the Administrative Agent) incurred by the Administrative Agent in connection with the preparation, negotiation, execution, administration, or enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice with respect to the rights or responsibilities of the parties under, the Loan Documents, any suit or action brought by the Administrative Agent to enforce the terms of the Loan Documents and/or collect any Obligations, any “lender liability” suit or claim brought against the Administrative Agent and/or the Lenders, and any claim or suit brought against the Administrative Agent and/or the Lenders arising under any Environmental Laws.  Such out-of-pocket expenses (including counsel fees) shall be advanced by the Lenders on the request of the Administrative Agent notwithstanding any claim or assertion that the Administrative Agent is not entitled to indemnification hereunder upon receipt of an undertaking by the Administrative Agent that the Administrative Agent will reimburse the Lenders if it is actually and finally determined by a court of competent jurisdiction that the Administrative Agent is not so entitled to indemnification.  The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder or under the other Loan Documents and the termination of this Agreement.  If the Borrower shall reimburse the Administrative Agent for any Indemnifiable Amount following payment by any Lender to the Administrative Agent in respect of such Indemnifiable Amount pursuant to this Section, the Administrative Agent shall share such reimbursement on a ratable basis with each Lender making any such payment.

	
  

	
Section 11.7.  Lender Credit Decision, Etc.

 

Each of the Lenders and the Issuing Bank expressly acknowledges and agrees that neither the Administrative Agent nor any of its officers, directors, employees, agents, counsel, attorneys-in-fact or other affiliates has made any representations or warranties to the Issuing Bank or such Lender and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Parent, the Borrower, any other Loan Party or any other Subsidiary or Affiliate, shall be deemed to constitute any such representation or warranty by the Administrative Agent to the Issuing Bank or any Lender.  Each of the Lenders and the Issuing Bank acknowledges that it has made its own credit and legal analysis and decision to enter into this Agreement and the transactions contemplated hereby, independently and without reliance upon the Administrative Agent, any other Lender or counsel to the Administrative Agent, or any of their respective officers, directors, employees, agents or counsel, and based on the financial statements of the Parent, the Borrower, the other Loan Parties, the other Subsidiaries and other Affiliates, and inquiries of such Persons, its independent due diligence of the business and affairs of the Parent, the Borrower, the other Loan Parties, the other Subsidiaries and other Persons, its review of the Loan Documents, the legal opinions required to be delivered to it hereunder, the advice of its own counsel and such other documents and information as it has deemed appropriate.  Each of the Lenders and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Lender or counsel to the Administrative Agent or any of their respective officers, directors, employees and agents, and based on such review, advice, documents and

  

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information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under the Loan Documents.  The Administrative Agent shall not be required to keep itself informed as to the performance or observance by the Parent, the Borrower or any other Loan Party of the Loan Documents or any other document referred to or provided for therein or to inspect the properties or books of, or make any other investigation of, the Parent, the Borrower, any other Loan Party or any other Subsidiary.  Except for notices, reports and other documents and information expressly required to be furnished to the Lenders and the Issuing Bank by the Administrative Agent under this Agreement or any of the other Loan Documents, the Administrative Agent shall have no duty or responsibility to provide any Lender or the Issuing Bank with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Parent, the Borrower, any other Loan Party or any other Affiliate thereof which may come into possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or other Affiliates.  Each of the Lenders and the Issuing Bank acknowledges that the Administrative Agent’s legal counsel in connection with the transactions contemplated by this Agreement is only acting as counsel to the Administrative Agent and is not acting as counsel to any Lender or the Issuing Bank.

	
  

	
Section 11.8.  Successor Administrative Agent.

 

The Administrative Agent (a) may resign at any time as Administrative Agent under the Loan Documents by giving written notice thereof to the Lenders and the Borrower or (b) may be removed as administrative agent by all of the Lenders (other than the Lender then acting as Administrative Agent) and the Borrower upon 30 days' prior written notice if the Administrative Agent (i) is found by a court of competent jurisdiction in a final, non-appealable judgment to have committed gross negligence or willful misconduct in the course of performing its duties hereunder or (ii) has become or is insolvent or has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.  Upon any such resignation or removal, the Requisite Lenders shall have the right to appoint a successor Administrative Agent which appointment shall, provided no Default or Event of Default exists, be subject to the Borrower’s approval, which approval shall not be unreasonably withheld or delayed (except that the Borrower shall, in all events, be deemed to have approved each Lender and any of its Affiliates as a successor Administrative Agent).  If no successor Administrative Agent shall have been so appointed in accordance with the immediately preceding sentence, and shall have accepted such appointment, within 30 days after the current Administrative Agent’s giving of notice of resignation or upon the removal of the current Administrative Agent, then the current Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent, which shall be a Lender, if any Lender shall be willing to serve, and otherwise shall be an Eligible Assignee.  Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the current Administrative Agent, and the current Administrative Agent shall be discharged from its duties and obligations under the Loan Documents.  Such successor Administrative Agent shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or shall make other arrangements satisfactory to the current Administrative Agent, in either case, to assume effectively the obligations of the current Administrative Agent with respect to such Letters of Credit.  After any Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Article XI. shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under the Loan Documents.  Notwithstanding anything contained herein to the contrary, the Administrative Agent may assign its rights and duties under the Loan Documents to any of its Affiliates by giving the Borrower and each Lender prior written notice.

  

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Section 11.9.  Titled Agents.

 

Each of the Joint Lead Arrangers, Joint Bookrunners, Syndication Agent and Documentation Agents (each a “Titled Agent”) in each such respective capacity, assumes no responsibility or obligation hereunder, including, without limitation, for servicing, enforcement or collection of any of the Loans, nor any duties as an agent hereunder for the Lenders.  The titles given to the Titled Agents are solely honorific and imply no fiduciary responsibility on the part of the Titled Agents to the Administrative Agent, any Lender, the Issuing Bank, the Borrower or any other Loan Party and the use of such titles does not impose on the Titled Agents any duties or obligations greater than those of any other Lender or entitle the Titled Agents to any rights other than those to which any other Lender is entitled.

Article XII. Miscellaneous

 

	
  

	
Section 12.1.  Notices.

 

Unless otherwise provided herein (including without limitation as provided in Section 8.5.), communications provided for hereunder shall be in writing and shall be mailed, telecopied, or delivered as follows:

If to the Borrower:

Parkway Properties LP

c/o Parkway Properties, Inc.

188 East Capitol Street, Suite 1000

Jackson, Mississippi 39201

Attention:  Chief Financial Officer

Telecopy Number:  (601) 949-4077

Telephone Number:  (601) 948-4091

If to the Administrative Agent:

Wells Fargo Bank, National Association

2859 Paces Ferry Road, Suite 1200

Atlanta, Georgia  30339

Attn:  Loan Administration Manager

Telecopier:    770-435-2262

Telephone:    770-319-3800

If to the Administrative Agent under Article II:

Wells Fargo Bank, National Association

608 2nd Avenue South, 11th Floor

Minneapolis, Minnesota  55402-1916

Attn:  Disbursement Administrator

Telecopier:    866-595-7861   

Telephone:    612-667-4773

  

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If to the Issuing Bank:

 

Wells Fargo Bank, National Association

2859 Paces Ferry Road, Suite 1200

Atlanta, Georgia  30339

Attn:  Loan Administration Manager

Telecopier:    770-435-2262

Telephone:    770-319-3800

If to any other Lender:

To such Lender’s address or telecopy number as set forth in the applicable Administrative Questionnaire

or, as to each party at such other address as shall be designated by such party in a written notice to the other parties delivered in compliance with this Section; provided, a Lender or the Issuing Bank shall only be required to give notice of any such other address to the Administrative Agent and the Borrower.  All such notices and other communications shall be effective (i) if mailed, upon the first to occur of receipt or the expiration of three (3) days after the deposit in the United States Postal Service mail, postage prepaid and addressed to the address of the Borrower or the Administrative Agent, the Issuing Bank and Lenders at the addresses specified; (ii) if telecopied, when transmitted; (iii) if hand delivered or sent by overnight courier, when delivered; or (iv) if delivered in accordance with Section 8.5. to the extent applicable; provided, however, that, in the case of the immediately preceding clauses (i), (ii) and (iii), non-receipt of any communication as of the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.  Notwithstanding the immediately preceding sentence, all notices or communications to the Administrative Agent, the Issuing Bank or any Lender under Article II. shall be effective only when actually received.  None of the Administrative Agent, the Issuing Bank or any Lender shall incur any liability to any Loan Party (nor shall the Administrative Agent incur any liability to the Issuing Bank or the Lenders) for acting upon any telephonic notice referred to in this Agreement which the Administrative Agent, the Issuing Bank or such Lender, as the case may be, believes in good faith to have been given by a Person authorized to deliver such notice or for otherwise acting in good faith hereunder.  Failure of a Person designated to get a copy of a notice to receive such copy shall not affect the validity of notice properly given to another Person.

	
  

	
Section 12.2.  Expenses.

 

The Borrower agrees (a) to pay or reimburse the Administrative Agent and the Joint Lead Arrangers for all of their respective reasonable out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of, and any amendment, supplement or modification to, any of the Loan Documents (including due diligence expense and reasonable travel expenses related to closing), and the consummation of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to the Administrative Agent and all costs and expenses of the Administrative Agent in connection with the use of IntraLinks, SyndTrak or other similar information transmission systems in connection with the Loan Documents and the reasonable fees and disbursements of counsel to the Administrative Agent relating to all such activities, (b) to pay or reimburse the Administrative Agent, the Issuing Bank and the Lenders for all their reasonable costs and expenses incurred in connection with the enforcement or preservation of any rights under the Loan Documents and the Fee Letter, including the reasonable fees and disbursements of their respective counsel (including the allocated fees and expenses of in-house counsel) and any payments in indemnification or otherwise payable by the Lenders to the Administrative Agent pursuant to the Loan Documents, (c) to pay, and indemnify and hold harmless the Administrative Agent, the Issuing Bank and the Lenders from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any failure to pay or delay in paying, documentary, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of any of the Loan Documents, or consummation of any amendment, supplement or modification of, or any waiver or consent under or in respect of, any Loan Document and (d) to the extent not already covered by any of the preceding subsections, to pay or reimburse the fees and disbursements of counsel to the Administrative

  

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Agent, the Issuing Bank and any Lender incurred in connection with the representation of the Administrative Agent, the Issuing Bank or such Lender in any matter relating to or arising out of any bankruptcy or other proceeding of the type described in Sections 10.1.(e) or 10.1.(f), including, without limitation (i) any motion for relief from any stay or similar order, (ii) the negotiation, preparation, execution and delivery of any document relating to the Obligations and (iii) the negotiation and preparation of any debtor-in-possession financing or any plan of reorganization of the Parent, the Borrower or any other Loan Party, whether proposed by the Parent, the Borrower, such Loan Party, the Lenders or any other Person, and whether such fees and expenses are incurred prior to, during or after the commencement of such proceeding or the confirmation or conclusion of any such proceeding.  If the Borrower shall fail to pay any amounts required to be paid by it pursuant to this Section, the Agent and/or the Lenders may pay such amounts on behalf of the Borrower and such amounts shall be deemed to be Obligations owing hereunder.

	
  

	
Section 12.3.  Stamp, Intangible and Recording Taxes.

 

The Borrower will pay any and all stamp, excise, intangible, registration, recordation and similar taxes, fees or charges and shall indemnify the Administrative Agent and each Lender against any and all liabilities with respect to or resulting from any delay in the payment or omission to pay any such taxes, fees or charges, which may be payable or determined to be payable in connection with the execution, delivery, recording, performance or enforcement of this Agreement, the Notes and any of the other Loan Documents, the amendment, supplement, modification or waiver of or consent under this Agreement, the Notes or any of the other Loan Documents or the perfection of any rights or Liens under this Agreement, the Notes or any of the other Loan Documents.

	
  

	
Section 12.4.  Setoff.

 

Subject to Section 3.3. and in addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, the Borrower hereby authorizes the Administrative Agent, the Issuing Bank, each Lender, each Affiliate of the Administrative Agent, the Issuing Bank or any Lender, and each Participant, at any time or from time to time while an Event of Default exists, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived, but in the case of the Issuing Bank, a Lender, an Affiliate of the Issuing Bank or a Lender, or a Participant, subject to receipt of the prior written consent of the Requisite Lenders exercised in their sole discretion, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Administrative Agent, the Issuing Bank, such Lender, any Affiliate of the Administrative Agent, the Issuing Bank or such Lender, or such Participant, to or for the credit or the account of the Borrower against and on account of any of the Obligations, irrespective of whether or not any or all of the Loans and all other Obligations have been declared to be, or have otherwise become, due and payable as permitted by Section 10.2., and although such Obligations shall be contingent or unmatured.

  

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Section 12.5.  Litigation; Jurisdiction; Other Matters; Waivers.

 

(a)           EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG THE PARENT, THE BORROWER, THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY OF THE LENDERS WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND EXPENSE TO THE PARTIES.  ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE LENDERS, THE ADMINISTRATIVE AGENT, THE ISSUING BANK, THE PARENT AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE FEE LETTER OR IN CONNECTION WITH, OR BY REASON OF, ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG THE PARENT, THE BORROWER, THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY OF THE LENDERS OF ANY KIND OR NATURE RELATING TO ANY OF THE LOAN DOCUMENTS.

(b)           EACH OF THE PARENT, THE BORROWER, THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND EACH LENDER HEREBY AGREES THAT THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK AND ANY STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW YORK SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY OF THE LENDERS, ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE FEE LETTER OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG THE PARENT, THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE RELATING TO ANY OF THE LOAN DOCUMENTS.  THE PARENT, THE BORROWER, THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND EACH OF THE LENDERS EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS.  EACH OF THE PARENT AND THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE PARENT OR THE BORROWER, AS APPLICABLE, AT ITS ADDRESS FOR NOTICES PROVIDED FOR HEREIN.  SHOULD THE PARENT OR THE BORROWER, AS APPLICABLE, FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN 30 DAYS AFTER THE MAILING THEREOF, THE PARENT OR THE BORROWER, AS APPLICABLE, SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS.  EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME.  THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER OR THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.

  

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(c)           THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE TERMINATION OR EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS AGREEMENT.

	
  

	
Section 12.6.  Successors and Assigns.

 

(a)           Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that none of the Parent, the Borrower or any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of the immediately following subsection (b), (ii) by way of participation in accordance with the provisions of the immediately following subsection (d) or (iii) by way of pledge or assignment of a security interest subject to the restrictions of the immediately following subsection (f) (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in the immediately following subsection (d) and, to the extent expressly contemplated hereby, the Related Parties of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i)           Minimum Amounts.

(A)           in the case of an assignment of the entire remaining amount of an assigning Revolving Lender’s Commitment and the Loans at the time owing to it, or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B)           in any case not described in the immediately preceding subsection (A), the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender, subject to each such assignment (in each case, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000 in the case of any assignment of a Commitment, unless each of the Administrative Agent and, so long as no Default or Event of Default shall exist, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that if after giving effect to such assignment, the amount of Commitment held by such assigning Lender or the principal outstanding balance of the Loans of such assigning Lender, as applicable, is less than $5,000,000, then such assigning Lender shall assign the entire amount of its Commitment and the Loans at the time owing to it.

  

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(ii)           Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned.

(iii)           Required Consents.  No consent shall be required for any assignment except to the extent required by clause (i)(B) of this subsection (b) and, in addition:

(A)           the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) a Default or Event of Default shall exist at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 5 Business Days after having received notice thereof;

(B)           the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of a Commitment if such assignment is to a Person that is not already a Lender with a Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(C) the consent of the Swingline Lender and the Issuing Bank (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of a Commitment.

(iv)           Assignment and Acceptance; Notes.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $4,500 for each assignment, and the assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Details Form.  If requested by the transferor Lender or the Assignee, upon the consummation of any assignment, the transferor Lender, the Administrative Agent and the Borrower shall make appropriate arrangements so that new Notes are issued to the Assignee and such transferor Lender, as appropriate.

(v)           No Assignment to Parent or Borrower.  No such assignment shall be made to the Borrower or any of the Parent’s Affiliates or Subsidiaries.

(vi)           No Assignment to Natural Persons.  No such assignment shall be made to a natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to the immediately following subsection (c), from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 4.4., 12.2. and 12.10. and the other provisions of this Agreement and the other Loan Documents as provided in Section 12.11. with respect to facts and circumstances occurring prior to the effective date of such assignment.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with the immediately following subsection (d).

  

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(c)           Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Principal Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d)           Participations.  Any Lender may at any time, without the consent of, or notice to, the Parent or the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Parent, the Borrower or any of the Parent’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Parent, the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver of any provision of any Loan Document described in the second sentence of Section 12.7. that adversely affects such Participant.  Subject to the immediately following subsection (e), the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.10., 4.1., 4.4. to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by Applicable Law, each Participant also shall be entitled to the benefits of Section 12.4. as though it were a Lender, provided such Participant agrees to be subject to Section 3.3. as though it were a Lender.

(e)           Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Sections 3.10. and 4.1. than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.10. unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower and the Administrative Agent, to comply with Section 3.10.(c) as though it were a Lender.

(f)           Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g)           No Registration.  Each Lender agrees that, without the prior written consent of the Borrower and the Administrative Agent, it will not make any assignment hereunder in any manner or under any circumstances that would require registration or qualification of, or filings in respect of, any Loan or Note under the Securities Act or any other securities laws of the United States of America or of any other jurisdiction.

  

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Section 12.7.  Amendments and Waivers.

 

(a)           Generally.  Except as otherwise expressly provided in this Agreement, (i) any consent or approval required or permitted by this Agreement or in any other Loan Document to be given by the Lenders may be given, (ii) any term of this Agreement or of any other Loan Document may be amended, (iii) the performance or observance by the Parent, the Borrower, any other Loan Party or any other Subsidiary of any terms of this Agreement or such other Loan Document may be waived, and (iv) the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Requisite Lenders (or the Administrative Agent at the written direction of the Requisite Lenders), and, in the case of an amendment to any Loan Document, the written consent of each Loan Party which is party thereto.

(b)           Consent of Lenders Directly Affected.  In addition to the foregoing requirements, no amendment, waiver or consent shall, unless in writing, and signed by each of the Lenders directly and adversely affected thereby (or the Administrative Agent at the written direction of such Lenders), do any of the following:

(i)           increase the Commitments of the Lenders (excluding any increase as a result of an assignment of Commitments permitted under Section 12.6. and any increases contemplated under Section 2.15.) or subject the Lenders to any additional obligations;

(ii)           reduce the principal of, or interest that has accrued or the rates of interest that will be charged on the outstanding principal amount of, any Loans or other Obligations;

(iii)           reduce the amount of any Fees payable to the Lenders hereunder;

(iv)           modify the definition of “Termination Date” (except in accordance with Section 2.12.), or otherwise postpone any date fixed for any payment of principal of, or interest on, any Loans or for the payment of Fees or any other Obligations, or extend the expiration date of any Letter of Credit beyond the Termination Date;

(v)           modify the definitions of “Commitment Percentage” or amend or otherwise modify the provisions of Section 3.2.;

(vi)           amend this Section or amend the definitions of the terms used in this Agreement or the other Loan Documents insofar as such definitions affect the substance of this Section;

(vii)           modify the definition of the term “Requisite Lenders” or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof;

(viii)           release any Guarantor from its obligations under the Guaranty except as contemplated by Section 7.14.(b);

(ix)           amend, or waive a Default or Event of Default under, Section 10.1.(a); or

(x)           amend, or waive the Borrower’s compliance with, Section 2.14.

  

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Notwithstanding anything to the contrary contained in this Section, no amendment, waiver or consent shall, unless in writing, and signed by all of the Lenders, amend Section 10.1.(l) or waive any Default or Event of Default occurring under such Section.

(d)           Amendment of Administrative Agent’s Duties, Etc.  No amendment, waiver or consent unless in writing and signed by the Administrative Agent, in addition to the Lenders required hereinabove to take such action, shall affect the rights or duties of the Administrative Agent under this Agreement or any of the other Loan Documents.  Any amendment, waiver or consent relating to Section 2.3. or the obligations of the Swingline Lender under this Agreement or any other Loan Document shall, in addition to the Lenders required hereinabove to take such action, require the written consent of the Swingline Lender.  Any amendment, waiver or consent relating to Section 2.2. or the obligations of the Issuing Bank under this Agreement or any other Loan Document shall, in addition to the Lenders required hereinabove to take such action, require the written consent of the Issuing Bank.  No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon and any amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose set forth therein.  No course of dealing or delay or omission on the part of the Administrative Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto.  Any Event of Default occurring hereunder shall continue to exist until such time as such Event of Default is waived in writing in accordance with the terms of this Section, notwithstanding any attempted cure or other action by the Parent, the Borrower, any other Loan Party or any other Person subsequent to the occurrence of such Event of Default.  Except as otherwise explicitly provided for herein or in any other Loan Document, no notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances.

	
  

	
Section 12.8.  Nonliability of Administrative Agent and Lenders.

 

The relationship between the Borrower, on the one hand, and the Issuing Bank, the Lenders and the Administrative Agent, on the other hand, shall be solely that of borrower and lender.  None of the Administrative Agent, the Issuing Bank or any Lender shall have any fiduciary responsibilities to the Parent, the Borrower or any other Loan Party and no provision in this Agreement or in any of the other Loan Documents, and no course of dealing between or among any of the parties hereto, shall be deemed to create any fiduciary duty owing by the Administrative Agent, the Issuing Bank or any Lender to any Lender, the Parent, the Borrower, any Subsidiary or any other Loan Party.  None of the Administrative Agent, the Issuing Bank or any Lender undertakes any responsibility to the Parent or the Borrower or any other Loan Party to review or inform the Parent or the Borrower of any matter in connection with any phase of the Parent’s or the Borrower’s business or operations.

	
  

	
Section 12.9.  Confidentiality.

 

Except as otherwise provided by Applicable Law, the Administrative Agent, the Issuing Bank and each Lender shall maintain the confidentiality of all Information (as defined below) in accordance with its customary procedure for handling confidential information of this nature and in accordance with safe and sound banking practices but in any event may make disclosure: (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any actual or proposed Assignee, Participant or other transferee in connection with a potential transfer of any Commitment or participation therein as permitted hereunder, or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations; (c) as required or requested by any Governmental Authority or representative thereof or pursuant to

  

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legal process or in connection with any legal proceedings, or as otherwise required by Applicable Law; (d) to the Administrative Agent’s, Issuing Bank’s or such Lender’s independent auditors and other professional advisors (provided they shall be notified of the confidential nature of the information); (e) in connection with the exercise of any remedies under any Loan Document (or any Specified Derivatives Contract) or any action or proceeding relating to any Loan Document (or any such Specified Derivatives Contract) or the enforcement of rights hereunder or thereunder; (f) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section actually known by the Administrative Agent or such Lender to be a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender or any Affiliate of the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Parent, the Borrower or any Affiliate of the Parent; (g) to the extent requested by, or required to be disclosed to, any nationally recognized rating agency or regulatory or similar authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners) having or purporting to have jurisdiction over it; (h) to bank trade publications, such information to consist of deal terms and other information customarily found in such publications; (i) to any other party hereto; and (j) with the consent of the Parent or the Borrower. Notwithstanding the foregoing, the Administrative Agent and each Lender may disclose any such confidential information, without notice to the Parent, the Borrower or any other Loan Party, to Governmental Authorities in connection with any regulatory examination of the Administrative Agent or such Lender or in accordance with the regulatory compliance policy of the Administrative Agent or such Lender.  As used in this Section, the term “Information” means all information received from the Parent, the Borrower, any other Loan Party, any other Subsidiary or Affiliate relating to any Loan Party or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Issuing Bank on a nonconfidential basis prior to disclosure by the Parent, the Borrower, any other Loan Party, any other Subsidiary or any Affiliate, provided that, in the case of any such information received from the Parent, the Borrower, any other Loan Party, any other Subsidiary or any Affiliate after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

	
  

	
Section 12.10.  Indemnification.

 

(a)           The Borrower shall and hereby agrees to indemnify, defend and hold harmless the Administrative Agent, the Issuing Bank, the Lenders, all of the Affiliates of each of the Administrative Agent, the Issuing Bank or any of the Lenders, and their respective directors, officers, shareholders, agents, employees and counsel (each referred to herein as an “Indemnified Party”) from and against any and all of the following (collectively, the “Indemnified Costs”):  losses, costs, claims, penalties, damages, liabilities, deficiencies, judgments or expenses of every kind and nature (including, without limitation, amounts paid in settlement, court costs and the reasonable fees and disbursements of counsel incurred in connection with any litigation, investigation, claim or proceeding or any advice rendered in connection therewith, but excluding Indemnified Costs indemnification in respect of which is specifically covered by Section 3.10. or 4.1. or expressly excluded from the coverage of such Sections) incurred by an Indemnified Party in connection with, arising out of, or by reason of, any suit, cause of action, claim, arbitration, investigation or settlement, consent decree or other proceeding (the foregoing referred to herein as an “Indemnity Proceeding”) which is in any way related directly or indirectly to: (i) this Agreement or any other Loan Document or the transactions contemplated thereby; (ii) the making of any Loans or issuance of Letters of Credit hereunder; (iii) any actual or proposed use by the Borrower of the proceeds of the Loans or Letters of Credit; (iv) the Administrative Agent’s, the Issuing Bank’s or any Lender’s entering into this Agreement; (v) the fact that the Administrative Agent, the Issuing Bank and the Lenders have established the credit facility evidenced hereby in favor of the Borrower; (vi) the fact that the Administrative Agent, the Issuing Bank and the Lenders are creditors of the Borrower and have or are alleged to have information regarding the financial condition, strategic plans or business operations of the Parent, the Borrower and the Subsidiaries; (vii) the fact that the Administrative Agent, the Issuing Bank and the Lenders are material creditors of the Borrower and are alleged to influence directly or indirectly the business decisions or affairs of the Parent, the Borrower and the Subsidiaries or their financial condition; (viii) the exercise of any right or remedy the

  

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Administrative Agent, the Issuing Bank or the Lenders may have under this Agreement or the other Loan Documents; provided, however, that the Borrower shall not be obligated to indemnify any Indemnified Party for any acts or omissions of such Indemnified Party in connection with matters described in this clause (viii) to the extent arising from the gross negligence or willful misconduct of such Indemnified Party, as determined by a court of competent jurisdiction in a final, non-appealable judgment; (ix) any civil penalty or fine assessed by the OFAC against, and all costs and expenses (including counsel fees and disbursements) incurred in connection with defense thereof by, the Administrative Agent, the Issuing Bank or any Lender as a result of conduct of the Parent, the Borrower, any other Loan Party or any other Subsidiary that violates a sanction administered or enforced by the OFAC; or (x) any violation or non-compliance by the Parent, the Borrower or any Subsidiary of any Applicable Law (including any Environmental Law) including, but not limited to, any Indemnity Proceeding commenced by (A) the Internal Revenue Service or state taxing authority or (B) any Governmental Authority or other Person under any Environmental Law, including any Indemnity Proceeding commenced by a Governmental Authority or other Person seeking remedial or other action to cause the Parent or its Subsidiaries (or its respective properties) (or the Administrative Agent and/or the Lenders and/or the Issuing Bank as successors to the Borrower) to be in compliance with such Environmental Laws.

(b)           The Borrower’s indemnification obligations under this Section shall apply to all Indemnity Proceedings arising out of, or related to, the foregoing whether or not an Indemnified Party is a named party in such Indemnity Proceeding.  In this connection, this indemnification shall cover all Indemnified Costs of any Indemnified Party in connection with any deposition of any Indemnified Party or compliance with any subpoena (including any subpoena requesting the production of documents).  This indemnification shall, among other things, apply to any Indemnity Proceeding commenced by other creditors of the Parent, the Borrower or any Subsidiary, any shareholder of the Parent or any Subsidiary (whether such shareholder(s) are prosecuting such Indemnity Proceeding in their individual capacity or derivatively on behalf of the Borrower), any account debtor of the Parent, the Borrower or any Subsidiary or by any Governmental Authority.

(c)           This indemnification shall apply to any Indemnity Proceeding arising during the pendency of any bankruptcy proceeding filed by or against the Parent, the Borrower and/or any Subsidiary.

(d)           All out-of-pocket fees and expenses of, and all amounts paid to third-persons by, an Indemnified Party shall be advanced by the Borrower at the request of such Indemnified Party notwithstanding any claim or assertion by the Borrower that such Indemnified Party is not entitled to indemnification hereunder upon receipt of an undertaking by such Indemnified Party that such Indemnified Party will reimburse the Borrower if it is actually and finally determined by a court of competent jurisdiction that such Indemnified Party is not so entitled to indemnification hereunder.

(e)           An Indemnified Party may conduct its own investigation and defense of, and may formulate its own strategy with respect to, any Indemnity Proceeding covered by this Section and, as provided above, all Indemnified Costs incurred by such Indemnified Party shall be reimbursed by the Borrower.  No action taken by legal counsel chosen by an Indemnified Party in investigating or defending against any such Indemnity Proceeding shall vitiate or in any way impair the obligations and duties of the Borrower hereunder to indemnify and hold harmless each such Indemnified Party; provided, however, that if (i) the Borrower is required to indemnify an Indemnified Party pursuant hereto and (ii) the Borrower has provided evidence reasonably satisfactory to such Indemnified Party that the Borrower has the financial wherewithal to reimburse such Indemnified Party for any amount paid by such Indemnified Party with respect to such Indemnity Proceeding, such Indemnified Party shall not settle or compromise any such Indemnity Proceeding without the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed).  Notwithstanding the foregoing, an Indemnified Party may settle or compromise any such Indemnity Proceeding without the prior written consent of the Borrower where (x) no monetary relief is sought against such Indemnified Party in such Indemnity Proceeding or (y) there is an allegation of a violation of law by such Indemnified Party.

  

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(f)           If and to the extent that the obligations of the Borrower under this Section are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under Applicable Law.

(g)           The Borrower’s obligations under this Section shall survive any termination of this Agreement and the other Loan Documents and the payment in full in cash of the Obligations, and are in addition to, and not in substitution of, any of the other obligations set forth in this Agreement or any other Loan Document to which it is a party.

	
  

	
Section 12.11.  Termination; Survival.

 

This Agreement shall terminate at such time as (a) all of the Commitments have been terminated, (b) all Letters of Credit have terminated, expired or been cancelled, (c) none of the Lenders is obligated any longer under this Agreement to make any Loans and the Issuing Bank is no longer obligated under this Agreement to issue Letters of Credit and (d) all Obligations (other than obligations which survive as provided in the following sentence) have been paid and satisfied in full. The indemnities to which the Administrative Agent, the Issuing Bank and the Lenders are entitled under the provisions of Sections 3.10., 4.1., 4.4., 11.6., 12.2. and 12.10. and any other provision of this Agreement and the other Loan Documents, and the provisions of Section 12.5., shall continue in full force and effect and shall protect the Administrative Agent, the Issuing Bank and the Lenders (i) notwithstanding any termination of this Agreement, or of the other Loan Documents, against events arising after such termination as well as before and (ii) at all times after any such party ceases to be a party to this Agreement with respect to all matters and events existing on or prior to the date such party ceased to be a party to this Agreement.

	
  

	
Section 12.12.  Severability of Provisions.

 

If any provision under this Agreement or the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid or unenforceable, that provision shall be deemed severed from the Loan Documents, and the validity, legality and enforceability of the remaining provisions shall remain in full force as though the invalid, illegal, or unenforceable provision had never been part of the Loan Documents.

	
  

	
Section 12.13.  GOVERNING LAW.

 

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

  

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Section 12.14.  Counterparts.

 

To facilitate execution, this Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts as may be convenient or required.  It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single document.  It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto.

	
  

	
Section 12.15.  Obligations with Respect to Loan Parties.

 

The obligations of the Parent and the Borrower to direct or prohibit the taking of certain actions by the other Loan Parties as specified herein shall be absolute and not subject to any defense the Parent or the Borrower may have that the Parent or the Borrower does not control such Loan Parties.

	
  

	
Section 12.16.  Independence of Covenants.

 

All covenants hereunder shall be given in any jurisdiction independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

	
  

	
Section 12.17.  Limitation of Liability.

 

None of the Administrative Agent, the Issuing Bank or any Lender, or any affiliate, officer, director, employee, attorney, or agent of the Administrative Agent, the Issuing Bank or any Lender shall have any liability with respect to, and each of the Parent and the Borrower hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by the Parent or the Borrower in connection with, arising out of, or in any way related to, this Agreement, any of the other Loan Documents or the Fee Letter, or any of the transactions contemplated by this Agreement or any of the other Loan Documents.  Each of the Parent and the Borrower hereby waives, releases, and agrees not to sue the Administrative Agent, the Issuing Bank or any Lender or any of the Administrative Agent’s, the Issuing Bank’s or any Lender’s affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Agreement, any of the other Loan Documents, the Fee Letter, or any of the transactions contemplated by this Agreement or financed hereby.

	
  

	
Section 12.18.  Entire Agreement.

 

This Agreement, the Notes, the other Loan Documents and the Fee Letter embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof and thereof and may not be contradicted or varied by evidence of prior, contemporaneous, or subsequent oral agreements or discussions of the parties hereto.  There are no oral agreements among the parties hereto.

	
  

	
Section 12.19.  Construction.

 

The Administrative Agent, the Issuing Bank, each Lender, the Parent and the Borrower acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement and the other Loan Documents with its legal counsel and that this Agreement and the other Loan Documents shall be construed as if jointly drafted by the Administrative Agent, the Issuing Bank, each Lender, the Parent and the Borrower.

  

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Section 12.20.  Headings.

 

The paragraph and section headings in this Agreement are provided for convenience of reference only and shall not affect its construction or interpretation.

[Signatures on Following Pages]

  

 

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

	
  

	
BORROWER:

	
  

	
PARKWAY PROPERTIES LP

	
                          

	
By:

	
Parkway Properties General Partners, Inc., its sole general partner

                     

                           By:  ___________________________________________                                                  

                                                                                    Name:________________________________________                                                     

                                                                                    Title:_________________________________________                                                      

 

                                                                                By:                                                    

                                                                                    Name:_______________________________________

                                                                                    Title:________________________________________                                                      

     PARENT:

     PARKWAY PROPERTIES, INC.

 By:                                                                

     Name:________________________________                                                                

     Title:_________________________________                                                                

 By:                                                                

      Name: ________________________________                                                               

      Title: _________________________________                                                               

[Signatures Continued on Next Page]

  

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[Signature Page to Credit Agreement with Parkway Properties LP]

	
  

	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, as Issuing Bank, as Swingline Lender,  and as a Lender

 By:_____________________________________                                                           

     Name:_________________________________                                                           

     Title:__________________________________                                                           

[Signatures Continued on Next Page]

  

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[Signature Page to Credit Agreement with Parkway Properties LP]

JPMORGAN CHASE BANK, N.A., as a Lender and as Syndication Agent

By:_____________________________________                                                           

     Name:_________________________________                                                           

     Title: _________________________________                                                          

  

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[Signature Page to Credit Agreement with Parkway Properties LP]

	
  

	
[LENDER]

By: ____________________________________                                                          

     Name:________________________________                                                           

     Title:_________________________________                                                           

  

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SCHEDULE I

COMMITMENTS

	
Lender

	
Commitment Amount

 

	
Wells Fargo Bank, National Association

 

	
$45,000,000.00

 

	
JPMorgan Chase Bank, N.A.

	
$45,000,000.00

 

	
PNC Bank, National Association

	
$29,000,000.00

 

	
Bank of America, N.A.

	
$29,000,000.00

 

	
U.S. Bank National Association

 

	
$20,000,000.00

 

	
Trustmark National Bank

 

	
$14,000,000.00

 

	
BancorpSouth Bank

 

	
$8,000,000.00

 

	
Total:

	
$190,000,000.00

	  	  

  

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SCHEDULE 1.1

List of Loan Parties

Parkway Properties

January 31, 2011

 

 

1.    Parkway Properties, Inc.

 

2.    Parkway Properties General Partners, Inc.

 

3.    Parkway Jackson LLC

 

4.    Parkway Lamar LLC

 

5.    111 Capitol Building LP

 

6.    Moore Building Associates LP

 

7.    Moore Garage LLC

 

8.    Parkway Moore LLC

 

9.    Parkway JHLIC LP

  

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EXHIBIT B

FORM OF GUARANTY

THIS GUARANTY dated as of __________ __, 2010, executed and delivered by each of the undersigned and the other Persons from time to time party hereto pursuant to the execution and delivery of an Accession Agreement in the form of Annex I hereto (all of the undersigned, together with such other Persons each a “Guarantor” and collectively, the “Guarantors”) in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as Administrative Agent (the “Administrative Agent”) for the Lenders under that certain Credit Agreement dated as of _____________ __, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among PARKWAY PROPERTIES LP (the “Borrower”), PARKWAY PROPERTIES, INC. (the “Parent”), the financial institutions party thereto and their assignees under Section 12.5. thereof (the “Lenders”), the Administrative Agent, and the other parties thereto.

WHEREAS, pursuant to the Credit Agreement, the Administrative Agent and the Lenders have agreed to make available to the Borrower certain financial accommodations on the terms and conditions set forth in the Credit Agreement;

WHEREAS, the Borrower and each of the Guarantors, though separate legal entities, are mutually dependent on each other in the conduct of their respective businesses as an integrated operation and have determined it to be in their mutual best interests to obtain financing from the Administrative Agent and the Lenders through their collective efforts;

WHEREAS, each Guarantor acknowledges that it will receive direct and indirect benefits from the Administrative Agent and the Lenders making such financial accommodations available to the Borrower under the Credit Agreement and, accordingly, each Guarantor is willing to guarantee the Borrower’s obligations to the Administrative Agent and the Lenders on the terms and conditions contained herein; and

WHEREAS, the execution and delivery of this Guaranty is a condition to the Administrative Agent and the Lenders making, and continuing to make, such financial accommodations to the Borrower.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor agrees as follows:

Section 1.  Guaranty.  Each Guarantor hereby absolutely, irrevocably and unconditionally guaranties the due and punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all of the following (collectively referred to as the “Guarantied Obligations”):  (a) all indebtedness, liabilities, obligations, covenants and duties owing by the Borrower to any Lender or the Administrative Agent under or in connection with the Credit Agreement and any other Loan Document, including without limitation, the repayment of all principal of the Loans, the Reimbursement Obligations and all other Letter of Credit Liabilities, and the payment of all interest, Fees, charges, reasonable attorneys’ fees and other amounts payable to any Lender or the Administrative Agent thereunder or in connection therewith (including, to the extent permitted by Applicable Law, interest, Fees and other amounts that would accrue and become due after the filing of a case or other proceeding under the Bankruptcy Code (as defined below) or other similar Applicable Law but for the commencement of such case or proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case or proceeding); (b) any and all extensions, renewals, modifications, amendments or substitutions of the foregoing; (c) all other Obligations; and (d) all expenses, including, without limitation, reasonable attorneys’ fees and disbursements, that are incurred by any of the Lenders or the Administrative Agent in the enforcement of any of the foregoing or any obligation of such Guarantor hereunder.

  

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Section 2.  Guaranty of Payment and Not of Collection.  This Guaranty is a guaranty of payment, and not of collection, and a debt of each Guarantor for its own account.  Accordingly, none of the Administrative Agent or the Lenders shall be obligated or required before enforcing this Guaranty against any Guarantor:  (a) to pursue any right or remedy any of them may have against the Borrower, any other Guarantor or any other Person or commence any suit or other proceeding against the Borrower, any other Guarantor or any other Person in any court or other tribunal; (b) to make any claim in a liquidation or bankruptcy of the Borrower, any other Guarantor or any other Person; or (c) to make demand of the Borrower, any other Guarantor or any other Person.

Section 3.  Guaranty Absolute.  Each Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the documents evidencing the same, regardless of any Applicable Law now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent or the Lenders with respect thereto.  The liability of each Guarantor under this Guaranty shall be absolute, irrevocable and unconditional in accordance with its terms and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever, including without limitation, the following (whether or not such Guarantor consents thereto or has notice thereof):

(a)           (i) any change in the amount, interest rate or due date or other term of any of the Guarantied Obligations, (ii) any change in the time, place or manner of payment of all or any portion of the Guarantied Obligations, (iii) any amendment or waiver of, or consent to the departure from or other indulgence with respect to, the Credit Agreement, any other Loan Document, or any other document or instrument evidencing or relating to any Guarantied Obligations, or (iv) any waiver, renewal, extension, addition, or supplement to, or deletion from, or any other action or inaction under or in respect of, the Credit Agreement, any of the other Loan Documents, or any other documents, instruments or agreements relating to the Guarantied Obligations or any other instrument or agreement referred to therein or evidencing any Guarantied Obligations or any assignment or transfer of any of the foregoing;

(b)           any lack of validity or enforceability of the Credit Agreement, any of the other Loan Documents, or any other document, instrument or agreement referred to therein or evidencing any Guarantied Obligations or any assignment or transfer of any of the foregoing;

(c)           any furnishing to the Administrative Agent or the Lenders of any security for the Guarantied Obligations;

(d)           any settlement or compromise of any of the Guarantied Obligations or any liability of any other party with respect to the Guarantied Obligations, or any subordination of the payment of the Guarantied Obligations to the payment of any other liability of the Borrower or any other Loan Party;

(e)           any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to such Guarantor, the Borrower, any other Loan Party or any other Person, or any action taken with respect to this Guaranty by any trustee or receiver, or by any court, in any such proceeding;

(f)           any act or failure to act by the Borrower, any other Loan Party or any other Person which may adversely affect such Guarantor’s subrogation rights, if any, against the Borrower to recover payments made under this Guaranty;

  

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(g)           any application of sums paid by the Borrower, any other Guarantor or any other Person with respect to the liabilities of the Borrower to the Administrative Agent or the Lenders, regardless of what liabilities of the Borrower remain unpaid;

(h)           any defect, limitation or insufficiency in the borrowing powers of the Borrower or in the exercise thereof;

(i)           any defense, set-off, claim or counterclaim (other than indefeasible payment and performance in full) which may at any time be available to or be asserted by the Borrower, any other Loan Party or any other Person against the Administrative Agent or any Lender;

(j)           any change in the corporate existence, structure or ownership of the Borrower or any other Loan Party;

(k)           any statement, representation or warranty made or deemed made by or on behalf of the Borrower, any Guarantor or any other Loan Party under any Loan Document, or any amendment hereto or thereto, proves to have been incorrect or misleading in any respect; or

(l)           any other circumstance which might otherwise constitute a defense available to, or a discharge of, a Guarantor hereunder (other than indefeasible payment and performance in full).

Section 4.  Action with Respect to Guarantied Obligations.  The Administrative Agent and the Lenders may, at any time and from time to time, without the consent of, or notice to, any Guarantor, and without discharging any Guarantor from its obligations hereunder, take any and all actions described in Section 3 and may otherwise:  (a) amend, modify, alter or supplement the terms of any of the Guarantied Obligations, including, but not limited to, extending or shortening the time of payment of any of the Guarantied Obligations or changing the interest rate that may accrue on any of the Guarantied Obligations; (b) amend, modify, alter or supplement the Credit Agreement or any other Loan Document; (c) release any other Loan Party or other Person liable in any manner for the payment or collection of the Guarantied Obligations; (d) exercise, or refrain from exercising, any rights against the Borrower, any other Guarantor or any other Person; and (e) apply any sum, by whomsoever paid or however realized, to the Guarantied Obligations in such order as the Lenders shall elect.

Section 5.  Representations and Warranties.  Each Guarantor hereby makes to the Administrative Agent and the Lenders all of the representations and warranties made by the Borrower with respect to or in any way relating to such Guarantor in the Credit Agreement and the other Loan Documents, as if the same were set forth herein in full.

Section 6.  Covenants.  Each Guarantor will comply with all covenants which the Borrower is to cause such Guarantor to comply with under the terms of the Credit Agreement or any of the other Loan Documents.

Section 7.  Waiver.  Each Guarantor, to the fullest extent permitted by Applicable Law, hereby waives notice of acceptance hereof or any presentment, demand, protest or notice of any kind, and any other act or thing, or omission or delay to do any other act or thing, which in any manner or to any extent might vary the risk of such Guarantor or which otherwise might operate to discharge such Guarantor from its obligations hereunder.

Section 8.  Inability to Accelerate Loan.  If the Administrative Agent and/or the Lenders are prevented under Applicable Law or otherwise from demanding or accelerating payment of any of the Guarantied Obligations by reason of any automatic stay or otherwise, the Administrative Agent and/or the Lenders shall be entitled to receive from each Guarantor, upon demand therefor, the sums which otherwise would have been due had such demand or acceleration occurred.

  

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Section 9.  Reinstatement of Guarantied Obligations.  If claim is ever made on the Administrative Agent or any of the Lenders for repayment or recovery of any amount or amounts received in payment or on account of any of the Guarantied Obligations, and the Administrative Agent or such Lender repays all or part of said amount by reason of (a) any judgment, decree or order of any court or administrative body of competent jurisdiction, or (b) any settlement or compromise of any such claim effected by the Administrative Agent or such Lender with any such claimant (including the Borrower or a trustee in bankruptcy for the Borrower), then and in such event each Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding on it, notwithstanding any revocation hereof or the cancellation of the Credit Agreement, any of the other Loan Documents, or any other instrument evidencing any liability of the Borrower, and such Guarantor shall be and remain liable to the Administrative Agent or such Lender for the amounts so repaid or recovered to the same extent as if such amount had never originally been paid to the Administrative Agent or such Lender.

Section 10.  Subrogation.  Upon the making by any Guarantor of any payment hereunder for the account of the Borrower, such Guarantor shall be subrogated to the rights of the payee against the Borrower; provided, however, that such Guarantor shall not enforce any right or receive any payment by way of subrogation or otherwise take any action in respect of any other claim or cause of action such Guarantor may have against the Borrower arising by reason of any payment or performance by such Guarantor pursuant to this Guaranty, unless and until all of the Guarantied Obligations have been indefeasibly paid and performed in full.  If any amount shall be paid to such Guarantor on account of or in respect of such subrogation rights or other claims or causes of action, such Guarantor shall hold such amount in trust for the benefit of the Administrative Agent and the Lenders and shall forthwith pay such amount to the Administrative Agent to be credited and applied against the Guarantied Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement or to be held by the Administrative Agent as collateral security for any Guarantied Obligations existing.

Section 11.  Payments Free and Clear.  All sums payable by each Guarantor hereunder, whether of principal, interest, Fees, expenses, premiums or otherwise, shall be paid in full, without set-off or counterclaim or any deduction or withholding whatsoever (including any Taxes), and if any Guarantor is required by Applicable Law or by a Governmental Authority to make any such deduction or withholding, such Guarantor shall pay to the Administrative Agent and the Lenders such additional amount as will result in the receipt by the Administrative Agent and the Lenders of the full amount payable hereunder had such deduction or withholding not occurred or been required.

Section 12.  Set-off.  In addition to any rights now or hereafter granted under any of the other Loan Documents or Applicable Law and not by way of limitation of any such rights, each Guarantor hereby authorizes the Administrative Agent, each Lender and any of their respective Affiliates, at any time while an Event of Default exists, without any prior notice to such Guarantor or to any other Person, any such notice being hereby expressly waived, but in the case of a Lender or an Affiliate of a Lender subject to receipt of the prior written consent of the Requisite Lenders exercised in their sole discretion, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Administrative Agent, such Lender, or any Affiliate of the Administrative Agent or such Lender, to or for the credit or the account of such Guarantor against and on account of any of the Guarantied Obligations, although such obligations shall be contingent or unmatured.

  

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Section 13.  Subordination.  Each Guarantor hereby expressly covenants and agrees for the benefit of the Administrative Agent and the Lenders that all obligations and liabilities of the Borrower to such Guarantor of whatever description, including without limitation, all intercompany receivables of such Guarantor from the Borrower (collectively, the “Junior Claims”) shall be subordinate and junior in right of payment to all Guarantied Obligations.  If an Event of Default shall exist, then no Guarantor shall accept any direct or indirect payment (in cash, property or securities, by setoff or otherwise) from the Borrower on account of or in any manner in respect of any Junior Claim until all of the Guarantied Obligations have been indefeasibly paid in full.

Section 14.  Avoidance Provisions.  It is the intent of each Guarantor, the Administrative Agent and the Lenders that in any Proceeding, such Guarantor’s maximum obligation hereunder shall equal, but not exceed, the maximum amount which would not otherwise cause the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Administrative Agent and the Lenders) to be avoidable or unenforceable against such Guarantor in such Proceeding as a result of Applicable Law, including without limitation, (a) Section 548 of the Bankruptcy Code and (b) any state fraudulent transfer or fraudulent conveyance act or statute applied in such Proceeding, whether by virtue of Section 544 of the Bankruptcy Code or otherwise.  The Applicable Laws under which the possible avoidance or unenforceability of the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Administrative Agent and the Lenders) shall be determined in any such Proceeding are referred to as the “Avoidance Provisions”.  Accordingly, to the extent that the obligations of any Guarantor hereunder would otherwise be subject to avoidance under the Avoidance Provisions, the maximum Guarantied Obligations for which such Guarantor shall be liable hereunder shall be reduced to that amount which, as of the time any of the Guarantied Obligations are deemed to have been incurred under the Avoidance Provisions, would not cause the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Administrative Agent and the Lenders), to be subject to avoidance under the Avoidance Provisions.  This Section is intended solely to preserve the rights of the Administrative Agent and the Lenders hereunder to the maximum extent that would not cause the obligations of any Guarantor hereunder to be subject to avoidance under the Avoidance Provisions, and no Guarantor or any other Person shall have any right or claim under this Section as against the Administrative Agent and the Lenders that would not otherwise be available to such Person under the Avoidance Provisions.

Section 15.  Information.  Each Guarantor assumes all responsibility for being and keeping itself informed of the financial condition of the Borrower and the other Guarantors, and of all other circumstances bearing upon the risk of nonpayment of any of the Guarantied Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that neither the Administrative Agent nor any of the Lenders shall have any duty whatsoever to advise any Guarantor of information regarding such circumstances or risks.

Section 16.  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

SECTION 17.  WAIVER OF JURY TRIAL.

(a)           EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG ANY GUARANTOR, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND EXPENSE TO THE PARTIES.  ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE LENDERS, THE ADMINISTRATIVE AGENT AND EACH GUARANTOR HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG ANY GUARANTOR, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE RELATING TO ANY OF THE LOAN DOCUMENTS.

  

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(b)           EACH OF THE GUARANTORS, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY AGREES THAT ANY FEDERAL DISTRICT COURT AND ANY STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN NEW YORK, NEW YORK SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG ANY GUARANTOR, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING HEREFROM OR THEREFROM.  EACH GUARANTOR AND EACH OF THE LENDERS EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS WITH RESPECT TO SUCH CLAIMS OR DISPUTES.  EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME.  THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY ANY PARTY OR THE ENFORCEMENT BY ANY PARTY OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.

(c)           THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE TERMINATION OR EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS GUARANTY.

Section 18.  Loan Accounts.  The Administrative Agent and each Lender may maintain books and accounts setting forth the amounts of principal, interest and other sums paid and payable with respect to the Guarantied Obligations, and in the case of any dispute relating to any of the outstanding amount, payment or receipt of any of the Guarantied Obligations or otherwise, the entries in such books and accounts shall be deemed conclusive evidence of the amounts and other matters set forth herein, absent manifest error.  The failure of the Administrative Agent or any Lender to maintain such books and accounts shall not in any way relieve or discharge any Guarantor of any of its obligations hereunder.

Section 19.  Waiver of Remedies.  No delay or failure on the part of the Administrative Agent or any of the Lenders in the exercise of any right or remedy it may have against any Guarantor hereunder or otherwise shall operate as a waiver thereof, and no single or partial exercise by the Administrative Agent or any of the Lenders of any such right or remedy shall preclude any other or further exercise thereof or the exercise of any other such right or remedy.

Section 20.  Termination.  This Guaranty shall remain in full force and effect until indefeasible payment in full of the Guarantied Obligations and the other Obligations and the termination or cancellation of the Credit Agreement in accordance with its terms.

  

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Section 21.  Successors and Assigns.  Each reference herein to the Administrative Agent or the Lenders shall be deemed to include such Person’s respective successors and assigns (including, but not limited to, any holder of the Guarantied Obligations) in whose favor the provisions of this Guaranty also shall inure, and each reference herein to each Guarantor shall be deemed to include such Guarantor’s successors and assigns, upon whom this Guaranty also shall be binding.  The Lenders may, in accordance with the applicable provisions of the Credit Agreement, assign, transfer or sell any Guarantied Obligation, or grant or sell participations in any Guarantied Obligations, to any Person without the consent of, or notice to, any Guarantor and without releasing, discharging or modifying any Guarantor’s obligations hereunder.  Subject to Section 12.9. of the Credit Agreement, each Guarantor hereby consents to the delivery by the Administrative Agent or any Lender to any Assignee or Participant (or any prospective Assignee or Participant) of any financial or other information regarding the Borrower or any Guarantor.  No Guarantor may assign or transfer its rights or obligations hereunder to any Person without the prior written consent of the Administrative Agent and the Lenders and any such assignment or other transfer to which the Administrative Agent and the Lenders have not so consented shall be null and void.

Section 22.  JOINT AND SEVERAL OBLIGATIONS.  THE OBLIGATIONS OF THE GUARANTORS HEREUNDER SHALL BE JOINT AND SEVERAL, AND ACCORDINGLY, EACH GUARANTOR CONFIRMS THAT IT IS LIABLE FOR THE FULL AMOUNT OF THE “GUARANTIED OBLIGATIONS” AND ALL OF THE OBLIGATIONS AND LIABILITIES OF EACH OF THE OTHER GUARANTORS HEREUNDER.

Section 23.  Amendments.  This Guaranty may not be amended except in a writing signed by the Requisite Lenders (or all of the Lenders if required under the terms of the Credit Agreement), the Administrative Agent and each Guarantor.

Section 24.  Payments.  All payments to be made by any Guarantor pursuant to this Guaranty shall be made in Dollars, in immediately available funds to the Administrative Agent at the Principal Office, not later than 2:00 p.m. on the date of demand therefor.

Section 25.  Notices.  All notices, requests and other communications hereunder shall be in writing (including facsimile transmission or similar writing) and shall be given (a) to each Guarantor at its address set forth below its signature hereto, (b) to the Administrative Agent or any Lender at its respective address for notices provided for in the Credit Agreement, or (c) as to each such party at such other address as such party shall designate in a written notice to the other parties.  Each such notice, request or other communication shall be effective (i) if mailed, when received; (ii) if telecopied, when transmitted; or (iii) if hand delivered, when delivered; provided, however, that any notice of a change of address for notices shall not be effective until received.

Section 26.  Severability.  In case any provision of this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 27.  Headings.  Section headings used in this Guaranty are for convenience only and shall not affect the construction of this Guaranty.

Section 28.  Limitation of Liability.  Neither the Administrative Agent nor any of the Lenders, nor any Affiliate, officer, director, employee, attorney, or agent of the Administrative Agent or any of the Lenders, shall have any liability with respect to, and each Guarantor hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by a Guarantor in connection with, arising out of, or in any way related to, this Guaranty or any of the other Loan Documents, or any of the transactions contemplated by this Guaranty, the Credit Agreement or any of the other Loan Documents.  Each Guarantor hereby waives, releases, and agrees not to sue the Administrative Agent or any of the Lenders or any of the Administrative Agent’s or of any Lenders’, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Guaranty, the Credit Agreement or any of the other Loan Documents, or any of the transactions contemplated by Credit Agreement or financed thereby.

  

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Section 29.  Definitions.  (a) For the purposes of this Guaranty:

“Bankruptcy Code” means 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.

“Proceeding” means any of the following:  (i) a voluntary or involuntary case concerning any Guarantor shall be commenced under the Bankruptcy Code; (ii) a custodian (as defined in such Bankruptcy Code or any other applicable bankruptcy laws) is appointed for, or takes charge of, all or any substantial part of the property of any Guarantor; (iii) any other proceeding under any Applicable Law, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding-up or composition for adjustment of debts, whether now or hereafter in effect, is commenced relating to any Guarantor; (iv) any Guarantor is adjudicated insolvent or bankrupt; (v) any order of relief or other order approving any such case or proceeding is entered by a court of competent jurisdiction; (vi) any Guarantor makes a general assignment for the benefit of creditors; (vii) any Guarantor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; (viii) any Guarantor shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; (ix) any Guarantor shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the foregoing; or (x) any corporate action shall be taken by any Guarantor for the purpose of effecting any of the foregoing.

(b)           Terms not otherwise defined herein are used herein with the respective meanings given them in the Credit Agreement.

[Signature on Next Page]

  

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IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this Guaranty as of the date and year first written above.

                   PARKWAY PROPERTIES, INC.

                   [Additional Guarantors]

                   By: _______________________________                                                          

                       Name: ___________________________                                                          

                        Title: ___________________________                                                          

                   Address for Notices:

                   c/o Parkway Properties, Inc.

                   188 East Capitol Street, Suite 1000

                   Jackson, Mississippi 39201

                   Attention:  Chief Financial Officer

                   Telecopy Number:  (601) 949-4077

                   Telephone Number:  (601) 948-4091

  

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