Document:

Exhibit
10.2

SNAP-ON INCORPORATED

SHARE AND PERFORMANCE AWARD AGREEMENT

THIS SHARE AND PERFORMANCE
AWARD AGREEMENT is granted by SNAP-ON INCORPORATED (the “Company”) to each
individual receiving and accepting the offer contained in the Share and
Performance Award Offer Letter (each such person being known as a “Key Employee”)
pursuant to the Company’s 2001 Incentive Stock and Awards Plan (the “Plan”).

WHEREAS, the Company
believes it to be in the best interests of the Company, its subsidiaries and
its stockholders for its officers and other key employees to have an incentive
tied to the price of Common Stock of the Company in order that they will have a
greater incentive to work for and manage the Company’s affairs in such a way
that its shares may become more valuable; and

WHEREAS,
the Company has determined to grant Key Employees Restricted Shares and
Performance Units pursuant to the terms of the Plan and this Agreement;

NOW,
THEREFORE, in consideration of the premises and of the services to be performed
by the Key Employee, the Company and the Key Employee hereby agree as follows:

1.                                      Restricted
Shares.

Subject to the
terms and conditions of this Agreement and the Plan, the Company hereby awards
to the Key Employee a number of shares of Common Stock (the “Restricted Shares”)
set forth in the Share and Performance Award Offer Letter (the “Offer”) under
the column titled “Quantity Granted.” 
Except as otherwise provided herein, no Restricted Share may be sold,
transferred or otherwise alienated or hypothecated until such Restricted Share
vests as provided herein.

2.                                      Escrow.

(a)                                  The Company shall
cause certificates for Restricted Shares to be issued as soon as practicable in
the name of the Key Employee, but the Company, as escrow agent, shall hold such
shares in escrow.  Upon issuance of such
certificates, (i) the Company shall give the Key Employee a receipt for the
Restricted Shares held in escrow which will state that the Company holds such
Restricted Shares in escrow for the account of the Key Employee, subject to the
terms of this Agreement, and (ii) the Key Employee shall give the Company a
stock power for such Restricted Shares duly endorsed in blank which will be
held in escrow for use in the event such Restricted Shares are forfeited in
whole or in part.

(b)                                 Unless theretofore
forfeited as provided herein, Restricted Shares and any other property held in
escrow pursuant to this Agreement shall cease to be held in escrow, and the
Company shall release such certificates for such Restricted Shares, and any related
property held in escrow (without interest), to the Key

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Employee, unless such Restricted Shares or other property are deferred
pursuant to a valid Deferral Election, or in the case of his or her death, to his
or her Beneficiary (as hereinafter defined) when such Restricted Shares vest as
provided herein at which time such shares shall be freely transferable by the
Key Employee or his or her Beneficiary.

(c)                                  Restricted Shares and
any other property held in escrow pursuant to this Agreement shall cease to be
held in escrow, and the Company may assume possession thereof in its own right,
when the Key Employee forfeits such Restricted Shares as provided herein.

3.                                      Vesting
and Forfeiture Based on Performance.

Subject to the terms and conditions set forth herein,

(a)                                  Vesting of the
Restricted Shares and payment in respect of Performance Units is dependent upon
performance relative to sales growth and RONAEBIT goals for fiscal years ____, _____
and _____. The threshold, target and maximum goals for sales growth and
RONAEBIT during fiscal years and _______ are as shown on Exhibit 1, and
the Restricted Shares will vest, and the Performance Units will be earned, in
accordance with the vesting matrix attached hereto as Exhibit 1 based on
actual performance of the Company relative to the goals subject to the terms
attached hereto as Exhibit 2.  As
soon as practicable after the Company’s audited financial statements for fiscal
____ are available to the Committee, the Committee shall calculate the Company’s
sales growth and RONAEBIT data for such years in accordance with the terms
attached hereto as Exhibit 2.  The
Committee shall then plot the sales growth and RONAEBIT data on the vesting
matrix.  The resulting position on the matrix
shall determine the percentage of the Restricted Shares that will vest and the
number of Performance Units that the Key Employee will earn as set forth below.
The Company shall promptly communicate this information to the Key Employee.

(b)                                 Unless the Key
Employee has previously forfeited such Restricted Shares, if the position on
the matrix reflects a percentage greater than zero and less than or equal to
100%, then the number of Restricted Shares that shall vest shall be equal to
the product of such percentage and the Grant Number, and if the position on the
matrix reflects a percentage greater than 100%, then the number of Restricted
Shares that shall vest shall be equal to the Grant Number. Upon the Committee’s
determination as provided above, the Key Employee will forfeit the Restricted
Shares that do not vest.

(c)                                  Unless the Key
Employee has previously forfeited the right to earn Performance Units, if the
position on the matrix reflects a percentage greater than 100%, then the Key
Employee will receive cash in respect of a number of Performance Units equal to
the product of the percentage in excess of 100%, but not greater than 50%,
multiplied by the Grant Number. The amount of the cash payment for each

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Performance Unit will be $______, the fair market value of a share of
the Company’s common stock on ___________, 20__.

(d)                                 If any calculation of
Shares to be awarded would result in a fraction, any fraction of 0.5 or greater
will be rounded to one, and any fraction of less than 0.5 will be rounded to
zero.

4.                                      Forfeiture
Based on Employment Status.

Subject to the terms and conditions set forth herein,

(a)                                  In addition to any
rights of the Company under Section 5, the Key Employee will forfeit any
Restricted Shares or any rights associated with Performance Units as to which
the Committee has not made its vesting determination under Section 3 and not
otherwise vested under Section 6 if the Key Employee’s employment with the
Company or its subsidiaries is terminated for any reason prior to such
determination unless in the case of termination by the Company or a subsidiary
the Committee determines, on such terms and conditions, if any, as the
Committee may impose, that there may nonetheless be vesting of all or a portion
of the award at the time of such determination or at any other time.  Absence of the Key Employee on leave approved
by a duly elected officer of the Company, other than the Key Employee, shall
not be considered a termination of employment during the period of such leave.

(b)                                 Notwithstanding the
foregoing, in the case of termination of employment as a result of death,
Disability (as defined below) or Retirement (as defined below), the Grant will
vest, and the Key Employee’s entitlement to cash in respect of Performance
Units will be determined, based upon the Company’s actual performance relative
to the sales growth and RONAEBIT goals over the full performance period, but in
lieu of the amounts under Section 3(b) and (c), the respective amounts, if any,
determined under those subsections shall be reduced by multiplying such amounts
by a fraction representing the portion of the three-year period that elapsed
before the termination of the Key Employee’s employment.

(c)                                  Whether or not a
divestiture of a subsidiary, division or other business unit (including through the formation of a joint
venture) results in termination of employment with the Company and its
subsidiaries will be at the discretion of the Committee, which discretion the
Committee may exercise on a case by case basis.

(d)                                 As used herein,

(i)                                     “Disability” means
a medically-determinable physical or mental condition that is expected to be
permanent and that results in the Key Employee being unable to perform one or
more of the essential duties of the Key Employee’s occupation or a reasonable
alternative offered by the Company or its subsidiaries, all as determined by
the Committee or any

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successor to such committee that administers the Awards Plan (as the
same may be amended).

(ii)                                  “Retirement” means
termination of employment from the Company and its subsidiaries on or after
satisfying the early or normal retirement age and service conditions specified
in the retirement policy or retirement plan of the Company or one of its
subsidiaries applicable to such Key Employee as in effect at the time of such
termination.

5.                                      Detrimental
Activity.

(a)                                  Activity During
Employment.  If, prior to termination
of the Key Employee’s employment with the Company or during the one-year period
following termination of the Key Employee’s employment with the Company, the
Company becomes aware that, prior to termination, the Key Employee had engaged
in detrimental activity, then the Committee in its sole discretion, for
purposes of this Agreement, may characterize or recharacterize termination of
the Key Employee’s employment as a termination to which this Section 5 applies
and may determine or redetermine the date of such termination, and the Key
Employee’s rights with respect to the Grant shall be determined in accordance
with the Committee’s determination.

(b)                                 Activity Following
Termination.  If, within the six-month
period following the Key Employee’s termination of employment with the Company,
the Company becomes aware that the Key Employee has engaged in detrimental
activity subsequent to termination, then the Key Employee’s rights with respect
to the Grant shall be determined in accordance with any determination by the
Committee under this Section 5.

(c)                                  Remedies.  If the Key Employee has engaged in
detrimental activity as described in subsections (a) and (b), then the
Committee may, in its discretion, declare that the Key Employee has forfeited
the Grant in whole or in part and cause the Company to assume possession of any
or all property held in escrow in respect of the Grant in its own right and/or
cause the Key Employee to return any cash or property actually realized by the
Key Employee (directly or indirectly) in respect of the Grant, in each case
whether or not the Committee has made a vesting determination under Section 3
in respect thereof before or after the date the Key Employee engaged in the
detrimental activity or before or after the date of termination as determined
or redetermined under subsection (a).

(d)                                 Allegations of
Activity.  If an allegation of
detrimental activity by the Key Employee is made to the Committee, then the
Committee may suspend the Key Employee’s rights in respect of the Grant to
permit the investigation of such allegation.

(e)                                  Definition of “Detrimental
Activity.”  For purposes of this
Agreement, “detrimental activity” means activity that is determined by the
Committee in its

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sole discretion to be detrimental to the interests of the Company or
any of its subsidiaries, including but not limited to situations where the Key
Employee (i) divulges trade secrets of the Company, proprietary data or other
confidential information relating to the Company or to the business of the
Company or any subsidiaries, (ii) enters into employment with a competitor
under circumstances suggesting that the Key Employee will be using unique or
special knowledge gained as an employee of the Company to compete with the
Company, (iii) uses information obtained during the course of his or her prior
employment with the Company for his or her own purposes, such as for the
solicitation of business and competition with the Company, (iv) is
determined to have engaged (whether or not prior to termination due to
retirement) in either gross misconduct or criminal activity harmful to the
Company, or (v) takes any action that harms the business interests,
reputation or goodwill of the Company and/or its subsidiaries.

6.                                      Change
in Control.

In the event of a “Change
of Control” (as defined in the Awards Plan) prior to the Committee’s
determination under Section 3(a),

(a)                                  Any unvested
Restricted Shares shall be treated as provided in the Awards Plan, unless the
Key Employee has previously forfeited such Restricted Shares; and

(b)                                 Notwithstanding their
treatment under the terms of the Awards Plan, the Company will immediately make
payment in respect of the number of Performance Units assuming performance at
maximum levels for the entire period.

7.                                      Voting
Rights; Dividends and Other Distributions.

(a)                                  While the Restricted
Shares are subject to restrictions under Section 1 and prior to any forfeiture thereof,
the Key Employee may exercise full voting rights for the Restricted Shares
registered in his or her name and held in escrow hereunder.

(b)                                 A Key Employee shall
have no voting rights with respect to the Performance Units.

(c)                                  While the Restricted
Shares are subject to the restrictions under Section 1 and prior to any
forfeiture thereof, all dividends and other distributions paid with respect to
the Restricted Shares shall be held in escrow pursuant to Section 2 and shall
be subject to the same restrictions as the Restricted Shares with respect to
which they were paid.

(d)                                 There shall be no
dividend right associated with the Performance Units.

(e)                                  Subject to the
provisions of this Agreement, the Key Employee shall have, with respect to the
Restricted Shares, all other rights of holders of Common Stock.

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8.                                      Tax
Withholding; Repurchase.

(a)                                  It shall be a
condition of the obligation of the Company to issue or release from escrow
Restricted Shares to the Key Employee or the Beneficiary, and the Key Employee
agrees, that the Key Employee shall pay to the Company, upon its demand, such
amount as may be requested by the Company for the purpose of satisfying its
liability to withhold federal, state, or local income or other taxes incurred
by reason of the award or as a result of the vesting hereunder or shall provide
evidence satisfactory to the Company that the Company has no liability to
withhold.  The Company may withhold from
cash payable in respect of Performance Units such amount as may be determined
by the Company for the purpose of satisfying its liability to withhold federal,
state, or local income or other taxes incurred by reason of such payment.

(b)                                 At each time the
Company is obligated to issue or release from escrow Restricted Shares to the
Key Employee or the Beneficiary, the Key Employee or the Beneficiary, as the
case may be, may elect to have the Company repurchase up to 40% of the
Restricted Shares to be so issued or released at a price equal to the Fair
Market Value (as defined below) on the Tax Date (as defined below).  The election must be delivered to the Company
within 30 days after the Tax Date. If the number of shares so determined shall
include a fractional share, then the Company shall not be obligated to
repurchase such fractional share.  All
elections shall be made in a form acceptable to the Company.  As used herein, (i) “Tax Date” means the date
on which the Key Employee must include in his or her gross income for tax
purposes the fair market value of the Restricted Shares and (ii) “Fair Market
Value” means the per share closing price on the date in question in the
principal market in which the Common Stock is then traded or, if no sales of
Common Stock have taken place on such date, the closing price on the most
recent date on which selling prices were quoted.

9.                                      Beneficiary.  The person who the Key Employee designates in
writing to the Committee as his or her beneficiary shall be referred to as the “Beneficiary”
and shall be entitled to receive the Restricted Shares that vest and the Performance
Units that are earned following the death of the Key Employee.  The Key Employee may from time to time revoke
or change his or her Beneficiary without the consent of any prior Beneficiary
by filing a new designation with the Committee. 
The last such designation that the Committee receives shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the Key
Employee’s death, and in no event shall any designation be effective as of a
date prior to such receipt.  If no such
Beneficiary designation is in effect at the time of the Key Employee’s death,
or if no designated Beneficiary survives the Key Employee or if such
designation conflicts with law, then the Key Employee’s estate shall be
entitled to receive the Restricted Shares that vest and the Performance Units
that are earned following the death of the Key Employee.  If the Committee is in doubt as to the right
of any person to receive such Restricted Shares and/or Performance Units, then
the Company may retain such Restricted Shares and the cash payment associated
with the Performance Units, without liability for any interest thereon, until
the Committee determines the person entitled thereto, or the Company may
deliver such Restricted Shares and the cash

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payment associated with
the Performance Units to any court of appropriate jurisdiction, and such
delivery shall be a complete discharge of the liability of the Company
therefor.

10.                               Adjustments
in Event of Change in Stock.

In the event of any reclassification, subdivision or
combination of shares of Common Stock, merger or consolidation of the Company
or sale by the Company of all or a portion of its assets, or other event which
could, in the judgment of the Committee, distort the implementation of the
Grant or the realization of its objectives, the Committee may make such
adjustments in the Grant Number and the number of Restricted Shares under this
Agreement, or in the terms, conditions or restrictions of this Agreement, as
the Committee deems equitable; provided that in the absence of express action
by the Committee, adjustments that apply generally to Restricted Shares granted
under the Awards Plan shall apply automatically to the Restricted Shares under
this Agreement.

11.                               Powers
of the Company Not Affected.

The existence of the Grant shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any
combination, subdivision or reclassification of the Common Stock or any
reorganization, merger, consolidation, business combination, exchange of
shares, or other change in the Company’s capital structure or its business, or
any issue of bonds, debentures or stock having rights or preferences equal,
superior or affecting the Common Stock or the rights thereof, or dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.  Nothing
in this Agreement shall confer upon the Key Employee any right to continue in
the employment of the Company or interfere with or limit in any way the right
of the Company to terminate the Key Employee’s employment at any time.

12.                               Certificate
Legend.

Each certificate for Restricted Shares shall bear the
following legend:

The sale or other
transfer of the shares of stock represented by this certificate, whether voluntary,
or by operation of law, is subject to certain restrictions set forth in the
Share and Performance Award Agreement between Snap-on Incorporated and the
registered owner hereof.  A copy of such
Agreement may be obtained from the Secretary of Snap-on Incorporated.

When the
restrictions imposed by Section 1 terminate, the Key Employee shall be entitled
to have the foregoing legend removed from the certificates representing such
Restricted Shares.

13.                               Impact
of Restatement of Financial Statements upon Previous Awards.

If any of the Company’s financial statements are
required to be restated, resulting from errors, omissions, or fraud, the
Committee may (in its sole discretion, but acting in good faith) direct that
the Company recover all or a portion of any such award made to all or any Key

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Employee with
respect to any fiscal year of the Company the financial results of which are
negatively affected by such restatement. The amount to be recovered from any Key
Employee shall be the amount by which the affected award exceeded the amount
that would have been payable to such Key Employee  had the financial statements been initially filed as restated, or any greater
or lesser amount (including, but not limited to, the entire award) that the
Committee shall determine. The Committee may determine to recover different
amounts from different Key Employees
or different classes of Key Employees on such bases as it shall deem appropriate.  In no event shall the amount to be recovered
by the Company be less than the amount required to be repaid or recovered as a
matter of law. The Committee shall determine whether the Company shall effect
any such recovery (i) by seeking repayment from the Key Employee, (ii) by reducing (subject to applicable law
and the terms and conditions of the applicable plan, program or arrangement)
the amount that would otherwise be payable to the Key Employee under any compensatory plan, program or
arrangement maintained by the Company or any of its affiliates, (iii) by
withholding payment of future increases in compensation (including the payment
of any discretionary bonus amount) or grants of compensatory awards that would
otherwise have been made in accordance with the Company’s otherwise applicable
compensation practices, or (iv) by any combination of the forgoing.

14.                               Interpretation
by Committee.

The Key Employee agrees that any dispute or
disagreement that may arise in connection with this Agreement shall be resolved
by the Committee, in its sole discretion, and that any interpretation by the
Committee of the terms of this Agreement or the Awards Plan and any
determination made by the Committee under this Agreement or such plan may be
made in the sole discretion of the Committee and shall be final, binding, and
conclusive.

15.                               Miscellaneous.

(a)                                  This Agreement shall
be governed and construed in accordance with the laws of the State of Wisconsin
applicable to contracts made and to be performed therein between residents
thereof.

(b)                                 This Agreement may not
be amended or modified except by the written consent of the parties hereto.

(c)                                  The captions of this
Agreement are inserted for convenience of reference only and shall not be taken
into account in construing this Agreement.

(d)                                 Any notice, filing or
delivery hereunder or with respect to the Grant shall be given to the Key
Employee at either his or her usual work location or work email address or his
or her home address as indicated in the records of the Company, and shall be
given to the Committee or the Company at 2801 80th Street, Kenosha, Wisconsin 53143, Attention:
Vice President and Chief Human Resource Officer.  All such notices shall be given by first
class mail, postage pre-paid, or by personal delivery or by email to the
Key Employee at his or her Company email address.

(e)                                  This Agreement shall
be binding upon and inure to the benefit of the Company and its successors and
assigns and shall be binding upon and inure to the benefit

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of the Key Employee, the Beneficiary and the personal representative(s)
and heirs of the Key Employee, except that the Key Employee may not transfer
any interest in any Restricted Shares prior to the release of the restrictions
imposed by Section 1.

 9
 

Exhibit 1

Vesting
Matrix

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Exhibit
2

1.               “RONAEBIT” for
purposes of the vesting matrix means a fraction expressed as a percentage where
(i) the numerator is Operating Earnings (as defined below) and (ii) the denominator
is average net assets employed. “Operating Earnings” means earnings from
continuing operations before income taxes (including Operating income from
financial services) plus interest expense less other income (expense) – net (i.e., less other income plus other
expense). “Net assets employed” means total assets minus cash and cash
equivalents and minus all liabilities excluding short-term and long-term debt. “Average
net assets employed” for a period means the average of net assets employed at
the end of the immediately preceding fiscal period and at the end of each
fiscal quarter during the period as reflected in the Company’s final
consolidated balance sheet for the quarter that is prepared as part of the
financial statements used in the preparation of the Company’s externally
reported financial statements.

2.               RONAEBIT for
purposes of the vesting matrix will be calculated based upon Operating Earnings
for the period consisting of ______________ and average net assets employed for
the same period.

3.               Sales growth for purposes of the vesting
matrix will be calculated by comparing the Company’s consolidated net sales for
fiscal ______ with the net sales amounts set forth on the matrix.

4.               The amount of each component of a calculation
will be determined by reference to the Company’s audited financial statements
for the year(s) in question or the notes thereto to the extent reflected
therein and, if not reflected therein, by reference to the Company’s unaudited
financial statements or the notes thereto contained in the Company’s periodic
reports filed with the Securities and Exchange Commission to the extent
reflected therein and, if not reflected therein, by reference to the Company’s
publicly disclosed earnings release for the relevant period and, if not
reflected therein, by reference to the Company’s final consolidated balance
sheet for the month that is prepared as part of the financial statements used
in the preparation of the Company’s externally reported financial statements.

5.               There
is graduated, proportionate vesting between the threshold and target
goals.  There is also graduated,
proportionate vesting between the target and outstanding goals.

6.               Except to the extent that doing so would
cause an award to fail to qualify for the performance-based exception
under Section 162(m) of the Internal Revenue Code, the threshold,
target and maximum goals for sales growth and RONAEBIT will be automatically
adjusted upward or downward as appropriate to eliminate the effects of  acquisitions and divestitures subject to the
following.

(a)                                  There will be
adjustments only where there is an acquisition or divestiture (or a combination
of multiple acquisitions or divestitures) of a subsidiary, division or other business unit that had revenues
during its last full fiscal year equal to 1% or more of the Company’s budgeted
consolidated net sales during the year the
acquisition or divestiture occurs as reflected in the Company’s overall
annual

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operating plan as of the commencement of the year as approved by the
Company’s Board of Directors (the “Final AOP”).

(b)                                 Adjustments to Sales Goals.  If an
acquisition occurs in ____________, then the Ad Hoc Committee will adjust
the target net sales amounts set forth on the vesting matrix upward by an
amount that is at least equal to the projected sales for the acquired business
in ______ as reflected in the financial projections for the acquired
business used as the basis for approval of the Company’s acquisition purchase
price decision by the Company’s Board of Directors or the highest authority
within the Company approving that decision
(the “Pricing Projections”).  If an
acquisition occurs in ______, then the Ad
Hoc Committee will adjust the target
net sales amounts set forth on the vesting matrix upward by an amount that is
at least equal to the projected sales for the acquired business in ______, as
reflected in the Pricing Projections for the acquired business, multiplied by a fraction representing the
portion of fiscal ______ occurring after the acquisition.  If a divestiture occurs in ________, then the
Ad Hoc Committee will adjust the target net sales amounts set
forth on the vesting matrix downward by an amount equal to the budgeted sales
for the divested business in the last Final AOP for which the divested business
was included (or such lesser reduction as the Ad Hoc Committee may
determine).  If a divestiture occurs in _____,
then the Ad Hoc Committee will adjust the target net sales amounts set
forth on the vesting matrix downward on a pro rata basis by an amount equal to
the budgeted sales for the divested business in _____, as reflected in
the Final AOP as of the commencement of fiscal ______, multiplied by a fraction representing the portion of fiscal ______ occurring
after the divestiture (or such lesser reduction as the Ad Hoc Committee may
determine).  If the target net sales
amount is adjusted as described above, the Ad Hoc Committee shall make a
proportionate adjustment to the minimum, threshold and maximum goals on the
vesting matrix.

(c)                            Adjustments to RONAEBIT Goals.  If there
is an acquisition or divestiture, then the RONAEBIT percentages on the vesting
matrix will be recalculated as set forth below.

“Unadjusted Operating Income” will be
estimated as the product obtained by multiplying the RONAEBIT percentage on the
vesting matrix by $_____________ (which is the net assets of the close of
fiscal ______).

For an acquisition, the Company’s Unadjusted
Operating Income will be adjusted upward by an amount determined by the Ad Hoc Committee that is at least equal to the projected Operating Income for the
acquired business for the remaining term of the plan cycle, as reflected in the
Pricing Projections for the acquired business, divided by the total number of years in the plan cycle.  For an acquisition, the Company’s net assets
as of the close of fiscal ______ will be adjusted upward by an amount
determined by the Ad Hoc Committee that is equal to the projected average net
assets of the acquired business for the remaining term of the plan cycle, as
reflected in the Pricing Projections for the acquired business, multiplied by the number of quarter ends
remaining in the plan cycle and divided by thirteen (or such lesser increase as
the Ad Hoc Committee may determine).

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For a divestiture, the Company’s Unadjusted
Operating Income will be adjusted downward by an amount equal to the budgeted
Operating Income for the divested business for the year in which the
divestiture occurs as reflected in the Final AOP as of the commencement
of such year divided by twelve and
multiplied by the number of months remaining in the plan cycle divided by the
total number of months in the plan cycle (or such lesser reduction as the Ad
Hoc Committee may determine).  For a
divestiture, the Company’s net assets as of the close of fiscal 2006 will be adjusted downward by an amount determined
by the Ad Hoc Committee that is at least equal to the budgeted net
assets for the divested business for the year in which the divestiture occurs as
reflected in the Final AOP as of the commencement of such year multiplied by the number of quarter ends
remaining in the plan cycle divided by thirteen.

The target RONAEBIT percentage on the vesting
matrix will be recalculated by dividing the adjusted Operating Income by the
adjusted net assets (on an annualized basis) and the minimum, threshold and
maximum RONAEBIT percentages will be adjusted by a proportionate amount.

 13EXHIBIT 10.195

REVOLVING CREDIT, SECURITY AND
GUARANTY AGREEMENT

dated as of

April 2, 2007

among

BEHRINGER HARVARD MULTIFAMILY OP I LP

as Borrower

and

BEHRINGER HARVARD MULTIFAMILY REIT I, INC.

BEHRINGER HARVARD HOLDINGS, LLC

THE SUBSIDIARY GUARANTOR PARTIES HERETO FROM TIME TO TIME,

as Guarantors,

and

BEHRINGER HARVARD OPERATING PARTNERSHIP I LP

as Lender and Agent

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
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  I.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
  1.1

  	
   

  	
  Accounting Terms

  	
   

  	
  1

  
	
   

  	
   

  	
  1.2

  	
   

  	
  General Terms

  	
   

  	
  1

  
	
   

  	
   

  	
  1.3

  	
   

  	
  Uniform Commercial Code Terms

  	
   

  	
  17

  
	
   

  	
   

  	
  1.4

  	
   

  	
  Certain Matters of Construction

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  ADVANCES, PAYMENTS, GUARANTIES, LETTERS OF CREDIT

  	
   

  	
  18

  
	
   

  	
   

  	
  2.1

  	
   

  	
  Revolving Advances

  	
   

  	
  18

  
	
   

  	
   

  	
  2.2

  	
   

  	
  Procedure for Borrowing Advances

  	
   

  	
  18

  
	
   

  	
   

  	
  2.3

  	
   

  	
  Limitation

  	
   

  	
  19

  
	
   

  	
   

  	
  2.4

  	
   

  	
  Disbursement of Advance Proceeds

  	
   

  	
  19

  
	
   

  	
   

  	
  2.5

  	
   

  	
  Repayment of Advances

  	
   

  	
  19

  
	
   

  	
   

  	
  2.6

  	
   

  	
  Use of Proceeds

  	
   

  	
  19

  
	
   

  	
   

  	
  2.7

  	
   

  	
  Guaranties

  	
   

  	
  19

  
	
   

  	
   

  	
  2.8

  	
   

  	
  Letters of Credit

  	
   

  	
  20

  
	
   

  	
   

  	
  2.9

  	
   

  	
  Mandatory Prepayments

  	
   

  	
  21

  
	
   

  	
   

  	
  2.10

  	
   

  	
  Optional Prepayments

  	
   

  	
  21

  
	
   

  	
   

  	
  2.11

  	
   

  	
  Statement of Account

  	
   

  	
  21

  
	
   

  	
   

  	
  2.12

  	
   

  	
  Increase in Maximum Commitment Amount

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  INTEREST AND FEES

  	
   

  	
  22

  
	
   

  	
   

  	
  3.1

  	
   

  	
  Interest

  	
   

  	
  22

  
	
   

  	
   

  	
  3.2

  	
   

  	
  Letter of Credit Fees

  	
   

  	
  22

  
	
   

  	
   

  	
  3.3

  	
   

  	
  Commitment Fee

  	
   

  	
  22

  
	
   

  	
   

  	
  3.4

  	
   

  	
  Facility Fee

  	
   

  	
  22

  
	
   

  	
   

  	
  3.5

  	
   

  	
  Guaranty Fee

  	
   

  	
  23

  
	
   

  	
   

  	
  3.6

  	
   

  	
  Computation of Interest and Fees

  	
   

  	
  23

  
	
   

  	
   

  	
  3.7

  	
   

  	
  Maximum Charges

  	
   

  	
  23

  
	
   

  	
   

  	
  3.8

  	
   

  	
  Authority to Charge Borrower’s Account

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
   

  	
  COLLATERAL: GENERAL TERMS

  	
   

  	
  23

  
	
   

  	
   

  	
  4.1

  	
   

  	
  Security Interest in the Collateral

  	
   

  	
  23

  
	
   

  	
   

  	
  4.2

  	
   

  	
  Perfection of Security Interest

  	
   

  	
  23

  
	
   

  	
   

  	
  4.3

  	
   

  	
  Books and Records

  	
   

  	
  24

  
	
   

  	
   

  	
  4.4

  	
   

  	
  Financial Disclosure

  	
   

  	
  24

  
	
   

  	
   

  	
  4.5

  	
   

  	
  Exculpation of Liability

  	
   

  	
  24

  
	
   

  	
   

  	
  4.6

  	
   

  	
  Financing Statements

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  24

  
	
   

  	
   

  	
  5.1

  	
   

  	
  Authority

  	
   

  	
  24

  
	
   

  	
   

  	
  5.2

  	
   

  	
  Formation and Qualification; Certain Collateral

  	
   

  	
  25

  
	
   

  	
   

  	
  5.3

  	
   

  	
  Survival of Representations and Warranties

  	
   

  	
  25

  
	
   

  	
   

  	
  5.4

  	
   

  	
  Tax Returns

  	
   

  	
  25

  
									

 

 i
 

 

	
  

  	
   

  	
  5.5

  	
   

  	
  Financial Statements

  	
   

  	
  26

  
	
   

  	
   

  	
  5.6

  	
   

  	
  Corporate or Limited Liability Company Name

  	
   

  	
  26

  
	
   

  	
   

  	
  5.7

  	
   

  	
  Environmental Matters

  	
   

  	
  26

  
	
   

  	
   

  	
  5.8

  	
   

  	
  Solvency; No Litigation; No Violation; ERISA

  	
   

  	
  27

  
	
   

  	
   

  	
  5.9

  	
   

  	
  Licenses and Permits

  	
   

  	
  27

  
	
   

  	
   

  	
  5.10

  	
   

  	
  Real Properties

  	
   

  	
  27

  
	
   

  	
   

  	
  5.11

  	
   

  	
  Space Lease

  	
   

  	
  29

  
	
   

  	
   

  	
  5.12

  	
   

  	
  REAs

  	
   

  	
  29

  
	
   

  	
   

  	
  5.13

  	
   

  	
  Ground Lease

  	
   

  	
  30

  
	
   

  	
   

  	
  5.14

  	
   

  	
  Default of Indebtedness

  	
   

  	
  30

  
	
   

  	
   

  	
  5.15

  	
   

  	
  No Default

  	
   

  	
  30

  
	
   

  	
   

  	
  5.16

  	
   

  	
  No Labor Disputes

  	
   

  	
  30

  
	
   

  	
   

  	
  5.17

  	
   

  	
  Margin Regulations

  	
   

  	
  31

  
	
   

  	
   

  	
  5.18

  	
   

  	
  Investment Company Act

  	
   

  	
  31

  
	
   

  	
   

  	
  5.19

  	
   

  	
  Conflicting Agreements

  	
   

  	
  31

  
	
   

  	
   

  	
  5.20

  	
   

  	
  Application of Certain Laws and Regulations

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  31

  
	
   

  	
   

  	
  6.1

  	
   

  	
  Payment of Obligations

  	
   

  	
  31

  
	
   

  	
   

  	
  6.2

  	
   

  	
  Compliance with Environmental Laws

  	
   

  	
  31

  
	
   

  	
   

  	
  6.3

  	
   

  	
  Maintenance of Property

  	
   

  	
  32

  
	
   

  	
   

  	
  6.4

  	
   

  	
  No Violations

  	
   

  	
  32

  
	
   

  	
   

  	
  6.5

  	
   

  	
  Litigation and Other Notices

  	
   

  	
  32

  
	
   

  	
   

  	
  6.6

  	
   

  	
  Collateral

  	
   

  	
  33

  
	
   

  	
   

  	
  6.7

  	
   

  	
  Execution of Supplemental Instruments

  	
   

  	
  33

  
	
   

  	
   

  	
  6.8

  	
   

  	
  Payment of Indebtedness

  	
   

  	
  33

  
	
   

  	
   

  	
  6.9

  	
   

  	
  Patriot Act Compliance

  	
   

  	
  33

  
	
   

  	
   

  	
  6.10

  	
   

  	
  Damage or Destruction

  	
   

  	
  33

  
	
   

  	
   

  	
  6.11

  	
   

  	
  Taking of a Real Property

  	
   

  	
  33

  
	
   

  	
   

  	
  6.12

  	
   

  	
  Insurance

  	
   

  	
  34

  
	
   

  	
   

  	
  6.13

  	
   

  	
  Payment of Taxes

  	
   

  	
  34

  
	
   

  	
   

  	
  6.14

  	
   

  	
  Leasing

  	
   

  	
  34

  
	
   

  	
   

  	
  6.15

  	
   

  	
  REAs

  	
   

  	
  34

  
	
   

  	
   

  	
  6.16

  	
   

  	
  Ground Leases

  	
   

  	
  35

  
	
   

  	
   

  	
  6.17

  	
   

  	
  Payment of Leasehold Obligations

  	
   

  	
  35

  
	
   

  	
   

  	
  6.18

  	
   

  	
  Standards of Financial Statements

  	
   

  	
  35

  
	
   

  	
   

  	
  6.19

  	
   

  	
  Guaranties

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  	
  38

  
	
   

  	
   

  	
  7.1

  	
   

  	
  Indebtedness

  	
   

  	
  38

  
	
   

  	
   

  	
  7.2

  	
   

  	
  Creation of Liens

  	
   

  	
  38

  
	
   

  	
   

  	
  7.3

  	
   

  	
  Fundamental Changes; Certain Transfers of Collateral
  and Equity Interest

  	
   

  	
  38

  
	
   

  	
   

  	
  7.4

  	
   

  	
  Restricted Payments

  	
   

  	
  38

  
	
   

  	
   

  	
  7.5

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  38

  
	
   

  	
   

  	
  7.6

  	
   

  	
  Modification of Management Agreements

  	
   

  	
  38

  
	
   

  	
   

  	
  7.7

  	
   

  	
  Subsidiaries

  	
   

  	
  39

  
	
   

  	
   

  	
  7.8

  	
   

  	
  Fiscal Year and Accounting Changes

  	
   

  	
  39

  

 

 ii
 

 

	
  

  	
   

  	
  7.9

  	
   

  	
  Pledge of Credit

  	
   

  	
  39

  
	
   

  	
   

  	
  7.10

  	
   

  	
  Compliance with ERISA

  	
   

  	
  39

  
	
   

  	
   

  	
  7.11

  	
   

  	
  Sole Purpose of Subsidiary Guarantor

  	
   

  	
  40

  
	
   

  	
   

  	
  7.12

  	
   

  	
  Changes in Zoning

  	
   

  	
  40

  
	
   

  	
   

  	
  7.13

  	
   

  	
  Governing Documents

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
   

  	
  CONDITIONS PRECEDENT

  	
   

  	
  40

  
	
   

  	
   

  	
  8.1

  	
   

  	
  Conditions to Entering Into this Agreement

  	
   

  	
  40

  
	
   

  	
   

  	
  8.2

  	
   

  	
  Conditions to Each Advance and Guaranty

  	
   

  	
  42

  
	
   

  	
   

  	
  8.3

  	
   

  	
  Deemed Representations

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
   

  	
  INFORMATION AS TO BORROWER

  	
   

  	
  44

  
	
   

  	
   

  	
  9.1

  	
   

  	
  Disclosure of Material Matters

  	
   

  	
  44

  
	
   

  	
   

  	
  9.2

  	
   

  	
  Litigation

  	
   

  	
  44

  
	
   

  	
   

  	
  9.3

  	
   

  	
  Material Occurrences

  	
   

  	
  44

  
	
   

  	
   

  	
  9.4

  	
   

  	
  Management Agreement

  	
   

  	
  44

  
	
   

  	
   

  	
  9.5

  	
   

  	
  Annual Financial Statements

  	
   

  	
  44

  
	
   

  	
   

  	
  9.6

  	
   

  	
  Quarterly Financial Statements

  	
   

  	
  45

  
	
   

  	
   

  	
  9.7

  	
   

  	
  Monthly Financial Statements

  	
   

  	
  45

  
	
   

  	
   

  	
  9.8

  	
   

  	
  Additional Information

  	
   

  	
  45

  
	
   

  	
   

  	
  9.9

  	
   

  	
  Notice of Suits, Adverse Events

  	
   

  	
  45

  
	
   

  	
   

  	
  9.10

  	
   

  	
  Additional Documents

  	
   

  	
  45

  
	
   

  	
   

  	
  9.11

  	
   

  	
  Subsidiaries

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
   

  	
  LENDER’S RIGHTS AND REMEDIES AFTER DEFAULT

  	
   

  	
  48

  
	
   

  	
   

  	
  11.1

  	
   

  	
  Rights and Remedies

  	
   

  	
  48

  
	
   

  	
   

  	
  11.2

  	
   

  	
  Agent’s Discretion

  	
   

  	
  49

  
	
   

  	
   

  	
  11.3

  	
   

  	
  Setoff

  	
   

  	
  49

  
	
   

  	
   

  	
  11.4

  	
   

  	
  Rights and Remedies not Exclusive

  	
   

  	
  49

  
	
   

  	
   

  	
  11.5

  	
   

  	
  Allocation of Payments After Event of Default

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
   

  	
  WAIVERS AND JUDICIAL PROCEEDINGS

  	
   

  	
  50

  
	
   

  	
   

  	
  12.1

  	
   

  	
  Waiver of Notice

  	
   

  	
  50

  
	
   

  	
   

  	
  12.2

  	
   

  	
  Delay

  	
   

  	
  51

  
	
   

  	
   

  	
  12.3

  	
   

  	
  Jury Waiver

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
   

  	
  EFFECTIVE DATE AND TERMINATION

  	
   

  	
  51

  
	
   

  	
   

  	
  13.1

  	
   

  	
  Term

  	
   

  	
  51

  
	
   

  	
   

  	
  13.2

  	
   

  	
  Termination

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIV.

  	
   

  	
  REGARDING AGENT

  	
   

  	
  52

  
	
   

  	
   

  	
  14.1

  	
   

  	
  Appointment

  	
   

  	
  52

  
	
   

  	
   

  	
  14.2

  	
   

  	
  Nature of Duties

  	
   

  	
  52

  
	
   

  	
   

  	
  14.3

  	
   

  	
  Lack of Reliance on Agent and Resignation

  	
   

  	
  53

  
	
   

  	
   

  	
  14.4

  	
   

  	
  Certain Rights of Agent

  	
   

  	
  53

  

 

 iii
 

 

	
  

  	
   

  	
  14.5

  	
   

  	
  Reliance

  	
   

  	
  53

  
	
   

  	
   

  	
  14.6

  	
   

  	
  Notice of Default

  	
   

  	
  54

  
	
   

  	
   

  	
  14.7

  	
   

  	
  Indemnification

  	
   

  	
  54

  
	
   

  	
   

  	
  14.8

  	
   

  	
  Agent in its Individual Capacity

  	
   

  	
  54

  
	
   

  	
   

  	
  14.9

  	
   

  	
  Delivery of Documents

  	
   

  	
  54

  
	
   

  	
   

  	
  14.10

  	
   

  	
  Borrower’s Undertaking to Agent

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XV.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  55

  
	
   

  	
   

  	
  15.1

  	
   

  	
  Governing Law

  	
   

  	
  55

  
	
   

  	
   

  	
  15.2

  	
   

  	
  Entire Understanding

  	
   

  	
  55

  
	
   

  	
   

  	
  15.3

  	
   

  	
  Successors and Assigns; Participations; New Lender

  	
   

  	
  56

  
	
   

  	
   

  	
  15.4

  	
   

  	
  Application of Payments

  	
   

  	
  57

  
	
   

  	
   

  	
  15.5

  	
   

  	
  Indemnity

  	
   

  	
  57

  
	
   

  	
   

  	
  15.6

  	
   

  	
  Notice

  	
   

  	
  57

  
	
   

  	
   

  	
  15.7

  	
   

  	
  Survival

  	
   

  	
  59

  
	
   

  	
   

  	
  15.8

  	
   

  	
  Severability

  	
   

  	
  59

  
	
   

  	
   

  	
  15.9

  	
   

  	
  Expenses

  	
   

  	
  59

  
	
   

  	
   

  	
  15.10

  	
   

  	
  Injunctive Relief

  	
   

  	
  59

  
	
   

  	
   

  	
  15.11

  	
   

  	
  Consequential Damages

  	
   

  	
  59

  
	
   

  	
   

  	
  15.12

  	
   

  	
  Captions

  	
   

  	
  59

  
	
   

  	
   

  	
  15.13

  	
   

  	
  Counterparts; Facsimile Signatures

  	
   

  	
  59

  
	
   

  	
   

  	
  15.14

  	
   

  	
  Construction

  	
   

  	
  60

  
	
   

  	
   

  	
  15.15

  	
   

  	
  Confidentiality; Sharing Information

  	
   

  	
  60

  

 

 iv
 

LIST OF
EXHIBITS AND SCHEDULES

Exhibits 

Exhibit 1.2(a) - Form of Equity Interests Agreement

Exhibit 2.1(a) - Form of Revolving Credit Note

Exhibit 7.7 - Form Guaranty by Subsidiary Guarantor

Schedules

Schedule 1.2(a)

Schedule 1.2(b)

Schedule 5.2(a)

Schedule 5.2(b)

 v

REVOLVING CREDIT, SECURITY

AND

GUARANTY AGREEMENT

REVOLVING
CREDIT, SECURITY AND GUARANTY AGREEMENT dated as of April 2nd, 2007 (this “Agreement”), among BEHRINGER HARVARD
MULTIFAMILY OP I LP, a Delaware limited partnership (“Borrower”); BEHRINGER HARVARD MULTIFAMILY
REIT I, INC., a Maryland corporation (“REIT”),
BEHRINGER HARVARD HOLDINGS, LLC, a Delaware limited liability company (the “Sponsor”), and each of the Subsidiary
Guarantors (as hereinafter defined) party hereto from time to time (together
with the “Sponsor” and REIT, each,
a “Guarantor” and collectively,
the “Guarantors”); and BEHRINGER
HARVARD OPERATING PARTNERSHIP I LP, a Texas limited partnership, as agent (in
such capacity, the “Agent”) and as
lender (in such capacity, the “Lender”).

WITNESSETH:

WHEREAS,
Borrower has requested Lender to make available to Borrower, a credit facility
in an aggregate principal amount not to exceed $100,000,000, as such amount may
be increased in accordance with the terms set forth herein, which credit
facility will be used for the purposes permitted hereunder; and

WHEREAS,
the Guarantors have agreed to provide a guaranty of Borrower’s obligations
hereunder, pursuant to the terms set forth herein;

WHEREAS,
Lender has agreed to make available to Borrower, and Agent has agreed to
administer, a credit facility upon the terms and conditions set forth in this
Agreement; and

WHEREAS,
as security for Borrower’s obligations hereunder, Borrower has agreed to pledge
to Lender: (i) each Bank Account of Borrower and each Subsidiary Guarantor; and
(ii) the Equity Interests of each Subsidiary of Borrower.

NOW,
THEREFORE, in consideration of the mutual conditions and agreements set forth
in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto hereby agree as follows.

IN
CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrower, Lender and Agent hereby agree as follows:

I.              DEFINITIONS.

1.1           Accounting
Terms.  As used in this
Agreement, the Note, or any certificate, report or other document made or
delivered pursuant to this Agreement, accounting terms not defined in Section 1.2
or elsewhere in this Agreement shall have the respective meanings given to them
under GAAP.

1.2           General
Terms.  For purposes of
this Agreement the following terms shall have the following meanings:

“Accessibility Laws” shall mean all laws and
regulations governing accessibility of public facilities to the handicapped,
specifically including the physical accessibility requirements of Title III of
the Americans with Disabilities Act of 1990, and the implementing regulations
promulgated thereunder by the Department of Justice and the Americans with
Disabilities Act Accessibility Guidelines (ADAAG) associated therewith.

“Accountants” shall have the meaning set
forth in Section 9.5 hereof.

“Acquisition” shall mean any transaction, or
any series of related transactions, consummated on or after the Closing Date,
by which Borrower or any Subsidiary (a) acquires any going business or all or
substantially all of the assets of any Person, whether through purchase of
assets, merger or otherwise, (b) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the capital stock of a Person which
has ordinary voting power for the election of directors or other similar
management personnel of a Person (other than capital stock having such power
only by reason of the happening of a contingency) or a majority of the
outstanding capital stock of a Person, or (c) acquires any Real Property.

“Advance Request” shall mean the notice
Borrower is required to send to Agent to request a Revolving Advance pursuant
to Section 2.2(a) hereof.

“Advisor” shall mean Behringer Advisors LP.

“Advisory Agreement” shall mean that certain
Fifth Amended and Restated Advisory Management Agreement, dated as December 29,
2006, by and between Advisor and Behringer Harvard REIT I, Inc., as such may be
amended or supplemented from time to time.

“Affiliate” of any Person shall mean (a) any
Person directly or indirectly owning, controlling, or holding, with the power
to vote, 10% or more of the outstanding voting securities of such other Person,
(b) any Person 10% or more of whose outstanding voting securities are directly
or indirectly owned, controlled or held, with the power to vote, by such other
Person, (c) any Person directly or indirectly controlling, controlled by or
under common control with such other Person, (d) any executive officer,
director, trustee or general partner of such other Person, or (e) any legal
entity for which such Person acts as an executive officer, director, trustee or
general partner.

“Agent” shall have the meaning set forth in
the preamble to this Agreement and shall include its successors and assigns.

“Agreement” shall mean this Agreement, as
may be amended from time to time in accordance with the terms herein.

“Applicable Interest Rate” shall mean, for
any Applicable Period, the Applicable Interest Rate based on the Leverage
Ratio, in accordance with the following table:

 2
 

 

	
  Leverage Ratio

  	
   

  	
  Applicable

  Interest Rate

  	
   

  
	
  less than or equal to 50%

  	
   

  	
  7.5

  	
  %

  
	
  greater than 50% less than or equal to 60%

  	
   

  	
  8.0

  	
  %

  
	
  greater than 60% but less than or equal to 70%

  	
   

  	
  8.50

  	
  %

  
	
  greater than 70% but less than or equal to 80%

  	
   

  	
  9.00

  	
  %

  
	
  greater than 80% but less than or equal to 90%

  	
   

  	
  9.5

  	
  %

  
	
  greater than 90% but less than or equal to 95%

  	
   

  	
  11.0

  	
  %

  
	
  greater than 95%

  	
   

  	
  13.0

  	
  %

  

 

The Applicable
Interest Rate for any Applicable Period as set forth in the table above shall
be further reduced as set forth in the table below (but, in no case below
7.5%), if, prior to the first day of the Applicable Period, Borrower and REIT
have raised in the aggregate, Gross Offering Proceeds, in one or more Equity
Offerings, the amounts set forth in the following table:

	
  Aggregate Equity Offering
  Amounts

  	
   

  	
  Reduction in

  Applicable Interest

  Rate

  	
   

  
	
  at least $50 million
  but less than $150 million

  	
   

  	
  0.25

  	
  %

  
	
  at least $150 million
  but less than $250 million

  	
   

  	
  0.50

  	
  %

  
	
  at least $250 million
  but less than $350 million

  	
   

  	
  0.75

  	
  %

  
	
  over $350 million

  	
   

  	
  1.00

  	
  %

  

 

“Applicable Period” shall mean the period
beginning on the first day of the month after the month in which REIT and Borrower
furnish the financial statements pursuant to either Section 9.5 or 9.6
and ending on the last day of the month in which the REIT and Borrower furnish
the immediately succeeding set of financial statements; provided, however,
the first Applicable Period shall be the period beginning on the Effective Date
and ending on the last day of the month in which REIT and Borrower furnish, for
the first time, the financial statements pursuant to either Section 9.5
or 9.6.

“Appraisal” shall mean a written appraisal
report as to any Real Property as the term “appraisal” is defined in the Code
of Professional Ethics of the American Institute of Appraisers, meeting the
requirements of the Federal Institutions Reform, Recovery and Enforcement Act
of 1989, prepared by an independent professional appraiser retained by Agent,
who is a member of

 3
 

the Appraisal
Institute, addressed to Agent and, if requested by Borrower, also permitting
any Guarantor to rely on such Appraisal, and in form, scope and substance
satisfactory to Agent, setting forth such appraiser’s determination of the
Appraised Value.

“Appraised Value” shall mean, as of any date
of determination with respect to any Real Property, the “as-is” fair market
value of such Real Property, which would be obtained in an arm’s length
transaction between an informed and willing buyer and an informed and willing
seller, under no compulsion, respectively, to buy or sell, as set forth in, and
as of the appraisal date of, the Appraisal for such Property which has most
recently been delivered to or received by Agent, plus the capitalized costs of
any subsequent improvements made on such Real Property; provided, however,
that with respect to any Real Property which has a mechanism to identify or
establish the market value of the Real Property, and such mechanism has
occurred, then the Appraised Value shall be the market value established by
such mechanism.

“Approved Mezzanine Loan” shall mean a
Mezzanine Loan that is approved by Lender, in Lender’s sole discretion.

“Bank Accounts” shall mean any deposit
account with any bank or other financial institution maintained by Borrower or
any Subsidiary Guarantor as of the Closing Date or opened by Borrower or any
Subsidiary Guarantor after the Closing Date.

“Borrower” shall have the meaning set forth
in the preamble to this Agreement and shall extend to all permitted successors
and assigns of such Person.

“Borrower’s Account” shall have the meaning
set forth in Section 2.11.

“Business Day” shall mean any day other than
Saturday or Sunday or a legal holiday on which commercial banks are authorized
or required by law to be closed for business in Dallas, Texas.

“Capital Expenditures” shall mean all
payments, including, without limitation, payments for Capitalized Lease
Obligations, for any fixed assets or improvements, or replacements,
substitutions or additions thereto, that have a useful life of more than one
year and which are required to be capitalized under GAAP.

“Capitalized Lease” shall mean, at any time,
any lease which, in accordance with. 
GAAP, is required to be capitalized on the consolidated balance sheet of
REIT and Borrower at such time.

“Capitalized Lease Obligations” of Borrower
at any time shall mean the aggregate amount which, in accordance with GAAP, is
required to be reported as a liability on the consolidated balance sheet of
REIT and Borrower at such time as lessee under Capitalized Leases.

“Casualty” shall mean any damage to,
destruction of or casualty affecting any Real Property that, together with any
other damage, destruction or other casualty then affecting such Real Property,
causes, or reasonably could be expected to cause, a decline in the “as-is” fair

 4
 

market value of
such Real Property in an amount greater than three percent (3%) of the then
Appraised Value of such Real Property.

“CERCLA” shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. §960l et  seq.

“Change of Multifamily Advisor” shall mean
the occurrence of (a) any failure by REIT to be advised by, and have its
day-to-day business affairs to be performed and directed by, Behringer Harvard
Multifamily Advisors I LP, or (b) any failure of the Behringer Harvard
Multifamily Advisors I LP to be Controlled by the Sponsor.

“Change of Control” shall mean the
occurrence of any of the following: (i) a Change of Multifamily Advisor; (ii)
any Person or any two or more Persons acting in concert shall have acquired, or
shall have entered into one or more definitive agreements to acquire,
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities and Exchange Act of 1934), directly or
indirectly, of Equity Interests of Borrower or REIT  representing more than 50% of the combined
voting power of all Equity Interests of Borrower or REIT entitled to vote in
the election of directors of Borrower or REIT; provided that a Change of
Control shall not be deemed to occur as a result of any offering of the Equity
Interests of Borrower or REIT; (iii) the direct or indirect sale, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or substantially all of the
properties or assets of Borrower and REIT, taken as a whole, to any “person” (as
that term is used in Section 13(d)(3) of the Exchange Act); or (iv) Borrower or
REIT consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, Borrower or REIT, in any such event
pursuant to a transaction in which any of the outstanding Equity Interests of
Borrower or REIT is converted into or exchanged for cash, securities or other
property, other than any such transaction where the Equity Interests of
Borrower or REIT outstanding immediately prior to such transaction is converted
into or exchanged for Equity Interests of the surviving or transferee Person
constituting a majority of the outstanding equity ownership of such Equity
Interests of such surviving or transferee Person (immediately after giving
effect to such issuance). In amplification of the foregoing, a Change of
Control shall occur regardless of the events or circumstances relating to or
causing such Change of Control, including any Transfer or any foreclosure or
other exercise of any remedies of any pledge of any Equity Interest. 

“Charges” shall mean all taxes, charges,
fees, imposts, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation and property taxes, custom duties, fees, assessments, liens, claims
and charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts, imposed by any taxing or
other authority, domestic or foreign (including, without limitation, the PBGC
or any environmental agency or superfund), upon the Collateral, any Borrower or
any of its Affiliates.

“Closing Date” shall mean April 2, 2007 or
such other date as may be agreed to by the parties hereto.

 5
 

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

“Collateral” shall mean and include all
existing or hereinafter acquired property and rights in property in which a
security interest is granted to Agent in this Agreement or in any of the Other
Documents, including, without limitation, all Subsidiary Stock and all Bank
Accounts and all proceeds therefrom.

“Commitment Fee Rate” shall have the meaning
set forth in Section 3.3 hereof.

“Commitments” shall mean the sum of: (i) the
principal amount of any outstanding Revolving Advances, (ii) the face amount of
any outstanding Guaranty of Third Party Indebtedness, (iii) the face amount of
any outstanding Guaranty of Contingent Recourse Obligations, and (iv) the face
amount of any outstanding Letters of Credit.

“Compliance Certificate” shall have the meaning
set forth in Section 9.6 hereof.

“Consents” shall mean all filings and all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and other third parties, domestic or
foreign, necessary to carry on Borrower’s or any Subsidiary Guarantor’s
business, including, without limitation, any Consents required under all
applicable federal, state or other applicable law.

“Contingent Obligation Guaranty” shall mean
a Guaranty, provided by Lender hereunder on behalf of Borrower or a Subsidiary
Guarantor pursuant to Section 2.7 hereof, of a Contingent Recourse
Obligation.

“Contingent Recourse Obligation” shall mean
any non-recourse, carve-out obligations and springing recourse obligations of
Borrower or any Subsidiary Guarantor.

“Control” shall mean 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.

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

“Deemed Value”  with respect to any Contingent Recourse Obligation shall mean
ten percent (10%) of the principal amount of the Third Party Indebtedness
giving rise to the Contingent Recourse Obligation.

“Default” shall mean an event which, with
the giving of notice or passage of time or both, would constitute an Event of
Default.

“Default Rate” shall have the meaning set
forth in Section 3.1 hereof.

 6
 

“Deposit Account Control Agreement” shall
mean the pledge agreements to be delivered pursuant to Sections 8.1(m)(ii)
and 8.2(g)(ii) pursuant to which Borrower and each Subsidiary Guarantor
pledges to Agent all of Borrower’s and such Subsidiary Guarantor’s right, title
and interest in its Bank Accounts.

“Designated Bank” shall mean any bank or
other financial institution that in Agent’s sole discretion may provide to
Borrower one or more Letters of Credit pursuant to Section 2.8.

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

“Effective Date” shall have the meaning set
forth in Section 13.1 hereof.

“Eligible Real Property” shall mean Real
Property which satisfies all of the following requirements:

(i)            is a multifamily
property that is either owned in fee simple or subject to a ground lease
(acceptable to Agent) by Borrower or any Subsidiary Guarantor of Borrower;

(ii)           is land zoned for the
development of a multifamily property or a multifamily property under
construction;

(iii)          is an investment in an
entity owning a multifamily property (stabilized, under construction or to be
built);

(iv)          is a loan to an entity
owning a multifamily property (stabilized or under construction), secured by
the property and/or by the equity interest in the property owning entity;

(v)           is free of all material
structural defects or major architectural deficiencies, title defects,
environmental conditions or other adverse matters.

“Environmental Complaint” shall mean REIT’s,
Borrower’s, or any Subsidiary Guarantor’s receipt of any notice of violation,
request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at any Real Property, or
receipt of a demand letter or complaint, order, citation, or other written
notice with regard to any Hazardous Discharge or violation of Environmental
Laws affecting any Real Property.

“Environmental Laws” shall mean all federal,
state and local environmental, land use, zoning, health, chemical use, safety
and sanitation laws, statutes, ordinances and codes - relating to the
protection of the environment and/or governing the use, storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.

“Equipment” shall mean and include as to
Borrower and each Subsidiary Guarantor, all of Borrower’s and such Subsidiary
Guarantor’s goods (other than Inventory) whether now owned or hereafter
acquired and wherever located including, without limitation, all equipment,

 7
 

machinery,
apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions
thereto.

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

“Equity Interests Pledge Agreement” shall
mean the pledge agreements to be delivered pursuant to Section 8.1(m)(i)
including any amendments thereto required to be delivered pursuant to Section
8.2(g)(i) in a form set forth on Exhibit 1.2(a) hereto or such other
form that is reasonably acceptable to Agent, pursuant to which Borrower and
each Subsidiary Guarantor, as applicable, pledges to Agent all of its
Subsidiary Stock.

“Equity Offering” shall mean any offering by
REIT or Borrower of Equity Interests of REIT or Borrower for cash.

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

“Event of Default” shall mean the occurrence
of any of the events set forth in Article X hereof.

“Expiration Date” shall mean the last day of
the Term.

“GAAP” shall mean generally accepted accounting
principles in the United States of America in effect from time to time.

“General Partner” shall mean the general
partner of Borrower, BHMF, Inc.

“Good Faith Contest” shall mean the contest
of an item if: (i) the item is diligently contested in good faith, and, if
appropriate, by proceedings timely instituted; (ii) adequate reserves are
established with respect to the contested item; (iii) during the period of such
contest, the enforcement of any contested item is effectively stayed; and (iv)
the failure to pay or comply with the contested item during the period of the
contest is not likely to result in a Material Adverse Effect.

“Governmental Body” shall mean any nation or
government, any state or other political subdivision thereof or any entity exercising
the legislative, judicial, regulatory or administrative functions of or
pertaining to a government.

“Gross Offering Proceeds” shall mean the
gross proceeds received by REIT or Borrower from any Equity Offering.

“Ground Lease” shall mean any lease which
grants Borrower or a Subsidiary Guarantor a leasehold estate (rather than a fee
interest) in all or part of any Real Property.

 8
 

“Ground Rent” shall mean any and all rent,
additional rent and any other amounts payable by Borrower or any Subsidiary
Guarantor as a lessee under a Ground Lease.

“Guaranty” shall mean a Third Party
Indebtedness Guaranty or a Contingent Obligation Guaranty provided by Lender
pursuant to Section 2.7.

“Guaranty Date” shall have the meaning set
forth in Section 2.7(b) hereof.

“Guaranty Fee” shall have the meaning set
forth in Section 3.5 hereof.

“Guaranty Request” shall mean the notice
Borrower is required to send to Agent to request a Guaranty pursuant to Section
2.7(b) hereof.

“Guaranty Value” shall mean, with respect to
any Third Party Indebtedness Guaranty, one hundred percent (100%) of the
principal amount of the Third Party Indebtedness for which Lender provides a
Third Party Indebtedness Guaranty hereunder, and with respect to any Contingent
Obligation Guaranty, the Deemed Value of any Contingent Recourse Obligation for
which Lender provides a Contingent Obligation Guaranty hereunder.

“Hazardous Discharge” shall mean a Release
or threat of a Release of a reportable quantity of any Hazardous Substances at
any Real Property.

“Hazardous Substance” shall mean, without
limitation, any flammable explosives, radon, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and
petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous
or Toxic Substances or related materials as defined in CERCLA, the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et  seq.),
RCRA or any other applicable Environmental Law and in the regulations adopted
pursuant thereto.

“Hazardous Wastes” shall mean all waste
materials subject to regulation under CERCLA, RCRA or applicable state law, and
any other applicable Federal and state laws now in force or hereafter enacted
relating to hazardous waste disposal.

“Increased Amount” shall have the meaning
set forth in Section 2.12 hereof.

“Increase Date” shall have the meaning set
forth in Section 2.12 hereof.

“Indebtedness” of a Person at a particular
date shall mean all obligations of such Person which in accordance with GAAP
would be classified upon a balance sheet as liabilities (except capital stock
and surplus earned or otherwise) and in any event, without limitation by reason
of enumeration, shall include all indebtedness, debt and other similar monetary
obligations of such Person whether direct or guaranteed, and all premiums, if
any, due at the required prepayment dates of such indebtedness, and all
indebtedness secured by a Lien on assets owned by such Person, whether or not
such indebtedness actually shall have been created, assumed or incurred by such
Person.  Any indebtedness of such Person
resulting from the acquisition by such Person of any assets subject to any Lien
shall be deemed, for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby, whether or not
actually so created, assumed or incurred.

 9
 

“Inventory” shall mean and include as to
Borrower and each Subsidiary Guarantor all of Borrower’s and such Subsidiary
Guarantor’s now owned or hereafter acquired goods, merchandise and other
personal property, wherever located, to be furnished under any consignment
arrangement, contract of service or held for sale or lease, all raw materials,
work in process, finished goods and materials and supplies of any kind, nature
or description which are or might be used or consumed in Borrower’s business or
used in selling or furnishing such goods, merchandise and other personal
property, and all documents of title or other documents representing them.

“Leasing Commissions and Tenant Improvement Costs”
shall mean, with respect to any portion of Real Property, (a) leasing brokerage
commissions, (b) tenant improvement allowances, and (c) costs of any renovation
or other tenant improvement work, in each case, which (i) a Borrower or a
Subsidiary Guarantor is obligated to pay in connection with the leasing of such
portion of such Real Property pursuant to the applicable Space Lease, (ii) have
been incurred in the ordinary course of business by Borrower or the Subsidiary
Guarantor and (iii) are customarily incurred by landlords with respect to
commercial leases in comparable buildings.

“Leasehold Interests” shall mean all of
Borrower’s right, title and interest in and to the premises listed on Schedule
1.2(a) and all Real Property locations hereafter leased by Borrower or any
Subsidiary Guarantor.

“Legal Requirements” shall mean all laws,
ordinances, rules, regulations, codes, orders and directives of any
Governmental Authority, including all applicable licenses, building codes, rent
stabilization laws, zoning and subdivision ordinances, flood disaster, health
and Environmental Laws, and Accessibility Laws.

“Lender” shall have the meaning ascribed to
such term in the preamble to this Agreement and shall include each Person which
becomes a successor or assign of Lender.

“Letter of Credit Fees” shall have the
meaning set forth in Section 3.2.

“Letters of Credit” shall have the meaning
set forth in Section 2.8.

“Leverage Ratio” shall mean the quotient,
expressed as a percentage, of (i) the consolidated total Indebtedness of
Borrower and REIT divided by (ii) the consolidated (A) total assets, less (B)
the Real Estate Intangibles, of Borrower and REIT, each as set forth on the
most recent balance sheet included with the financial statements delivered
pursuant to Sections 9.5 and 9.6.

“Lien” shall mean any mortgage, deed of
trust, pledge, hypothecation, assignment, security interest, lien (whether
statutory or otherwise), Charge, claim or encumbrance, or preference, priority
or other security agreement or preferential arrangement held or asserted in
respect of any asset of any kind or nature whatsoever including, without
limitation, any conditional sale or other title retention agreement, any lease
having substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement under the UCC or
comparable law of any jurisdiction.

“Loan Documents” shall mean, collectively,
this Agreement and the Other Documents.

 10
 

“Management Agreement” shall mean a written
agreement between Borrower or any Subsidiary Guarantor and a Manager entered
into in accordance with this Agreement and pursuant to which a Manager
undertakes the management of any Real Property, and any and all amendments and
modifications thereof and all restatements thereto entered into in accordance
with this Agreement.

“Manager” shall mean the property management
company engaged by Borrower or any Subsidiary Guarantor to manage any Real
Property.

“Material Adverse Effect” shall mean a
material adverse effect upon (a) the financial condition, assets, business,
operating results or prospects of REIT, Borrower and any Subsidiary Guarantors
taken as a whole, (b) the ability of the Borrower to pay the Obligations in
accordance with the terms thereof, (c) the value of the Collateral, or Agent’s
Liens on the Collateral or the priority of any such Lien or (d) the rights of
or benefits available to Lender under this Agreement and the Other Documents.

“Maximum Commitment Amount” shall mean on
the Effective Date, One Hundred Million Dollars ($100,000,000), as such may be
increased in accordance with Section 2.12.

“Mezzanine Loan” shall mean a loan secured
by (i) a pledge of Equity Interests in one or more entities holding direct or
indirect beneficial interests in an entity owning (or having a ground lease
interest in) real estate, (ii) preferred Equity Interests, or (iii) a second or
later mortgage.  

“Monthly Advances” shall have the meaning
set forth in Section 3.1 hereof.

“Multiemployer Plan” shall mean a “multiemployer
plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA.

“Note” shall mean the Revolving Credit Note
and all replacements and substitutions for such Revolving Credit Note.

“Notice” shall have the meaning set forth in
Section 15.6 hereof.

“Obligations” shall mean and include any and
all loans, advances, debts, liabilities, obligations, covenants and duties
owing by Borrower to Lender or Agent or to any other direct or indirect
subsidiary or affiliate of Agent or Lender of any kind or nature, present or
future (including, without limitation, any interest accruing thereon after
maturity, or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding relating to
Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether or not evidenced by any note, guaranty or
other instrument, whether arising under any agreement, instrument or document,
(including, without limitation, this Agreement and the Other Documents) whether
or not for the payment of money, whether arising by reason of an extension of
credit, opening of a letter of credit, loan, equipment lease or Guaranty, under
any interest or currency swap, future, option or other similar agreement, or in
any other manner, whether arising out of overdrafts or deposit or other
accounts or electronic funds transfers (whether through automated clearing
houses or otherwise) or out of the Agent’s or Lender non-receipt of or inability
to collect funds, whether direct or indirect

 11
 

(including those
acquired by assignment or participation), absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising, contractual
or tortious, liquidated or unliquidated, regardless of how such indebtedness or
liabilities arise or by what agreement or instrument they may be evidenced or
whether evidenced by any agreement or instrument, including, but not limited
to, any and all of Borrower’s Indebtedness and/or liabilities under this
Agreement, the Other Documents or under any other agreement between Agent or
Lender and Borrower and any amendments, extensions, renewals or increases and
all costs and expenses of Agent and Lender incurred in the documentation,
negotiation, modification, enforcement, collection or otherwise in connection
with any of the foregoing, including but not limited to reasonable attorneys’
fees and expenses and all obligations of Borrower to Agent or Lender to perform
acts or refrain from taking any action. Obligations shall be deemed to include
the repayment of any payments made by Lender on any Guaranties made hereunder.

“Other Documents” shall mean the Pledge
Agreements, the Revolving Credit Note and any and all other agreements,
instruments and documents, including, without limitation, guaranties, pledges,
powers of attorney, consents, interest or currency swap agreements,
intercreditor agreements, subordination agreements or other similar agreements
and all other writings heretofore, now or hereafter executed by Borrower and/or
delivered to Agent or Lender in respect of the transactions contemplated by
this Agreement.

“Outstanding Commitments” shall have the
meaning set forth in Section 3.1.

“Outstanding Facility Amount” shall mean the
sum of (i) the principal amount of any outstanding Revolving Advances, (ii) the
Guaranty Value of all aggregate outstanding Guaranties provided hereunder, and
(iii) the face amount of all issued and outstanding Letters of Credit.

“Parent” of any Person shall mean a
corporation or other entity owning, directly or indirectly at least 50% of the
shares of stock or other ownership interests having ordinary voting power to
elect a majority of the directors of the Person, or other Persons performing
similar functions for any such Person.

“Patriot Act” shall mean the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as the same may be amended
from time to time, and corresponding provisions of future laws.

“Payment Obligations” shall have the meaning
set forth in Section 6.19(a) hereof.

“Payment Office” shall mean initially 15601
Dallas Parkway, Addison, Texas, 75001; thereafter, such other office of Agent,
if any, which it may designate by notice to Borrower and to Lender to be the
Payment Office.

“PBGC” shall mean the Pension Benefit
Guaranty Corporation.

“Permitted Encumbrances” shall mean (a)
Liens in favor of Agent for the benefit of Agent and Lender; (b) Liens for
taxes, assessments or other governmental charges not delinquent or being
contested in good faith and by appropriate proceedings and with respect to
which proper

 12
 

reserves have been
taken by Borrower; provided, that, the Lien shall have no effect on the
priority of the Liens in favor of Agent or the value of the assets in which
Agent has such a Lien and a stay of enforcement of any such Lien shall be in
effect; (c) deposits or pledges to secure obligations under worker’s
compensation, social security or similar laws, or under unemployment insurance;
(d) deposits or pledges to secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the ordinary course
of any Borrower’s business; (e) judgment Liens that have been stayed or bonded
and mechanics’, workers’, materialmen’s or other like Liens arising in the
ordinary course of Borrower’s business with respect to obligations which are
not due or which are being contested in good faith by Borrower; (f) Liens
placed upon fixed assets hereafter acquired to secure a portion of the purchase
price thereof; (g) other Liens incidental to the conduct of Borrower’s
business or the ownership of its property (such as easements and minor title
restrictions included in REAs) and assets which were not incurred in connection
with the borrowing of money or the obtaining of advances or credit, and which
do not in the aggregate materially detract from Agent’s or Lender’s rights in
and to the Collateral or the value of Borrower’s property or assets or which do
not materially impair the use thereof in the operation of Borrower’s business;
(h) Space Leases existing as of the Closing Date, or with respect to any Real
Property hereafter acquired; (i) Liens created by any Permitted Indebtedness;
and (j) Liens disclosed on Schedule 1.2(b).

“Permitted Indebtedness” shall mean any (a)
of the Obligations, (b) incidental indemnity and hold harmless agreements under
agreements entered into by Borrower or any Subsidiary Guarantor in accordance
with this Agreement, (c) trade debt and accounts payable incurred by Borrower
or any Subsidiary Guarantor in the ordinary course of business, (d) conditional
sales contracts and purchase money financing for equipment and other items of
tangible personal property, in each case, incurred by Borrower or any
Subsidiary Guarantor in the ordinary course of business, (e) Capitalized Lease
Obligations of Borrower or any Subsidiary Guarantor, (f) Ground Rent, (g) Leasing
Commissions and Tenant Improvement Costs, (h) Indebtedness incurred by Borrower
or any Subsidiary Guarantor the proceeds of which are used to purchase Eligible
Real Property, provided that such Indebtedness is no more than the Appraised
Value of the Eligible Real Property, and (i) Approved Mezzanine Loans.

“Person” shall mean any individual, sole
proprietorship, partnership, corporation, business trust, joint stock company,
trust, unincorporated organization, association, limited liability company, institution,
public benefit corporation, joint venture, entity or government (whether
Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).

“Plan” shall mean any employee benefit plan
within the meaning of Section 3(3) of ERISA, maintained for employees of
Borrower or any member of the Controlled Group or any such Plan to which any
Borrower or any member of the Controlled Group is required to contribute on
behalf of any of its employees.

“Pledge Agreements” shall mean,
collectively, the Equity Interests Pledge Agreements and the Deposit Account
Control Agreements.

 13
 

“RCRA” shall mean the Resource Conservation
and Recovery Act, 42 U.S.C. § 6901, as same may be amended from time to time.

“REA” shall mean any reciprocal easement
agreement, easement and operating agreement, parking agreements or any other
similar agreement in effect with respect to any Real Property which is recorded
or filed of record against such Real Property.

“Real Estate Intangibles” shall mean, with
respect to Borrower and REIT on a consolidated basis, the sum of the following
items as set forth in the applicable consolidated balance sheet: (i) lease
intangibles, net, (ii) acquired below-market leases, net, and (iii) other
intangibles, net.

“Real Property” shall mean all of Borrower’s
and any Subsidiary Guarantor’s right, title and interest in and to any owned
and leased premises.

“Real Property
Documents” shall mean, with respect to any Real Property:

(a)           evidence satisfactory to
Agent that the Borrower or Subsidiary Guarantor, as the case may be, shall have
all necessary and material occupancy and operating permits and licenses for
such Real Property and such Real Property must be in compliance with all Legal
Requirements, all as shall be demonstrated to Agent’s satisfaction;

(b)           a title report showing
that Borrower of the Subsidiary Guarantor is the fee or ground leasehold owner
of such Real Property, as applicable, a legal description of the Real Property
and that no title defects exist with respect to such Real Property which could
affect the marketability or insurability of such Real Property, all as shall be
demonstrated to the reasonable satisfaction of Agent, along with copies of all
exceptions to title shown on such title report;

(c)           evidence of approval by
REIT’s board of directors of the acquisition of such Real Property;

(d)           evidence that all
insurance policies required to be in effect with respect to the Real Property
pursuant to this Agreement shall be in effect with respect to such Real
Property, as confirmed to Agent’s reasonable satisfaction in a schedule
reasonably detailing such insurance addressed to Agent;

“Real Property Package” shall mean, with
respect to any Real Property:

(a)           a Survey of such Real
Property dated no more than ninety (90) days prior to the Advance Request Date
(or if dated prior to such ninety (90) day period, then updated within such
period);

(b)           to the extent available,
all purchase information relating to such Real Property (including copies of
any contracts of sale, closing statements, deeds, and such other documents and
agreements entered into or delivered in connection with the acquisition of such
Property);

(c)           to the extent
available, an operating statement, occupancy report and/or lease-up schedule,
receivables aging report and operating and Capital Expenditure budget for such
Real

 14
 

Property for the
then current calendar year, and to the extent available to the Borrower or the
Subsidiary Guarantor, the three (3) immediately preceding calendar years; and

(d)           to the extent
available, an operating statement for the current calendar quarter and the
trailing twelve (12) calendar months, a current Rent Roll, a current receivable
aging report;

(e)           an Appraisal of such
Real Property;

(f)            any documents
reflecting any Indebtedness incurred in connection with the purchase of the
Real Property and the Lien created thereby; and

(g)           any additional
documents that Agent may reasonably request.

“Receivables” shall mean and include, as to
Borrower and each Subsidiary Guarantor, all of Borrower’s and such Subsidiary
Guarantor’s accounts, contract rights, instruments, documents, chattel paper
(including electronic chattel paper), general intangibles relating to accounts,
drafts and acceptances, credit card receivables, and all other forms of
obligations owing to Borrower and such Subsidiary Guarantor arising out of or
in connection with the sale or lease of Inventory or the rendition of services,
all supporting obligations, guarantees and other security therefor, whether
secured or unsecured, now existing or hereafter created, and whether or not
specifically sold or assigned to Agent hereunder.

“Reduction Notice” shall have the meaning
set forth in Section 13.1 hereof.

“Release” or “Releases” shall have the meaning set forth in Section 5.7(c)(i)
hereof.

“Rent Roll” shall have the meaning set forth
in Section 5.11 hereof.

“Reportable Event” shall mean a reportable
event described in Section 4043(b) of ERISA or the regulations promulgated
thereunder.

“Restoration” shall mean in case of a
Casualty or a Taking, the restoration, replacement or rebuilding of the portion
of a Real Property affected by the Casualty or Taking such that when such
restoration, replacement or rebuilding is completed, the applicable Real
Property shall have been restored, in the case of any Casualty, substantially
to the same character and condition as prior to such Casualty, and in the case
of any Taking, to an integral unit as substantially similar as possible, taking
into account the extent of the Taking, to the character and condition of the
applicable Real Property prior to such Taking, in each case in accordance with
this Agreement, all Legal Requirements, the Permitted Encumbrances, and to the
extent any alterations or additions were made in compliance with this
Agreement, with any such alterations or additions.

“Restricted Payment” shall mean any dividend
or other distribution (whether in cash securities or other property) with
respect to any Equity Interests in Borrower, REIT or any Subsidiary Guarantor,
or any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such Equity Interests
or any option, warrant or other right to acquire any such Equity Interests.

 15
 

“Revolving Advance Date” shall have the
meaning set forth in Section 2.2(a) hereof.

“Revolving Advances” shall mean those
advances made pursuant to Section 2.1.

“Revolving Credit Note” shall mean the
promissory note referred to in Section 2.1 hereof, as such may be
amended and supplemented from time to time.

“Schedule of Documents” shall mean that
certain Schedule of Documents prepared by Agent in connection with this Agreement.

“Space Leases” shall mean means any and all
leases, subleases, licenses, concessions and other agreements related to the
occupancy of any portion of any Real Property now or hereafter entered into by
or on behalf of Borrower or the applicable Subsidiary Guarantor or its
predecessors in title thereto, together with any and all extensions and
renewals thereof.

“Space Lease Rents” shall mean all sums
payable pursuant to any Space Lease in the nature of “rent”, “fixed rent”, “base
rent”, “additional rent”, “percentage rent”, “common area maintenance or
administrative charges”, “real estate taxes”, “insurance premiums”, or
otherwise with respect to the use and occupancy of all or any portion of the
Real Property encumbered by such Space Lease.

“Subsidiary” shall mean a corporation or
other entity of whose shares of stock or other ownership interests having
ordinary voting power (other than stock or other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the directors of such corporation or other entity, or other Persons
performing similar functions for such entity, are owned, directly or
indirectly, by such Person.

“Subsidiary Guarantor” shall mean a wholly
owned Subsidiary of Borrower.

“Subsidiary Stock” shall mean all of the
Equity Interests of any Subsidiary Guarantor owned by Borrower.

“Survey” shall mean, for each parcel of Real
Property, an as-built ALTA/ASCM survey of such Real Property which shall
include certifications in favor of Agent and the applicable title company.

“Taking” shall mean any temporary or
permanent taking by any Governmental Authority of any Real Property or any part
thereof through eminent domain or other proceedings or by any settlement or
compromise of such proceedings, or any voluntary conveyance of such property or
any part thereof during the pendency of any such proceedings.

“Tenant” shall mean a tenant, subtenant,
licensee, concession holder or other Person having the right to use or occupy
all or any portion of any Real Property pursuant to a Space Lease.

“Term” shall have the meaning set forth in Section 13.1
hereof.

 16

“Termination Event” shall mean (i) a
Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the
withdrawal of any Borrower or any member of the Controlled Group from a Plan or
Multiemployer Plan during a plan year in which such entity was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing
of notice of intent to terminate a Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings
to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which
might 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 (b) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA; or (vi) the partial or complete withdrawal within
the meaning of Sections 4203 and 4205 of ERISA, of any Borrower or any member
of the Controlled Group from a Multiemployer Plan.

“Third Party Indebtedness” shall mean any
Indebtedness owed by Borrower or any Subsidiary Guarantor to a Person that is
not an Affiliate of Borrower or such Subsidiary Guarantor.  

“Third Party Indebtedness Guaranty” shall
mean a Guaranty, provided by Lender hereunder on behalf of Borrower or a
Subsidiary Guarantor pursuant to Section 2.7 hereof, of any Third Party
Indebtedness incurred by Borrower or the Subsidiary Guarantor.

“Toxic Substance” shall mean and include any
material present on the Real Property or the Leasehold Interests which has been
shown to have significant adverse effect on human health or which is subject to
regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et
seq., applicable state law, or any other applicable Federal or state laws
now in force or hereafter enacted relating to toxic substances.  “Toxic Substance” includes but is not limited
to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

“Transferee” shall have the meaning set
forth in Section 15.3(b) hereof.

“UCC” shall mean the Uniform Commercial Code
as in effect in the State of Texas on the date of this Agreement, as may be
amended or otherwise modified hereafter, including, without limitation, by the
revisions to Article 9 and other Articles of the Uniform Commercial Code, as
adopted by the State of Texas.

1.3           Uniform Commercial Code Terms.  All terms used herein and defined in the UCC
from time to time shall have the meaning given therein unless otherwise defined
herein.  To the extent the definition of any
category or type of Collateral is expanded by any amendment, modification or
revision to the UCC, such expanded definition will apply automatically as of
the date of such amendment, modification or revision.

1.4           Certain Matters of Construction.  The terms “herein”, “hereof” and “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision.  Any pronoun used shall be deemed to cover all
genders.  Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice versa.  All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations.  Unless otherwise provided,
all references to any instruments or agreements to which Agent is a party,
including, without

 17
 

limitation,
references to any of the Other Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.

II.            ADVANCES, PAYMENTS, GUARANTIES, LETTERS OF
CREDIT.

2.1           Revolving Advances.  Subject to the terms and conditions set forth
in this Agreement, during the Term Lender shall make Revolving Advances to
Borrower, at any time and from time to time on or after the date hereof, in
aggregate amounts that shall not exceed at any time the (A) the Maximum
Commitment Amount less (B) the Outstanding Facility Amounts.  The Revolving Advances shall be evidenced by
a secured promissory note, executed by Borrower, dated as of the date of this
Agreement (the “Revolving Credit Note”),
payable to Lender on the Expiration Date (unless sooner accelerated or prepaid
pursuant to the terms of this Agreement, substantially in the form attached
hereto as Exhibit 2.1(a).

2.2           Procedure
for Borrowing Advances.

(a)           To request a Revolving
Advance (other than the initial Revolving Advance which shall be made on the
date hereof), Borrower shall notify Agent of such request by delivery to Agent
of an Advance Request not later than 2:00 p.m., Dallas, Texas time, on a
Business Day that is not less than fifteen (15) Days before the date of the
proposed Revolving Advance (the “Revolving Advance Date”).
Each such Advance Request shall be in a form approved by Agent and signed by
Borrower and shall be revocable until one (1) Business Day prior to the date of
the requested Revolving Advance, but shall thereafter be irrevocable; provided,
however, in the event of any such revocation, Borrower shall be responsible for
any losses, costs or other expenses incurred by Lender in liquidating or
redeploying deposits or other funds acquired by Lender to fund the applicable
Revolving Advance and any overdraft, processing or other reasonable costs
(including reasonable attorney’s fees) incurred by Lender as a result of such
revocation.

(b)           Each Advance Request shall specify the
following information in compliance with Section 2.2(a) hereof:

(i)            the aggregate amount of the requested
Revolving Advance;

(ii)           the Revolving Advance Date, which shall be a
Business Day;

(iii)          certification by an executive officer of the
General Partner that the proceeds of the Revolving Advance will be used for the
acquisition or development of Eligible Real Property, investments in mezzanine
financing, or general corporate purposes and that the limitation set forth in Section
2.3 shall not be violated as a result of such Revolving Advance;

(iv)          the Real Property Package with respect to any
Revolving Advance the proceeds of which will be used to purchase Real Property;

(v)           the name of any Subsidiary Guarantor which
will be made a party to this Agreement as a result of such Revolving Advance;
and

 18
 

(vi)          the location and number of the Borrower’s
account into which funds relating to such Revolving Advance shall be disbursed
and which shall comply with the requirements of Section 2.4 hereof.

2.3           Limitation.  No Revolving Advance shall be required to be
made hereunder with respect to any Eligible Real Property that will be subject
to any Indebtedness or a Lien, unless the amount of such Indebtedness is no more
than the Appraised Value of the Eligible Real Property.

2.4           Disbursement of Advance Proceeds.  All Revolving Advances shall be disbursed
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrower to Agent or Lender,
shall be charged to Borrower’s Account on Agent’s books.  During the Term, Borrower may use the
Revolving Advances by borrowing, prepaying and reborrowing, all in accordance
with the terms and conditions hereof.  The
proceeds of each Revolving Advance requested by Borrower or deemed to have been
requested by Borrower under Section 2.2(a) hereof shall, with respect to
requested Revolving Advances to the extent Lender make such Revolving Advances,
be made available to the Borrower on the Revolving Advance Date by wire
transfer of immediately available funds by 2:00 p.m., Dallas, Texas time, to
the account designated by Borrower in the applicable Advance Request.

2.5           Repayment
of Advances.

(a)           The unpaid principal
amount of each Revolving Advance shall be due and payable in full on the last
day of the Term, as such may be extended in accordance herewith, subject to
earlier prepayment as herein provided.

(b)           All payments of
principal, interest and other amounts payable hereunder, or under any of the
Other Documents shall be made to Agent at the Payment Office not later than 12
p.m. Dallas, Texas time, on the due date therefor in lawful money of the United
States of America in federal funds or other funds immediately available to
Agent.  Borrower shall pay principal,
interest, and all other amounts payable hereunder, or under any related
agreement, without any deduction whatsoever, including, but not limited to, any
deduction for any setoff or counterclaim.

2.6           Use of Proceeds.  Borrower shall apply the proceeds of
Revolving Advances to (i) purchase or develop Eligible Real Estate, (ii) make
investments in mezzanine loans, and (iii) to provide for its working capital
needs and general corporate purposes.

2.7           Guaranties.

(a)           Subject to the terms
and conditions set forth in this Agreement, Lender shall Guaranty any Third
Party Indebtedness incurred by Borrower or any Subsidiary Guarantor or provide
Contingent Obligation Guaranties in aggregate amounts that shall not exceed at
any time (A) the Maximum Commitment Amount less (B) the Outstanding Facility
Amounts.

(b)           To request a Guaranty,
Borrower shall notify Agent of such request by delivery to Agent of a Guaranty
Request not later than 2:00 p.m., Dallas, Texas time, on a

 19
 

Business Day that is not less
than fifteen (15) Days before the date the proposed Guaranty is to be provided
(the “Guaranty Date”).
Each such Guaranty Request shall be in a form approved by Agent and signed by
Borrower and shall be revocable until one (1) Business Day prior to the date of
the requested Guaranty, but shall thereafter be irrevocable; provided, however,
in the event of any such revocation, Borrower shall be responsible for any
losses, costs or other expenses incurred by Agent or Lender (including reasonable
attorney’s fees) as a result of such revocation.

(c)           Each Guaranty Request shall specify:

(i)            the aggregate principal amount of the Third
Party Indebtedness covered by the requested Third Party Indebtedness Guaranty
and the aggregate principal amount of any Third Party Indebtedness for which
Lender is providing a Contingent Obligation Guaranty;

(ii)           the Guaranty Date, which shall be a Business
Day;

(iii)          the name of any Subsidiary Guarantor which
will be made a party to this Agreement as a result of such Guaranty; and

(iv)          certification by an executive officer of the
General Partner that the Guaranty relates to Third Party Indebtedness or a
Contingent Recourse Obligation.

(d)           Borrower may terminate
any Guaranty by notifying Agent of the revocation, settlement or satisfaction
of the Third Party Indebtedness or Contingent Recourse Obligation underlying
the Guaranty, and providing Agent evidence of such revocation, settlement or
satisfaction, in such form that is reasonably satisfactory to Agent.

2.8           Letters
of Credit.

(a)           Subject to the terms
and conditions hereof, upon Borrower’s written request as may be provided from
time to time, Agent shall use its commercially reasonable best efforts to cause
one or more Designated Banks to make available to Borrower, for its own account
or for the account of any of its wholly owned Subsidiaries, one or more letters
of credit (each, a “Letter of Credit”)
having an aggregate face amount of up to Fifty Million Dollars ($50,000,000);
provided, however, that Agent will not be required to cause to be issued any
Letters of Credit to the extent that the face amount of such Letters of Credit
would then cause the Outstanding Facility Amounts to exceed the Maximum
Commitment Amount.  This Agreement is not
a pre-advice for the issuance of a Letter of Credit.  All disbursements or payments related to
Letters of Credit shall be deemed to be Revolving Advances and shall bear
interest at the Applicable Interest Rate. 
Letters of Credit that have not been drawn upon shall not bear interest.

(b)           Borrower shall use its
commercially reasonable best efforts to cooperate with Agent in obtaining each
such Letter of Credit.

(c)           In connection with the
issuance of any Letter of Credit, Borrower shall indemnify, save and hold Agent
and Lender harmless from any loss, cost, expense or liability,

 20
 

including, without limitation,
payments made by any of them and expenses and reasonable attorneys’ fees
incurred by Agent or Lender arising out of, or in connection with, any Letter
of Credit to be issued or created for any Borrower.

2.9           Mandatory
Prepayments.

(a)           If at any time the
Outstanding Facility Amounts exceeds the Maximum Commitment Amount, Borrower
shall, immediately upon receipt of written notice from Agent of such an event,
pay to Agent an amount sufficient to reduce the Outstanding Commitments to the
Maximum Commitment Amount.  Agent shall
apply all amounts paid pursuant to this Section to first reduce any outstanding
Revolving Advances in reverse chronological order of the Revolving Advance Date,
and next to collateralize any Letters of Credit with cash.

(b)           When Borrower or any
Subsidiary Guarantor sells or otherwise disposes of any Real Property, or
refinances any Revolving Advances borrowed in connection with the purchase of
such Real Property, Borrower shall repay the Revolving Advances in an amount
equal to the lesser of the portion of the Revolving Advance allocable to the
Real Property (as set forth on the Borrower’s Account) and the net proceeds of
such sale (i.e., gross proceeds less the reasonable costs of such sales or
other dispositions), such repayments to be made promptly but in no event more
than one (1) Business Day following receipt of such net proceeds, and until the
date of payment, such proceeds shall be held in trust for Agent.  The foregoing shall not be deemed to be
implied consent to any such sale otherwise prohibited by the terms and
conditions hereof.

2.10         Optional Prepayments.  Borrower may prepay all or any portion of any
Revolving Advance without premium or penalty hereunder.

2.11         Statement of Account.  Agent shall maintain, in accordance with its
customary commercially reasonable procedures, a loan account (“Borrower’s Account”) in the name of
Borrower in which shall be recorded the date and amount of each Revolving Advance
made by Agent and the date and amount of each payment in respect thereof, the
date and amount of each Guaranty and the date and face amount of each Letter of
Credit and disbursement under each Letter of Credit; provided, however, the
failure by Agent to record the date and amount of any of the foregoing shall
not adversely affect Agent or Lender. 
Each month, Agent shall send to Borrower a statement showing the
accounting for the Revolving Advances and Guaranties made, payments made or
credited in respect thereof, and Letters of Credit provided and disbursements
and reimbursements made therefor, and other transactions between Agent and
Borrower, during such month.  The monthly
statements shall be deemed correct and binding upon Borrower in the absence of
manifest error and shall constitute an account stated between Lender and
Borrower unless Agent receives a written statement of Borrower’s specific
exceptions thereto within forty five (45) days after such statement is received
by Borrower.  The records of Agent with
respect to the Borrower’s Account shall be conclusive evidence absent manifest
error of the amounts of Advances, Guaranties and other charges thereto and of
payments applicable thereto.

2.12         Increase in Maximum Commitment Amount.  At any time during the Term upon written
request by Borrower to Agent, the Maximum Commitment Amount may be increased,
in $100,000,000 increments, to up to Four Hundred Million Dollars
($400,000,000) as

 21
 

consented to by
Lender (which consent may be withheld in Lender’s sole discretion).  Upon the approval of such an increase (the “Increase Date”) the term “Maximum Commitment Amount” shall mean the
increased amount as agreed to in accordance herewith (the “Increased Amount”).  Further, on the Increase Date, Borrower shall
execute and deliver a supplement or allonge to the Revolving Credit Note
reflecting the increase to the Maximum Commitment Amount. 

III.           INTEREST AND FEES.

3.1           Interest.  Interest on all Revolving Advances,
unreimbursed paid calls on any Guaranties and unreimbursed drawings under
Letters of Credit shall be payable in arrears on the first day of each month
and in its then-remaining entirety on the last day of the Term.  Interest charges shall be computed on the actual
principal amount of Revolving Advances, unreimbursed paid calls on Guaranties
and unreimbursed drawings under Letters of Credit outstanding (“Outstanding Commitments”) during the month
(the “Monthly Advances”) at a rate
per annum equal to the Applicable Interest Rate.  Upon and after the occurrence of an Event of
Default, and during the continuation thereof, the Outstanding Commitments shall
bear interest at the rate of eighteen percent (18%) per annum (the “Default Rate”).

3.2           Letter of Credit Fees.  Borrower shall pay to Agent, for the benefit
of Lender, fees for each Letter of Credit issued to Borrower during the Term
equal to the face amount of each outstanding Letter of Credit multiplied by one
and one-half percent (1.5%) per annum, such fees to be payable quarterly in
advance with the first such payment due upon the issuance of the Letter of
Credit and the succeeding payments payable on the 1st day of the calendar quarter following the date
of issuance.

3.3           Commitment Fee.  Upon execution of this Agreement by Lender,
Borrower shall pay to Agent, for the benefit of Lender, a Commitment Fee equal
to one-quarter of one percent (0.25%) (the “Commitment
Fee Rate”) of the Maximum Commitment Amount.  Upon each occurrence of an increase of the
Maximum Commitment Amount pursuant to Section 2.12, Borrower shall
pay to Agent, for the benefit of Lender, an additional Commitment Fee equal to
the Commitment Fee Rate multiplied by the difference between the Increased
Amount and the Maximum Commitment Fee in effect immediately prior to the
Increase Date.  Further, if the Term is
extended pursuant to Section 13.1, then upon approval of such
extension, Borrower shall pay to Agent, for the benefit of Lender an additional
Commitment Fee equal to the Commitment Fee Rate multiplied by the Maximum
Commitment Amount then in effect.

3.4           Facility Fee.  If, for any calendar year (or portion thereof
for any period during the Term not constituting a complete calendar year)
during the Term, the sum of (i) the average daily unpaid principal balance of
the Revolving Advances, plus (ii) the average daily Guaranty Value, plus
(iii) the average daily stated amount of outstanding Letters of Credit, in each
case, for each day of such calendar year (or portion thereof) does not exceed
the average daily Maximum Commitment Amount for such calendar year (or portion
thereof), then Borrower shall pay to Agent, for the benefit of Lender, a fee at
a rate equal to one-tenth of one percent (0.1%) per annum on the amount by
which the average daily Maximum Commitment Amount exceeds such average daily
balance.  Such fee shall be payable to
Agent in arrears on the last day of each

 22
 

calendar year (or,
on the last day of the Term, if the last day of the Term does not fall on the
last day of a calendar year).

3.5           Guaranty Fee.  Borrower shall pay to Agent, for the benefit
of Lender, fees for each Guaranty provided during the Term equal to the
Guaranty Value of each Guaranty multiplied by one and one-half percent (1.5%)
per annum, such fees to be payable quarterly in advance with the first such payment
due upon the provision of the Guaranty and the succeeding payments payable on
the 1st day of the calendar quarter following the date of provision (the “Guaranty Fee”).

3.6           Computation of Interest and Fees.  Interest and fees hereunder shall be computed
on the basis of a year of 360 days and for the actual number of days
elapsed.  If any payment to be made
hereunder becomes due and payable on a day other than a Business Day, the due
date thereof shall be extended to the next succeeding Business Day.

3.7           Maximum Charges.  In no event whatsoever shall interest and
other charges charged hereunder exceed the highest rate permissible under
law.  In the event interest and other
charges as computed hereunder would otherwise exceed the highest rate,
permitted under law, such excess amount shall be first applied to any unpaid
principal balance on Revolving Advances owed by Borrower, and if the then
remaining excess amount is greater than the previously unpaid principal
balance, Lender shall promptly refund such excess amount to Borrower and the
provisions hereof shall be deemed amended to provide for such permissible rate.

3.8           Authority to Charge Borrower’s Account.  Borrower hereby authorizes Agent to charge
Borrower’s Account with the amount of all payments due under this Article
III as such payments become due.  Any
amount charged to Borrower’s Account shall be deemed a Revolving Advance
hereunder and shall bear interest at the Applicable Interest Rate.  Borrower confirms that any charges which
Agent may make to Borrower’s Account as provided herein will be made as an
accommodation to Borrower and solely at Agent’s discretion.

IV.           COLLATERAL: GENERAL TERMS.

4.1           Security Interest in the Collateral.  To secure the prompt payment and performance
to Agent and Lender of the Obligations, Borrower hereby assigns, pledges and
grants to Agent for its benefit and for benefit of Lender a continuing security
interest in and to all of the Collateral, whether now owned or existing or
hereafter acquired or arising and wheresoever located.

4.2           Perfection of Security Interest.  Borrower shall deliver to Agent the Pledge
Agreements and shall take all action that may be necessary or desirable, or
that Agent may reasonably request, so as at all times to maintain the validity,
perfection, enforceability and priority of Agent’s security interest in the
Collateral or to enable Agent to protect, exercise or enforce its rights
hereunder and in the Collateral.  All
charges, expenses and fees Agent may incur in protecting, exercising or enforcing
its rights hereunder in the Collateral shall be charged to Borrower’s Account
as a Revolving Advance and added to the Obligations, or, at Agent’s option,
shall be paid to Agent for the benefit of Lender immediately upon demand.

 23
 

4.3           Books and Records.  Borrower and each Subsidiary Guarantor shall
(a) keep proper books of record and account in which full, true and correct
entries will be made of all dealings or transactions of or in relation to its
business and affairs; (b) set up on its books accruals with respect to all
taxes, assessments, charges, levies and claims; and (c) on a reasonably current
basis set up on its books, from its earnings, allowances against doubtful
Receivables, advances and investments and all other proper accruals (including
without limitation by reason of enumeration, accruals for premiums, if any, due
on required payments and accruals for depreciation, obsolescence, or
amortization of properties), which should be set aside from-such earnings in
connection with its business.  All determinations
pursuant to this subsection shall be made in accordance with, or as required
by, GAAP consistently applied in the opinion of such independent public
accountant as shall then be regularly engaged by Borrower.

4.4           Financial Disclosure.  Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by Borrower at any time during
the Term to exhibit and deliver to Agent and Lender copies of Borrower’s and
any Subsidiary Guarantor’s financial statements, trial balances or other
accounting records of any sort in the accountant’s or auditor’s possession, and
to disclose to Agent and Lender any information such accountants may have
concerning Borrower’s and each Subsidiary Guarantor’s financial status and
business operations.  Borrower hereby
authorizes all federal, state and municipal authorities to furnish to Agent and
Lender copies of reports or examinations relating to Borrower and each
Subsidiary Guarantor, whether made by Borrower or otherwise; however, Agent and
Lender will attempt to obtain such information or materials directly from
Borrower prior to obtaining such information or materials from such accountants
or such authorities.

4.5           Exculpation of Liability.  Nothing herein contained shall be construed
to constitute Agent or Lender as any Borrower’s or any Subsidiary Guarantor’s
agent for any purpose whatsoever, nor shall Agent or Lender be responsible or
liable for any shortage, discrepancy, damage, loss or destruction of any part
of the Collateral wherever the same may be located and regardless of the cause
thereof.  Neither Agent nor Lender,
whether by anything herein or in any assignment or otherwise, assume any of
Borrower’s or any Subsidiary Guarantor’s obligations under any contract or
agreement assigned to Agent or Lender, and neither Agent nor Lender shall be
responsible in any way for the performance by Borrower or any Subsidiary
Guarantor of any of the terms and conditions thereof.

4.6           Financing Statements.  Borrower and each Subsidiary Guarantor hereby
authorizes Agent to file all financing statements and any amendment thereto,
deemed appropriate by Agent in connection with the perfection of a security
interest in the Collateral (and will pay the cost of filing or recording the
same in all public offices deemed necessary or desirable by the Agent).

V.            REPRESENTATIONS AND WARRANTIES.

Borrower,
with respect to itself and each Subsidiary Guarantor; and each Guarantor with
respect to itself, represents and warrants as follows:

5.1           Authority.  Borrower and each Guarantor has full power,
authority and legal right to enter into this Agreement and the Other Documents
to which it is a party and to perform all its

 24
 

respective
Obligations hereunder and thereunder. 
This Agreement and the Other Documents constitute the legal, valid and
binding obligation of Borrower and such Guarantor enforceable in accordance
with their terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors’ rights generally.  The
execution, delivery and performance of this Agreement and of the Other
Documents to which it is a party (a) are within Borrower’s and such Guarantor’s
corporate or limited liability company or limited partnership, as the case may
be, powers, have been duly authorized, are not in contravention of law or the
terms of Borrower’s or such Guarantor’s by-laws, certificate or articles of
incorporation, limited liability company operating agreement, limited
partnership agreement or certificate of formation or other applicable documents
relating to Borrower’s or such Guarantor’s formation or to the conduct of
Borrower’s or such Guarantor’s business (collectively, “Charter Documents”)  or of any material agreement or
undertaking to which Borrower or such Guarantor is a party or by which Borrower
and such Guarantor is bound, and (b) will not conflict with nor result in any
breach in any of the provisions of or constitute a default under or result in
the creation of any Lien except Permitted Encumbrances upon any asset of
Borrower or such Guarantor under the provisions of any agreement, Charter
Document, instrument, by-law, or other instrument to which Borrower or such
Guarantor is a party or by which it or its property may be bound.

5.2           Formation
and Qualification; Certain Collateral.

(a)           Schedule 5.2(a)
hereto sets forth (i) the exact legal name of Borrower and each Guarantor, (ii)
the state in which Borrower and each Guarantor is incorporated or organized and
in good standing, and (iii) each state in which Borrower or a Subsidiary
Guarantor is qualified to do business and is in good standing which constitute
all states in which qualification and good standing are necessary for Borrower
or such Subsidiary Guarantor to conduct its business and own its property and
where the failure to so qualify could reasonably be expected to have a Material
Adverse Effect.  Borrower and each
Guarantor has delivered to Agent true and complete copies of its Charter
Documents and will promptly notify Agent in writing (with copies thereof) of
any amendment or changes thereto.

(b)           The Subsidiaries of
Borrower as of the date hereof are listed on Schedule 5.2(b).

5.3           Survival of Representations and Warranties.  All representations and warranties of
Borrower and each Guarantor contained in this Agreement and the Other Documents
shall survive the execution, delivery and acceptance thereof by the parties
thereto and the closing of the transactions described therein or related
thereto.

5.4           Tax Returns.  Borrower’s, each Subsidiary Guarantor’s and
REIT’s federal tax identification number has been provided to Agent.  Each of Borrower, each Subsidiary Guarantor
and REIT has filed all federal, state and local tax returns and other reports
each is required by law to file and has paid all taxes, assessments, fees and
other governmental charges that are due and payable, except such other reports
where the failure to file would not result in a liability to Borrower, any
Subsidiary Guarantor or REIT in excess of $50,000 and except for any such
filing or payment which Borrower, any Subsidiary Guarantor or REIT is
contesting in good faith by appropriate proceedings which act to prevent the
filing of any Lien against the Collateral on

 25
 

account of such
failure to file or nonpayment during the pendency of the proceedings and with
respect to which the Borrower, the Subsidiary Guarantor or REIT has established
adequate reserves on its books and records. 
The provision for taxes on the books of Borrower and REIT are adequate
for all years not closed by applicable statutes, and for its current fiscal
year, and neither Borrower nor REIT has any knowledge of any deficiency or
additional assessment in connection therewith not provided for on its books.

5.5           Financial Statements.  The consolidated balance sheets of REIT,
Borrower, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of October 31, 2006, and the
related statements of income, changes in stockholder’s equity, and changes in
cash flow for the period ended on such date, all accompanied by reports thereon
containing opinions without qualification by independent certified public
accountants, copies of which have been delivered to Agent, have been prepared
in accordance with GAAP, consistently applied (except for changes in
application in which such accountants concur) and present fairly the financial
position of REIT, Borrower and their Subsidiaries at such date and the results
of their operations for such period. 
Since October 31, 2006 there has been no change in the condition,
financial or otherwise, of REIT, Borrower or their Subsidiaries as shown on the
consolidated balance sheet as of such date and no change in the aggregate value
of machinery, equipment and Real Property owned by REIT, Borrower and their
respective Subsidiaries, except changes in the ordinary course of business,
none of which individually or in the aggregate has been materially adverse.

5.6           Corporate or Limited Liability Company Name.  Neither REIT, Borrower nor any Subsidiary
Guarantor has been known by any other corporate or limited partnership name in
the past five years and does not sell Inventory or real estate under any other
name, nor has REIT, Borrower or any Subsidiary Guarantor been the surviving
corporation of a merger or consolidation or acquired all or substantially all
of the assets of any Person during the preceding five (5) years.

5.7           Environmental
Matters.

(a)           Each of REIT, Borrower
and each Subsidiary Guarantor has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act, the Environmental Protection Act, RCRA and all other Environmental
Laws, except where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect; there have been no outstanding citations,
notices or orders of non-compliance issued to REIT, Borrower or any Subsidiary
Guarantor or relating to any of their business, assets, property, leaseholds or
Equipment under any such laws, rules or regulations which could reasonably be
expected to have a Material Adverse Effect.

(b)           Each of REIT, Borrower
and each Subsidiary Guarantor has been issued all required federal, state and
local licenses, certificates or permits relating to all applicable
Environmental Laws, except for such licenses, certificates or permits, if any,
which if not issued could reasonably be expected to have a Material Adverse
Effect.

 26
 

(c)           (i), there are no
visible signs of releases, spills, discharges, leaks or disposal (collectively
referred to as “Releases”) of Hazardous Substances
at, upon, under or within any Real Property; (ii) there are no underground
storage tanks or polychlorinated biphenyls on the Real Property; (iii) the Real
Property has never been used as a treatment, storage or disposal facility of
Hazardous Waste; and (iv) no Hazardous Substances are present on the Real
Property, excepting such quantities as are handled in accordance with all
applicable manufacturer’s instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of any Borrower or of its tenants.

5.8           Solvency;
No Litigation; No Violation; ERISA.

(a)           REIT and Borrower and
their Subsidiaries on a consolidated basis are solvent, able to pay their debts
as they mature, have capital sufficient to carry on their business and all
businesses in which they are about to engage, and (i) as of the Closing Date,
the fair present saleable value of their assets, calculated on a going concern
basis, is in excess of the amount of their liabilities and (ii) subsequent to
the Closing Date, the fair saleable value of their assets (calculated on a
going concern basis) will be in excess of the amount of their liabilities.

(b)           There are no actions,
suits or proceedings at law or in equity now pending or, to the knowledge of
REIT or Borrower threatened, against or affecting REIT, Borrower or any of
their Subsidiaries or any business, property or rights of any such person as to
which there is a reasonable possibility of an adverse determination and that,
if adversely determined, could reasonably be expected to result in a Material
Adverse Effect.

(c)           Neither REIT, Borrower
nor any Subsidiary Guarantor is in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect, nor is REIT, Borrower or any Subsidiary
Guarantor in violation of any order of any court, governmental authority or
arbitration board or tribunal, which violation could reasonably be expected to
have a Material Adverse Effect.

(d)           Neither REIT, Borrower,
nor any Subsidiary Guarantor nor any member of the Controlled Group maintains
or contributes to any Plan.

5.9           Licenses and Permits.  Each of REIT, Borrower and each Subsidiary
Guarantor (a) is in compliance with and (b) has procured and is now in
possession of, all material licenses or permits required by any applicable
federal, state, provincial or local law or regulation for the operation of its
business in each jurisdiction wherein it is now conducting or proposes to
conduct business and where the failure to so comply or to procure such licenses
or permits could reasonably be expected to have a Material Adverse Effect.

5.10         Real
Properties.

(a)           Casualty;
Taking.  No Casualty has
occurred to any portion of any Real Property since the Borrower’s or the
applicable Subsidiary Guarantor’s acquisition thereof which remains unrepaired
and (i) no Taking of any portion of any Real Property, (ii) no Taking or
modification, realignment or relocation of any streets or roadways abutting any
Real Property or (iii) no denial of access to any Real Property from any point
of access (public or private), has occurred since Borrower’s or the applicable
Subsidiary Guarantor’s acquisition thereof (or to

 27
 

Borrower’s knowledge, prior to
such acquisition) or, to the knowledge of Borrower or such Subsidiary
Guarantor, is threatened or pending.

(b)           Encroachments.  Except as shown on the Survey of each Real
Property, to Borrower’s knowledge, none of the improvements thereon encroach
upon any building line, setback line, side yard line or any easement.

(c)           Legal
Requirements.  Each Real
Property is, or upon construction completion shall be, in material compliance
with all Legal Requirements.

(d)           Defects.  Except as disclosed in the building condition
reports certified to Agent and delivered to Agent at or prior to the Effective
Date, to Borrower’s knowledge, there exists no structural or other material
defects or damages in any of the Real Properties, whether latent or otherwise
that (i) pose a hazard to life or safety, (ii) require immediate repair and in
the case of either (i) or (ii), the cost of which would exceed $200,000 to
repair, and Borrower or any Subsidiary Guarantor has not received written
notice from any insurance company or bonding company of any defects or
inadequacies in any of the Real Properties, or any part thereof, which would
materially adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination
or threatened termination of any policy of insurance or bond.

(e)           Alterations.  No alterations, additions or other
modifications have been made to any Real Property since the date of the Survey
of such property which would render such Survey inaccurate in any material
respect.

(f)            Utilities
and Access.  Each Real
Property has, or will have upon construction completion, utility services and
facilities, including water supply, storm and sanitary sewer facilities, gas
and electric and telephone facilities, adequate in all respects, including
minimum capacities, for the operation of such Real Property for its intended
purposes in accordance with this Agreement. Except as shown on the Survey of
each Real Property, to Borrower’s knowledge all such utility services and
facilities are, or will be upon construction completion, available at the
boundaries of such Real Property. Each Real Property has, or will have upon
construction completion, direct physical access to and from at least one public
road adequate in all respects for the operation of such Real Property for its
intended purposes in accordance with this Agreement.

(g)           Tax
Parcel.  Each parcel of
Real Property is separately assessed from all other adjacent land for purposes
of real estate taxes and without regard for any other property, and for all
purposes may be mortgaged, conveyed and otherwise dealt with as an independent
parcel. Borrower has paid all taxes and assessments affecting the Real
Properties or otherwise payable by Borrower which were due on or before the
Closing Date, except for Taxes being contested in good faith. To the best of
Borrower’s knowledge, there is no material proposed new tax assessment against
any of Real Property or any basis for such an assessment, other than potential
increases in valuation in connection with Borrower’s (or a Subsidiary Guarantor’s)
recent acquisition of the Real Property.

 28
 

(h)           Flood
Hazards.  Except as shown
on the Survey of each Real Property, to Borrower’s knowledge, neither all nor
any portion of such Real Property is located within an area that has been
designated or identified as an area having special flood hazards by the
Secretary of Housing and Urban Development or by such other official as shall
from time to time be authorized by federal or state law to make such
designation pursuant to the National Flood Insurance Act of 1968, as such act
may from time to time be amended, or pursuant to any other national, state,
county or city program of flood control.

5.11         Space Lease.  There are no Space
Leases with respect to any Real Property other than the Space Leases which are
set forth on the Rent Roll. Except as set forth on the rent roll for such Real
Property (the “Rent Roll”) or by
any estoppel certificate received by Agent on or prior to the Closing Date: (a)
each Space Lease is in full force and effect; (b) the Tenants have accepted
possession of and are in occupancy of all of their respective demised premises
and have commenced the payment of Space Lease Rent under the Space Leases to
the extent set forth on the Rent Roll, and, to Borrower’s knowledge, there are
no offsets, claims or defenses to the enforcement thereof presently
outstanding; (c) all Space Lease Rents due and payable under each Space Lease
have been paid and no portion of any Space Lease Rent has been paid for any
period more than thirty (30) days in advance; (d) the fixed rent payable under
each Space Lease is the amount of fixed rent set forth in the Rent Roll, and,
to Borrower’s knowledge, there is no claim or basis for a claim by the Tenant
thereunder for an adjustment to the such fixed rent; (e) no Tenant has made any
claim in writing against Borrower or any Manager which has been received by
Borrower or Manager and remains outstanding that Borrower or Manager is in
default under its applicable Space Lease; (f) to Borrower’s knowledge, no
default by Borrower, any Subsidiary Guarantor or any Tenant under any Space
Lease, and no event which, with the giving of notice or passage of time, or
both, would constitute a default, has occurred; and (g) each Space Lease is the
valid, binding and enforceable obligation of the Borrower or the applicable
Subsidiary Guarantor and to Borrower’s knowledge, the applicable Tenant
thereunder, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or moratorium or other similar laws relating to the
enforcement of creditors’ rights generally and by general equitable principles.

5.12         REAs. 
Borrower has delivered or caused to be delivered to Agent a true,
correct and complete copy of each REA. Each REA is in full force and effect and
has not been modified, amended or otherwise supplemented except pursuant to any
amendment, modification or supplement delivered to Agent. The REAs represent
the only agreements among Borrower, a Subsidiary Guarantor and the other
parties thereto with respect to the applicable Real Property and any other
property which is the subject of the REAs, and there are no other promises,
agreements, understandings, or commitments of any kind among Borrower, any
Subsidiary Guarantor and the other parties to the REAs with respect thereto.
There are no defaults under any REA on the part of Borrower, the applicable
Subsidiary Guarantor, or to Borrower’s or the Subsidiary Guarantor’s knowledge,
by any other party thereunder, and no event has occurred, which with the
passage of time, the giving of notice, or both, would constitute a default
under any REA. All sums due and payable by Borrower or any Subsidiary Guarantor
under the REAs have been paid in full. Neither Borrower, the applicable
Subsidiary Guarantor nor any other party to any REA has commenced any action
or, to Borrower’s or a Subsidiary Guarantor’s knowledge, given or received any
notice for the purpose of terminating such REA, or to Borrower’s knowledge,
given or received any notice of default which has not been cured. To

 29
 

Borrower’s or a
Subsidiary Guarantor’s knowledge, no party to the REA is the subject of any
bankruptcy or other insolvency action. No REA contains any option to purchase
or right of first refusal or option to purchase any Collateral or any part
thereof.  To Borrower’s or any Subsidiary
Guarantor’s knowledge (a) all of the representations, warranties,
certifications, statements and other information set forth on any estoppel
certificate relating to an REA and delivered to Agent are true, correct and
complete in all material respects and (b) none of such estoppels omit to state
a material fact necessary in order to make the representations, warranties,
certifications, statements and other information contained therein not
materially misleading.

5.13         Ground Lease.  Each Ground Lease is in full force and effect
and has not been modified or amended except as disclosed to Agent. The Ground
Lease represents the only agreements between Borrower, the applicable
Subsidiary Guarantor and the landlord thereunder with respect to the applicable
Real Property and there are no other promises, agreements, understandings, or
commitments of any kind between the applicable Borrower and the landlord
thereunder with respect thereto. There are no defaults under any Ground Lease on
the part of Borrower or the applicable Subsidiary Guarantor as tenant or, to
Borrower’s or any Subsidiary Guarantor’s knowledge, by the landlord thereunder,
and no event has occurred, which with the passage of time, the giving of
notice, or both, would constitute a default under any Ground Lease on the part
of the Borrower, the applicable Subsidiary Guarantor, or to Borrower’s or a
Subsidiary Guarantor’s knowledge, by the landlord thereunder. All rents,
additional rents and other sums due and payable under each Ground Lease have
been paid in full. Neither Borrower or the applicable Subsidiary Guarantor, as
tenant, or the landlord under any Ground Lease has commenced any action or
given or received any notice for the purpose of terminating such Ground Lease or
given or received notice of default which has not been cured. To Borrower’s
knowledge, the landlord under the Ground Lease is not the subject of any
bankruptcy or other insolvency action. To Borrower’s knowledge (a) all of the
representations, warranties, certifications, statements and other information
set forth on any estoppel certificate relating to a Ground Lease and delivered
to Agent are true, correct and complete in all material respects and (b) none
of such estoppels omit to state a material fact necessary in order to make the
representations, warranties, certifications, statements and other information
contained therein not materially misleading. 

5.14         Default of Indebtedness.  Neither REIT, Borrower nor any Subsidiary
Guarantor is in default in the payment of the principal of or interest on any
Indebtedness or under any instrument or agreement under or subject to which any
Indebtedness has been issued and no event has occurred under the provisions of
any such instrument or agreement which with or without the lapse of time or the
giving of notice, or both, constitutes or would constitute an event of default
thereunder.

5.15         No Default.  Neither REIT, Borrower nor any Subsidiary
Guarantor is in default in the payment or performance of any of its contractual
obligations which could reasonably be expected to have a Material Adverse
Effect and no Default has occurred.

5.16         No Labor Disputes.  Neither REIT, Borrower nor any Subsidiary
Guarantor is involved in any labor dispute; there are no strikes or walkouts or
union organization of REIT’s, Borrower’s or any Subsidiary Guarantor’s
employees threatened or in existence and no labor

 30
 

contract is
scheduled to expire during the Term, which in any such case could reasonably be
expected to have a Material Adverse Effect.

5.17         Margin Regulations.  Neither REIT, Borrower nor any Subsidiary
Guarantor is engaged, nor will it engage, principally or as one of its
important activities, in the business of extending credit for the purpose of “purchasing”
or “carrying” any “margin stock” within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect.  No part of the proceeds of any Revolving
Advance will be used for “purchasing” or “carrying” “margin stock” as defined
in Regulation U of such Board of Governors. 
No part of the proceeds of any Revolving Advances will be used for any
purpose which entails a violation of, or which is inconsistent with, the provisions
of Regulations T, U or X of the Board of Governors.

5.18         Investment Company Act.  Neither REIT, Borrower nor any Subsidiary
Guarantor (i) is an “investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company, or (ii) is a “holding company” as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935, as
amended.

5.19         Conflicting Agreements.  No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on REIT, Borrower or any
Subsidiary Guarantor or affecting the Collateral conflicts with, or requires
any Consent which has not already been obtained to, or would in any way prevent
the execution, delivery or performance of, the terms of this Agreement or the
Other Documents.

5.20         Application of Certain Laws and Regulations.  Neither Borrower nor any Subsidiary Guarantor
is subject to any statute, rule or regulation which regulates the incurrence of
any Indebtedness, including without limitation, statutes or regulations
relative to common or interstate carriers or to the sale of electricity, gas,
steam, water, telephone, telegraph or other public utility services.

VI.           AFFIRMATIVE COVENANTS. 

Each
of Borrower, REIT and each Subsidiary Guarantor, as specified herein, shall,
until payment in full of the Obligations and termination of this Agreement:

6.1           Payment of Obligations.  Borrower and each Subsidiary Guarantor will
pay its obligations, excluding the Obligations (which are the subject of the
other provisions of this Agreement and in the Other Documents), before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is subject to a Good Faith Contest, (b) Borrower has set aside on its
books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.

6.2           Compliance
with Environmental Laws.

(a)           Borrower, REIT and each
Subsidiary Guarantor shall comply in all material respects with all applicable
Environmental Laws and immediately pay or cause to be

 31
 

paid all costs and expenses
incurred in connection with such compliance, except to the extent there is a
Good Faith Contest.

(b)           Borrower shall defend
and indemnify Agent and Lender and hold Agent, Lender and their respective
employees, agents, directors and officers harmless from and against all loss,
liability, damage and expense, claims, costs, fines and penalties, including
attorney’s fees, suffered or incurred by Agent or Lender under or on account of
any Environmental Laws, including, without limitation, the assertion of any
Lien thereunder, with respect to any Hazardous Discharge, the presence of any
Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property as a result of the foregoing
except to the extent such loss, liability, damage and expense is attributable
to any Hazardous Discharge resulting from actions on the part of Agent or
Lender.

6.3           Maintenance
of Property. Borrower, REIT and each Subsidiary Guarantor shall
do all things reasonably necessary to maintain, preserve, protect and keep its
properties in good repair, working order and condition except where the failure
will not result in a Material Adverse Effect.

6.4           No Violations.  Without limiting any other provision hereof,
Borrower and each Subsidiary Guarantor will comply in all material respects
with all Legal Requirements applicable to it or its property, obtain, keep in
full force and effect and comply in all material respects with all licenses and
permits and any other agreements and instruments binding upon Borrower or the
Subsidiary Guarantor or its properties required for the operation of its
property, except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect. Borrower shall comply in all material respects
with the terms and provisions of its constitutive documents and any judgment,
Management Agreements, and Space Leases.

6.5           Litigation and Other Notices.  Borrower shall give Agent prompt notice of
the following:

(a)           promptly following the
receipt of a notice, or obtaining knowledge, thereof, the issuance by any court
or Governmental Authority of any injunction, order, decision or other restraint
prohibiting, or having the effect of prohibiting, the making of any Revolving
Advances or Guaranties, or invalidating, or having the effect of invalidating,
any provision of this Agreement or the Other Documents that would materially
adversely affect Lender’s ability to enforce any payment obligations hereunder,
or the filing or commencement of any litigation or similar proceeding seeking
any such injunction, order, decision or other restraint;

(b)           promptly following the
receipt of a notice, or obtaining knowledge, thereof, the filing or
commencement of any action, suit or proceeding against or affecting Borrower,
any Subsidiary Guarantor, REIT or any of their wholly owned Affiliates, whether
at law or in equity or by or before any arbitrator or Governmental Authority,
(i) which is material and is brought by or on behalf of any Governmental Authority,
or in which injunctive or other equitable relief is sought or (ii) which, if
adversely determined, could (A) reasonably be expected to result in liability
in an aggregate amount of $500,000 or more, not reimbursable by insurance or
otherwise have a Material Adverse Effect, or (B) materially impairs the right
of Borrower or

 32
 

any Subsidiary Guarantor to
perform its obligations under this Agreement or any of the Other Documents to
which it is a party;

(c)           promptly following the
receipt of a notice, or obtaining knowledge, thereof, the occurrence of any
Reportable Event;

6.6           Collateral.  To the extent reasonably requested by Agent,
Borrower shall take all steps necessary to protect Agent’s interest in the
Collateral under applicable state or local statutes or ordinances.

6.7           Execution of Supplemental Instruments.  Borrower and each Subsidiary Guarantor shall
execute and deliver to Agent from time to time, upon demand, such supplemental
agreements, statements, assignments and transfers, or instructions or documents
relating to the Collateral, and such other instruments as Agent may reasonably
request, in order that the full intent of this Agreement may be carried into
effect.

6.8           Payment of Indebtedness.  Borrower and each Subsidiary Guarantor shall
pay, discharge or otherwise satisfy at or before maturity (subject, where
applicable, to specified grace periods and, in the case of the trade payables,
to normal payment practices) all its obligations and liabilities of whatever
nature, except when the failure to do so could not reasonably be expected to
have a Material Adverse Effect or when the amount or validity thereof is the
subject of a Good Faith Contest.

6.9           Patriot Act Compliance.  Borrower will, and will cause the REIT and
all Subsidiaries of Borrower and the REIT to comply with the Patriot Act and
all related requirements of governmental authorities having jurisdiction over
such Persons and the Real Property, including those relating to money
laundering and terrorism. Agent shall have the right to audit Borrower’s, REIT’s
and each such other Person’s compliance with the Patriot Act and all related
requirements of governmental authorities having jurisdiction over such Person
and the applicable Real Property, including those relating to money laundering
and terrorism. In the event that REIT, Borrower, or such other Person fails to
comply with the Patriot Act, then Agent may, at its option, cause such Person
to comply therewith and any and all costs and expenses incurred by Agent in
connection therewith shall be added to the Obligations and bear interest at the
Default Rate from the date paid or incurred by Agent until paid to Agent.

6.10         Damage or Destruction.  Promptly, and in any case within five (5)
Business Days after the occurrence thereof, Borrower shall notify Agent of any
fire or other Casualty with respect to any portion of any Real Property. Such
notice also shall generally describe the nature and extent of such Casualty and
set forth such party’s best estimate of the cost of Restoration.

6.11         Taking of a Real Property.  Promptly, and in any case within three (3)
Business Days after the occurrence thereof, Borrower shall notify Agent of any
Taking of any portion of any Real Property or the commencement of any
proceedings or negotiations which might result in such a Taking. Such notice
shall generally describe the nature and extent of such Taking or the nature of
such proceedings or negotiations and the nature and extent of the Taking which
might result therefrom.

 33

6.12         Insurance.  At Borrower’s own cost and expense in amounts
and with carriers acceptable to Agent, Borrower and each Subsidiary Guarantor
shall (a) keep all its insurable properties and properties in which Borrower or
any Subsidiary Guarantor has an interest insured against the hazards of fire,
flood (where applicable), sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is
customary in the case of companies engaged in businesses similar to Borrower’s
and such Subsidiary Guarantor including, without limitation, business
interruption insurance; (b) maintain a bond in such amounts as is customary in
the case of companies engaged in businesses similar to Borrower and the
Subsidiary Guarantor insuring against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrower
either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property
damage suffered by others; (d) maintain all such worker’s compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which Borrower or any Subsidiary Guarantor is engaged in business; (e) furnish
Agent with copies of all policies of insurance upon the request of Agent and
annually during the Term evidence of the maintenance of such policies by the
renewal thereof at least thirty (30) days before any expiration date.

6.13         Payment of Taxes.  Borrower and each Subsidiary Guarantor will
pay, before the same become delinquent, all taxes, assessments and other
Charges lawfully levied or assessed upon Borrower or the Subsidiary Guarantor
or any of their properties including, without limitation, real and personal
property taxes, assessments and charges and all franchise, income, employment,
social security benefits, withholding, and sales taxes, except to the extent
they are the subject of a Good Faith Contest.

6.14         Leasing.  Borrower and each Subsidiary Guarantor shall
have the right to enter, amend, modify, extend, renew or otherwise supplement
into Space Leases with respect to the Real Property.  Borrower and the applicable Subsidiary
Guarantor shall, and shall cause each Manager to, observe, perform, and
discharge all material obligations, covenants, and warranties provided for
under the terms of the Space Leases. Borrower and the applicable Subsidiary
Guarantor shall, and shall cause each Manager to use commercially reasonable
efforts to diligently enforce or secure the performance of each and every
material obligation, term, covenant, condition, and agreement to be performed
by any Space Lessee under the terms of the applicable Space Lease; provided,
however, that, Borrower shall not be required to commence any litigation
against a Tenant to enforce such obligations under its Space Lease if Borrower
reasonably believes such commencement would not be appropriate under the
circumstances. Borrower and the applicable Subsidiary Guarantor shall, and
shall cause each Manager to, appear in and defend any action or proceeding
arising under, occurring out of, or in any manner connected with, the Space
Leases or the obligations, duties, or liabilities of Borrower, any Subsidiary
Guarantor or any Tenant thereunder. 
Neither Borrower nor any Subsidiary Guarantor shall pledge, transfer,
assign, mortgage, encumber, or allow to be encumbered any Space Leases or Space
Lease Rents except to Agent and Lender as provided herein. 

6.15         REAs. 
Borrower and each Subsidiary Guarantor shall cause each REA to remain in
full force and effect at all times. Borrower and each Subsidiary Guarantor
shall observe, perform, and discharge, in all material respects, all
obligations, covenants, and warranties

 34
 

provided for under
the REAs.  Borrower and each Subsidiary
Guarantor shall use commercially reasonable efforts to enforce its rights
and/or secure the performance by the other party(ies) to the REAs. Neither
Borrower nor any Subsidiary Guarantor shall enter into, surrender, terminate,
cancel, modify or amend in any material respect, or enter into any agreement in
substitution for, or consent to the assignment of any REA without, in each
case, the prior consent of Agent, which shall not be unreasonably withheld. 

6.16         Ground
Leases.  

(a)           Borrower and each
Subsidiary Guarantor who is a tenant under a Ground Lease shall (i) pay all Ground
Rents required to be paid under and pursuant to the provisions of each such
Ground Lease as and when such rent or other charge is payable, (ii) diligently
perform and observe in all material respects all of the terms, covenants and
conditions of each such Ground Lease, and (iii) promptly notify Agent of the
giving of any written notice by the landlord under any such Ground Lease to the
Borrower or the Subsidiary Guarantor of any default by the Borrower or the
Subsidiary Guarantor in the performance or observance of any of the terms,
covenants or conditions of such Ground Lease and deliver to Agent a true copy
of each such notice.

(b)           During the Term, there
shall be no merger of the leasehold estate created by any such Ground Lease
with the fee estate of the landlord thereunder without the prior written
consent of Agent.

6.17         Payment of Leasehold Obligations.  Borrower and each Subsidiary Guarantor shall
at all times pay, when and as due, its rental obligations under all leases
under which it is a tenant (including all Ground Leases), and shall otherwise
comply, in all material respects, with all other terms of such leases and keep
them in full force and effect and, at Agent’s request will provide evidence of
having done so.  Notwithstanding the
foregoing, Borrower and any Subsidiary Guarantor may contest or dispute any of
its rental obligations in good faith and by appropriate proceedings so long as
Borrower has notified Agent of such contest or dispute and during the pendency
of such contest or dispute no Lien attaches to any part of the Collateral as a
result thereof and Borrower’s or the Subsidiary Guarantor’s use of the leased
property and Agent’s access to the Collateral or any portion thereof is not
impaired. 

6.18         Standards of Financial Statements.  REIT and Borrower shall cause all financial
statements referred to in Sections 9.5 and 9.6 as to which GAAP
is applicable to be complete and correct in all material respects (subject, in
the case of interim financial statements, to normal year-end audit adjustments)
and to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as concurred in
by such reporting accountants or officer, as the case may be, and disclosed
therein).

6.19         Guaranties. To induce Agent and Lender
to enter into this Agreement and to provide Revolving Advances, Guaranties and
to use their commercially reasonable best efforts to obtain Letters of Credit
for the benefit of Borrower:

(a)           Guaranty.  Each of REIT and the Sponsor (for purposes of
this Section 6.19 only, collectively referred to as “Guarantor”)  hereby
jointly, severally, unconditionally and

 35
 

irrevocably guaranties to Lender, the
punctual payment and performance when due, whether at stated maturity or by
acceleration or otherwise, of the indebtedness and other obligations of
Borrower to Lender that may become owing by Borrower under any of the Loan
Documents (hereinafter referred to as “Payment Obligations”). 
This guaranty is a present and continuing guaranty of payment and not of
collectibility, and Lender shall not be required to prosecute collection,
enforcement or other remedies against Borrower or any other guarantor of the
Payment Obligations, or to enforce or resort to any collateral for the repayment
of the Payment Obligations or other rights or remedies pertaining thereto,
before calling on Guarantor for payment. If for any reason Borrower shall fail
or be unable to pay, punctually and fully, any of the Payment Obligations, each
Guarantor, subject to the limitations set forth in Section 6.19(b)
below, shall pay such obligations to Lender in full immediately upon
demand.  One or more successive actions
may be brought against any of REIT or the Sponsor, as often as Lender deems
advisable, until all of the Payment Obligations are paid in full (except that
Sponsor’s obligations hereunder are subject to the limitations set forth in Section
6.19(b) below).  Each Guarantor
agrees that Payment Obligations of such Guarantor shall be a primary
obligation, shall not be subject to any counterclaim, set off, abatement,
deferment or defense based upon any claim that Guarantor may have against
Lender, Borrower, any other Guarantor or any other person or entity (except
that Sponsor’s obligations hereunder are subject to the limitations set forth
in Section 6.19(b) below), and shall remain in full force and effect
without regard to, and shall not be released, discharged or affected in any way
by, any circumstance or condition (whether or not Guarantor shall have any knowledge
thereof), including without limitation: (i) any lack of validity or
enforceability of any of the Loan Documents; (ii) any termination, amendment,
modification or other change in any of the Loan Documents, including, without
limitation, any modification of the interest rate(s) described therein; (iii)
any furnishing, exchange, substitution or release of any Collateral, or any
failure to perfect any lien in the Collateral; (iv) any failure, omission or
delay on the part of Borrower, Guarantor, any other guarantor of the Payment
Obligations or of Lender or Agent to conform or comply with any term of any of
the Loan Documents or any failure of Agent to give notice of any Event of
Default; (v) any waiver, compromise, release, settlement or extension of time
of payment or performance or observance of any of the obligations or agreements
contained in any of the Loan Documents; (vi) any action or inaction by Lender
or Agent under or in respect of any of the Loan Documents, any failure, lack of
diligence, omission or delay on the part of Lender or Agent to perfect,
enforce, assert or exercise any lien, security interest, right, power or remedy
conferred on it in any of the Loan Documents, or any other action or inaction
on the part of Lender or Agent; (vii) any voluntary or involuntary bankruptcy,
insolvency, reorganization, arrangement, readjustment, assignment for the
benefit of creditors, composition, receivership, liquidation, marshalling of
assets and liabilities or similar events or proceedings with respect to
Borrower, Guarantor or any other guarantor of the Payment Obligations, as
applicable, or any of their respective property or creditors, or any action
taken by any trustee or receiver or by any court in any such proceeding; (viii)
any merger or consolidation of Borrower or any Guarantor into or with any
entity, or any sale, lease or transfer of any of the assets of Borrower,
Guarantor or any other guarantor of the Payment Obligations to any other person
or entity; (ix) any change in the ownership of Borrower or any Guarantor or any
change in the relationship between Borrower, Guarantor or any other guarantor
of the Payment Obligations, or any termination of any such relationship; (x)
any release or discharge by operation of law of Borrower, Guarantor or any
other guarantor of the Payment Obligations from any obligation or agreement
contained in any of the Loan Documents;

 36
 

or (xi) any other occurrence, circumstance,
happening or event, whether similar or dissimilar to the foregoing and whether
foreseen or unforeseen, which otherwise might constitute a legal or equitable
defense or discharge of the liabilities of a guarantor or surety or which
otherwise might limit recourse against Borrower or Guarantor to the fullest
extent permitted by law.

Guarantor
expressly and unconditionally waives (i) notice of any of the matters referred
to in Section 6.19(a), (ii) all notices which may be required by
statute, rule of law or otherwise, now or hereafter in effect, to preserve
intact any rights against Guarantor, including, without limitation, any demand,
presentment and protest, proof of notice of non payment under any of the Loan
Documents and notice of any Event of Default or any failure on the part of
Borrower, Guarantor or any other guarantor of the Payment Obligations to
perform or comply with any covenant, agreement, term or condition of any of the
Loan Documents, (iii) any right to the enforcement, assertion or exercise
against Borrower, Guarantor or any other guarantor of the Payment Obligations
of any right or remedy conferred under any of the Loan Documents, (iv) any
requirement of diligence on the part of any person or entity, (v) to the
fullest extent permitted by law and except as otherwise expressly provided in
this Guaranty or the other Loan Documents, any claims based on allegations that
Lender or Agent has failed to act in a commercially reasonable manner or failed
to exercise Lender’s or Agent’s so called obligation of good faith and fair
dealing, (vi) any requirement to exhaust any remedies or to mitigate the
damages resulting from any default under any of the Loan Documents, and (vii)
any notice of any sale, transfer or other disposition of any right, title or
interest of Lender or Agent under any of the Loan Documents.

Until
the Payment Obligations are paid in full and all periods under applicable
bankruptcy law for the contest of any payment by Guarantor or Borrower as a
preferential or fraudulent payment have expired, Guarantor knowingly, and with
advice of counsel, waives, relinquishes, releases and abandons all rights and
claims to indemnification, contribution, reimbursement, subrogation and payment
which Guarantor may now or hereafter have by and from Borrower and the
successors and assigns of Borrower, for any payments made by Guarantor to Agent
or Lender, including, without limitation, any rights which might allow
Borrower, Borrower’s successors, a creditor of Borrower, or a trustee in
bankruptcy of Borrower to claim in bankruptcy or any other similar proceedings
that any payment made by Borrower or Borrower’s successors and assigns to
Lender or Agent was on behalf of or for the benefit of Guarantor and that such
payment is recoverable by Borrower, a creditor or trustee in bankruptcy of
Borrower as a preferential payment, fraudulent conveyance, payment of an
insider or any other classification of payment which may otherwise be
recoverable from Lender or Agent.   

If
one or more attorneys is retained to represent Lender or Agent in any
proceedings whatsoever in connection with this guaranty, then Guarantor shall
pay to Lender and Agent upon demand all fees, costs and expenses incurred by
Lender and Agent in connection therewith, including, without limitation,
reasonable attorney’s fees, court costs and filing fees, in addition to all
other amounts due hereunder.

(b)           Limitations
on Guaranty.  The guaranty
made by the Sponsor pursuant to Section 6.19(a) be and hereby is
limited to, and shall be enforced solely by way of, a set-off against any
unpaid fees the Sponsor or the Advisor, as applicable, has accrued or is
entitled to accrue under the Advisory Agreement prior to the demand for
enforcement of said guaranty.

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VII.         NEGATIVE COVENANTS.  

Until
the expiration of the Term and all outstanding Obligations then or required to
be performed have been paid or performed, as applicable, Borrower and REIT and
each Guarantor, as applicable, covenants and agrees with Agent and Lender that:

7.1           Indebtedness. Borrower, REIT and each
Subsidiary Guarantor shall not create, incur, assume or permit to exist any
Indebtedness, except Permitted Indebtedness. 

7.2           Creation of Liens.  Neither Borrower nor REIT will create, incur,
assume or permit to exist and shall promptly discharge any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:

(a)           Permitted Encumbrances;
and

(b)           Liens created in favor
of Agent and Lender pursuant to this Agreement.

7.3           Fundamental
Changes; Certain Transfers of Collateral and Equity Interest.

(a)           REIT shall not engage
to any material extent in any business other than businesses as are
contemplated or described in REIT’s Charter Documents, as the same may be
updated from time to time.

(b)           Except as otherwise
permitted herein, neither Borrower, REIT nor any Subsidiary Guarantor shall,
directly or indirectly, transfer any Equity Interests in any Subsidiary or any
interest therein except to the extent expressly permitted by this Agreement.

7.4           Restricted Payments.  Neither REIT, Borrower nor any Subsidiary
Guarantor may make any Restricted Payment if at the time of the making thereof
an Event of Default has occurred and is continuing, or would result therefrom,
other than the minimum amount of dividends (directly or indirectly through the
partners of Borrower that are direct or indirect wholly-owned Subsidiaries of
REIT) required by law for REIT to maintain its status as a real estate
investment trust under the Code and solely to the extent sufficient funds to
pay such dividends are not then available from any Subsidiary of REIT other
than Borrower or a Subsidiary Guarantor.

7.5           Transactions with Affiliates.  Directly or indirectly, purchase, acquire or
lease any property from, or sell, transfer or lease any property to, or otherwise
deal with, any Affiliate, except transactions in the ordinary course of
business, on an arm’s-length basis on terms no less favorable than terms which
would have been obtainable from a Person other than an Affiliate.

7.6           Modification of Management Agreements.  Borrower and each Subsidiary Guarantor shall
at all times cause each Real Property to be managed by a Manager pursuant to a
Management Agreement. Borrower and each Subsidiary Guarantor shall not modify,
amend, alter, terminate accept the surrender of, or enter into any agreement in
substitution of, any Management Agreement, or waive any term of any Management
Agreement in any way that could adversely affect the rights, remedies or
interests of Agent or Lender under the Loan

 38
 

Documents or in the
Collateral, or such party’s ability to perform its Obligations.  Borrower and each Subsidiary Guarantor shall
observe, perform, and discharge all material obligations, covenants, and
warranties provided for under any Management Agreement. Borrower and each
Subsidiary Guarantor shall diligently enforce its material rights under the
Management Agreement.

7.7           Subsidiaries.  Borrower shall not form or acquire any
Subsidiary unless (x) Borrower pledges all of the Equity Interests of such
Subsidiary to Lender pursuant to the Equity Interests Agreement, or (y) such
Subsidiary is formed by Borrower to effectuate an Acquisition in which no
portion of the purchase price is paid, directly or indirectly, from the
proceeds of any Revolving Advances or for which no Guaranty is made or Letter
of Credit is utilized.  In addition, each
Subsidiary that benefits from any Revolving Advance made hereunder, shall enter
into this Agreement and a separate Guaranty in the form attached hereto as Exhibit
7.7 at the time such Revolving Advance is made.

7.8           Fiscal Year and Accounting Changes.  Neither Borrower nor any Subsidiary Guarantor
shall change its fiscal year from December 31 or make any change (i) in
accounting treatment and reporting practices except as required by GAAP or (ii)
in tax reporting treatment except as required by law.

7.9           Pledge of Credit.  Neither Borrower nor any Subsidiary Guarantor
shall now or hereafter pledge Agent’s or Lender’s credit on any purchases or
for any purpose whatsoever or use any portion of any Revolving Advance except
in accordance with the terms of this Agreement.

7.10         Compliance with ERISA.  Neither REIT, Borrower or any Subsidiary
Guarantor shall (i) (x) maintain, or permit any member of the Controlled Group
to maintain, or (y) become obligated to contribute, or permit any member of the
Controlled Group to become obligated to contribute, to any Plan, (ii) engage,
or permit any member of the Controlled Group to engage, in any non-exempt “prohibited
transaction”, as that term is defined in Section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the
Controlled Group to incur, any “accumulated funding deficiency”, as that term
is defined in Section 302 of ERISA or Section 412 of the Code, (iv)
terminate, or permit any member of the Controlled Group to terminate, any Plan
where such event could result in any liability of any Borrower or any member of
the Controlled Group or the imposition of a lien on the property of any
Borrower or any member of the Controlled Group pursuant to Section 4068 of
ERISA, (v) assume, or permit any member of the Controlled Group to assume, any
Obligation to contribute to any Multiemployer Plan, (vi) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of
any Termination Event, (viii) fail to comply, or permit a member of the
Controlled Group to fail to comply, with the requirements of ERISA or the Code
or other applicable laws in respect of any Plan, (ix) fail to meet, or permit
any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any member
of the Controlled Group to postpone or delay any funding requirement with
respect of any Plan.

 39
 

7.11         Sole Purpose of Subsidiary Guarantor.  Each Subsidiary Guarantor is and shall
remain, a single purpose entity whose sole purpose is to acquire, own, hold,
lease, operate, manage, develop, maintain or sell and otherwise deal with its
Real Property and the other Collateral provided by it and perform activities
ancillary thereto.

7.12         Changes in Zoning.  Neither Borrower nor any Subsidiary Guarantor
shall request or seek to obtain any change to, or consent to any request for or
change in, any Legal Requirement, restrictive covenant or other restriction
applicable to any Real Property or any portion thereof or any other law,
ordinance, rule, regulation, restrictive covenant or restriction affecting the
zoning, development or use of the applicable Real Property or any portion
thereof, or any variance or special exception therefrom, without the prior
consent of Agent, which consent shall not be unreasonably withheld. 

7.13         Governing Documents.  Neither Borrower nor REIT shall take any
actions, or omit to take any actions, which results in, or can reasonably be
expected to result in: (a) non-compliance with any leverage and debt
limitations contained in any Charter Documents, or (b) a violation of any Legal
Requirements or their Charter Documents with respect to any restrictions on the
nature, amount and type of investments that Borrower or REIT is allowed to make
thereunder.

VIII.        CONDITIONS PRECEDENT.

8.1           Conditions to Entering Into this Agreement.  The agreement of Lender to enter into this
Agreement is subject to the satisfaction, or waiver by Lender, of the following
conditions precedent:

(a)           Filings,
Registrations and Recordings. 
Each document (including, without limitation, any UCC financing
statement) required by this Agreement, any related agreement or under law or
reasonably requested by Agent to be filed, registered or recorded in order to
create, in favor of Agent, a perfected security interest in or lien upon the
Collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested, and Agent shall have received an acknowledgment copy, or
other evidence satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;

(b)           Corporate
Proceedings of Borrower. 
Agent shall have received a copy of the resolutions in form and
substance reasonably satisfactory to Agent, of the board of directors of REIT,
authorizing (i) the execution, delivery and performance of this Agreement and
the Other Documents by REIT and Borrower, and (ii) the granting by Borrower of
the security interests in and liens upon the Collateral in each case certified
by the Secretary or an Assistant Secretary of REIT as of the Closing Date; and,
such certificate shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded as of the date of such
certificate;

(c)           Certificates.  Agent shall have received a copy of the
Charter Documents of Borrower and each Guarantor, and all amendments thereto,
certified by the Secretary of State

 40
 

or other appropriate official of its
jurisdiction of incorporation (for those Charter Documents filed or required to
be with a Governmental Authority) or certified as accurate and complete by an
authorized signatory of Borrower and each Guarantor, as applicable;

(d)           Good
Standing Certificates. 
Agent shall have received good standing certificates for Borrower and
each Guarantor dated not more than 30 days (or such longer period as is
acceptable to Agent) prior to the Closing Date, issued by the Secretary of
State or other appropriate official of Borrower’s and each Guarantor’s
jurisdiction of incorporation or organization and each jurisdiction where
Borrower and each Guarantor maintain their principal place of business;

(e)           No
Litigation.  (i) No
litigation, investigation or proceeding before or by any arbitrator or
Governmental Body shall be continuing or threatened against Borrower, REIT or
against the officers or directors of Borrower or REIT which could, in the
reasonable opinion of Agent, have a Material Adverse Effect; and (ii) no
injunction, writ, restraining order or other order of any nature materially
adverse to Borrower or REIT or the conduct of its business or inconsistent with
the due consummation of the Transactions shall have been issued by any
Governmental Body;

(f)            Fees.  Agent shall have received all fees payable to
Agent and Lender on or prior to the Closing Date hereunder, including, without
limitation, the Commitment Fee required pursuant to Article III hereof.

(g)           Insurance.  Agent shall have received in form and
substance satisfactory to Agent, a schedule summarizing in reasonable detail
Borrower’s casualty and liability insurance policies;

(h)           Payment
Instructions.  Agent shall
have received written instructions from Borrower directing the application of
proceeds of any initial Revolving Advances made pursuant to this Agreement;

(i)            Consents.  Agent shall have received any and all
Consents necessary to permit the effectuation of the transactions contemplated
by this Agreement and the Other Documents; and, Agent shall have received such
Consents and waivers of such third parties as might assert claims with respect
to the Collateral, as Agent and its counsel shall deem necessary;

(j)            No
Adverse Material Change. 
(i) Since October 31, 2006, there shall not have occurred any event,
condition or state of facts which could reasonably be expected to have a
Material Adverse Effect and (ii) no representations made or information
supplied to Agent shall have been proven to be inaccurate or misleading in any
material respect;

(k)           Contract
Review.  Borrower and REIT
shall have provided to Agent all material contracts and agreements of Borrower
and REIT;

(l)            Closing
Certificate.  Agent shall
have received a closing certificate signed by an executive or accounting
officer of the General Partner, each Subsidiary Guarantor and REIT dated as of
the date hereof, stating that (i) all representations and warranties set forth
in this Agreement and the Other Documents are true and correct on and as of
such date,

 41
 

(ii) Borrower, each Subsidiary Guarantor and
REIT are on such date in compliance with all the terms and provisions set forth
in this Agreement and the Other Documents and (iii) on such date no Default or
Event of Default has occurred or is continuing;

(m)          Pledge
Agreements.  Agent shall
have received: (i) an Equity Interests Agreement of all of the Equity Interests
of each Subsidiary Guarantor, together with stock powers (undated and in
blank), any original certificates evidencing such equity interests, and (ii) a
Deposit Account Control Agreement pursuant to which Borrower pledges to Agent all
Bank Accounts of Borrower.

(n)           No Common
Directors.  Borrower and REIT shall certify
that no member of Lender’s or Behringer Harvard REIT I, Inc.’s board of
directors is also a member of the board of directors or an officer of REIT or
Borrower.

(o)           Guaranty.  Each Subsidiary Guarantor that is made a
party to this Agreement on the Effective Date shall have executed and delivered
to Agent a guaranty in the form set forth on Exhibit 7.7.

(p)           Other.  All documents, instruments and agreements
required to be delivered by or on behalf of Borrower pursuant to the Schedule
of Documents provided by Agent in connection with this Agreement shall be
delivered in form and substance satisfactory to Agent and its counsel.

8.2           Conditions to Each Advance and Guaranty.  The agreement of Lender to make any Revolving
Advance or Guaranty requested to be made on any date, is subject to the
satisfaction of the following conditions precedent as of the date such
Revolving Advance or Guaranty is made:

(a)           [Reserved.]

(b)           Filings,
Registrations and Recordings. 
Each document (including, without limitation, any UCC financing
statement) required by this Agreement, any related agreement or under law or
reasonably requested by the Agent to be filed, registered or recorded in order
to create, in favor of Agent, a perfected security interest in or lien upon any
additional Collateral resulting from the Revolving Advance or Guaranty shall
have been properly filed, registered or recorded in each jurisdiction in which
the filing, registration or recordation thereof is so required or requested,
and Agent shall have received an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration or recordation and
satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;

(c)           Certificates.  Agent shall have received a copy of the
Charter Documents of the Subsidiary Guarantor specified in the Advance Request
or Guaranty Request, certified by the Secretary of State or other appropriate
official of its jurisdiction of incorporation or formation (for those Charter
Documents filed or required to be with a Governmental Authority) or certified
as accurate and complete by an authorized signatory of the Subsidiary
Guarantor, as applicable;

 42
 

(d)           Guaranty.  The Subsidiary Guarantor shall have become a
party to this Agreement and shall have executed and delivered to Agent a
guaranty in the form set forth on Exhibit 7.7.

(e)           Real
Property.  With respect to
any Revolving Advance, the proceeds of which will be used to purchase Real
Property, the Real Property Documents;

(f)            Consents.  Agent shall have received such Consents and
waivers of such third parties as might assert claims with respect to any
Collateral resulting from the Revolving Advance or Guaranty, as Agent and its
counsel shall deem necessary;

(g)           Pledge
Agreements.  Agent shall
have received (i) an amendment to the Equity Interests Agreement by including
thereon all of the Equity Interests of the Subsidiary Guarantor, together with
stock powers (undated and in blank), any original certificates evidencing such
equity interests, and (ii) a Deposit Account Control Agreement pursuant to
which the Subsidiary Guarantor pledges to Agent all Bank Accounts of such
Subsidiary Guarantor;

(h)           Representations
and Warranties and Updated Schedules.  Agent shall have received a certificate from
the General Partner that each of the representations and warranties made by
Borrower and the Subsidiary Guarantor by becoming a party hereto in or pursuant
to this Agreement and any related agreements to which it is a party, and each
of the representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date;

(i)            No
Default.  No Event of
Default or Default shall have occurred and be continuing on such date, or would
exist after giving effect to the Revolving Advances or Guaranty requested to be
made, on such date; provided, however, that Agent, in its sole
discretion, may continue to make Revolving Advances notwithstanding the
existence of an Event of Default or Default and that any Revolving Advances so
made shall not be deemed a waiver of any such Event of Default or Default;

(j)            No Common
Directors.  Borrower and REIT shall certify
that no member of Lender’s board of directors is also a member of the board of
directors or an officer of REIT, Borrower or any Subsidiary Guarantor.

(k)           Maximum
Advances.  In the case of
any Revolving Advances or Guaranties requested to be made, after giving effect
thereto, the aggregate Outstanding Facility Amounts shall not exceed the
Maximum Commitment Amount.

8.3           Deemed Representations.  Each request for a Revolving Advance or
Guaranty by Borrower hereunder shall constitute a representation and warranty
by Borrower as of the date of such Revolving Advance and Guaranty that the
conditions contained in this subsection shall have been satisfied.

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IX.           INFORMATION AS TO BORROWER.

Borrower
shall, until satisfaction in full of the Obligations and the termination of
this Agreement:

9.1           Disclosure of Material Matters.  Immediately upon learning thereof, report to
Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral.

9.2           Litigation.  Promptly notify Agent in writing of any
litigation, suit or administrative proceeding affecting Borrower or any
Subsidiary Guarantor, whether or not the claim is covered by insurance, and of
any suit or administrative proceeding, which in any such case could reasonably
be expected to have a Material Adverse Effect.

9.3           Material Occurrences.  Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event, development
or circumstance whereby any financial statements or other reports furnished to
Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of Borrower
as of the date of such statements; (c) any accumulated retirement plan funding
deficiency which, if such deficiency continued for two plan years and was not
corrected as provided in Section 4971 of the Code, could subject Borrower
to a tax imposed by Section 4971 of the Code; (d) each and every default
by Borrower which might result in the acceleration of the maturity of any
Indebtedness, including the names and addresses of the holders of such Indebtedness
with respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (e) any other development in the business or affairs of Borrower or any
Subsidiary Guarantor which could reasonably be expected to have a Material
Adverse Effect; in each case describing the nature thereof and the action
Borrower propose to take with respect thereto.

9.4           Management Agreement.  Promptly following receipt of a notice, or
obtaining knowledge, thereof, any breach, default or failure of performance by
any party under, or any notice that a party has challenged or denied the
validity or enforceability of the Permitted Encumbrances, any REA, Management
Agreement or any other material agreement, contract or other instrument to
which Borrower or any Subsidiary Guarantor is a party or by which any of their
properties are bound, in each case, which could reasonably be expected to have
a Material Adverse Effect.

9.5           Annual Financial Statements.  Furnish Agent within one hundred fifty (150)
days after the end of each fiscal year of Borrower, financial statements of
Borrower and REIT on a consolidated basis including, but not limited to,
statements of income and stockholders’ equity and cash flow from the beginning
of the current fiscal year to the end of such fiscal year and the balance sheet
as at the end of such fiscal year, all prepared in accordance with GAAP applied
on a basis consistent with prior practices, and in reasonable detail and reported
upon without qualification by an independent certified public accounting firm
selected by Borrower and satisfactory to Agent (the “Accountants”).  In
addition, the reports shall be accompanied by a certificate of the principal
accounting officer of REIT which shall state that, based on an examination
sufficient to permit such officer make an informed statement, no Default or
Event of

 44
 

Default exists,
or, if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
Borrower or REIT with respect to such event.

9.6           Quarterly Financial Statements.  Furnish Agent within ninety (90) days after
the end of each fiscal quarter, an unaudited balance sheet of Borrower and REIT
on a consolidated basis and unaudited statements of income and stockholders’
equity and cash flow of Borrower on a consolidated basis reflecting results of
operations from the beginning of the fiscal year to the end of such quarter and
for such quarter, prepared on a basis consistent with prior practices and
complete and correct in all material respects, subject to normal and recurring
year end adjustments that individually and in the aggregate are not material to
the business of Borrower.  The reports shall
be accompanied by a certificate (“Compliance
Certificate”), in a form acceptable to the Lender, which shall state
that, based on an examination sufficient to permit the principal accounting
officer of REIT to make an informed statement, no Default or Event of Default
exists, or, if such is not the case, specifying such Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps
being taken by Borrower or REIT with respect to such default.

9.7           Monthly Raise Report.  Furnish Agent within thirty (30) days after
the end of each month a report, certified as true and correct by REIT’s
principal accounting officer, setting forth the total amount of Gross Offering
Proceeds received by REIT and Borrower during the applicable month and the
aggregate amount of Gross Offering Proceeds received through the end of the
applicable month. 

9.8           Additional Information. Furnish Agent
with such additional information as Agent shall reasonably request in order to
enable Agent to determine whether the terms, covenants, provisions and
conditions of this Agreement and the Other Documents have been complied with by
Borrower.

9.9           Notice of Suits, Adverse Events.  Furnish Agent with prompt notice of (i) any
lapse or other termination of any Consent issued to Borrower, REIT or any
Subsidiary Guarantor by any Governmental Body or any other Person that is
material to the operation of any of their business, (ii) any refusal by any
Governmental Body or any other Person to renew or extend any such Consent; and
(iii) copies of any periodic or special reports filed by Borrower, REIT or any
Subsidiary Guarantor with any Governmental Body or Person, if such reports
indicate any material change in the business, operations, affairs or condition
of any of them, or if copies thereof are requested by Lender, and (iv) copies
of any material notices and other communications from any Governmental Body or
Person which specifically relate to Borrower.

9.10         Additional Documents.  Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.

9.11         Subsidiaries.  Deliver to Agent together with the financial
statements provided pursuant to Section 9.7, notice of any
Subsidiary formed by Borrower, since the delivery of the previous month’s
financial statements, together with the name, jurisdiction of organization and
schedule of equity owners of such Subsidiary.

 45
 

X.            EVENTS OF DEFAULT.

The
occurrence of any one or more of the following events shall constitute an Event
of Default:

10.1         failure by Borrower to
pay any principal on the Obligations when due or any interest on the
Obligations or fees due hereunder within five (5) Business Days of the date such
fees or interest are required to be paid hereunder, whether at maturity or by
reason of acceleration pursuant to the terms of this Agreement or by notice of
intention to prepay, or by required prepayment or failure to pay any other
liabilities or make any other payment, fee or charge provided for herein when
due or in any Other Document;

10.2         any representation or
warranty made or deemed made by Borrower, REIT or any Subsidiary Guarantor in
this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been false or misleading in any material respect
on the date when made or deemed to have been made which remains uncured for a
period of thirty (30) days after the earlier of (x) knowledge of such failure
by an executive officer or principal accounting officer of Borrower, the
General Partner, REIT or any Subsidiary Guarantor, or (y) written notice to
Borrower by Agent or Lender;

10.3         failure or neglect of
Borrower, REIT or any Subsidiary Guarantor, as applicable, to perform, keep or
observe any term, provision, condition or covenant:

(i)            contained in Article VII;

(ii)           contained in Article IX which remains
unremedied for a period of ten (10) Business Days;

(iii)          contained in any other provisions of this
Agreement or any of the Other Documents;

which, in the case of (i) and (iii), remains unremedied for a period of
thirty (30) days after the earlier of (x) knowledge of such failure by an executive
officer or principal accounting officer of Borrower, REIT or any Subsidiary
Guarantor, or (y) written notice of such failure to Borrower by Agent or
Lender; provided, however, that if any such failure or neglect in
the case of (i) and (iii) above cannot by its nature be cured within such
thirty (30) day grace period and so long as Borrower shall have commenced cure
within such thirty (30) day grace period and shall, at all times thereafter,
diligently prosecute the same to completion, Borrower shall have an additional
period to cure such default;

10.4         issuance of a notice of
Lien, levy, assessment, injunction or attachment against a material portion of
Borrower’s or any Subsidiary Guarantor’s property which is not discharged,
dismissed, stayed or lifted within thirty (30) days, but, in any event, not
later than five (5) Business Days prior to the date of any proposed sale of
such property in connection therewith;

 46
 

10.5         any judgment or judgments
are rendered or judgment liens filed against (i) Borrower or any Subsidiary
Guarantor, for an aggregate amount in excess of $500,000 per occurrence or in
the aggregate in any calendar year, or (ii) against any Subsidiary of Borrower
that is not a Subsidiary Guarantor for an aggregate amount of $1,000,000 per
occurrence or in the aggregate in any calendar year, which within sixty (60)
days of such rendering or filing is not either satisfied, stayed, vacated,
discharged or bonded pending appeal;

10.6         Borrower, REIT or any
Subsidiary Guarantor shall (i) apply for, consent to or suffer the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator
or similar fiduciary of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within sixty (60) days, any
petition filed against it in any involuntary case under such bankruptcy laws,
or (vii) take any action for the purpose of effecting any of the foregoing;

10.7         Borrower, REIT or any
Subsidiary Guarantor shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;

10.8         Borrower or any
Subsidiary Guarantor shall take any action, or omit to take any action, which
shall cause a default under, or the acceleration of payments due under, any
Indebtedness which is senior to Borrower’s Obligations hereunder or any
Approved Mezzanine Loans;

10.9         any Lien created
hereunder or provided for hereby or under any related agreement for any reason
ceases to be or is not a valid and perfected Lien having a first priority
interest, except for Permitted Encumbrances;

10.10       a default beyond applicable
notice and grace periods (if any) occurs with respect to any Third Party
Indebtedness or Contingent Recourse Obligation incurred by Borrower or any
Subsidiary Guarantor;

10.11       any Change of Control shall
occur;

10.12       any material provision of
this Agreement or any of the Other Documents shall, for any reason, cease to be
valid and binding on Borrower or any Guarantor, or Borrower or such Guarantor
shall otherwise disavow, revoke or terminate this Agreement or any of the Other
Documents or challenge or contest the validity or enforceability of this
Agreement or any of the Other Documents;

10.13       any material portion of the
Collateral shall be seized or taken by a Governmental Body, or Borrower or any
Subsidiary Guarantor or the title and rights of Borrower or the Subsidiary
Guarantor which is the owner of any material portion of the Collateral shall
have become the subject matter of litigation which might, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the Other Documents, as determined by Agent in its discretion
exercised in a commercially reasonable manner; or

 47

10.14       an event or condition
specified in Section 7.10 hereof shall occur or exist with respect to
any Plan and, as a result of such event or condition, together with all other
such events or conditions, REIT, Borrower or any member of the Controlled Group
shall incur, or in the opinion of Agent be reasonably likely to incur, a
liability to a Plan or the PBGC (or both) which, in the reasonable judgment of
Agent, would have a Material Adverse Effect;

10.15       following such election,
REIT shall fail to maintain its status as a Real Estate Investment Trust
consistent with the requirements applicable to its election to be taxed as a “real
estate investment trust” under Sections 850 through 856 of the Code.

10.16       failure by Borrower or any
Subsidiary Guarantor to remediate any Environmental Complaint or Hazardous
Discharge related to any Real Property having a book value in excess of
$500,000 in accordance with Section 6.2 within the timeframe for
such remediation required by any Legal Requirements (or if no such timeframe is
required thereby, then within a commercially reasonable time after receipt of
notice of the Hazardous Discharge or Environmental Complaint); and

10.17       Lender shall be required to
make any payment under a Guaranty.

XI.           LENDER’S RIGHTS AND REMEDIES AFTER DEFAULT.

11.1         Rights and Remedies.  Upon the occurrence of (i) an Event of
Default pursuant to Section 10.6 or 10.7 all Obligations
shall be immediately due and payable and this Agreement and the obligation of
Lender to make Revolving Advances or Guaranties shall be deemed terminated and
Borrower shall immediately collateralize with cash an amount equal to 105% of
the face amount of any Letters of Credit and the Guaranty Value of all
outstanding Guaranties (such cash collateral to be deposited in a Bank Account
designated by Agent) and reimburse any unreimbursed drawings on all Letters of
Credit; and, (ii) any of the other Events of Default and at any time thereafter
(such default not having previously been cured), at the option of Lender all
Obligations shall be immediately due and payable and Lender shall have the
right to terminate this Agreement and to terminate the obligation of Lender to
make Revolving Advances and Guaranties and Borrower shall immediately
collateralize with cash an amount equal to 105% of the face amount of any
Letters of Credit and the Guaranty Value of all outstanding Guaranties (such
cash collateral to be deposited in a Bank Account designated by Agent) and
reimburse any unreimbursed drawings on all Letters of Credit, and (iii) a
filing of a petition against Borrower, REIT or any Subsidiary Guarantor in any
involuntary case under any state or federal bankruptcy laws, the obligation of
Lender to make Revolving Advances or Guaranties shall be deemed terminated and
Borrower shall immediately collateralize with cash an amount equal to 105% of
the face amount of any Letters of Credit and the Guaranty Value of all
outstanding Guaranties (such cash collateral to be deposited in a Bank Account
designated by Agent) and reimburse any unreimbursed drawings on all Letters of
Credit other than as may be required by an appropriate order of the bankruptcy
court having jurisdiction over Borrower, REIT or the Subsidiary Guarantor.  During the existence of any Event of Default,
Agent shall have the right to exercise any and all other rights and remedies
provided for herein, under the UCC and at law or equity generally, including,
without limitation, the right to foreclose the security interests granted
herein and to realize upon any Collateral by any available judicial procedure
and/or to take possession of and sell any or all of the Collateral with or
without judicial process.  During the
existence of

 48
 

an Event of
Default, Borrower hereby irrevocably authorizes Agent, in its discretion, on
Borrower’s behalf and in Borrower’s name to open a Bank Account and to make and
maintain deposits therein, or in an account opened by Borrower, in the amounts
required to be made by Borrower, out of the proceeds of any Collateral or out
of any other funds of Borrower coming into Lender’s possession at any time.
Agent will invest such cash collateral (less applicable reserves) in such
short-term money-market items as to which Agent and Borrower mutually agree and
the net return on such investments shall be credited to such account and
constitute additional cash collateral. 
Borrower may not withdraw amounts credited to any such account except
upon payment and performance in full of all Obligations and termination of this
Agreement.  During the existence of an
Event of Default, Agent may enter Borrower’s premises or other premises without
legal process and without incurring liability to Borrower therefor, and Agent
may thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Agent may deem
advisable and Agent may require Borrower to make the Collateral available to
Agent at a convenient place.  During the
existence of an Event of Default, with or without having the Collateral at the
time or place of sale, Agent may sell the Collateral, or any part thereof, at
public or private sale, at any time or place, in one or more sales, at such
price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect.  Agent
shall give Borrower reasonable notification of such sale or sales, it being
agreed that in all events written notice mailed to Borrower at least five (5)
Business Days prior to such sale or sales is reasonable notification.  At any public sale Agent or Lender may bid
for and become the purchaser, and Agent, Lender or any other purchaser at any
such sale thereafter shall hold the Collateral sold absolutely free from any
claim or right of whatsoever kind, including any equity of redemption and such
right and equity are hereby expressly waived and released by Borrower.  Agent may sell the Collateral without giving
any warranties as to the Collateral. 
Agent may specifically disclaim any warranties of title, possession,
quiet enjoyment and the like.  If Agent disposes
of any of the Collateral upon credit, Borrower will be credited with only those
payments actually made by the purchaser and received by Agent.  In the event the purchaser of such Collateral
fails to pay for such Collateral, Agent may resell such Collateral and Borrower
shall be credited with any cash proceeds of the sale.  Notwithstanding the provisions of any of the
Other Agreements, the proceeds realized from the sale of any Collateral shall
be applied as provided in Section 11.5.  If any deficiency shall arise, Borrower shall
remain liable to Agent and Lender therefor. 

11.2         Agent’s Discretion.  Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent’s or Lender’s rights hereunder.

11.3         Setoff. 
In addition to any other rights which Agent or Lender may have under
applicable law, upon the occurrence of an Event of Default hereunder, Agent and
Lender shall have a right to apply any Borrower’s or Subsidiary Guarantor’s
property held by Agent and Lender to reduce the Obligations.

11.4         Rights and Remedies not Exclusive.  The enumeration of the foregoing rights and
remedies is not intended to be exhaustive and the exercise of any right or
remedy shall not preclude the exercise of any other right or remedies provided
for herein or otherwise provided by law, all of which shall be cumulative and
not alternative.

 49
 

11.5         Allocation of Payments After Event of Default.  Notwithstanding any other provisions of this
Agreement to the contrary, after the occurrence and during the continuance of
an Event of Default, all amounts collected or received by the Agent on account
of the Obligations or any other amounts outstanding under any of the Other
Documents or in respect of the Collateral may, at Agent’s discretion, be paid
over or delivered as follows: 

FIRST,
to reimburse all unreimbursed drawings on all Letters of Credit;

SECOND,
to the repayment of all payments made by Lender under any of the Guaranties;

THIRD,
to the payment of reasonable out-of-pocket costs and expenses (including
without limitation, reasonable attorneys’ fees) of the Agent in connection with
enforcing the rights of Lender under this Agreement and the Other Documents and
any protective advances made by the Agent with respect to the Collateral under
or pursuant to the terms of this Document;

FOURTH,
to the payment of any fees owed to the Agent;

FIFTH,
to the payment of all reasonable out-of-pocket costs and expenses (including
without limitation, reasonable attorneys’ fees) of Lender in connection with
enforcing its rights under this Agreement and the Other Documents or otherwise
with respect to the Obligations owing to Lender;

SIXTH,
to the payment of all of the Obligations consisting of accrued fees and
interest;

SEVENTH,
to the payment of the outstanding principal amount of the Obligations;

EIGHTH,
to all other Obligations and other obligations which shall have become due and
payable under the Other Documents or otherwise and not repaid pursuant to
clauses “FIRST” through “SEVENTH” above;.

NINTH,
to the payment of the surplus, if any, to whoever may be lawfully entitled to
receive such surplus.

In carrying out
the foregoing, (i) amounts received shall be applied in the numerical order
provided until exhausted prior to application to the next succeeding category;
and (ii) to the extent that any amounts available for distribution pursuant to
clause “SEVENTH” above are attributable to the issued but undrawn amount of
outstanding Letters of Credit, such amounts shall be held by the Agent in a
cash collateral account and applied (A) first, to reimburse the Agent from time
to time for any drawings under such Letters of Credit and (B) then, following
the expiration of all Letters of Credit, to all other obligations of the types
described in clauses “SEVENTH” and “EIGHTH” above in the manner provided in
this Section 11.5.

XII.         WAIVERS AND JUDICIAL PROCEEDINGS.

12.1         Waiver of Notice.  Borrower and each Subsidiary Guarantor hereby
waives demand, presentment, protest and notice thereof with respect to any and
all instruments, notice of

 50
 

acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in connection with this Agreement in
reliance hereon, and all other demands and notices of any description, except
such as are expressly provided for herein.

12.2         Delay. 
No delay or omission on Agent’s or Lender’s part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any default.

12.3         Jury Waiver.  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY
HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

XIII.        EFFECTIVE DATE AND TERMINATION.

13.1         Term. 
This Agreement, which shall inure to the benefit of and shall be binding
upon the respective successors and permitted assigns of Borrower, Agent and
Lender, shall become effective on the Closing Date hereof (sometimes herein
referred to as the “Effective Date”)
and shall continue in full force and effect until the Business Day immediately
preceding the first (1st) anniversary of the Effective Date (the “Term”) unless sooner terminated as provided
herein.  The Term may be extended for a
period of one (1) year upon (i) written request of Borrower to Agent not less
than ninety (90) days prior to the first anniversary of the Effective Date,
(ii) no Defaults or Events of Default are then in existence, (iii) Borrower and
each Guarantor certifies that all representations and warranties made by
Borrower and each Guarantor contained herein and any Other Documents are true
and correct in all material respects at the time of the request and at the date
of extension, and (iv) Lender consents to such extension, which consent may be
withheld in Lender’s sole discretion (if extended, the word “Term” as used
herein, shall be deemed to include the extended term of an additional year
mentioned above), unless sooner terminated as provided. The request by Borrower
may include a notice by Borrower to reduce the Maximum Commitment Amount (a “Reduction Notice”) to an amount equal to or
greater than the then-outstanding amount of Outstanding Facility Amounts, and
upon the approval of such extension request the term “Maximum Commitment Amount” shall mean the
reduced amount as agreed to in accordance herewith (including for purposes of
determining the amount of the Commitment Fee payable upon extension in
accordance with Section 3.3).

 51
 

13.2         Termination.  Borrower may terminate this Agreement at any
time upon thirty (30) days’ prior written notice upon payment in full of the
Obligations.  The termination of this
Agreement shall not affect any Borrower’s, Agent’s or Lender’s rights, or any
of the Obligations having their inception prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into, rights or interests created or Obligations
have been fully disposed of, concluded or liquidated.  The security interests, Liens and rights
granted to Agent and Lender hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower’s Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of Borrower have been paid or performed in full after the
termination of this Agreement or Borrower has furnished Agent and Lender with
an indemnification satisfactory to Agent and Lender with respect thereto.  Accordingly, Borrower waives any rights which
it may have under the UCC to demand the filing of termination statements with
respect to the Collateral, and Agent shall not be required to send such
termination statements to Borrower or any Subsidiary Guarantor, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid in full in
immediately available funds.  All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until all Obligations are paid or performed in
full.

XIV.        REGARDING AGENT.

14.1         Appointment.  Lender hereby designates Behringer Harvard
Operating Partnership I LP to act as Agent for Lender under this Agreement and
the Other Documents.  Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto and Agent shall hold all
Collateral, payments of principal and interest, fees, charges and collections
(without giving effect to any collection days) received pursuant to this
Agreement, for the ratable benefit of Lender. 
Agent may perform any of its duties hereunder by or through its agents
or employees.  As to any matters not
expressly provided for by this Agreement (including without limitation,
collection of any Revolving Credit Note) Agent shall not be required to
exercise any discretion or take 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 Lender, and such instructions shall be
binding; provided, however, that Agent shall not be required to
take any action which exposes Agent to liability or which is contrary to this
Agreement or the Other Documents or applicable law unless Agent is furnished
with an indemnification reasonably satisfactory to Agent with respect thereto.

14.2         Nature of Duties.  Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Other Documents.  Neither Agent nor any
of its officers, directors, employees or agents shall be (i) liable for any
action taken or omitted by them as such hereunder or in connection herewith,
unless caused by their gross (not mere) negligence or willful misconduct, or
(ii) responsible in any manner for any recitals, statements, representations or
warranties made by Borrower or any Guarantor or any officer thereof contained
in this Agreement, or in any of the Other Documents or in any certificate, report,

 52
 

statement or other
document referred to or provided for in, or received by Agent under or in
connection with, this Agreement or any of the Other Documents or for the value,
validity, effectiveness, genuineness, due execution, enforceability or sufficiency
of this Agreement, or any of the Other Documents or for any failure of any
Borrower or Guarantor to perform its obligations hereunder.  Agent shall not be under any obligation to
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any of the
Other Documents, or to inspect the properties, books or records of Borrower or
any Guarantor.  The duties of Agent as
respects the Revolving Advances and to Borrower and Guaranties made on behalf
of Borrower shall be mechanical and administrative in nature; Agent shall not
have by reason of this Agreement a fiduciary relationship in respect of Lender;
and nothing in this Agreement, expressed or implied, is intended to or shall be
so construed as to impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.

14.3         Lack of Reliance on Agent and Resignation.  Independently and without reliance upon Agent
or any other Lender, Lender has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of Borrower
and each Guarantor in connection with the making and the continuance of the
Revolving Advances and Guaranties hereunder and the taking or not taking of any
action in connection herewith, and (ii) its own appraisal of the
creditworthiness of Borrower and each Guarantor.  Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide Lender with any credit or
other information with respect thereto, whether coming into its possession
before making of the Revolving Advances or Guaranties or at any time or times
thereafter except as shall be provided by Borrower pursuant to the terms
hereof.  Agent shall not be responsible
to Lender for any recitals, statements, information, representations or
warranties herein or in any agreement, document, certificate or a statement
delivered in connection with or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or
any Other Document, or of the financial condition of Borrower or any Guarantor,
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, any
Revolving Credit Note, the Other Documents or the financial condition of
Borrower or any Guarantor, or the existence of any Event of Default or any
Default.

14.4         Certain Rights of Agent.  If Agent shall request instructions from
Lender with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled
to refrain from such act or taking such action unless and until Agent shall
have received instructions from Lender; and Agent shall not incur liability to
any Person by reason of so refraining.

14.5         Reliance.  Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, order
or other document or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other
Documents and its duties hereunder, upon advice of counsel selected by it.  Agent may employ agents and attorneys-in-fact
and shall not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by Agent with reasonable care.

 53
 

14.6         Notice of Default.  Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder or
under the Other Documents, unless Agent has received notice from a Lender or
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a “notice of
default”.  In the event that Agent
receives such a notice, Agent shall give notice thereof to Lender.  Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by Lender;
provided, that, unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of Lender.

14.7         Indemnification.  To the extent Agent is not reimbursed and
indemnified by Borrower or the Guarantors, Lender will reimburse and indemnify
Agent in proportion to its respective portion of the Revolving Advances and
Guaranties, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any Other Document; provided
that, Lender shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct.

14.8         Agent in its Individual Capacity.  With respect to the obligation of Agent to
lend and provide Guaranties under this Agreement, the Revolving Advances and
Guaranties made by it shall have the same rights and powers hereunder as any
other Lender and as if it were not performing the duties as Agent specified
herein; and the term “Lender” or any similar term shall, unless the context
clearly otherwise indicates, include Agent in its individual capacity as a
Lender.  Agent may engage in business
with Borrower or any Guarantor as if it were not performing the duties
specified herein, and may accept fees and other consideration from Borrower and
any Guarantor for services in connection with this Agreement or otherwise
without having to account for the same to Lender.

14.9         Delivery of Documents.  To the extent Agent receives financial
statements required under Sections 9.5, 9.6, and 9.7 from
Borrower or any Guarantor pursuant to the terms of this Agreement, Agent will
promptly furnish such documents and information to Lender.

14.10       Borrower’s Undertaking to Agent.  Without prejudice to their respective
obligations to Lender under the other provisions of this Agreement, Borrower
hereby undertakes with Agent to pay to Agent from time to time on demand all
amounts from time to time due and payable by it for the account of Agent or
Lender or any of them pursuant to this Agreement to the extent not already
paid.  Any payment made pursuant to any
such demand shall pro tanto
satisfy the Borrower’s obligations to make payments for the account of Lender
or the relevant one or more of them pursuant to this Agreement.

 54
 

XV.         MISCELLANEOUS.

15.1         Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas applied to
contracts to be performed wholly within the State of Texas.  Any judicial proceeding brought by or against
Borrower or any Guarantor with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of Texas, United States of America, and, by execution
and delivery of this Agreement, Borrower and each Guarantor accepts for itself
and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this
Agreement.  Borrower and each Guarantor
hereby waives personal service of any and all process upon it and consents that
all such service of process may be made by registered mail (return receipt
requested) directed to Borrower at its address set forth in Section 15.6
and service so made shall be deemed completed five (5) days after the same
shall have been so deposited in the mails of the United States of America, or,
at the Agent’s and/or Lender’s option, by service upon Borrower which each
Guarantor irrevocably appoints as such Guarantor’s Agent for the purpose of
accepting service within the State of Texas. 
Nothing herein shall affect the right to serve process in any manner
permitted by law or shall limit the right of Agent or Lender to bring
proceedings against Borrower or any Guarantor in the courts of any other
jurisdiction.  Borrower and each
Guarantor waives any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum
non conveniens.  Any judicial
proceeding by Borrower against Agent or Lender involving, directly or
indirectly, any matter or claim in any way arising out of, related to or
connected with this Agreement or any related agreement, shall be brought only
in a federal or state court located in the County of Dallas, State of Texas. 

15.2         Entire
Understanding.

(a)           THIS
AGREEMENT AND THE DOCUMENTS EXECUTED CONCURRENTLY HEREWITH REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

Any
promises, representations, warranties or guarantees not contained herein and
hereinafter made shall have no force and effect unless in writing, signed by
Borrower’s, each Guarantor’s, Agent’s and Lender’s respective officers.  Neither this Agreement nor any portion or
provisions hereof may be changed, modified, amended, waived, supplemented,
discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be
charged. Each party acknowledges that it has been advised by counsel in
connection with the execution of this Agreement and the Other Documents.

(b)           Lender, Agent and
Borrower may, subject to the provisions of this Section 15.2(b),
from time to time enter into written supplemental agreements to this Agreement
or the Other Documents executed by Borrower, for the purpose of adding or
deleting any

 55
 

provisions or otherwise changing, varying or
waiving in any manner the rights of Lender, Agent, Borrower or any Guarantor
thereunder or the conditions, provisions or terms thereof of waiving any Event
of Default thereunder, but only to the extent specified in such written
agreements.

Any
such supplemental agreement shall apply equally to Lender and shall be binding
upon Borrower, each Guarantor, Lender and Agent and all future holders of the
Obligations.  In the case of any waiver,
Borrower, Agent and Lender shall be restored to their former positions and
rights, and any Event of Default waived shall be deemed to be cured and not
continuing, but no waiver of a specific Event of Default shall extend to any
subsequent Event of Default (whether or not the subsequent Event of Default is
the same as the Event of Default which was waived), or impair any right
consequent thereon.

Agent
is hereby authorized by the Borrower, each Guarantor and Lender, from time to
time in the Agent’s sole discretion, (a) after the occurrence and during the
continuation of a Default or an Event of Default, or (b) at any time that any
of the other applicable conditions precedent set forth in Section 8.2
hereof have not been satisfied, to make Revolving Advances to Borrower on
behalf of Lender which the Agent, in its reasonable business judgment, deems
necessary or desirable (i) to preserve or protect the Collateral, or any
portion thereof, (ii) to enhance the likelihood of, or maximize the amount of,
repayment of the Revolving Advances and other Obligations, or (iii) to pay any
other amount chargeable to Borrower pursuant to the terms of this Agreement;
provided, that at any time after giving effect to any such Revolving Advances
the Outstanding Commitments do not exceed one hundred and ten percent (110%) of
the Maximum Commitment Amount.

15.3         Successors
and Assigns; Participations; New Lender.

(a)           This Agreement shall be
binding upon and inure to the benefit of Borrower, each Guarantor, Agent,
Lender, all future holders of the Obligations and their respective successors
and assigns, except that no Borrower or Guarantor may assign or transfer any of
its rights or obligations under this Agreement without the prior written
consent of Agent and Lender.

(b)           Borrower acknowledges
that Lender may at any time and from time to time sell participating interests
in the Revolving Advances to other Persons (each such transferee or purchaser
of a participating interest, a “Transferee”)
having a minimum principal amount of $1,000,000 (and integral multiples of
$1,000,000 in excess thereof).  Each
Transferee may exercise all rights of payment (including without limitation
rights of set-off) with respect to the portion of such Revolving Advances held
by it or other Obligations payable hereunder as fully as if such Transferee
were the direct holder thereof provided that Borrower shall not be required to
pay to any Transferee more than the amount which it would have been required to
pay to Lender which granted an interest in its Revolving Advances or other
Obligations payable hereunder to such Transferee had Lender retained such
interest in the Revolving Advances hereunder or other Obligations payable hereunder
and in no event shall Borrower be required to pay any such amount arising from
the same circumstances and with respect to the same Revolving Advances or other
Obligations payable hereunder to both Lender and such Transferee.

 56
 

(c)           Borrower and each Guarantor
authorizes Lender to disclose to any Transferee and any prospective Transferee
any and all financial information in Lender’s possession concerning Borrower
and such Guarantor which has been delivered to Lender by or on behalf of
Borrower and such Guarantor pursuant to this Agreement or in connection with
Lender’s credit evaluation of Borrower or such Guarantor.

15.4         Application of Payments.  Agent shall have the continuing and exclusive
right to apply or reverse and re-apply any payment and any and all proceeds of
Collateral to any portion of the Obligations. 
To the extent that Borrower or any Guarantor makes a payment or Agent or
Lender receives any payment or proceeds of the Collateral for Borrower’s
benefit, which are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent, the Obligations or part thereof
intended to be satisfied shall be revived and continue as if such payment or
proceeds had not been received by Agent or Lender.

15.5         Indemnity.  Borrower shall indemnify Agent, Lender and
each of their respective officers, directors, Affiliates, employees and agents
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, fees and
disbursements of counsel) which may be imposed on, incurred by, or asserted
against Agent or Lender in any litigation, proceeding or investigation
instituted or conducted by any governmental agency or instrumentality or any
other Person with respect to any aspect of, or any transaction contemplated by,
or referred to in, or any matter related to, this Agreement or the Other
Documents, whether or not Agent or Lender is a party thereto, except to the
extent that any of the foregoing arises out of the gross negligence or willful
misconduct of the party being indemnified.

15.6         Notice. 
Any notice or request hereunder may be given to Borrower, any Guarantor,
or to Agent or Lender at their respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this Section. 
Any notice, request, demand, direction or other communication (for
purposes of this Section 15.6 only, a “Notice”) to be given to or made upon any party hereto under
any provision of this Loan Agreement shall be given or made by telephone or in
writing (which includes by means of electronic transmission (i.e., “e-mail”) or
facsimile transmission.  Any such Notice
must be delivered to the applicable parties hereto at the addresses and numbers
set forth under their respective names on Section 15.6 hereof or in
accordance with any subsequent unrevoked Notice from any such party that is
given in accordance with this Section 15.6.  Any Notice shall be effective:

(a)           In the case of
hand-delivery, when delivered;

(b)           If given by mail, four
days after such Notice is deposited with the United States Postal Service, with
first-class postage prepaid, return receipt requested;

(c)           In the case of a
telephonic Notice, when a party is contacted by telephone, if delivery of such
telephonic Notice is confirmed no later than the next Business Day by hand

 57
 

delivery, a facsimile or electronic
transmission, or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business Day);

(d)           In the case of a
facsimile transmission, when sent to the applicable party’s facsimile machine’s
telephone number, if the party sending such Notice receives confirmation of,
the delivery thereof from its own facsimile machine;.

(e)           In the case of
electronic transmission, when actually received; and

(f)            If given by any other
means (including by overnight courier), when actually received.

Lender
giving a Notice to Borrower or any Guarantor shall concurrently send a copy
thereof to the Agent, and the Agent shall promptly notify the other Lender of
its receipt of such Notice.

	
  (A)

  	
   

  	
  If to Agent or Lender:

  	
   

  	
  Behringer Harvard Operating Partnership I LP

  
	
   

  	
   

  	
   

  	
   

  	
  15601 Dallas
  Parkway

  
	
   

  	
   

  	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
   

  	
   

  	
  Addison, Texas
  75001

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Legal
  Department

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone: (214)
  655-1600

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile: (214)
  655-1610

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and a copy to:

  	
   

  	
  Shefsky & Froelich Ltd.

  
	
   

  	
   

  	
   

  	
   

  	
  111 East Wacker
  Dr., Suite 2800

  
	
   

  	
   

  	
   

  	
   

  	
  Chicago,
  Illinois 60601

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:
  Michael J. Choate

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone: (312)
  836-4066

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile: (312)
  527-5921

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (B)

  	
   

  	
  If to Borrower

  	
   

  	
  Behringer Harvard Multifamily OP I, LP

  
	
   

  	
   

  	
  or any Guarantor, at:

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Legal Department

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone: (214) 655-1600

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile: (214) 655-1610

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Greenberg Traurig, LLP

  
	
   

  	
   

  	
   

  	
   

  	
  Met Life
  Building

  
	
   

  	
   

  	
   

  	
   

  	
  200 Park Avenue

  
	
   

  	
   

  	
   

  	
   

  	
  New York, New
  York 10166

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:
  Judith D. Fryer

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone: (212)
  801-9330

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile: (212)
  801-6400

  

 

 58
 

15.7         Survival.  The obligations of Borrower under Sections
2.8(c), 6.2(b), 14.7 and 15.5 shall survive
termination of this Agreement and the Other Documents and payment in full of
the Obligations.

15.8         Severability.  If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated
thereby and shall be given effect so far as possible.

15.9         Expenses.  All costs and expenses including, without
limitation, reasonable attorneys’ fees (including the allocated costs of in
house counsel) and disbursements incurred by Agent (and, in respect to clause
(d) below, by Lender) on its behalf or on behalf of Lender (a) in all efforts
made to enforce payment of any Obligation or effect collection of any
Collateral, or (b) in connection with the drafting, negotiating, entering into,
modification, amendment, administration and enforcement of this Agreement or
any consents or waivers hereunder and all related agreements, documents and
instruments, or (c) in perfecting, instituting, maintaining, preserving,
enforcing and foreclosing on Agent’s security interest in or Lien on any of the
Collateral, whether through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent’s or Lender’s transactions with Borrower or any Guarantor, or (e) in
connection with any advice given to Agent or Lender with respect to its rights
and obligations under this Agreement and all related agreements, shall be
payable by Borrower upon demand, and to the extent such costs and expenses
remain unpaid for more than thirty (30) days following demand, such costs and
expenses shall be charged to Borrower’s Account as a Revolving Advance and
shall be part of the Obligations.

15.10       Injunctive Relief.  Borrower and each Subsidiary Guarantor
recognizes that, in the event Borrower or such Subsidiary Guarantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy at law may prove to be inadequate relief to Lender;
therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving that actual
damages are not an adequate remedy.

15.11       Consequential Damages.  Neither Agent nor Lender, nor any agent or
attorney for any of them, shall be liable to Borrower for consequential damages
arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.

15.12       Captions.  The captions at various places in this
Agreement are intended for convenience only and do not constitute and shall not
be interpreted as part of this Agreement.

15.13       Counterparts; Facsimile Signatures.  This Agreement may be executed in any number
of and by different parties hereto on separate counterparts, all of which, when
so executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. 
Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto. 
Delivery of an executed counterpart of this Agreement by facsimile shall
be equally as effective as delivery of a manually executed counterpart of this
Agreement.  Any party delivering an
executed counterpart of this Agreement by facsimile shall also deliver a

 59
 

manually executed
counterpart, but any failure to do so shall not affect the validity,
enforceability, and binding effect of this Agreement.

15.14       Construction.  The parties acknowledge that each party and
its counsel have reviewed this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments, schedules or exhibits thereto.

15.15       Confidentiality; Sharing Information.  Agent, Lender and each Transferee shall hold
all non-public information obtained by Agent, Lender or such Transferee
pursuant to the requirements of this Agreement in confidence and shall not
disclose any of the non-public information during the Term and for a period of two
(2) years thereafter; provided, however, Agent, Lender and each Transferee may
disclose such confidential information (a) to its examiners, affiliates,
outside auditors, counsel and other professional advisors, (b) to Agent, Lender
or to any prospective Transferees, and (c) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process;
provided, further that (i) unless specifically prohibited by applicable law or
court order, Agent, Lender and each Transferee shall use commercially
reasonable efforts prior to disclosure thereof, to notify Borrower of the
applicable request for disclosure of such non-public information (A) by a
Governmental Body or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a
Transferee by such Governmental Body) or (B) pursuant to legal process and (ii)
in no event shall Agent, Lender or any Transferee be obligated to return any
materials furnished by Borrower or any Guarantor other than those documents and
instruments in possession of Agent or Lender in order to perfect its Lien on
the Collateral once the Obligations have been paid in full and this Agreement
has been terminated.

[SIGNATURE PAGES FOLLOW]

 60

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed on the day and year first above written.

	
  

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD MULTIFAMILY OP I LP,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BHMF, Inc.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Gerald
  J. Reihsen, III

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President -

  	
   

  
	
   

  	
   

  	
   

  	
  Corporate Development & Legal

  	
   

  
						

 

	
  

  	
  REIT:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  BEHRINGER HARVARD MULTIFAMILY REIT I, INC., 

  a Maryland corporation

  	 

	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
    /s/ Gerald
  J. Reihsen, III

  	
   

  
	
   

  	
  Name:

  	
  Gerald J. Reihsen, III

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice President -

  	
   

  
	
   

  	
   

  	
  Corporate Development & Legal

  	
   

  
	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  SPONSOR:

  	 

	
   

  	
   

  	 

	
   

  	
  BEHRINGER HARVARD HOLDINGS, LLC, 

  a Delaware limited liability company

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
    /s/ Gerald
  J. Reihsen, III

  	
   

  	 

	
   

  	
  Name:

  	
  Gerald J. Reihsen, III

  	
   

  	 

	
   

  	
  Title:

  	
  Executive Vice President -

  	
   

  	 

	
   

  	
   

  	
  Corporate Development & Legal

  	
   

  	 

						

 

 

	
  

  	
  AGENT AND LENDER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD OPERATING PARTNERSHIP I LP,

  a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHR, Inc.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Gary S.
  Bresky

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gary S. Bresky

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
						

 

Exhibit   1.2(a)

EQUITY
INTERESTS PLEDGE AGREEMENT

EQUITY INTERESTS PLEDGE AGREEMENT,
dated as of April 2, 2007, between BEHRINGER HARVARD MULTIFAMILY OP I LP, a
Delaware limited partnership (“Pledgor”), and
BEHRINGER HARVARD OPERATING PARTNERSHIP I LP, a Texas limited partnership, as
agent (“Agent”) for Lender under the Credit
Facility referred to below.

W I T N E S S E T H:

WHEREAS, Pledgor is the record
and beneficial owner of the Equity Interests described in Schedule I hereto
(the “Pledged Equity Interests” of Pledgor)
issued by the entities named therein; and

WHEREAS, Pledgor is the
operating partnership of Behringer Harvard Multifamily REIT I, Inc. (“REIT”), and Pledgor, REIT and Behringer Harvard Holdings,
LLC have entered into a Revolving Credit, Security and Guaranty Agreement,
dated as of April 2, 2007, along with the Subsidiary Guarantors that may become
a party thereto (as at any time amended, modified or supplemented, the “Credit Facility”), with Agent and Lender, pursuant to which
Agent and Lender have agreed to make Revolving Advances to Pledgor and provide
Guaranties on behalf of Pledgor; and

WHEREAS, in connection with the
making of the Revolving Advances under the Credit Facility and as security for
all of the Obligations of Pledgor under the Credit Facility, Lender is
requiring that Pledgor shall have executed and delivered this Equity Interests
Pledge Agreement and granted the security interest contemplated hereby;

NOW, THEREFORE, in consideration
of the premises and the covenants hereinafter contained and to induce Lender to
make the Revolving Advances under the Credit Facility, it is agreed as follows:

1.             Definitions.  Unless otherwise defined herein, terms
defined in the Credit Facility are used herein as therein defined, and the
following shall have (unless otherwise provided elsewhere in this Equity
Interests Pledge Agreement) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):

“Act” shall have
the meaning assigned to such term in Section 8(d) hereof.

“Agreement”
shall mean this Equity Interests Pledge Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the
foregoing, and shall refer to the Agreement as the same may be in effect at the
time such reference becomes operative.

“Bankruptcy Code”
shall mean Title 11, United States Code, as amended from time to time, and any
successor statute thereto.

“Pledged Collateral”
shall have the meaning assigned to such term in Section 2 hereof.

“Pledged Equity Interests”
shall have the meaning assigned to such term in the first recital clause
hereof.

“Secured Obligations”
shall have the meaning assigned to such term in Section 3 hereof.

“Termination Date”
shall have the meaning assigned to such term in Section 12 hereof.

2.             Pledge.  Pledgor hereby pledges and grants to Agent,
for its benefit and the benefit of Lender, a first priority security interest
in all of the following (the “Pledged Collateral”),
except as otherwise provided in Section 7(b):

(a)           the Pledged Equity Interests of
Pledgor and any certificates representing the Pledged Equity Interests, and all
dividends, cash instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Equity Interests of Pledgor;

(b)           all additional Equity Interests of
any issuer of the Pledged Equity Interests of Pledgor from time to time
acquired by Pledgor in any manner (which Equity Interests shall be deemed to be
part of the Pledged Equity Interests) and any certificates representing such
Equity Interests, and all dividends, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Equity Interests; and

(c)           all Equity Interests of any Person
who, after the date of this Agreement, becomes, as a result of any occurrence,
a Subsidiary Guarantor of Pledgor (which Equity Interests shall be deemed to be
part of the Pledged Equity Interests) and any certificates representing such
Equity Interests, and all dividends, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such Equity Interests.

3.             Security for Obligations.  This Agreement secures, and the Pledged
Collateral is security for, the prompt payment in full when due, whether at
stated maturity, by acceleration or otherwise, and performance of the
Obligations, whether for principal, premium, interest, fees, costs and
expenses, and all obligations of Pledgor now or hereafter existing under this
Agreement and under the Credit Facility (collectively, the “Secured Obligations”).

4.             Delivery of Pledged Collateral.  Any certificates representing or evidencing
the Pledged Equity Interests shall be delivered to and held by or on behalf of
Agent, for its benefit and the benefit of Lender, pursuant hereto and shall be
accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to Agent.  Subject to Section 7 hereof, Agent shall have
the right, at any time in its discretion and without notice to the Pledgor, to
transfer to or to register in the name of Agent, for its benefit and the
benefit of Lender, or any of its nominees any or all of the Pledged Equity
Interests.  In addition, also subject to
Section 7 hereof, Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Equity Interests
for certificates or instruments of smaller or larger denominations.

 2
 

5.             Representations and Warranties.  Pledgor represents and warrants to Agent and
Lender that:

(a)           Pledgor is, and at the time of delivery
of the Pledged Equity Interests to Agent, for its benefit and the benefit of
Lender, pursuant to Section 4 hereof will be, the sole holder of record and the
sole beneficial owner of the Pledged Collateral pledged by Pledgor free and
clear of any Lien thereon or affecting the title thereto except for the Lien
created by this Agreement.

(b)           All of the Pledged Equity Interests
of Pledgor have been duly authorized, validly issued and are fully paid and
non-assessable.

(c)           Pledgor has the right and requisite
corporate authority to pledge, assign, transfer, deliver, deposit and set over
the Pledged Collateral pledged by Pledgor to Agent, for its benefit and the
benefit of Lender, as provided herein.

(d)           None of the Pledged Equity Interests
of Pledgor has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to
which such issuance or transfer may be subject.

(e)           The authorized Equity Interests of
each of the issuers listed on Schedule I hereto consists of the number of
shares of common stock, limited liability interests, or partnership interests,
as applicable, with the number of Equity Interests issued and outstanding, that
are described in Schedule I hereto.  As
of the date hereof, there are no existing options, warrants, calls or
commitments of any character whatsoever relating to any Equity Interests of any
of such issuers.

(f)            No consent, approval, authorization
or other order of any Person and no consent, authorization, approval, or other
action by, and no notice to or filing with, any Governmental Body is required
either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement by
Pledgor or (ii) for the exercise by Agent, for its benefit  and the benefit of Lender, of the voting or
other rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement, except as may be required in
connection with such disposition by laws affecting the offering and sale of
securities generally.

(g)           The pledge, assignment and delivery
of the Pledged Collateral pursuant to this Agreement will create a valid first
priority Lien on and a first priority perfected security interest in the
Pledged Collateral pledged by Pledgor, and the proceeds thereof, securing the
payment of the Secured Obligations.

(h)           This Agreement has been duly
authorized, executed and delivered by Pledgor and constitutes a legal, valid
and binding obligation of Pledgor enforceable in accordance with its terms.

(i)            The Pledged Equity Interests
constitute one hundred percent (100%) of the issued and outstanding Equity
Interests of the issuers thereof.

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(j)            The Subsidiary Guarantors listed on
Part I of Schedule I hereto are the only Subsidiaries of Pledgor.

The representations and warranties set forth in this
Section 5 shall survive the execution and delivery of this Agreement.

6.             Covenants.  Pledgor covenants and agrees that until the
Termination Date:

(a)           Without the, prior written consent of
Agent, Pledgor will not sell, assign, transfer, pledge, or otherwise encumber
any of its rights in or to the Pledged Collateral pledged by Pledgor or any
unpaid dividends or other distributions or payments with respect thereto or
grant a Lien in any therein except as otherwise permitted by the Credit
Facility.

(b)           Pledgor will, at its expense,
promptly execute, acknowledge and deliver all such instruments and take all
such action as Agent from time to time may request in order to ensure to Agent
the benefits of the Liens in and to the Pledged Collateral intended to be
created by this Agreement.

(c)           Pledgor has and will defend the title
to the Pledged Collateral and the Liens of Agent and Lender thereon against the
claim of any Person and will maintain and preserve such Liens until the
Termination Date.

(d)           Pledgor will, upon obtaining any
additional Equity Interests of any Subsidiaries that are already Subsidiary
Guarantors or required to become Subsidiary Guarantors pursuant to the Credit
Facility, which Equity Interests are not already Pledged Collateral, promptly
(and in any event within three (3) Business Days) deliver to Agent a Pledge
Amendment, duly executed by Pledgor, in substantially the form of Schedule II
hereto (a “Pledge Amendment”), in
respect of the additional Pledged Equity Interests which are to be pledged
pursuant to this Agreement.  Pledgor
hereby authorizes Agent to attach each such Pledge Amendment to this Agreement
and agrees that all Pledged Equity Interests listed on any Pledge Amendment
delivered to Agent shall for all purposes hereunder be considered Pledged
Collateral.

7.             Pledgors’ Rights.  As long as no Default or Event of Default
shall have occurred and be continuing and until written notice shall be given
to Pledgor in accordance with Section 8(a) hereof:

(a)           Pledgor shall have the right, from
time to time, to vote and give consents with respect to the Pledged Collateral
or any part thereof for all purposes not inconsistent with the provisions of
this Agreement, the Credit Facility, and any other agreement; provided,
however, that no vote shall be cast, and no consent shall be given or action
taken, which would have the effect of impairing the position or interest of
Agent or Lender in respect of the Pledged Collateral or which would authorize
or effect (except as and, to the extent expressly permitted by the Credit
Facility) (i) the dissolution or liquidation, in whole or in part, of any
Subsidiary Guarantor, (ii) the consolidation or merger of any Subsidiary
Guarantor with any other Person, (iii) the sale, disposition or encumbrance of
all or substantially all of the assets of any of Subsidiary Guarantor, (iv) 

 4
 

any change in
the authorized number of Equity Interests, the stated capital or the authorized
capital of any Subsidiary Guarantor or the issuance of any additional Equity
Interests  therein, or (v) the alteration
of the voting rights with respect to the Equity Interests of any Subsidiary Guarantor;

(b)           Pledgor shall be entitled, from time
to time, to collect and receive for its own use all dividends paid in respect
of the Pledged Equity Interests to the extent not in violation of the Credit
Facility.

8.             Defaults and
Remedies.

(a)           Upon the occurrence of an Event of
Default and during the continuation of such Event of Default (provided that
such Event of Default is not waived by Agent or Lender) and following written
notice to Pledgor, Agent (personally or through an agent) is hereby authorized
and empowered, to transfer and register in its name or in the name of its
nominee the whole or any part of the Pledged Collateral, to exercise the voting
rights with respect thereto, to collect and receive all cash dividends and
other distributions made thereon, to sell in one or more sales after ten (10)
days’ notice of the time and place of any public sale or of the time after
which a private sale is to take place (which notice Pledgor agrees is
commercially reasonable), that without any previous notice or advertisement,
the whole or any part of the Pledged Collateral and to otherwise act with
respect to the Pledged Collateral as though Agent was the outright owner
thereof, Pledgor hereby irrevocably constituting and appointing Agent as the
proxy and attorney-in-fact of Pledgor, with full power of substitution to do
so; provided, however, Agent shall not have any duty to exercise
any such right or to preserve the same and shall not be liable for any failure
to do so or for any delay in doing so. 
Any sale shall be made at a public or private sale at Agent’s place of
business, or elsewhere to be named in the notice of sale, either for cash or
upon credit or for future delivery at such price as Agent may deem fair, and
Agent may be the purchaser of the whole or any part of the Pledged Collateral so
sold and hold the same thereafter in its own right free from any claim of such
Pledgor or any right of redemption.  Each
sale shall be made to the highest bidder, but Agent reserves the right to
reject any and all bids at such sale which, in its discretion, it shall deem
inadequate.  Demands of performance,
except as otherwise herein specifically provided for, notices of sale,
advertisements and the presence of property at sale are hereby waived and any
sale hereunder may be conducted by an auctioneer or any officer or agent of
Agent.

(b)           If, at the original time or times
appointed for the sale of the whole or any part of the Pledged Collateral, the
highest bid, if there be but one sale, shall be inadequate to discharge in full
all the Secured Obligations, or if the Pledged Collateral be offered for sale
in lots, if at any of such sales, the highest bid for the lot offered for sale
would indicate to Agent, in its discretion, the unlikelihood of the proceeds of
the sales of the whole of the Pledged Collateral being sufficient to discharge
all the Secured Obligations, Agent may, on one or more occasions and in its
discretion, postpone any of said sales by public announcement at the time of
sale or the time of previous postponement of sale, and no other notice of such
postponement or postponements of sale need be given, any other 

 5
 

notice being
hereby waived; provided, however, that any sale or sales made after such
postponement shall be after ten (10) days’ notice to Pledgor.

(c)           In the event of any sales hereunder,
Agent shall, after deducting all costs or expenses of every kind (including
reasonable attorneys’ fees and disbursements) for care, safekeeping,
collection, sale, delivery or otherwise, apply the residue of the proceeds of
the sales to the payment or reduction, either in whole or in part, of the
Secured Obligations in accordance with the agreements and instruments governing
and evidencing the Secured Obligations, returning the surplus, if any, to
Pledgor.

(d)           If, at any time when Agent shall
determine to exercise its rights to sell the whole or any part of the Pledged
Collateral hereunder, such Pledged Collateral or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as amended (the “Act”),
Agent may, in its discretion (subject only to applicable requirements of law),
sell such Pledged Collateral or part thereof by private sale in such manner and
under such circumstances as Agent may deem necessary or advisable, but subject
to the other requirements of this Section 8, and shall not be required to
effect such registration or to cause the same to be effected.  Without limiting the generality of the
foregoing, in any such event Agent in its discretion may (a) in accordance with
applicable securities laws, proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Collateral or part thereof could be or shall have been filed under the Act (or
similar statute), (b) approach and negotiate with a single possible purchaser
to effect such sale, and (c) restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment and not with a view to the distribution or sale of such Pledged
Collateral or part thereof.  In addition
to a private sale as provided above in this Section 8, if any of the Pledged
Collateral shall not be freely distributable to the public without registration
under the Act (or similar statute) at the time of any proposed sale pursuant to
this Section 8, then Agent shall not be required to effect such registration or
cause the same to be effected but, in its discretion (subject only to
applicable requirements of law), may require that any sale hereunder (including
a sale at auction) be conducted subject to restrictions (i) as to the financial
sophistication and ability of any Person permitted to bid or purchase at any
such sale, (ii) as to the content of legends to be placed upon any certificates
representing the Pledged Collateral sold in such sale, including restrictions
on future transfer thereof, (iii) as to the representations required to be made
by each Person bidding or purchasing at such sale relating to that Person’s
access to financial information about the Pledged Collateral and such Person’s
intentions as to the holding of the Pledged Collateral so sold for investment,
for its own account, and not with a view of the distribution thereof, and (iv)
as to such other matters as Agent may, in its discretion, deem necessary or
appropriate in order that such sale (notwithstanding any failure so to
register) may be effected in compliance with the Code and other laws affecting
the enforcement of creditors’ rights and the Act and all applicable state securities
laws.

(e)           Pledgor acknowledges that
notwithstanding the legal availability of a private sale or a sale subject to
the restrictions described above in paragraph (d), Agent may, in its
discretion, elect to register any or all the Pledged Collateral under the Act
(or 

 6
 

any applicable
state securities law) in accordance with its rights hereunder.  Pledgor, however, recognizes that Agent may
be unable to effect a public sale of any or all the Pledged Collateral and may
be compelled to resort to one or more private sales thereof.  Pledgor also acknowledges any such private
sale (conducted in a commercially reasonable manner for private sales) may
result in prices and other terms less favorable to the seller than if such sale
were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner.  Agent shall be under
no obligation to delay a sale of any of the Pledged Collateral for the period
of time necessary to permit the registrant to register such securities for
public sale under the Act, or under applicable state securities laws, even if
Pledgor or issuer of the Pledged Collateral would agree to do so.

(f)            Pledgor agrees that following the
occurrence and during the continuance of an Event of Default it will not at any
time plead, claim or take the benefit of any appraisal, valuation, stay,
extension, moratorium or redemption law now or hereafter in force in order to
prevent or delay the enforcement of this Agreement, or the absolute sale of the
whole or any part of the Pledged Collateral or the possession thereof by any
purchaser at any sale hereunder, and Pledgor waives the benefit of all such
laws to the extent it lawfully may do so. 
Pledgor agrees that it will not interfere with any right, power and
remedy of Agent provided for in this Agreement or now or hereafter existing at
law or in equity or by statute or otherwise, or the exercise or beginning of
the exercise by Agent of any one or more of such rights, powers, or
remedies.  No failure or delay on the
part of Agent to exercise any such right, power or remedy and no notice or
demand which may be given to or made upon Pledgor by Agent with respect to any
such remedies shall operate as a waiver thereof, or limit or impair Agent’s
right to take any action or to exercise any power or remedy hereunder, without
notice or demand, or prejudice its rights as against Pledgor in any respect.

(g)           Pledgor further agrees that a breach
of any of the covenants contained in this Section 8 will cause irreparable
injury to Agent and Lender, that Agent and Lender have no adequate remedy at
law in respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 8 shall be specifically enforceable against
Pledgor, and Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that the Secured Obligations are not then due and payable in accordance
with the agreements and instruments governing and evidencing such obligations.

9.             Application of Proceeds.  Any cash held by Agent as Pledged Collateral
and all cash proceeds received by Agent in respect of any sale of, liquidation
of, or other realization upon all or any part of the Pledged Collateral shall
be applied by Agent as follows:

(a)           First, to the payment of the costs
and expenses of such sale, including reasonable compensation to Agent and its
agents and counsel, and all expenses, liabilities and advances made or incurred
by Agent in connection therewith;

(b)           Next, to the payment of
the Secured Obligations; and

 7
 

(c)           Finally, after payment in full of all
Secured Obligations, to the payment of Pledgor, or its successors or assigns,
or to whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.

10.           Waiver.  No delay on Agent’s part in exercising any
power of sale, Lien, option or other right hereunder, and no notice or demand
which may be given to or made upon Pledgor by Agent with respect to any power
of sale, Lien, option or other right hereunder, shall constitute a waiver
thereof, or limit or impair Agent’s right to take any action or to exercise any
power of sale, Lien, option, or any other right hereunder, without notice or
demand, or prejudice Agent’s rights as against Pledgor in any respect.

11.           Assignment.  Agent and Lender may assign, indorse or
transfer any instrument evidencing all or any part of the Secured Obligations
as provided in, and in accordance with, the Credit Facility, and the holder of
such instrument shall be entitled to the benefits of this Agreement.

12.           Termination.  Immediately following the payment in full of
all Secured Obligations and the termination of the Credit Facility (such date
being referred to herein as the “Termination Date”),
Agent shall deliver to Pledgor the Pledged Collateral pledged by Pledgor at the
time subject to this Agreement and all instruments of assignment executed in
connection therewith, free and clear of the Liens hereof, and any assignment
required to be executed by Agent to effect such redelivery and, except as
otherwise provided herein, all of Pledgor’s obligations hereunder shall at such
time terminate.

13.           Lien Absolute.  All rights of Agent and Lender hereunder, and
all obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of:

(a)           any lack of validity or
enforceability of the Credit Facility, any of the Other Documents or any other
agreement or instrument governing or evidencing any Secured Obligations;

(b)           any change in the time, manner or
place of payment of, or in any other term of, all or any part of the Secured
Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Facility, any of the Other Documents or any other
agreement or instrument governing or evidencing any Secured Obligations;

(c)           any exchange, release or
non-perfection of any other collateral, or any release or amendment or waiver
of or consent to departure from any guaranty, for all or any of the Secured
Obligations; or

(d)           any other circumstance which might
otherwise constitute a defense available to, or a discharge of, Pledgor.

14.           Release.  Pledgor consents and agrees that Agent may at
any time, or from time to time, in its discretion (a) renew, extend or change
the time of payment, and/or the manner, place or terms of payment of all or any
part of the Secured Obligations and (b) exchange, release and/or surrender all
or any of the Pledged Collateral, or any part thereof, by whomsoever 

 8
 

deposited, which is now
or may hereafter be held by Agent in connection with all or any of the Secured
Obligations; all in such manner and upon such terms as Agent may deem proper,
and without notice to or further assent from Pledgor, it being hereby agreed
that Pledgor shall be and remain bound upon this Agreement, irrespective of the
existence, value or condition of any of the Pledged Collateral, and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, renewal or extension, and notwithstanding also that the Secured
Obligations may, at any time exceed the aggregate principal amount thereof set
forth in the Credit Facility, or any other agreement governing any Secured
Obligations.  Pledgor hereby waives
notice of acceptance of this Agreement, and also presentment, demand, protest
and notice of dishonor of any and all of the Secured Obligations, and
promptness in commencing suit against any party hereto or liable hereon, and in
giving any notice to and of making any claim or demand hereunder upon such
Pledgor.  No act or omission of any kind
on Agent’s part shall in any event affect or impair this Agreement.

15.           Indemnification.  Pledgor agrees to indemnify and hold Agent
harmless from and against any taxes, liabilities, claims and damages, including
reasonable attorney’s fees and disbursements, and other expenses incurred or
arising by reason of the taking or the failure to take action by Agent, in good
faith, in respect of any transaction effected under this Agreement or in
connection with the Lien provided for herein, including, without limitation,
any taxes payable in connection with the delivery or registration of any of the
Pledged Collateral as provided herein (collectively “Indemnified
Claims”), in the manner provided in Section 15.5 of the Credit
Facility.  Whether or not the
transactions contemplated by this Agreement shall be consummated, Pledgor
agrees to pay to Agent all out-of-pocket costs and expenses incurred in
connection with this Agreement and all reasonable fees, expenses and
disbursements, including registration costs under the Act (or similar statute)
and the reasonable fees of Agent’s agents or representatives, incurred in
connection with the execution and delivery of this Agreement and the
performance by Agent of the provisions of this Agreement and of any
transactions effected in connection with this Agreement.  The obligations of Pledgor under this Section
15 shall survive the termination of this Agreement.  The foregoing notwithstanding, the indemnity
provided for herein shall not apply to any Indemnified Claim of Agent or any
Lender if a court of competent jurisdiction determines that such Indemnified Claim
is the result of the gross negligence or willful misconduct of Agent or any
such Lender.

16.           Reinstatement.  This Agreement shall remain in full force and
effect and continue to be effective should any petition be flied by or against
Pledgor for liquidation or reorganization, should Pledgor become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Pledgor’s assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time payment
and performance of the Secured Obligations, or any part thereof is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned, and in any such case, the Secured Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.

 9
 

17.           Miscellaneous.

(a)           Agent may execute any of its duties hereunder by or
through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.

(b)           Pledgor agrees to promptly reimburse
Agent for actual out-of-pocket expenses, including, without limitation,
reasonable counsel fees, incurred by Agent in connection with the
administration and enforcement of this Agreement.

(c)           Neither Agent nor any Lender nor any
of their respective officers, directors, employees, agents or counsel shall be
liable for any action lawfully taken or omitted to be taken by it or them
hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct.

(d)           This Agreement shall be binding upon
Pledgor and its successors and assigns, and shall inure to the benefit of, and
be enforceable by, Agent and Lender and their respective successors and
assigns, and shall be governed by, and construed and enforced in accordance
with, the internal laws in effect in the State of Texas without giving effect
to principles of choice of law, and none of the terms or provisions of this
Agreement may be waived, altered, modified or amended except in writing duly
signed for and on behalf of Agent and Pledgor.

18.           Severability.  If for any reason any provision or provisions
hereof are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or effect those portions of
this Agreement which are valid.

19.           Notices.  Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by another, or whenever any of the parties desires to give or
serve upon another any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be delivered in accordance and to the addresses
set forth in Section 15.6 of the Credit Facility.  The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such notice.  Every notice, demand, request, consent,
approval, declaration or other communication hereunder shall be effective as
and when provided in Section 15.6 of the Credit Facility.  Failure or delay in delivering copies of any
notice, demand, request, consent, approval, declaration or other communication
to the persons designated above to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.

20.           Section Titles.  The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

21.           Counterparts.  This Agreement may be executed in any number
of counterparts, which shall, collectively and separately, constitute one
agreement.

 10
 

22.           Conflict of Terms.  Except as otherwise explicitly provided in
this Agreement, if any provision contained in this Agreement is in conflict
with or inconsistent with any provision in the Credit Facility, the provision
contained in the Credit Facility shall govern and control to the extent of such
conflict or inconsistency.

[Signature Page Follows]

 11

IN WITNESS WHEREOF, the parties
hereto have caused this Equity Interests Pledge Agreement to be duly executed
as of the date first written above, 

 

	
  

  	
  BEHRINGER HARVARD MULTIFAMILY OP I LP,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  
	
   

  	
  By:

  	
   

  	
  BHMF, Inc., its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Executive Vice President -

  
	
   

  	
   

  	
   

  	
   

  	
  Corporate Development & Legal

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accepted and Acknowledged by:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BEHRINGER HARVARD OPERATING PARTNERSHIP I, LP,

  	
   

  	
   

  
	
  as Agent and Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Gary S. Bresky

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Chief Financial Officer

  	
   

  	
   

  
									

 

 

Signature Page

 

SCHEDULE I

to the Equity Interests Pledge Agreement

Attached to and forging a part of that certain Equity
Interests Pledge Agreement, dated as of April 2, 2007, by BEHRINGER HARVARD
MULTIFAMILY OP I LP, Pledgor, to BEHRINGER HARVARD OPERATING PARTNERSHIP I LP,
as Agent for Lender.

	
  Name and

  Address of

  Pledgor

  	
   

  	
  Issuer

  	
   

  	
  Class of

  Equity

  	
   

  	
  Certificate

  No(s).

  	
   

  	
  Number

  of Equity Interests

  	
   

  
	
  Behringer Harvard
  Multifamily OP I, LP

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 I-1

SCHEDULE II

to the Equity Interests Pledge Agreement

PLEDGE AMENDMENT

This Pledge Amendment, dated ___________, 20_ is
delivered pursuant to Section 6(d) of the Equity Interests Pledge Agreement
referred to below.  The undersigned
hereby agrees that this Pledge Amendment may be attached to that certain Equity
Interests Pledge Agreement, dated as of April 2, 2007, by the undersigned, as
Pledgor, to BEHRINGER HARVARD OPERATING PARTNERSHIP I LP, as Agent for Lender
described therein, and that the Pledged Equity Interests listed on this Pledge
Amendment shall be and become a part of the Pledged Collateral referred to in
said Equity Interests Pledge Agreement and shall secure all Secured Obligations
referred to in said Equity Interests Pledge Agreement.

	
  

  	
  BEHRINGER HARVARD MULTIFAMILY OP I LP, 

  
	
   

  	
  a Delaware limited partnership

  
	
   

  
	
   

  	
  By:

  	
   

  	
  BHMF, Inc.,

  Its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Executive Vice President -

  
	
   

  	
   

  	
   

  	
   

  	
  Corporate Development & Legal

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

	
  Name and

  Address of

  Pledgor

  	
   

  	
  Issuer

  	
   

  	
  Class of

  Equity

  	
   

  	
  Certificate

  No(s).

  	
   

  	
  Number

  of Equity Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 II-1

Exhibit
2.1(a)

REVOLVING
CREDIT NOTE

	
  $100,000,000

  	
  April 2, 2007

  
	
   

  	
  Addison, Texas

  

 

FOR
VALUE RECEIVED, BEHRINGER HARVARD MULTIFAMILY OP I LP, a Delaware limited
partnership (the “Borrower”),
promises to pay to the order of BEHRINGER HARVARD OPERATING PARTNERSHIP I LP, a
Texas limited partnership, as agent (in such capacity, the “Agent”) and as lender (in such capacity, the “Lender”), at Agent’s office located at 15601 Dallas Parkway,
Suite 600, Addison, Texas 75001, in lawful money of the United Stated of
America and in immediately available funds, the principal sum of One Hundred
Million Dollars ($100,000,000), or such lesser amount as is recorded on the
schedule attached hereto, or in the books and records of the Lender, on the Expiration
Date (unless sooner accelerated or prepaid pursuant to the Credit Agreement
referred to below); and to pay interest on the unpaid principal balance hereof
from time to time outstanding, in like money and funds, for the period from the
date hereof until the Revolving Advances evidenced hereby shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.

The
Lender is authorized by the Borrower to record on the schedule attached to this
Note, or on its books and records, the date and the amount of each Revolving
Advance and the Applicable Interest Rate, the amount of each payment or
prepayment of principal thereon and the other information provided for on the
schedule, which schedule or books and records, as the case may be, shall
constitute prima facie evidence of the information so recorded, provided,
however, that any failure by the Lender to record, or any error in
recording, any such information shall not relieve the Borrower of its
obligation to repay the outstanding principal amount of the Revolving Advances,
all accrued interest thereon and any amount payable with respect thereto in
accordance with the terms of this Note and the Credit Agreement.

The
Borrower and each endorser or guarantor hereof waive demand, presentment,
protest, diligence, notice of dishonor and any other formality in connection
with this Note.  Should the indebtedness
evidenced by this Note or any part thereof be collected in any proceeding or be
placed in the hands of attorneys for collection, the Borrower agrees to pay, in
addition to the principal, interest and other sums due and payable hereon, all
costs of collecting this Note, including attorneys’ fees and expenses.

This
Note evidences one or more Revolving Advances made under that certain Revolving
Credit, Security and Guaranty Agreement, dated as of April 2, 2007 (as amended
and modified from time to time, the “Credit Agreement”),
among Borrower, Lender, REIT, Sponsor and each Subsidiary Guarantor, to which
reference is made for a statement of the circumstances under which this Note is
subject to prepayment and under which its due date may be accelerated and for a
description of the collateral securing this Note.  Capitalized terms used but not defined in
this Note shall have the respective meanings assigned to them in the Credit
Agreement.

This
Note is made under, and shall be governed by and construed in accordance with,
the laws of the State of Texas applicable to contracts made and to be performed
entirely within such State and without giving effect to choice of law
principals of such State.

	
  

  	
   

  	
  BEHRINGER HARVARD MULTIFAMILY OP I LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  BHMF, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Executive Vice President — Corporate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Development & Legal

  

 

 2
 

Schedule to
Revolving Credit Note, dated April 2, 2007,

made by Behringer Harvard Multifamily OP I LP

in favor of Behringer Harvard Operating Partnership I LP

	
  Transaction

  Date

  	
   

  	
  Principal

  Amount of

  Loan

  	
   

  	
  Interest

  Rate

  	
   

  	
  Principal

  Amount Paid

  or Prepaid

  	
   

  	
  Principal

  Balance

  Outstanding

  	
   

  	
  Notation

  Made by

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 3

Exhibit 7.7

GUARANTY
OF PAYMENT AND COMPLETION

THIS GUARANTY (this
“Guaranty”) is dated as of the [____] day of [___________], 200[__], by
[___________], a [____________] (“Guarantor”), for the benefit of BEHRINGER
HARVARD OPERATING PARTNERSHIP I LP,
a Texas limited partnership, it successors and assigns (“Lender”).

R E C
I T A L S:

A.            Reference
is hereby made to that certain Revolving Credit, Security and Guaranty
Agreement, dated as of April 2, 2007, by and among, Lender, Behringer Harvard
Multifamily OP I LP, a Delaware limited partnership (“Borrower”), Behringer
Harvard Multifamily REIT I, Inc., a Maryland corporation, and Behringer Harvard
Holdings, LLC, a Delaware limited liability company, pursuant to which Lender
agreed to make available to Borrower a credit facility in an aggregate
principal amount not to exceed $100 million, as such amount may be increased in
accordance with the terms therein (as amended from time to time, the “Credit
Facility”). Any capitalized terms used but not defined herein shall have the
meaning ascribed to such term in the Credit Facility.

B.            Lender
has agreed to extend credit to Borrower subject to the terms and conditions set
forth in the Credit Facility.  The
obligations of Lender to extend such credit are conditioned upon, among other
things, the execution and delivery of this Guaranty.

C.            Guarantor
is an Affiliate of Borrower, will derive substantial benefits from the
extension of credit to Borrower pursuant to the Credit Facility and is willing
to execute and deliver this Guaranty in order to induce Lender to extend such
credit.

D.            In
accordance with the Credit Facility, Borrower has requested Lender to provide
to Borrower a Revolving Advance in the principal amount, or a Guaranty having a
Guaranty Value, as set forth on Schedule I attached hereto and made a part
hereof, as such Schedule may be supplemented from time to time by the Guaranty
Supplement set forth on Schedule II (the “Guaranteed Obligations”).

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

1.             Guaranty of Payment and
Performance.  Guarantor
hereby unconditionally and irrevocably guarantees to Lender, the punctual
payment and performance when due, whether at stated maturity or by acceleration
or otherwise, of the indebtedness and other obligations of Borrower to Lender
that may become owing by Borrower under any of the Loan Documents (hereinafter
referred to as “Borrower’s Obligations”). 
This guaranty is a present and continuing guaranty of payment and not of
collectibility, and Lender shall not be required to prosecute collection,
enforcement or other remedies against Borrower or any other guarantor of
Borrower’s Obligations, or to enforce or resort to any collateral for the
repayment of Borrower’s Obligations or other rights or remedies pertaining
thereto, before calling on Guarantor for payment. If for any reason Borrower
shall fail or be unable to pay, punctually and fully, any of Borrower’s

Obligations, each
Guarantor, subject to the Limitation (as hereinafter defined), shall pay such
obligations to Lender in full immediately upon demand.  One or more successive actions may be brought
against Guarantor, as often as Lender deems advisable (subject to the Limitation),
until all of Borrower’s Obligations are paid in full.

2.             Limitation.  The Guaranty made by Guarantor hereunder, and
any payments required to be made by Guarantor hereunder with respect to
Borrower’s Obligations, be and hereby are limited to the amount of the
Guaranteed Obligations (the “Limitation”).

3.             Continuing Guaranty.  Guarantor agrees that the payment of Borrower’s
Obligations by Guarantor shall be a primary obligation, shall not be subject to
any counterclaim, set-off, abatement, deferment or defense based upon any
claim that Guarantor may have against Lender, Borrower, any other guarantor of
Borrower’s Obligations or any other person or entity, and shall remain in full
force and effect without regard to, and shall not be released, discharged or
affected in any way by, any circumstance or condition (whether or not Guarantor
shall have any knowledge thereof), including without limitation:

(a)           any lack of validity or
enforceability of any of the Loan Documents;

(b)           any termination, amendment, modification
or other change in any of the Loan Documents, including, without limitation,
any modification of the interest rate(s) described therein;

(c)           any furnishing, exchange,
substitution or release of any collateral securing repayment of the Loan, or any
failure to perfect any lien in such collateral;

(d)           any failure, omission or delay on the
part of Borrower, Guarantor, any other guarantor of Borrower’s Obligations or
Lender to conform or comply with any term of any of the Loan Documents or any
failure of Lender to give notice of any Event of Default;

(e)           any waiver, compromise, release,
settlement or extension of time of payment or performance or observance of any
of the obligations or agreements contained in any of the Loan Documents;

(f)            any action or inaction by Lender
under or in respect of any of the Loan Documents, any failure, lack of
diligence, omission or delay on the part of Lender to perfect, enforce, assert
or exercise any lien, security interest, right, power or remedy conferred on it
in any of the Loan Documents, or any other action or inaction on the part of
Lender;

(g)           any voluntary or involuntary
bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment
for the benefit of creditors, composition, receivership, liquidation,
marshalling of assets and liabilities or similar events or proceedings with
respect to Borrower, Guarantor or any other guarantor of Borrower’s
Obligations, as applicable, or any of their respective property or creditors,
or any action taken by any trustee or receiver or by any court in any such
proceeding;

 2
 

(h)           any merger or consolidation of
Borrower into or with any entity, or any sale, lease or transfer of any of the
assets of Borrower, Guarantor or any other guarantor of Borrower’s Obligations
to any other person or entity;

(i)            any change in the ownership of
Borrower or any change in the relationship between Borrower, Guarantor or any
other guarantor of Borrower’s Obligations, or any termination of any such
relationship;

(j)            any release or discharge by
operation of law of Borrower, Guarantor or any other guarantor of Borrower’s
Obligations from any obligation or agreement contained in any of the Loan
Documents; or

(k)           any other occurrence, circumstance,
happening or event, whether similar or dissimilar to the foregoing and whether
foreseen or unforeseen, which otherwise might constitute a legal or equitable
defense or discharge of the liabilities of a guarantor or surety or which
otherwise might limit recourse against Borrower or Guarantor to the fullest
extent permitted by law.

4.             Waivers.  Guarantor expressly and unconditionally
waives (i) notice of any of the matters referred to in Section 4
above, (ii) all notices which may be required by statute, rule of law or
otherwise, now or hereafter in effect, to preserve intact any rights against
Guarantor, including, without limitation, any demand, presentment and protest,
proof of notice of non-payment under any of the Loan Documents and notice
of any Event of Default or any failure on the part of Borrower, Guarantor or
any other guarantor of Borrower’s Obligations to perform or comply with any
covenant, agreement, term or condition of any of the Loan Documents,
(iii) any right to the enforcement, assertion or exercise against
Borrower, Guarantor or any other guarantor of Borrower’s Obligations of any
right or remedy conferred under any of the Loan Documents, (iv) any
requirement of diligence on the part of any person or entity, (v) to the
fullest extent permitted by law and except as otherwise expressly provided in
this Guaranty or the other Loan Documents, any claims based on allegations that
Lender has failed to act in a commercially reasonable manner or failed to
exercise Lender’s so-called obligation of good faith and fair dealing,
(vi) any requirement to exhaust any remedies or to mitigate the damages
resulting from any default under any of the Loan Documents, and (vii) any
notice of any sale, transfer or other disposition of any right, title or
interest of Lender under any of the Loan Documents.

5.             Subordination.  Guarantor agrees that any and all present and
future debts and obligations of Borrower to Guarantor hereby are subordinated
to the claims of Lender and hereby are assigned by Guarantor to Lender as
security for Borrower’s Obligations and Guarantor’s obligations under this
Guaranty.

6.             Subrogation Waiver.  Until Borrower’s Obligations are paid in full
and all periods under applicable bankruptcy law for the contest of any payment
by Guarantor or Borrower as a preferential or fraudulent payment have expired,
Guarantor knowingly, and with advice of counsel, waives, relinquishes, releases
and abandons all rights and claims to indemnification, contribution,
reimbursement, subrogation and payment which Guarantor may now or hereafter
have by and from Borrower and the successors and assigns of Borrower, for any

 3
 

payments made by
Guarantor to Lender, including, without limitation, any rights which might
allow Borrower, Borrower’s successors, a creditor of Borrower, or a trustee in
bankruptcy of Borrower to claim in bankruptcy or any other similar proceedings
that any payment made by Borrower or Borrower’s successors and assigns to
Lender was on behalf of or for the benefit of Guarantor and that such payment
is recoverable by Borrower, a creditor or trustee in bankruptcy of Borrower as
a preferential payment, fraudulent conveyance, payment of an insider or any
other classification of payment which may otherwise be recoverable from Lender.

7.             Reinstatement.  The obligations of Guarantor pursuant to this
Guaranty shall continue to be effective or automatically be reinstated, as the
case may be, if at any time payment of any of Borrower’s Obligations or
Guarantor’s obligations under this Guaranty is rescinded or otherwise must be
restored or returned by Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Guarantor or Borrower or otherwise, all as
though such payment had not been made.

8.             Enforcement Costs.  If: 
(a) this Guaranty, is placed in the hands of one or more attorneys
for collection or is collected through any legal proceeding; (b) one or
more attorneys is retained to represent Lender in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors’ rights
and involving a claim under this Guaranty, or (c) one or more attorneys is
retained to represent Lender in any other proceedings whatsoever in connection
with this Guaranty,  then Guarantor shall
pay to Lender upon demand all fees, costs and expenses incurred by Lender in
connection therewith, including, without limitation, reasonable attorney’s
fees, court costs and filing fees, in addition to all other amounts due
hereunder.

9.             Successors and Assigns;
Joint and Several Liability. 
This Guaranty shall inure to the benefit of Lender and its successors
and assigns.  This Guaranty shall be
binding on Guarantor and the successors and assigns of Guarantor.  If this Guaranty is executed by more than one
person, it shall be the joint and several undertaking of each of the
undersigned.  Regardless of whether this
Guaranty is executed by more than one person, it is agreed that the undersigned’s
liability hereunder is several and independent of any other guarantees or other
obligations at any time in effect with respect to Borrower’s Obligations or any
part thereof and that Guarantor’s liability hereunder may be enforced
regardless of the existence, validity, enforcement or non-enforcement of
any such other guarantees or other obligations.

10.           No Waiver of Rights.  No delay or failure on the part of Lender to exercise
any right, power or privilege under this Guaranty or any of the other Loan
Documents shall operate as a waiver thereof, and no single or partial exercise
of any right, power or privilege shall preclude any other or further exercise
thereof or the exercise of any other power or right, or be deemed to establish
a custom or course of dealing or performance between the parties hereto.  The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.  No notice to or demand on Guarantor in any
case shall entitle Guarantor to any other or further notice or demand in the
same, similar or other circumstance.

11.           Modification.  The terms of this Guaranty may be waived,
discharged, or terminated only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.  No amendment, modification,
waiver or

 4
 

other change of any of
the terms of this Guaranty shall be effective without the prior written consent
of Lender.

12.           Joinder.  Any action to enforce this Guaranty may be
brought against Guarantor without any reimbursement or joinder of Borrower or
any other guarantor of Borrower’s Obligations in such action.

13.           Severability.  If any provision of this Guaranty is deemed
to be invalid by reason of the operation of law, or by reason of the
interpretation placed thereon by any administrative agency or any court,
Guarantor and Lender shall negotiate an equitable adjustment in the provisions
of the same in order to effect, to the maximum extent permitted by law, the
purpose of this Guaranty and the validity and enforceability of the remaining
provisions, or portions or applications thereof, shall not be affected thereby
and shall remain in full force and effect.

14.           Applicable Law.  This Guaranty is governed as to validity,
interpretation, effect and in all other respects by laws and decisions of the
State of Texas.

15.           Notice.  All notices, communications and waivers under
this Guaranty shall be delivered in accordance with, and to the addresses set
forth in, Section 15.6 of the Credit Facility.

16.          CONSENT TO JURISDICTION.  TO INDUCE LENDER TO ACCEPT THIS GUARANTY,
EACH GUARANTOR IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S SOLE AND ABSOLUTE
ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO
THIS GUARANTY WILL BE LITIGATED IN COURTS HAVING SITUS IN DALLAS, TEXAS.  EACH GUARANTOR HEREBY CONSENTS AND SUBMITS TO
THE JURISDICTION OF ANY COURT LOCATED WITHIN DALLAS, TEXAS, WAIVES PERSONAL
SERVICE OF PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL DIRECTED TO GUARANTOR AT THE ADDRESS STATED HEREIN AND SERVICE
SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

17.          WAIVER OF JURY TRIAL.  GUARANTOR AND LENDER (BY ACCEPTANCE HEREOF),
HAVING BEEN REPRESENTED BY COUNSEL, EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS GUARANTY OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.  GUARANTOR
AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST LENDER ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

[Remainder
of Page Intentionally Left Blank]

 

 5

IN WITNESS WHEREOF,
Guarantor has executed this Guaranty as of the date first above written.

	
  

  	
   

  	
  [NAME OF GUARANTOR]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  

 

 

Signature Page

SCHEDULE I

Initial Guaranteed Obligations

	
  Date

  	
   

  	
  Revolving Advance Amount

  	
   

  	
  Guaranty Value

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 I-1

SCHEDULE
II

Guaranty Supplement

This Guaranty Supplement, dated ___________, 20_ is
delivered pursuant to that certain Guaranty referred to below.  The undersigned hereby agrees that this
Guaranty Supplement may be attached to that certain Guaranty, dated as of
___________, 20_, by the undersigned, as Guarantor, to BEHRINGER HARVARD
OPERATING PARTNERSHIP I LP, as Lender, and that the Guaranteed Obligations
listed on this Guaranty Supplement shall be and become a part of the Guaranteed
Obligations referred to in said Guaranty.

	
  

  	
   

  	
  [NAME OF GUARANTOR]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  

 

	
  Date

  	
   

  	
  Revolving Advance Amount

  	
   

  	
  Guaranty Value

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 II-1

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