Document:

Exhibit 10.43

 

 

 

LOAN AGREEMENT

 

dated as of

 

August 25, 2005

 

among

 

DOUGLAS EMMETT 1995, LLC,

A DELAWARE LIMITED LIABILITY COMPANY

 

the LENDERS Party Hereto,

 

and

 

EUROHYPO AG, NEW YORK BRANCH,

 

as Administrative Agent

 

 

$260,000,000

 

 

EUROHYPO AG, NEW YORK BRANCH,

as Lead Arranger and Joint Bookrunner

 

and

 

BARCLAYS CAPITAL REAL ESTATE INC.

as Co-Lead Arranger and Joint Bookrunner

 

 

 

 

	
  ARTICLE I

  	
   

  	
  DEFINITIONS AND ACCOUNTING MATTERS

  	
  1

  
	
  1.01

  	
   

  	
  Certain Defined
  Terms

  	
  1

  
	
  1.02

  	
   

  	
  Accounting Terms
  and Determinations

  	
  32

  
	
  1.03

  	
   

  	
  Types of Loans

  	
  32

  
	
  1.04

  	
   

  	
  Terms Generally

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  COMMITMENTS, LOANS, NOTES AND PREPAYMENTS

  	
  33

  
	
  2.01

  	
   

  	
  Loans

  	
  33

  
	
  2.02

  	
   

  	
  Funding of Loans

  	
  33

  
	
  2.03

  	
   

  	
  Several
  Obligations

  	
  33

  
	
  2.04

  	
   

  	
  Notes

  	
  34

  
	
  2.05

  	
   

  	
  Conversions or
  Continuations of Loans

  	
  34

  
	
  2.06

  	
   

  	
  Prepayment

  	
  35

  
	
  2.07

  	
   

  	
  Mandatory
  Prepayments

  	
  36

  
	
  2.08

  	
   

  	
  Interest and
  Other Charges on Prepayment

  	
  37

  
	
  2.09

  	
   

  	
  Release of
  Projects

  	
  37

  
	
  2.10

  	
   

  	
  Call Date

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  PAYMENTS OF PRINCIPAL AND INTEREST

  	
  40

  
	
  3.01

  	
   

  	
  Repayment of
  Loans

  	
  40

  
	
  3.02

  	
   

  	
  Interest

  	
  40

  
	
  3.03

  	
   

  	
  Project-Level
  Account

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.

  	
  41

  
	
  4.01

  	
   

  	
  Payments

  	
  41

  
	
  4.02

  	
   

  	
  Pro Rata
  Treatment

  	
  42

  
	
  4.03

  	
   

  	
  Computations

  	
  43

  
	
  4.04

  	
   

  	
  Minimum Amounts

  	
  43

  
	
  4.05

  	
   

  	
  Certain Notices

  	
  43

  
	
  4.06

  	
   

  	
  Non-Receipt of Funds
  by the Administrative Agent

  	
  44

  
	
  4.07

  	
   

  	
  Sharing of
  Payments, Etc.

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  YIELD PROTECTION, ETC.

  	
  46

  
	
  5.01

  	
   

  	
  Additional Costs

  	
  46

  
	
  5.02

  	
   

  	
  Limitation on
  Eurodollar Loans

  	
  48

  
	
  5.03

  	
   

  	
  Illegality

  	
  49

  
	
  5.04

  	
   

  	
  Treatment of
  Affected Loans

  	
  49

  

 

i

 

	
  5.05

  	
   

  	
  Compensation

  	
  49

  
	
  5.06

  	
   

  	
  Taxes

  	
  50

  
	
  5.07

  	
   

  	
  Replacement of
  Lenders

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  CONDITIONS PRECEDENT

  	
  52

  
	
  6.01

  	
   

  	
  Conditions
  Precedent to Effectiveness of Loan Commitments

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
  57

  
	
  7.01

  	
   

  	
  Organization;
  Powers

  	
  57

  
	
  7.02

  	
   

  	
  Authorization;
  Enforceability

  	
  57

  
	
  7.03

  	
   

  	
  Government
  Approvals; No Conflicts

  	
  57

  
	
  7.04

  	
   

  	
  Financial
  Condition

  	
  57

  
	
  7.05

  	
   

  	
  Litigation

  	
  58

  
	
  7.06

  	
   

  	
  ERISA

  	
  58

  
	
  7.07

  	
   

  	
  Taxes

  	
  58

  
	
  7.08

  	
   

  	
  Investment and
  Holding Company Status

  	
  58

  
	
  7.09

  	
   

  	
  Environmental
  Matters

  	
  58

  
	
  7.10

  	
   

  	
  Organizational
  Structure

  	
  59

  
	
  7.11

  	
   

  	
  Subsidiaries

  	
  60

  
	
  7.12

  	
   

  	
  Title

  	
  60

  
	
  7.13

  	
   

  	
  No Bankruptcy
  Filing

  	
  60

  
	
  7.14

  	
   

  	
  Executive
  Offices; Places of Organization

  	
  60

  
	
  7.15

  	
   

  	
  Compliance;
  Government Approvals

  	
  60

  
	
  7.16

  	
   

  	
  Condemnation;
  Casualty

  	
  60

  
	
  7.17

  	
   

  	
  Utilities and
  Public Access; No Shared Facilities

  	
  61

  
	
  7.18

  	
   

  	
  Solvency

  	
  61

  
	
  7.19

  	
   

  	
  Foreign Person

  	
  61

  
	
  7.20

  	
   

  	
  No Joint
  Assessment; Separate Lots

  	
  61

  
	
  7.21

  	
   

  	
  Security
  Interests and Liens

  	
  61

  
	
  7.22

  	
   

  	
  Leases

  	
  62

  
	
  7.23

  	
   

  	
  Insurance

  	
  62

  
	
  7.24

  	
   

  	
  Physical
  Condition

  	
  62

  
	
  7.25

  	
   

  	
  Flood Zone

  	
  63

  
	
  7.26

  	
   

  	
  Management
  Agreement

  	
  63

  
	
  7.27

  	
   

  	
  Boundaries

  	
  63

  

 

ii

 

	
  7.28

  	
   

  	
  Illegal Activity

  	
  63

  
	
  7.29

  	
   

  	
  Permitted Liens

  	
  63

  
	
  7.30

  	
   

  	
  Foreign Assets
  Control Regulations, Etc.

  	
  63

  
	
  7.31

  	
   

  	
  Defaults

  	
  64

  
	
  7.32

  	
   

  	
  Other
  Representations

  	
  64

  
	
  7.33

  	
   

  	
  True and
  Complete Disclosure

  	
  64

  
	
  7.34

  	
   

  	
  Reserved

  	
  64

  
	
  7.35

  	
   

  	
  Limited Partners

  	
  64

  
	
  7.36

  	
   

  	
  Non-Foreign
  Status

  	
  64

  
	
  7.37

  	
   

  	
  Borrower’s
  Member

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  AFFIRMATIVE COVENANTS OF THE BORROWER

  	
  65

  
	
  8.01

  	
   

  	
  Information

  	
  65

  
	
  8.02

  	
   

  	
  Notices of
  Material Events

  	
  67

  
	
  8.03

  	
   

  	
  Existence, Etc.

  	
  68

  
	
  8.04

  	
   

  	
  Compliance with
  Laws; Adverse Regulatory Changes

  	
  68

  
	
  8.05

  	
   

  	
  Insurance

  	
  69

  
	
  8.06

  	
   

  	
  Real Estate
  Taxes and Other Charges

  	
  75

  
	
  8.07

  	
   

  	
  Maintenance of
  the Projects; Alterations

  	
  75

  
	
  8.08

  	
   

  	
  Further
  Assurances

  	
  76

  
	
  8.09

  	
   

  	
  Performance of
  the Loan Documents

  	
  77

  
	
  8.10

  	
   

  	
  Books and
  Records; Inspection Rights

  	
  77

  
	
  8.11

  	
   

  	
  Environmental
  Compliance

  	
  77

  
	
  8.12

  	
   

  	
  Management of
  the Projects

  	
  79

  
	
  8.13

  	
   

  	
  Leases

  	
  79

  
	
  8.14

  	
   

  	
  Tenant Estoppels

  	
  79

  
	
  8.15

  	
   

  	
  Subordination,
  Non-Disturbance and Attornment Agreements

  	
  80

  
	
  8.16

  	
   

  	
  Operating Plan
  and Budget

  	
  80

  
	
  8.17

  	
   

  	
  Operating
  Expenses

  	
  81

  
	
  8.18

  	
   

  	
  Margin
  Regulations

  	
  81

  
	
  8.19

  	
   

  	
  Hedge
  Agreements.

  	
  81

  
	
  8.20

  	
   

  	
  Reserved

  	
  85

  
	
  8.21

  	
   

  	
  Required Work

  	
  85

  

 

iii

 

	
  ARTICLE IX

  	
   

  	
  NEGATIVE COVENANTS OF THE BORROWER

  	
  85

  
	
  9.01

  	
   

  	
  Fundamental
  Change

  	
  85

  
	
  9.02

  	
   

  	
  Limitation on
  Liens

  	
  86

  
	
  9.03

  	
   

  	
  Due on Sale;
  Transfer; Pledge

  	
  88

  
	
  9.04

  	
   

  	
  Indebtedness

  	
  93

  
	
  9.05

  	
   

  	
  Investments

  	
  96

  
	
  9.06

  	
   

  	
  Restricted
  Payments

  	
  96

  
	
  9.07

  	
   

  	
  Change of
  Organization Structure; Location of Principal Office

  	
  97

  
	
  9.08

  	
   

  	
  Transactions
  with Affiliates

  	
  97

  
	
  9.09

  	
   

  	
  Leases

  	
  97

  
	
  9.10

  	
   

  	
  Reserved

  	
  99

  
	
  9.11

  	
   

  	
  No Joint
  Assessment; Separate Lots

  	
  99

  
	
  9.12

  	
   

  	
  Zoning

  	
  99

  
	
  9.13

  	
   

  	
  ERISA

  	
  99

  
	
  9.14

  	
   

  	
  Reserved

  	
  100

  
	
  9.15

  	
   

  	
  Property
  Management

  	
  100

  
	
  9.16

  	
   

  	
  Foreign Assets
  Control Regulations

  	
  100

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  INSURANCE AND CONDEMNATION PROCEEDS

  	
  101

  
	
  10.01

  	
   

  	
  Casualty Events

  	
  101

  
	
  10.02

  	
   

  	
  Condemnation
  Awards

  	
  102

  
	
  10.03

  	
   

  	
  Restoration

  	
  102

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
  CASH TRAP ACCOUNT

  	
  108

  
	
  11.01

  	
   

  	
  Low DSCR Trigger
  Event

  	
  108

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
  EVENTS OF DEFAULT

  	
  110

  
	
  12.01

  	
   

  	
  Events of
  Default

  	
  110

  
	
  12.02

  	
   

  	
  Remedies

  	
  114

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  	
  THE ADMINISTRATIVE AGENT

  	
  115

  
	
  13.01

  	
   

  	
  Appointment,
  Powers and Immunities

  	
  115

  
	
  13.02

  	
   

  	
  Reliance by
  Administrative Agent

  	
  116

  
	
  13.03

  	
   

  	
  Defaults

  	
  116

  
	
  13.04

  	
   

  	
  Rights as a
  Lender

  	
  118

  
	
  13.05

  	
   

  	
  Indemnification

  	
  119

  
	
  13.06

  	
   

  	
  Non-Reliance on
  Administrative Agent and Other Lenders

  	
  119

  

 

iv

 

	
  13.07

  	
   

  	
  Failure to Act

  	
  119

  
	
  13.08

  	
   

  	
  Resignation of Administrative Agent

  	
  120

  
	
  13.09

  	
   

  	
  Consents under
  Loan Documents

  	
  121

  
	
  13.10

  	
   

  	
  Authorization

  	
  121

  
	
  13.11

  	
   

  	
  Amendments
  Concerning Agency Function

  	
  122

  
	
  13.12

  	
   

  	
  Liability of the
  Administrative Agent

  	
  122

  
	
  13.13

  	
   

  	
  Transfer of
  Agency Function

  	
  122

  
	
  13.14

  	
   

  	
  Co-Lead Arranger
  and Joint Bookrunner

  	
  122

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
   

  	
  MISCELLANEOUS

  	
  122

  
	
  14.01

  	
   

  	
  Non-Waiver;
  Remedies Cumulative

  	
  122

  
	
  14.02

  	
   

  	
  Notices

  	
  122

  
	
  14.03

  	
   

  	
  Expenses, Etc.

  	
  123

  
	
  14.04

  	
   

  	
  Indemnification

  	
  125

  
	
  14.05

  	
   

  	
  Amendments, Etc.

  	
  125

  
	
  14.06

  	
   

  	
  Successors and
  Assigns

  	
  126

  
	
  14.07

  	
   

  	
  Assignments and
  Participations

  	
  126

  
	
  14.08

  	
   

  	
  Survival

  	
  129

  
	
  14.09

  	
   

  	
  Reserved

  	
  130

  
	
  14.10

  	
   

  	
  Right of Set-off

  	
  130

  
	
  14.11

  	
   

  	
  Remedies of
  Borrower

  	
  131

  
	
  14.12

  	
   

  	
  Brokers

  	
  131

  
	
  14.13

  	
   

  	
  Estoppel
  Certificates

  	
  131

  
	
  14.14

  	
   

  	
  Preferences

  	
  132

  
	
  14.15

  	
   

  	
  Certain Waivers

  	
  132

  
	
  14.16

  	
   

  	
  Entire Agreement

  	
  132

  
	
  14.17

  	
   

  	
  Severability

  	
  132

  
	
  14.18

  	
   

  	
  Captions

  	
  133

  
	
  14.19

  	
   

  	
  Counterparts

  	
  133

  
	
  14.20

  	
   

  	
  GOVERNING LAW

  	
  133

  
	
  14.21

  	
   

  	
  SUBMISSION TO
  JURISDICTION

  	
  133

  
	
  14.22

  	
   

  	
  WAIVER OF JURY
  TRIAL; COUNTERCLAIM

  	
  133

  
	
  14.23

  	
   

  	
  Limitation of
  Liability

  	
  134

  
	
  14.24

  	
   

  	
  Confidentiality

  	
  135

  

 

v

 

	
  14.25

  	
   

  	
  Usury Savings
  Clause

  	
  136

  
	
  14.26

  	
   

  	
  Cooperation with
  Syndication

  	
  137

  
	
  14.27

  	
   

  	
  Reserved

  	
  137

  
	
  14.29

  	
   

  	
  Financing
  Statements

  	
  140

  
	
  14.30

  	
   

  	
  Severance of
  Loan

  	
  140

  
	
  14.31

  	
   

  	
  Additional
  Permitted Public REIT Provisions

  	
  141

  

 

	
  SCHEDULES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1A

  	
  -

  	
  List of Projects

  	
   

  
	
  Schedule 1B

  	
  -

  	
  Legal
  Descriptions of Projects

  	
   

  
	
  Schedule 1.01(1)

  	
  -

  	
  Allocated Loan
  Amounts

  	
   

  
	
  Schedule 1.01(2)

  	
  -

  	
  List of
  Applicable Lending Offices

  	
   

  
	
  Schedule 1.01(3)

  	
  -

  	
  Appraised Values

  	
   

  
	
  Schedule 1.01(4)

  	
  -

  	
  List of
  Commitments and Proportionate Shares

  	
   

  
	
  Schedule 1.01(5)

  	
  -

  	
  Certain Eligible
  Assignees

  	
   

  
	
  Schedule 1.01(6)

  	
  -

  	
  List of
  Environmental Reports

  	
   

  
	
  Schedule 1.01(7)

  	
  -

  	
  List of Property
  Condition Reports

  	
   

  
	
  Schedule 1.01(8)

  	
  -

  	
  List of Property
  Management Agreements

  	
   

  
	
  Schedule 1.01(9)

  	
  -

  	
  Title Companies

  	
   

  
	
  Schedule 7.04

  	
  -

  	
  Financial
  Condition Events

  	
   

  
	
  Schedule 7.05

  	
  -

  	
  Pending
  Litigation

  	
   

  
	
  Schedule 7.09

  	
  -

  	
  Environmental
  Matters

  	
   

  
	
  Schedule 7.11

  	
  -

  	
  Subsidiaries

  	
   

  
	
  Schedule 7.22

  	
  -

  	
  Rent Roll

  	
   

  
	
  Schedule 8.11

  	
  -

  	
  List of
  Underground Storage Tanks

  	
   

  
	
  Schedule 8.21

  	
  -

  	
  Required Work

  	
   

  
	
  Schedule 9.12

  	
  -

  	
  Existing
  Non-conforming Uses

  	
   

  
					

 

vi

 

	
  EXHIBITS:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of
  Assignment and Assumption

  	
   

  
	
  Exhibit B

  	
  -

  	
  Borrower’s
  Manager’s Limited Indemnity and Guarantee

  	
   

  
	
  Exhibit C

  	
  -

  	
  Form of
  Cash Trap Account Security Agreement

  	
   

  
	
  Exhibit D

  	
  -

  	
  Form of
  Deed of Trust

  	
   

  
	
  Exhibit E

  	
  -

  	
  Form of
  Environmental Indemnity

  	
   

  
	
  Exhibit F

  	
  -

  	
  Form of
  General Assignment

  	
   

  
	
  Exhibit G-1

  	
  -

  	
  Form of
  Hedge Agreement Pledge (Required)

  	
   

  
	
  Exhibit G-2

  	
  -

  	
  Form of
  Hedge Agreement Pledge (Optional)

  	
   

  
	
  Exhibit H

  	
  -

  	
  Form of
  Notes

  	
   

  
	
  Exhibit I

  	
  -

  	
  Form of
  Project-Level Account Security Agreement

  	
   

  
	
  Exhibit J

  	
  -

  	
  Form of
  Property Manager’s Consent

  	
   

  
	
  Exhibit K

  	
  -

  	
  Form of
  Subordination, Non-Disturbance and Attornment Agreement

  	
   

  
	
  Exhibit L

  	
  -

  	
  Notice of
  Conversion or Continuation

  	
   

  
	
  Exhibit M

  	
  -

  	
  Form of
  Survey Certification

  	
   

  
	
  Exhibit N

  	
  -

  	
  Form of
  Lease Information Summary

  	
   

  
	
  Exhibit O

  	
  -

  	
  Form of
  Controlled Account Agreement

  	
   

  

 

vii

 

LOAN AGREEMENT

 

LOAN
AGREEMENT dated as of August 25, 2005 by Douglas Emmett 1995, LLC, a limited
liability company organized under the laws of the State of Delaware (the “Borrower”);
each of the lenders (including Eurohypo (as hereinafter defined) in its
capacity as a lender) that is a signatory hereto identified under the caption “LENDERS”
on the signature pages hereto and each lender that becomes a “Lender”
after the date hereof pursuant to Section 14.07(b) (individually,
a “Lender” and, collectively, the “Lenders”); and EUROHYPO AG,
NEW YORK BRANCH, as agent for the Lenders (in such capacity, together with its
successors in such capacity, the “Administrative Agent”).

 

RECITALS:

 

A.                                   The
Borrower is the fee owner of those certain office buildings listed in Schedule 1A
attached hereto located in the County of Los Angeles, State of California on
certain land more fully described in Schedule 1B attached hereto
(each such office building and the rights of the Borrower with respect to the
land on which such office building is located, together with any air rights and
other rights, privileges, easements, hereditaments and appurtenances thereunto
relating or appertaining thereto, all Improvements thereon, together with all
fixtures and equipment required for the operation thereof, all personal
property related to the foregoing and the rights of the Borrower with respect
to all other items described in the granting clause of the Deed of Trust
relating to such office building and interest in land is referred to as a “Project”
and, collectively, the “Projects”).

 

B.                                     The
Projects consist of five (5) improved office buildings, containing
approximately 1,065,802 square feet (each such Project and all other
improvements constructed on each Project being, individually and collectively,
the “Improvements”).

 

C.                                     The
Borrower has requested and applied to the Lenders for a loan in the aggregate
principal amount of $260,000,000 in connection with the Projects for the
purposes provided herein.

 

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

 

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

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING MATTERS

 

1.01                           Certain
Defined Terms.  As used herein, the
following terms shall have the following meanings:

 

“Additional Costs” shall have the meaning
assigned to such term in Section 5.01.

 

 

“Adjusted LIBO Rate” shall mean, for any
Eurodollar Loan for any Interest Period therefor, a rate per annum (expressed
as a percentage and rounded upwards, if necessary, to the nearest 1/10000 of
1%) determined by the Administrative Agent to be equal to a fraction, the
numerator of which is equal to the LIBO Rate for such Eurodollar Loan for such
Interest Period and the denominator of which is equal to (x) 1 minus (y) the Reserve Requirement (if any) for such
Eurodollar Loan for such Interest Period.

 

“Adjusted Net Operating Income” shall mean Net
Operating Income, exclusive of any income from tenants subject to any
proceeding or case under the Bankruptcy Code (except to the extent such income
has been actually received).

 

“Administrative Agent” shall have the meaning
assigned to such term in the preamble.

 

“Administrative Agent’s Account” shall mean the
account maintained by the Administrative Agent and of which the Borrower shall
have been notified, with such bank as may from time to time be specified by the
Administrative Agent.

 

“Administrative Questionnaire” shall mean an administrative
questionnaire in a form supplied by the Administrative Agent.

 

“Advance Date” shall have the meaning assigned
to such term in Section 4.06.

 

“Affiliate” shall mean, with respect to any
Person, another Person that directly or indirectly controls, or is under common
control with, or is controlled by, such Person and, if such Person is an
individual, any member of the immediate family (including parents, spouse,
children and siblings) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust.  As used in this definition, “control”
(including, with its correlative meanings, “controlled by” and “under
common control with”) shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise), provided that, in any event, any Person that
owns directly or indirectly securities having 10% or more of the voting power
for the election of directors or other governing body of a publicly traded corporation
or 10% or more of the partnership, membership or other ownership interests of
any other publicly traded Person (other than as a limited partner of such other
Person) shall be deemed to control such corporation or other Person.

 

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

 

“Agreement” shall mean this Loan Agreement, as
the same may from time to time hereafter be Modified and in effect from time to
time.

 

“All-in-Rate” shall mean, for any period, an
annual interest rate equal to the weighted average of the following rates: (i) as
to any portions of the Outstanding Principal Amount which are covered by one or
more Hedge Agreements (including any Excess Hedge Agreement for which a Hedge
Agreement Pledge has been executed and delivered to the

 

2

 

Administrative Agent and
remains in effect) which are in effect during such period (collectively, the “Hedged
Principal Amount”), an imputed rate equal to the sum of all interest
payments due with respect to such period on the Hedged Principal Amount, plus
all payments due by the Borrower or Other Swap Pledgor with respect to
such period under all Hedge Agreements maintained pursuant to Section 8.19
(including any Excess Hedge Agreement for which a Hedge Agreement Pledge has
been executed and delivered to the Administrative Agent and remains in effect),
minus all payments due to the Borrower or Other Swap Pledgor with
respect to such period under all Hedge Agreements maintained pursuant to Section 8.19
(including any Excess Hedge Agreement for which a Hedge Agreement Pledge has
been executed and delivered to the Administrative Agent and remains in effect) (with
all such interest and other payments to be annualized), divided by the Hedged
Principal Amount and (ii) as to any portion of the Outstanding Principal
Amount which is not covered by any Hedge Agreement (or Excess Hedge Agreement
for which a Hedge Agreement Pledge has been executed and delivered to the Administrative
Agent and remains in effect) during such period, the weighted average annual interest
rate actually payable hereunder on such Loans during such period.  For
purposes of this calculation, the notional amount provided for in any Hedge
Agreement (or Excess Hedge Agreement) in effect during any period shall be deemed
to “cover” a portion of the Outstanding Principal Amount outstanding during
such period in proportion to the amount which the notional amount provided for
in such Hedge Agreement (or Excess Hedge Agreement) bears to the entire
Outstanding Principal Amount outstanding during such period.  If this
Agreement requires the calculation of  the “All-in-Rate” based upon any
monthly or quarterly periods, and the period during which any Hedge Agreement (or
Excess Hedge Agreement) covering any portion of the Outstanding Principal
Amount is in effect is less than the entirety of the relevant month or quarter,
the calculation required under this definition shall be made separately with
respect to the different periods during such month or quarter during which such
portion of the Outstanding Principal Amount is covered by such Hedge Agreement
(or Excess Hedge Agreement), and such calculations shall be aggregated, on a weighted
average basis, for the relevant period of one month or quarter.

 

“Allocated Loan Amount” shall mean, solely for
the purposes of performing certain calculations hereunder: for any Project, the
portion of the Loans allocated to such Project in Schedule 1.01(1) attached
hereto.  The Allocated Loan Amount of a
Project suffering a Casualty Event or a Taking shall be reduced by the amount
of any Net Proceeds attributable to such Project applied by the Administrative
Agent in prepayment of the Outstanding Principal Amount pursuant to Section 2.07.

 

“Annual Budget” shall have the meaning assigned
to such term in Section 8.16(a).

 

“Anti-Terrorism Order” shall mean Executive
Order No. 13,224, 66 Fed. Reg. 49,079 (2001), issued by the President of
the United States of America (Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism).

 

“Applicable Law” shall mean any statute, law
(including Environmental Laws), regulation, ordinance, rule, judgment, rule of
common law, order, decree, Government Approval, approval, concession, grant,
franchise, license, agreement, directive, guideline, policy, requirement, or
other governmental restriction or any similar form of decision of, or

 

3

 

determination by, or any
interpretation or administration of any of the foregoing by, any Governmental
Authority, whether now or hereinafter in effect and, in each case, as amended
(including any thereof pertaining to land use, zoning and building ordinances
and codes).

 

“Applicable Lending Office” shall mean, for each
Lender and for each Type of Loan, the “Lending Office” of such Lender (or of an
Affiliate of such Lender) designated for such Type of Loan on Schedule 1.01(2) or
such other office of such Lender (or of an Affiliate of such Lender) as such
Lender may from time to time specify to the Administrative Agent and the
Borrower as the office by which its Loans of such Type are to be made and
maintained.

 

“Applicable Margin” shall mean (a) with
respect to that portion of the Loan evidenced by Note A, the Note A
Applicable Margin, (b) with respect to that portion of the Loan evidenced
by Note B, the Note B Applicable Margin and (c) with respect to
that portion of the Loan evidenced by Note C, the Note C Applicable
Margin.

 

“Appraisal” shall mean an appraisal of each
Project prepared by an Appraiser, each such Appraisal must comply in all
respects with the standards for real estate appraisal established pursuant to
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of
1989, as amended, and otherwise in form and substance satisfactory to the
Administrative Agent.

 

“Appraised Value” shall mean, for any Project,
the appraised value indicated as such for that Project in Schedule 1.01(3) attached
hereto, as determined by the Appraisal.

 

“Appraiser” shall mean CB Richard Ellis and/or
KTR Newmark, or any other “state certified general appraiser” as such term is
defined and construed under applicable regulations and guidelines issued
pursuant to Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended, which appraiser must have been licensed
and certified by the applicable Governmental Authority having jurisdiction in
the State of California, and which appraiser shall have been selected by the
Administrative Agent.

 

“Approved Annual Budget” shall have the meaning
assigned to such term in Section 8.16(a).

 

“Approved Capital Expenditures” shall have the
meaning assigned to such term in Section 11.01(b).

 

“Approved Fund” shall mean any Person (other
than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of its business (and which is not engaged in the business of acquiring direct
or indirect ownership interests in commercial real estate projects) and that is
administered or managed by (a) a Lender, or (b) a Person that meets
the requirements in clauses (i), (ii), (iii) or (iv) of
the definition of “Eligible Assignee.”

 

“Approved Lease” shall mean (a) each
existing Lease as of the Closing Date as set forth in the Leasing Affidavit and
(b) each Lease entered into after the Closing Date in accordance with the
terms and conditions contained in Section 9.09 as such leases and
related documents shall be Modified as permitted pursuant to the terms of this
Agreement.

 

4

 

“Approved Leasing Expenditures” shall have the
meaning assigned to such term in Section 11.01(b).

 

“Arranger” shall mean EUROHYPO AG, NEW YORK
BRANCH as lead arranger and joint bookrunner of the lending syndicate.

 

“Assignment and Assumption” shall mean an
Assignment and Assumption, duly executed by the parties thereto, in
substantially the form of Exhibit A attached hereto and, if
required pursuant to Section 14.07(b) consented to by the
Borrower and the Administrative Agent.

 

“Authorized Officer” shall mean, with respect
to the Borrower or the Borrower’s Member, any of the individual officers
serving as the President, Vice President, Chief Financial Officer, Secretary, Treasurer
or Assistant Treasurer of Borrower’s Manager, in its respective capacity as the
manager of Borrower or the sole general partner of Borrower’s Member, and whose
name appears on a certificate of incumbency executed by the Secretary of Borrower’s
Manager, in its respective capacity as the manager of Borrower and/or the sole
general partner of Borrower’s Member, and delivered concurrently with the
execution of this Agreement, as such certificate of incumbency may be amended
from time to time to identify the names of the individuals then holding such
offices and certified by the Secretary of Borrower’s Manager, in its respective
capacity as the manager of Borrower or the sole general partner of Borrower’s
Member.

 

“Bankruptcy Code” shall mean the Federal
Bankruptcy Code of 1978, as amended from time to time.

 

“Bankruptcy Party” shall mean any of the
Borrower Parties (including, in the case of a Borrower Party which is a
Qualified Successor Entity consisting of a Permitted Private REIT Subsidiary of
a Permitted Private REIT, such Permitted Private REIT, its Operating
Partnership and any Permitted Private REIT Subsidiary that holds direct or
indirect interests in the Borrower). 
Following a Permitted Public REIT Transfer, “Bankruptcy Party” shall
mean any of the Borrower Parties while such Person qualifies as a “Borrower
Party” under the definition of such term, the Permitted Public REIT, its Operating
Partnership, and any Permitted Public REIT Subsidiary that holds direct or
indirect interests in and controls the Borrower.  “Bankruptcy Party” shall also mean any
Subsidiary of the Borrower while such Person remains a Subsidiary of the
Borrower, other than an Immaterial Subsidiary.

 

“Base Rate” shall mean, for any day, a rate per
annum equal to the Federal Funds Rate for such day.  Each change in any interest rate provided for
herein based upon the Base Rate resulting from a change in the Base Rate shall
take effect at the time of such change in the Base Rate.

 

“Base Rate Loans” shall mean the portions of
the Outstanding Principal Amount that bear interest at rates based upon the
Base Rate.

 

“Basel Accord” shall mean the proposals for
risk-based capital framework described by the Basel Committee on Banking
Regulations and Supervisory Practices in its paper 

 

5

 

entitled “International
Convergence of Capital Measurement and Capital Standards” dated July 1988,
as Modified and in effect from time to time.

 

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

 

“Borrower Party” shall mean each of the
Borrower, the Borrower’s Member and the Borrower’s Manager (and in any event
shall not include any such Person that is not the general partner or manager of
the Qualified Successor Entity).  Upon
the acquisition of the Projects, but not of direct or indirect Equity Interests
in the Borrower by a Qualified Successor Entity, “Borrower Party” shall also
mean and include such Qualified Successor Entity and the general partner or
manager thereof (except as expressly provided in this definition) and, unless
the Borrower, the Borrower’s Member or the Borrower’s Manager constitutes the
general partner or manager of the Qualified Successor Entity, shall no longer
include the original Borrower, the original Borrower’s Member or the original Borrower’s
Manager (and in any event shall not include any such Person that is not the
general partner or manager of the Qualified Successor Entity).  Upon the acquisition of the Projects, but not
of direct or indirect Equity Interests in the Borrower, by a Qualified
Successor Entity that is a Permitted Public REIT Subsidiary in connection with
a Permitted Public REIT Transfer, “Borrower Party” shall include such Permitted
REIT Subsidiary and its general partner or manager; provided, however, if the
general partner or manager of such Permitted Public REIT Subsidiary is the
Permitted Public REIT or such REIT’s Operating Partnership, “Borrower Party”
shall not include the Permitted Public REIT or such Operating Partnership.  Upon the acquisition of direct or indirect
Equity Interests in the Borrower by a Permitted Public REIT Subsidiary, or by
the Operating Partnership of the Permitted Public REIT, or by the Permitted
Public REIT, “Borrower Party” shall include the Borrower and its general
partner or manager, but shall not include such Permitted Public REIT Subsidiary
(unless it is the general partner or manager of the Borrower) or such Operating
Partnership or the Permitted Public REIT (regardless of whether such Operating
Partnership or the Permitted Public REIT is the general partner or manager of the
Borrower).

 

“Borrower’s Account” shall mean an account
maintained by the Borrower with such bank as may from time to time be specified
by or approved by the Administrative Agent to accept the deposit of funds in
accordance with this Agreement.

 

“Borrower’s Manager” shall mean DERA, in the
capacity of the manager of the Borrower or in the capacity of the sole general
partner of Borrower’s Member, under their respective Organizational Documents, and
its successors thereunder in one or more of such capacities as permitted under
the Loan Documents.  Except as may
otherwise be expressly provided herein or as the context may require, each
reference herein to Borrower’s Manager shall mean Borrower’s Manager in both
such capacities.  It is understood that,
notwithstanding anything to the contrary contained in this Agreement, any
covenants, representations or warranties that are required to be observed under
this Agreement by the “Borrower’s Manager” shall not be required to be observed
by any manager of the Borrower consisting of the Permitted Public REIT or its
Operating Partnership.

 

6

 

“Borrower’s Manager’s Limited Indemnity and
Guarantee” shall mean that certain Limited Indemnity and Guarantee in the
form of Exhibit B attached hereto, to be executed, dated and
delivered by Borrower’s Manager to the Administrative Agent (on behalf of the
Lenders) on the Closing Date as the same may be Modified and in effect from
time to time.

 

“Borrower’s Member” shall mean Douglas Emmett
Realty Fund 1995, a California Limited Partnership, as sole member under the
Organizational Documents of Borrower, and its successors thereunder as sole
member of the Borrower as permitted under the Loan Documents.  It is understood that, notwithstanding
anything to the contrary contained in this Agreement, any covenants, representations
or warranties that are required to be observed under this Agreement by the “Borrower’s
Member” shall not be required to be observed by any member of the Borrower
consisting of the Permitted Public REIT, its Operating Partnership or any
Permitted Public REIT Subsidiary that is not the general partner or manager of
the Borrower including, without limitation Douglas Emmett Realty Fund 1995, the
Borrower’s Member as of the date hereof, if it is not the general partner or
manager of the Borrower.

 

“Business Day” shall mean any day that is not a
Saturday, Sunday or other day on which commercial banks in New York City (or,
with respect only to payments to be made by the Borrower, in California) are
authorized or required by law to remain closed; provided that, when used
in connection with a borrowing, or Continuation of, a Conversion into, a
payment or prepayment of principal of or interest on, or an Interest Period
for, a Eurodollar Loan, or a notice by the Borrower with respect to any such
borrowing, Continuation, Conversion, payment, prepayment or Interest Period,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

 

“Business Interruption Insurance” shall mean rental
and/or business income insurance required pursuant to Section 8.05(a)(iii) or
otherwise maintained in accordance with this Agreement.

 

“Capital Lease Obligations” shall mean, for any
Person, all obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) property to the extent
such obligations would generally be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.

 

“Cash Trap Account Security Agreement” shall
mean a Cash Trap Account Security Agreement, among the Borrower, the
Administrative Agent (on behalf of the Lenders) and the Depository Bank, substantially
in the form of Exhibit C attached hereto, and which is established
and maintained in accordance with Section 11.01.

 

“Cash Trap Account” shall have the meaning assigned
to such term in the Cash Trap Account Security Agreement.

 

“Casualty Event” shall mean any loss of or
damage to, any portion of any Project by fire or other casualty.

 

7

 

“Change
of Control” shall mean, with respect to any Permitted Public REIT, any
event or series of events by which any “person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, but excluding (i) any person or group consisting of Named Principals
or Related Parties, (ii) any “person” or “group” which is controlled by
one or more Named Principals or Related Parties, (iii) the Depository
Trust Company or its nominees, (iv) any “dealer” (as defined in the
Securities Act of 1933) who acquires securities of the Permitted Public REIT
with a view to, or in connection with, (A) the distribution of such
securities, (B) the resale of such securities in accordance with the
provisions of Rule 144A(d) promulgated under the Securities Act of
1933 or (C) the resale of such securities in accordance with the
provisions of Rule 904 (promulgated under the Securities Act) applicable
to “Distributors” as defined in Rule 902 (promulgated under the Securities
Act), (v) any employee benefit plan of such person or its subsidiaries,
and any person or entity acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan) becomes the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to acquire
(such right, an “option right”), whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of forty percent
(40%) or more of the equity securities of the Permitted Public REIT entitled to
vote for members of the board of directors or equivalent governing body of the
Permitted Public REIT on a fully-diluted basis (and taking into account all
such securities that such person or group has the right to acquire pursuant to
any option right).

 

“Closing Date” shall mean the date of this
Agreement, which date shall be the initial funding date of the Loans pursuant
to Section 2.02.

 

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

 

“Commitment” shall mean, as to each Lender, the
obligation of such Lender to make a Loan in a principal amount up to but not
exceeding the amount set opposite the name of such Lender on Schedule 1.01(4) attached
hereto under the caption “Commitment” or, in the case of a Person that becomes
a Lender pursuant to an assignment permitted under Section 14.07(b),
as specified in the respective Assignment and Assumption pursuant to which such
assignment is effected, as such percentage may be modified by any Assignment
and Assumption.

 

“Condemnation Awards” shall mean all
compensation, awards, damages, rights of action and proceeds awarded to the
Borrower by reason of a Taking.

 

“Consumer Price Index” shall mean the “Consumer
Price Index — For all Items” for the Los Angeles-Riverside-Orange County
Consolidated Metropolitan Statistical Area, published monthly in the “Monthly
Labor Review” of the Bureau of Labor Statistics of the United States Department
of Labor.  If at any time the Consumer
Price Index is no longer available, then the term “Consumer Price Index” shall
be an index selected by the Administrative Agent which, in the opinion of the
Administrative Agent, is comparable to the Consumer Price Index.

 

8

 

“Continue”, “Continuation” and “Continued”
shall refer to the continuation pursuant to Section 2.05 of (a) a
Eurodollar Loan from one Interest Period to the next Interest Period or (b) Base
Rate Loan at the Base Rate.

 

“Controlled Account” shall mean one or more
deposit accounts established by the Administrative Agent (for the benefit of
the Lenders) at a depository bank or financial institution that is acceptable
to the Administrative Agent, and which is established and maintained in
accordance with Section 14.28 hereof.

 

“Controlled Account Agreement” shall have the
meaning assigned to such term in Section 14.28(a)(i).

 

“Controlled Account Collateral” shall have the
meaning assigned to such term in Section 14.28(c)(i).

 

“Convert”, “Conversion” and “Converted”
shall refer to a conversion pursuant to Section 2.05 of one Type of
Loan into another Type of Loan, which may be accompanied by the transfer by a
Lender (at its sole discretion) of a Loan from one Applicable Lending Office to
another.

 

“Debt
Service Coverage Ratio” shall mean, with respect to any period being
measured, the ratio of (a) Adjusted Net Operating Income for such period
to (b) DSCR Debt Service for such period. 
For purposes of calculating Debt Service Coverage Ratio pursuant to Section 2.09(a),
Adjusted Net Operating Income and DSCR Debt Service shall be calculated on an
annualized basis, and the Debt Service Coverage Ratio for such purposes shall
be as determined by the Administrative Agent, based upon the quarterly results
reflected in the most recent reports submitted by Borrower pursuant to Section 8.01
(or, if the most recent report has not been submitted pursuant to such section,
based on such other information as the Administrative Agent shall determine in
its reasonable discretion), which determination shall be conclusive in the
absence of manifest error.  For purposes
of calculating Debt Service Coverage Ratio pursuant to Section 10.03(c),
Adjusted Net Operating Income and DSCR Debt Service shall be projected for a
period of one year in accordance with Section 10.03(c)(iv).

 

“Deed of Trust” shall mean each Deed of Trust,
Assignment of Leases and Rents and Security Agreement and substantially in the
form of Exhibit D attached hereto, to be executed, dated and
delivered by the Borrower to the Administrative Agent (on behalf of the
Lenders) on the Closing Date, securing the obligations identified therein, as
each such deed of trust may be Modified and in effect from time to time.

 

“Default” shall mean an Event of Default or an
event that with notice or lapse of time or both would become an Event of
Default.

 

“Depository Bank” shall mean, at any time, the
depository bank which is party to the Cash Trap Account Security Agreement, the
Project-Level Account Security Agreement or a Controlled Account Agreement.

 

“DERA” shall mean Douglas Emmett Realty
Advisors, a California corporation.

 

9

 

“Disbursement Request” shall have the meaning
assigned to such term in Section 11.01(c)(iii).

 

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

 

“Douglas Emmett Realty Funds” shall mean
Douglas Emmett Joint Venture, Douglas Emmett Realty Fund 1995, Douglas Emmett
Realty Fund 1996, Douglas Emmett Realty Fund 1997, Douglas Emmett Realty Fund
1998, Douglas Emmett Realty Fund 2000, Douglas Emmett Realty Fund 2002 and
Douglas Emmett Realty Fund 2005 and their respective Subsidiaries.

 

“DSCR Debt Service” shall mean, for any period,
an amount equal to the payment of interest which would be required under the
Notes delivered by the Borrower based on the Outstanding Principal Amounts of
such Notes as of the end of such period and the All-in-Rate at such time.  All such calculations shall be subject to the
approval of the Administrative Agent. 
For purposes of Section 10.03, the calculation of DSCR Debt
Service shall be projected for a one year period in accordance with Section 10.03(c)(iv).

 

“Eligible Assignee” means any of (i) a
commercial bank organized under the Laws of the United States, or any state
thereof, and having (x) total assets in excess of $25,000,000,000 and
(y) a combined capital and surplus of at least $1,000,000,000; (ii) a
commercial bank organized under the laws of any other country which is a member
of the Organization of Economic Cooperation and Development (“OECD”), or
a political subdivision of any such country, and having (x) total assets
in excess of $25,000,000,000 and (y) a combined capital and surplus of at
least $1,000,000,000, provided that such bank is acting through a branch
or agency located in the United States or in the country in which it is
organized or another country which is also a member of OECD; (iii) a life
insurance company organized under the Laws of any state of the United States,
or organized under the Laws of any country which is a member of OECD and
licensed as a life insurer by any state within the United States and having
(x) admitted assets of at least $25,000,000,000 and (y) a combined
capital and surplus of at least $1,000,000,000; (iv) any Person described
in Schedule 1.01(5); or (v) an Approved Fund having (1) total
assets of at least $25,000,000,000 and (2) a net worth of at least
$1,000,000,000; provided that any such Person meeting the requirements
of (i) through (v) (or its holding company) shall also have a
long-term senior unsecured indebtedness rating of BBB- or better by S&P (if
rated by S&P) and Baa3 or better by Moody’s (if rated by Moody’s) at the
time an interest in the Loans is assigned to it.

 

“Environmental Claim” shall mean, with respect
to any Person, any written request for information by a Governmental Authority,
or any written notice, notification, claim, administrative, regulatory or
judicial action, suit, judgment, demand or other written communication by any
Person or Governmental Authority alleging or asserting liability with respect
to the Borrower or the Projects, whether for damages, contribution,
indemnification, cost recovery, compensation, injunctive relief, investigatory,
response, Remediation, damages to natural resources, personal injuries, fines
or penalties arising out of, based on or resulting from (i) the presence,
Use or Release into the environment of any Hazardous Substance originating at
or from, or otherwise affecting, the Projects, (ii) any fact,
circumstance, condition or occurrence forming the basis of any violation, or
alleged violation, of any Environmental Law by the

 

10

 

Borrower or otherwise
affecting the health, safety or environmental condition of the Projects or (iii) any
alleged injury or threat of injury to the environment by the Borrower or
otherwise affecting the Projects.

 

“Environmental Indemnity” means that certain
Environmental Indemnity Agreement by the Borrower in favor of the
Administrative Agent and each of the Lenders substantially in the form of Exhibit E
attached hereto, to be executed, dated and delivered to the Administrative
Agent (on behalf of the Lenders) on the Closing Date, as the same may be Modified
and in effect from time to time.

 

“Environmental Laws” shall mean any and all
Applicable Laws relating to the regulation or protection of the environment or
the Release or threatened Release of Hazardous Substances into the indoor or
outdoor environment, including ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata, or otherwise relating to the Use of
Hazardous Substances; provided, however, that solely for purposes
of the Environmental Indemnity, “Environmental Laws” shall not include the
California Environmental Quality Act or statutes, laws, regulations or orders
which relate to zoning or otherwise regulating the permissible uses of land or
permissible structures to be developed thereon.

 

“Environmental Liens” shall have the meaning
assigned thereto in Section 8.11(a).

 

“Environmental Losses” shall mean any losses,
damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities
(including, but not limited to, strict liabilities), obligations, debts, diminutions
in value, fines, penalties, charges, costs of Remediation (whether or not
performed voluntarily), amounts paid in settlement, foreseeable and
unforeseeable consequential damages, litigation costs, reasonable attorneys’
fees and expenses, engineers’ fees, environmental consultants’ fees, and
investigation costs (including, but not limited to, costs for sampling, testing
and analysis of soil, water, air, building materials, and other materials and
substances whether solid, liquid or gas), of whatever kind or nature, and
whether or not incurred in connection with any judicial or administrative
proceedings, actions, claims, suits, judgments or awards relating to Hazardous
Substances, Environmental Claims, Environmental Liens and violation of
Environmental Laws.  Notwithstanding the
foregoing, “Environmental Losses” shall not include any loss resulting from
diminution in value of any Project suffered by any Lender if the Lenders shall
have been paid in full all amounts payable by the Borrower under this Agreement
and the other Loan Documents to which the Borrower is a party or shall have
otherwise realized all such amounts upon or prior to foreclosure of the
collateral for the Loans; provided, that, subject to the
provisions of Section 8 of the Environmental Indemnity, nothing contained
in this sentence shall limit any claim for a loss (otherwise included within
the term “Environmental Losses” as defined herein) suffered by the
Administrative Agent, any Lender or any Affiliate as a result of a claim for the
diminution in value of the interest of any Person (other than the interest of
the Administrative Agent, any Lender or any Affiliate of the Administrative
Agent or any Lender) in any Project (including the interest of any ground
lessor, tenant, easement holder or other third party, but excluding any Person
who has purchased or acquired the Borrower’s interest in such Project by
foreclosure or deed-in-lieu of foreclosure or any time thereafter) or the diminution
in value of any other property made against the Administrative Agent, any such
Lender or any Affiliate by any other Person as a result of the Administrative

 

11

 

Agent, any Lender or any
Affiliate succeeding to the ownership of any Project through foreclosure or
other exercise of remedies (but not as a result of any contractual obligation
incurred by the Administrative Agent, any Lender or any Affiliate subsequent to
or in connection with its acquisition of the ownership of a Project).

 

“Environmental Reports” shall mean,
collectively, each environmental survey and assessment report prepared for the
Administrative Agent relating to each Project listed on Schedule 1.01(6) attached
hereto; each such environmental report shall include a certification by the
engineer (i) that such engineer has obtained and examined the list of
prior owners, (ii) has made an on-site physical examination of the applicable
Project and (iii) has made a visual observation of the surrounding areas
and has found no evidence of the presence of toxic or Hazardous Substances, or
of past or present Hazardous Substances activities that have not been
remediated or are not subject to an operation and maintenance program.  The Administrative Agent acknowledges receipt
of copies of the Environmental Reports.

 

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

 

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

 

“ERISA Affiliate” shall mean any trade or
business (whether or not incorporated) that, together with any Borrower Party,
is treated as a single employer under Section 414(b) or (c) of
the Code, or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 (b), (c),
(m) or (o) of the Code.

 

“ERISA Event” means (a) any “reportable
event”, as defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan which is subject to Title IV of ERISA (other
than an event for which the thirty (30) day notice period is waived); (b) the
existence with respect to any Plan subject to Section 412 of the Code or Section 302
of ERISA of an “accumulated funding deficiency” (as defined in Section 412
of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan subject to Section 412 of the Code or Section 302
of ERISA; (d) the incurrence by a Borrower Party or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan which is subject to Title IV of ERISA; (e) the
receipt by any Borrower Party or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans which are subject to Title IV of ERISA or to appoint a trustee to
administer any such Plan; (f) the incurrence by a Borrower Party or any of
its ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan which is subject to Title IV of ERISA or Multiemployer
Plan; or (g) the receipt by a Borrower Party or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from a Borrower Party or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

12

 

“Eurodollar Loans” shall mean the portions of
the Outstanding Principal Amount that bear interest based on a “LIBO Rate”.

 

“Eurohypo” shall mean Eurohypo AG, New York
Branch.

 

“Event of Default” shall have the meaning
assigned to such term in Article XII.

 

“Excess Cash” shall mean with respect to any
calendar month, the amount by which the sum of Operating Income actually
received during such calendar month plus amounts actually paid during such
month to or for the account of the Borrower or Other Swap Pledgor by the
counterparty under and pursuant to the Hedge Agreement (but only on account of
any “regular” payments due thereunder (and not on account of any default or
termination thereunder or any obligation to deliver collateral pursuant
thereto)) exceeds the sum of (i) Operating Expenses actually paid during
such month plus (ii) the sum of interest payments on the Loans and other
amounts due and payable under the Loan Documents plus amounts actually paid during
such month by the Borrower or Other Swap Pledgor to the counterparty under and
pursuant to the Hedge Agreement (but only on account of any “regular” payments
due thereunder (and not on account of any default or termination thereunder or
any obligation to deliver collateral pursuant thereto)) in each case, to the
extent actually paid during such month; provided, however, that
for purposes of determining Excess Cash, Operating Expenses shall exclude any
amounts due or accrued for Insurance Premiums, Real Estate Taxes, Approved
Capital Expenditures or Approved Leasing Expenditures, except for amounts
actually paid in cash during the relevant month for Insurance Premiums, Real
Estate Taxes and, if approved in accordance with the provisions of Article XI,
Approved Capital Expenditures or Approved Leasing Expenditures (and the
Borrower may utilize its Operating Income in such month to pay for Insurance
Premiums, Real Estate Taxes and, if approved in accordance with the provisions
of Article XI, Approved Capital Expenditures or Approved Leasing
Expenditures).  For the avoidance of
doubt, it is understood that the calculation of Excess Cash for any month shall
be based upon the cash method of accounting notwithstanding references to GAAP
or the imputation of any income or expense item that is not actually received
or paid in such month in the definitions of “Operating Income” and “Operating
Expenses.”  Notwithstanding the
provisions set forth in the definition of “Operating Expenses” relating to the
treatment of reserves specifically required under this Agreement and amounts
paid from such reserves for purposes of that definition, for purposes of the
calculation of Excess Cash, the deposit of sums into any such
specifically-required reserve (but not the expenditure and release of sums from
any such reserve) shall be treated as an expense.

 

“Excess Hedge Agreement” shall have the meaning
assigned to such term in Section 8.19(a).

 

“Excluded Project” shall mean (a) any of the
Residential Properties, (b) any of the Properties owned by the Borrower on
the Closing Date other than the Projects which are identified on Schedule 1A,
(c) any Qualified Real Estate Interest that is acquired after the Closing
Date by the Borrower or by a wholly-owned Subsidiary or Qualified Sub-Tier
Entity, and (d) any Project which has been released from the Liens of the
Loan Documents in accordance with Section 2.09.

 

13

 

“Excluded Taxes” shall mean, with respect to
the Administrative Agent and any Lender, or any other recipient of any payment
to be made by or on account of any obligation of the Borrower hereunder, (a) income
or franchise taxes imposed on (or measured by) its net income by the United
States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its Applicable Lending Office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 5.07), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office)
or is attributable to such Foreign Lender’s failure to comply with Section 5.06(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation, to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 5.06(a).

 

“Extraordinary Capital or Leasing Expenditures”
shall have the meaning assigned to such term in Section 11.01(b).

 

“Federal Funds Rate” shall mean, for any day,
the weighted average (rounded upwards, if necessary, to the next 1/1000 of 1%)
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a Business Day, for the immediately preceding
Business Day) on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average (rounded upwards, if necessary, to the next 1/1000 of
1%) of the quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing selected
by it.

 

“Fee Letter” means that certain letter
agreement, dated as of the date of this Agreement, between the Borrower and the
Administrative Agent with respect to certain fees payable by the Borrower in
connection with the Commitments, as the same may be Modified from time to time.

 

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

 

“GAAP” shall mean generally accepted accounting
principles applied on a basis consistent with those that, in accordance with Section 1.02(a) and,
except as otherwise provided in this Agreement, are to be used in making the
calculations for purposes of determining compliance with this Agreement, it
being understood that the annual and quarterly financial statements to be
delivered by the Borrower shall be deemed prepared in accordance with “GAAP”
for purposes of this Agreement notwithstanding that such financial statements
contain adjustments for the market value of the Properties of the Borrower (as
reflected in the auditor’s statement that is contained in the most recent such
annual financial statement provided to the Administrative Agent on or before the
Closing Date) and that the treatment of depreciation

 

14

 

charges in such quarterly
financial statements is consistent with the treatment of depreciation charges
in the most recent such quarterly financial statements provided to the
Administrative Agent on or before the Closing Date.

 

“General Assignment” shall mean that certain
Assignment of Contracts and Government Approvals substantially in the form of Exhibit F
attached hereto, to be executed, dated and delivered by the Borrower to the
Administrative Agent (on behalf of the Lenders) on the Closing Date, as the
same may be Modified and in effect from time to time.

 

“Government Approval” shall mean any action,
authorization, consent, approval, license, ruling, permit, tariff, rate,
certification, exemption, filing or registration by or with any Governmental
Authority, including all licenses, permits, allocations, authorizations,
approvals and certificates obtained by or in the name of, or assigned to, the
Borrower and used in connection with the ownership, construction, operation, use
or occupancy of the Projects, including building permits, certificates of
occupancy, zoning and planning approvals, business licenses, licenses to
conduct business, and all such other permits, licenses and rights.

 

“Governmental Authority” shall mean any
governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body, federal, state or
local, foreign or domestic, having jurisdiction over the matter or matters in
question.

 

“Guarantee” shall mean a guarantee, an
endorsement, a contingent agreement to purchase or to furnish funds for the
payment or maintenance of, or otherwise to be or become contingently liable
under or with respect to, the Indebtedness, other obligations, net worth,
working capital or earnings of any Person, or a guarantee of the payment of
dividends or other distributions upon the stock or equity interests of any
Person, or an agreement to purchase, sell or lease (as lessee or lessor)
Property, products, materials, supplies or services primarily for the purpose
of enabling a debtor to make payment of such debtor’s obligations or an
agreement to assure a creditor against loss, and including causing a bank or
other financial institution to issue a letter of credit or other similar
instrument for the benefit of another Person, but excluding endorsements for
collection or deposit in the ordinary course of business.  The terms “Guarantee” and “Guaranteed”
used as a verb shall have a correlative meaning.

 

“Guaranteed Line of Credit” shall have the meaning set forth in Section 9.04(h).

 

“Guarantor” shall mean the Borrower’s Manager,
in its capacity as the guarantor under the Borrower’s Manager’s Limited
Indemnity and Guarantee.

 

“Guarantor Documents” shall mean the Borrower’s
Manager’s Limited Indemnity and Guarantee.

 

“Hazardous Substance” shall mean, collectively,
(a) any petroleum or petroleum products, flammable materials, explosives,
radioactive materials, asbestos, urea formaldehyde foam insulation, Mold, and
transformers or other equipment that contain polychlorinated biphenyls (“PCB’s”),
(b) any chemicals or other materials or substances that are now or
hereafter become defined as or included in the definition of “hazardous
substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous
wastes”, “restricted hazardous wastes”, “toxic

 

15

 

substances”, “toxic
pollutants”, “contaminants”, “pollutants” or words of similar import under any
Environmental Law and (c) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.

 

“Hedge Agreement” shall mean any Swap Agreement
or Swap Agreements between the Borrower or Other Swap Pledgor and one or more
financial institutions providing for the transfer or mitigation of interest
risks with respect to the Loans, either generally or under specific
contingencies, as the same may be Modified and in effect from time to time in
accordance with Section 8.19.

 

“Hedge Agreement Pledge” shall mean that
certain Assignment, Pledge and Security Agreement substantially in the form of Exhibit G-1
or G-2, as applicable, attached hereto, to be executed, dated and
delivered by the Borrower or Other Swap Pledgor to the Administrative Agent (on
behalf of the Lenders) in accordance with Section 8.19 and at any
other time the Borrower elects or is required to enter into, or cause to be
delivered, a Hedge Agreement, covering the Borrower’s or Other Swap Pledgor’s right,
title and interest in and to any such Hedge Agreement, as the same may be
Modified and in effect from time to time.

 

“Hedging Termination Date” shall mean the date
which is three (3) months prior to August 1, 2011 as to fifty percent
(50%) of the Aggregate Notional Amount and three (3) months prior to August 1,
2012 as to the remainder of the Aggregate Notional Amount.

 

“Immaterial Subsidiary” shall mean any
Subsidiary of the Borrower which has incurred no Indebtedness other than (i) Indebtedness
which is non-recourse to such Subsidiary, the Bankruptcy Parties and the Named
Principals (except for “carve-outs” (or Guarantees guarantying the debtor’s
liability with respect to “carve-outs”) for fraud, misrepresentation,
misappropriation and other exceptions-from-non-recourse customary in the real
estate finance industry and not materially more favorable to such lender than
the exceptions-from-non-recourse set forth in the second sentence of Sections 14.23(a) (and
which shall in no event include any recourse obligation of the Borrower on
account of the occurrence with respect to such Subsidiary or any other Person of
any event of the type described in Sections 12.01(d), (e) or
(f) hereof)) and (ii) Indebtedness which, in the aggregate for
all such Immaterial Subsidiaries, does not exceed ten percent (10%) of the
aggregate Indebtedness of the Borrower and all Subsidiaries of the Borrower.

 

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

 

“Indebtedness” of any Person means, without
duplication, (a) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has

 

16

 

been assumed, (g) all
Guarantees by such Person of Indebtedness of others or performance of
obligations, (h) all Capital Lease Obligations of such Person, (i) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all obligations under
or in respect of Swap Agreements and (k) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.

 

“Indemnified Parties” shall mean the
Administrative Agent, the Arranger, the Affiliates of the Administrative Agent,
the Arranger, and each Lender and each of the foregoing parties’ respective
directors, officers, employees, attorneys, agents, successors and assigns.

 

“Indemnified Taxes” shall mean Taxes other than
Excluded Taxes.

 

“Information” has the meaning assigned to such
term in Section 14.24.

 

“Insurance Premiums” shall have the meaning
assigned to such term in Section 8.05(b).

 

“Insurance Proceeds” shall mean all insurance
proceeds, damages, claims and rights of action and the right thereto under any
insurance policies relating to the Projects.

 

“Insurance Threshold Amount” shall have the
meaning assigned to such term in Section 10.01(b).

 

“Interest Period” shall mean, at all times following the Stub Interest
Period, with respect to any Eurodollar Loan, each period commencing on
the date such Eurodollar Loan is made or Converted from a Base Rate Loan or (in
the event of a Continuation) the last day of the immediately preceding Interest
Period for such Loan and ending on the numerically corresponding day in the
first, second, third, sixth or (but only if available from all Lenders) twelfth calendar month thereafter, as the
Borrower may select as provided in Section 4.05; provided that, (i) except for the Stub Interest Period, each Interest
Period that commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month; (ii) each Interest Period that
would otherwise end on a day that is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the immediately preceding Business Day); (iii) except for the Stub Interest Period, no
Interest Period shall have a duration of less than one month and, if the
Interest Period for any Eurodollar Loan would otherwise be a shorter period (other than for the Stub Interest Period),
such Loan shall bear interest at the Base Rate plus the Applicable Margin for
Base Rate Loans; (iv) in no event shall any Interest Period extend beyond
the Maturity Date; and (v) there may be no more than seven (7) separate
Interest Periods in respect of Eurodollar Loans outstanding from each Lender at
any one time.  The first Interest Period shall be the Stub Interest Period.

 

17

 

“Interest Rate Hedge Period” shall have the
meaning assigned to such term in Section 8.19(a).

 

“Investment” shall mean, for any Person:  (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of capital stock, bonds, notes,
debentures, partnership or other ownership interests or other securities of any
other Person or any agreement to make any such acquisition (including any “short
sale” or any sale of any securities at a time when such securities are not
owned by the Person entering into such sale); (b) the making of any
deposit with, or advance, loan or other extension of credit to, any other
Person (including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person), but excluding any such advance, loan or extension of credit having
a term not exceeding ninety (90) days arising in connection with the sale of
inventory or supplies by such Person in the ordinary course of business; (c) the
entering into of any Guarantee of, or other contingent obligation with respect
to, Indebtedness or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person; or (d) the entering into of any Swap Agreement (other than the
Hedge Agreement or any Excess Hedge Agreement).

 

“Lease Approval Package” shall have the meaning
assigned to such term in Section 9.09(b)(iii).

 

“Lease Information Summary” shall have the
meaning assigned to such term in Section 9.09(b)(iii).

 

“Leases” shall mean all leases and other
agreements or arrangements with or assumed by the Borrower as landlord for the
use or occupancy of all or any portion of the Projects, including any signage
thereat, now in effect or hereafter entered into (including lettings,
subleases, licenses, concessions, tenancies and other occupancy agreements with
or assumed by the Borrower as landlord covering or encumbering all or any
portion of the Projects), together with any Guarantees, Modifications of the
same, and all additional remainders, reversions and other rights and estates
appurtenant thereto.

 

“Leasing Affidavit” shall have the meaning
assigned to such term in Section 6.01(p).

 

“Lender” shall have the meaning assigned to
such term in the preamble.

 

“LIBO Rate” shall mean, for any Interest Period
for any Eurodollar Loan, the rate per annum appearing on Page 3750 of the
Dow Jones Markets Service (Telerate) (or on any successor or substitute page of
such service, or any successor to or substitute for such service, providing
rate quotations comparable to those currently provided on such page of
such service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to Dollar
deposits in the London interbank market) at approximately 11:00 a.m.
London time on the date two (2) Business Days prior to the first day of
such Interest Period as the rate for Dollar deposits having a term comparable
to such Interest Period and in an amount comparable to the amount of the
applicable Eurodollar Loan, provided that if such rate does not appear
on such page as of the date of determination, or if such page

 

18

 

shall cease to be
publicly available at such time, or if the information contained on such page,
in the sole judgment of the Administrative Agent shall cease accurately to
reflect the rate offered by leading banks in the London interbank market, the
LIBO Rate shall be based on the rate that appears as of 11:00 a.m. London
time on such date of determination on the LIBO Page of Reuters Screen for
Dollar deposits having a term comparable to such Interest Period and in an
amount comparable to the amount of the applicable Eurodollar Loan.  If both of such pages shall cease to be
publicly available as of the time of determination, or if the information
contained on such page, in the sole but reasonable judgment of the
Administrative Agent shall cease accurately to reflect the rate offered by
leading banks in the London interbank market, the LIBO Rate shall be based on
the rate reported by any publicly available source of similar market data
selected by the Administrative Agent that, in its sole but reasonable judgment,
accurately reflects such rate offered by leading banks in the London interbank
market.  The LIBO Rate for the Stub Interest Period shall be 4.4120% per annum.

 

“Lien” shall mean, with respect to any Property
(including the Projects), any mortgage, deed of trust, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such Property.  For purposes of this Agreement and the other
Loan Documents, a Person shall be deemed to own subject to a Lien any Property
that it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement (other than an operating lease) relating to such Property.

 

“Limiting
Regulation” shall mean any law or regulation of any Governmental
Authority, or any interpretation, directive or request under any such law or
regulation (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or Governmental Authority
or monetary authority charged with the interpretation or administration
thereof, or any internal bank policy resulting therefrom (applicable to loans
made in the United States of America) which would or could in any way require a
Lender to have the approval right contained in the last paragraph of Section 9.03.

 

“Loan” and “Loans” shall have the
respective meanings assigned to such terms in Section 2.01 with
reference to the extensions of credit provided to the Borrower hereunder.

 

“Loan Documents” shall mean, collectively, this
Agreement, the Notes, the Security Documents, the Environmental Indemnity, the
Guarantor Documents and each other agreement, instrument or document (excluding
any Hedge Agreement or Excess Hedge Agreement) required to be executed and
delivered in connection with the Loans, together with any Modifications
thereof.

 

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

 

“Losses” shall have the meaning assigned to
such term in Section 14.04.

 

“Low DSCR Release Event” shall mean, at any
time after the occurrence of a Low DSCR Trigger Event, that the Debt Service
Coverage Ratio shall be at or above 1:20:1.00 for a period of at least two (2) consecutive
calendar quarters.

 

19

 

“Low DSCR Trigger Event” shall mean,
at any time prior to the Maturity Date, that the Debt Service Coverage Ratio
measured as of the end of any calendar quarter is less than 1:15:1.00.

 

“Low DSCR Trigger Period” shall mean the period
of time after a Low DSCR Trigger Event until the occurrence of a Low DSCR
Release Event.

 

“LP Claim” shall have the meaning set forth in Section 7.35.

 

“Major Default” shall mean (i) any Event
of Default; (ii) any Default arising from the failure to make any payment
on account of interest to any Lender required under the Loan Documents or any
fees payable to the Administrative Agent under the Fee Letter, in each case on
or before the due date therefor; and (iii) any other Default written
notice of which has been delivered by the Administrative Agent to the Borrower unless,
in the case of this clause (iii), the Borrower has provided written notice to the Administrative Agent, within seven (7) days
after notice of such Default has been delivered to the Borrower, stating that
the Borrower shall undertake to
cure such Default on or prior to the expiration of the applicable cure period
therefor, if any, set forth in the definition of the term “Event of Default”
(and setting forth the steps that the Borrower intends to take in order to
effectuate such cure), and the Administrative Agent shall not have provided
notice to the Borrower within five (5) Business Days after receipt of such
notice from the Borrower, setting forth the Administrative Agent’s
determination, in its reasonable discretion, that the steps set forth in the
notice from the Borrower are not likely to result in the timely cure of such
default.  Notwithstanding the foregoing,
for purposes of Sections 13.08 and 14.07(b)(i)(A), a Major
Default of the type described in clause (ii) above shall not be deemed to “exist”
unless the Borrower has received notice of such Major Default and has failed to
cure such Major Default within five (5) Business Days.

 

“Major Lease” shall mean one or more Leases to
the same tenant or its Affiliates covering an aggregate of either (i) 20%
of the rentable square footage of any Project or (ii) 30,000 rentable
square feet or more.

 

“Material Adverse Effect” shall mean a material
adverse effect, as determined by the Administrative Agent, in its reasonable
judgment and discretion, on (a) any Project or the business, operations,
financial condition, liabilities or capitalization of the Borrower, (b) the
ability of the Borrower or any other Borrower Party to pay or perform (or cause
to be performed) its respective material obligations under any of the Loan
Documents to which it is a party, including the timely payment of the principal
of or interest on the Loans or other amounts payable in connection therewith, (c) the
Administrative Agent’s Liens in any of the collateral securing the Loans or the
priority of any such Liens, (d) the validity or enforceability of any of
the Loan Documents or (e) the rights and remedies of the Lenders and the
Administrative Agent under any of the Loan Documents.

 

“Maturity Date” shall mean the earliest of (a) the
Stated Maturity Date or (b) the date as to any Loans on which the
Outstanding Principal Amounts under the Notes evidencing such Loans are
accelerated or automatically become due and payable pursuant to the terms of
the Notes or any other Loan Document.

 

20

 

“Maximum Rate” shall have the meaning assigned
to such term in Section 14.25.

 

“Modifications” shall mean any amendments,
supplements, modifications, renewals, replacements, consolidations, severances,
substitutions and extensions thereof from time to time; “Modify”, “Modified”,
or related words shall have meanings correlative thereto.

 

“Mold” shall mean any microbial or fungus contamination
or infestation in any Project of a type which could reasonably be anticipated
(after due inquiry and investigation) to pose a risk to human health or the
environment or could reasonably be anticipated (after due inquiry and
investigation) to negatively impact the value of such Project in any material
respect.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.,
or any successor thereto.

 

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

 

“Named Principals” shall mean Dan A.
Emmett, Christopher H. Anderson, Kenneth M. Panzer and Jordan L.
Kaplan.

 

“Net Operating Income” shall mean, for any
period, the excess, if any, of Operating Income for such period over Operating
Expenses for such period.

 

“Net Proceeds” shall have the meaning assigned
to such term in Section 10.03(b).

 

“Net Proceeds Deficiency” shall have the
meaning assigned to such term in Section 10.03(h).

 

“Note A” shall mean those certain notes or
note denominated “Note A” dated concurrently with the Loan Agreement,
executed by Borrower to the order of the Lender named therein, in the aggregate
original principal amount of $148,148,148.15, as the same may be Modified from
time to time.  Each Note A shall
constitute a “Note” for all purposes under this Agreement and the other Loan
Documents.

 

“Note A Applicable Margin” shall mean (a) for
Base Rate Loans, 80 basis points per annum; and (b) for Eurodollar
Loans, 65 basis points per annum.

 

“Note B” shall mean those certain notes or
note denominated  “Note B” dated
concurrently with the Loan Agreement, executed by Borrower to the order of the
Lender named therein, in the aggregate original principal amount of $97,037,037.04,
as the same may be Modified from time to time. 
Each Note B shall constitute a “Note” for all purposes under this
Agreement and the other Loan Documents.

 

“Note B Applicable Margin” shall mean (a) for
Base Rate Loans, 110 basis points per annum; and (b) for Eurodollar
Loans, 85 basis points per annum.

 

“Note C” shall mean those certain notes or
note denominated “Note C” dated concurrently with the Loan Agreement,
executed by Borrower to the order of the Lender named therein, in the aggregate
original principal amount of $14,814,814.81, as the same may be

 

21

 

Modified from time to
time.  Each Note C shall constitute
a “Note” for all purposes under this Agreement and the other Loan Documents.

 

“Note C Applicable Margin” shall mean (a) for
Base Rate Loans, 410 basis points per annum; and (b) for Eurodollar
Loans, 285 basis points per annum.

 

“Notes” shall mean, collectively, each Note A,
Note B, Note C and each other promissory note hereafter executed by
the Borrower to the order of any of the Lenders evidencing such Lender’s
respective Commitment and Loans, as such notes may be Modified or substituted
and in effect from time to time.  Subject
to such modifications thereto as may be deemed necessary by the Administrative
Agent to reflect the Applicable Margin applicable to such Notes or to
denominate any such Note as a Note A, Note B, Note C or similar
reference, and subject to the provisions of Section 14.30, each of
the Notes shall be substantially in the form of Exhibit H attached
hereto.

 

“Obligations” means all obligations,
liabilities and indebtedness of every nature of the Borrower from time to time
owing to the Administrative Agent or any Lender under or in connection with
this Agreement, the Notes or any other Loan Document to which it is a party,
including principal, interest, fees (including fees of counsel), and expenses
whether now or hereafter existing under the Loan Documents to which it is a
party.

 

“OECD” has the meaning assigned to such term in
the definition of “Eligible Assignee”.

 

“OP
Merger Sub” shall have the meaning set forth in Section 14.31.

 

“Operating Expenses” shall mean, for any
period, all expenditures, computed in accordance with GAAP, of whatever kind or
nature relating to the ownership, operation, maintenance, repair or leasing of
the Projects that are incurred on a regular monthly or other periodic basis,
including (a) allocated amounts on account of Insurance Premiums and Real
Estate Taxes, prorated on an annual basis, (b) management fees in an
amount which is the greater of (i) management fees actually paid and (ii) management
fees at an imputed rate of 2.0% of Operating Income for such period and (c) imputed
capital expenditure in an amount equal to a prorated portion of an annual
amount equal to $0.20 per square foot; provided, however, that
Operating Expenses shall not include (i) depreciation, amortization and
other non-cash charges or capital expenditures (except as provided above), (ii) leasing
commissions, tenant improvement allowances or other expenditures incurred for
tenant improvements, (iii) any deposits to cash reserves (if any) required
to be maintained under the Loan Documents (except if and to the extent any sums
are withdrawn therefrom to pay (and are actually used to pay) expenses which
otherwise constitute Operating Expenses without duplication), (iv) any
payment or expense for which the Borrower was or is to be reimbursed by any
third party if the receipt of the related reimbursement payment is required to
be excluded in the calculation of Operating Income, (v) any payment
payable by the Borrower or any Other Swap Pledgor under the Hedge Agreement, (vi) any
changes in value of derivative contracts or of the Projects, and (vii) any
principal, interest or other debt service payable with respect to the
Loans.  Operating Expenses shall be
determined on an annualized basis based on the relevant quarterly results for
purposes of Section 2.09(a), and on a projected annual basis for
purposes of Section 10.03(c)(iv).

 

22

 

“Operating Income” shall mean, for any period,
all regular ongoing income, computed in accordance with GAAP (but without
taking into account any treatment of Rent on a straight-line amortization basis
over the term of a lease that would otherwise be required by GAAP), during such
period from the ownership or operation, or otherwise arising in respect, of the
Projects, including (a) all amounts payable to the Borrower by any Person
as Rents under Approved Leases, (b) business interruption proceeds and
rent loss insurance proceeds (except with respect to any Leases that have been
terminated as of the date of computation as a result of any Casualty Event or
Taking) and (c) all other amounts which are included in the Borrower’s
financial statements as operating income of the Projects, including, receipts
from leases and parking agreements, concession fees and charges, other
miscellaneous operating revenues, but excluding any extraordinary income,
including (i) any Condemnation Awards or Insurance Proceeds (other than
business interruption and rent loss proceeds as aforementioned), (ii) any
item of income otherwise includable in Operating Income but paid directly to a
Person other than the Borrower, its representative or its Affiliate (except, in
each case, to the extent the Borrower receives monetary credit for such payment
from the recipient thereof or such item is treated as an income item to the
Borrower, in accordance with GAAP), (iii) security deposits and earnest
money deposits received from tenants until forfeited or applied in accordance
with their Leases, (iv) lease buyout payments made by tenants in
connection with any surrender, cancellation or termination of their Leases, (v) any
disbursements to the Borrower from the Cash Trap Account (it being understood
that nothing set forth in this clause (v) shall prevent the receipt of
funds that have been deposited into the Cash Trap Account from being treated as
Operating Income when received to the extent such receipt otherwise constitutes
Operating Income as provided in the definition thereof), (vi) any changes
in value of derivative contracts or of the Projects, and (vii) any payment
payable to the Borrower or any Other Swap Pledgor under the Hedge Agreement.  Operating Income shall be determined on an
annualized basis based on the relevant quarterly results for purposes of Section 2.09(a),
and on a projected annual basis for purposes of Section 10.03(c).

 

“Operating Partnership” shall mean, with respect
to a Permitted REIT, its affiliated operating partnership majority-owned and
controlled, directly or indirectly, by such Permitted REIT through which such
REIT holds substantially all of its assets.

 

“Organizational Documents” shall mean (a) for
any corporation, the certificate or articles of incorporation, the bylaws, any
certificate of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement, and any
amendments thereto, (b) for any limited liability company, the articles of
organization and any certificate relating thereto and the limited liability
company (or operating) agreement of such limited liability company, and any
amendments thereto, and (c) for any partnership (general or limited), the
certificate of limited partnership or other certificate pertaining to such
partnership and the partnership agreement of such partnership (which must be a
written agreement), and any amendments thereto.

 

“Other Charges” shall mean all ground rents,
maintenance charges, impositions other than Real Estate Taxes, and any other
charges, including vault charges and license fees for the use of vaults, chutes
and similar areas adjoining the Projects, now or hereafter levied or assessed
or imposed against the Projects or any part thereof, other than Excluded Taxes.

 

23

 

“Other Swap Pledgor” shall mean (i) Borrower’s
Member, (ii) any Qualified Successor Entity to whom the Projects are
transferred pursuant to Section 9.03(a)(iii), (iii) any entity that
qualifies under clause (I) of the definition of Qualified Successor
Entity, (iv) a Permitted Public REIT, its Operating Partnership or any
Permitted Public REIT Subsidiary and/or (v) a Permitted Private REIT or
any Permitted Private REIT Subsidiary.

 

“Other Taxes” means any and all present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies arising from any payment made under any Loan Document
or from the execution, delivery, ownership or enforcement of, or otherwise with
respect to, any Loan Document.

 

“Outstanding Principal Amount” shall mean the outstanding principal amount of the
Loans at any point in time after giving effect to any repayment thereof
pursuant to Sections 2.06, 2.07, 2.09 and 3.01 or
other applicable provisions of this Agreement.

 

“Participant” shall have the meaning assigned
to such term in Section 14.07(c)(i).

 

“Payment Date” shall mean the first Business
Day of each calendar month.  The first
Payment Date shall be October 1, 2005.

 

“Payor” shall have the meaning assigned to such
term in Section 4.06.

 

“PBGC” shall mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA and any successor entity
performing similar functions.

 

“Permitted Investments” shall mean:  (a) direct obligations of the United
States of America, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America, or by any agency
thereof, in either case maturing not more than ninety (90) days from the date
of acquisition thereof; (b) certificates of deposit issued by any bank or
trust company organized under the laws of the United States of America or any
state thereof and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than ninety (90) days from the date of
acquisition thereof; and (c) commercial paper rated A-1 or P-1 or better
by S&P or Moody’s, respectively, maturing not more than ninety (90) days
from the date of acquisition thereof; in each case so long as the same (i) provide
for the payment of principal and interest (and not principal alone or interest
alone) and (ii) are not subject to any contingency regarding the payment
of principal or interest.

 

“Permitted Liens” shall mean for each Project: (a) any
Lien created by the Loan Documents, (b) Liens for Real Estate Taxes not
yet delinquent and Liens for Other Charges imposed by any Governmental
Authority not yet due or delinquent, (c) rights of existing and future
tenants under Approved Leases as tenants only, (d) Permitted Title
Exceptions that constitute Liens, (e) utility and other easements entered
into by the Borrower in the ordinary course of business having no adverse
impact on the occupation, use, enjoyment, operation, value or marketability of
any Project and approved in advance in writing by the Administrative Agent in
its reasonable discretion, (f) any Lien for the performance of work or the
supply of materials affecting any Project unless the Borrower fails to
discharge such Lien by payment or bonding (in accordance with statutory bonding
requirements the effect of which is to release such Lien from the affected
Project and to limit the Lien claimant’s rights to a recovery on the bond) on
or prior

 

24

 

to the date that is the
earlier of (i) thirty (30) days after the date of filing of such Lien and (ii) the
date on which the Project or the Borrower’s interest therein is subject to risk
of sale, forfeiture, termination, cancellation or loss, (g) any Lien
consisting of the rights of a lessor under equipment leases which are entered
into in compliance with Sections 9.02(h) and 9.04(d), and (h) any
other title and survey exceptions (not referred to in clauses (a) through (g) above)
affecting the Projects as the Administrative Agent may approve in advance in writing
and in its sole discretion.

 

“Permitted Private REIT” shall have the meaning
set forth in Section 9.03(a)(iii).

 

“Permitted Private REIT Subsidiary” shall mean any
wholly-owned Subsidiary of a Permitted Private REIT or its Operating
Partnership.

 

“Permitted Public REIT” shall mean a REIT, in
which, at the time of the initial public offering of shares therein, at least
two (2) of the Named Principals are senior officers of such REIT.

 

“Permitted Public REIT Subsidiary” shall mean
any wholly-owned Subsidiary of the Permitted Public REIT or its Operating
Partnership.

 

“Permitted Public REIT Transfer” shall mean (a) a
transfer, through one or a series of related transactions, of one hundred
percent (100%) of the direct or indirect Equity Interests in the Borrower or
any Qualified Successor Entity to the Permitted Public REIT, its Operating
Partnership or a Permitted Public REIT Subsidiary in accordance with this
Agreement; provided that the Projects continue to be directly owned by
the Borrower or such Qualified Successor Entity, as the case may be, or (b) a
transfer, in compliance with Section 9.03(a)(iii), of all but not
less than all of the Projects to a Qualified Successor Entity that is a Permitted
Public REIT Subsidiary of the Permitted Public REIT (other than its Operating
Partnership).

 

“Permitted REIT” shall mean a Permitted Private
REIT or the Permitted Public REIT.

 

“Permitted REIT Subsidiary” shall mean a
Permitted Public REIT Subsidiary or a Permitted Private REIT Subsidiary.

 

“Permitted Reorganization” shall have the
meaning set forth in Section 14.31.

 

“Permitted Title Exceptions” shall mean as to
any Project, the outstanding liens, easements, restrictions, security interests
and other exceptions to title set forth in the policy of title insurance
insuring the lien of the Deed of Trust encumbering such Project approved by the
Administrative Agent.

 

“Person” shall mean any individual,
corporation, company, voluntary association, partnership, limited liability
company, joint venture, trust, unincorporated organization or government (or
any agency, instrumentality or political subdivision thereof).

 

“Plan” shall mean any employee pension benefit
plan (other than a Multiemployer Plan) as defined in Section 3(2) of
ERISA, and in respect of which any Borrower Party or its

 

25

 

ERISA Affiliates is (or,
if such plan were terminated, would, if the Plan were subject to Title IV of
ERISA, under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

 

“Policy” and “Policies” shall have the
respective meanings assigned to such terms in Section 8.05(b).

 

“Post-Default Rate” shall mean a rate per annum
equal to 5% plus the Base Rate as in effect from time to time plus
the Applicable Margin for Base Rate Loans, provided that, with respect
to principal of a Eurodollar Loan, the “Post-Default Rate” shall be the greater
of (a) 5% plus the interest rate for such Loan as provided in Section 3.02(a)(ii) and
(b) the rate provided for above in this definition; provided, however,
that in no event shall the Post-Default Rate exceed the Maximum Rate.

 

“Primary Credit Facility” means, with respect to
any Permitted REIT, the primary credit facility under which such Permitted REIT
obtains financing for its general purposes.

 

“Principal Office” shall mean the office of
Eurohypo, located on the date hereof at 1114 Avenue of the Americas, 29th
Floor, New York, New York, or such other office as the Administrative Agent
shall designate upon ten (10) days’ prior notice to the Borrower and the
Lenders.

 

“Principals” shall mean the Named Principals
and any other Person holding ten percent (10%) or more of the shares,
partnership interests, membership interests, or other voting or beneficial
interests in Borrower’s Manager.  As of
the date hereof, the Named Principals own all of the shares in Borrower’s
Manager.

 

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

 

“Project-Level Account” shall have the meaning
assigned to such term in the Project-Level Account Security Agreement.

 

“Project-Level
Account Security Agreement” shall mean the Project-Level Account Security
Agreement, among the Borrower, the Administrative Agent (on behalf of the
Lenders) and the Depository Bank, substantially in the form of Exhibit I
attached hereto, delivered on the Closing Date, as the same may be Modified and
in effect from time to time.

 

“Property” shall mean any right or interest in
or to property of any kind whatsoever, whether real, personal or mixed and
whether tangible or intangible.

 

“Property Condition Report” shall mean,
collectively, those certain property condition reports for each Project
prepared for the Administrative Agent and listed on Schedule 1.01(7) attached
hereto.  The Administrative Agent
acknowledges receipt of copies of the foregoing Property Condition Reports.

 

“Property Management Agreement” shall mean,
collectively, (a) each Property Management Agreement between the Borrower and
the Property Manager listed on Schedule 1.01(8) attached
hereto and (b) any other property management and/or leasing agreement
entered

 

26

 

into with a Property
Manager appointed in accordance with the definition of Property Manager
contained in this Section 1.01, as the same shall be Modified in
accordance with the provisions of this Agreement.

 

“Property Manager” shall mean Douglas, Emmett
and Company or such successor manager and/or leasing agent as shall be
reasonably approved by the Administrative Agent or otherwise permitted without
such approval pursuant to Section 9.15 or Section 14.31.

 

“Property Manager’s Consent” shall mean a
Property Manager’s Consent and Subordination of Property Management Agreement
substantially in the form of Exhibit J attached hereto, to be
executed, dated and delivered by (a) the Property Manager and the Borrower
to the Administrative Agent (on behalf of the Lenders) on the Closing Date and (b) any
other Property Manager to the Administrative Agent (on behalf of the Lenders)
prior to its appointment as Property Manager, as such agreements may be
Modified and in effect from time to time.

 

“Proportionate Share” shall mean, with respect
to each Lender, the percentage set forth opposite such Lender’s name on Schedule 1.01(4) attached
hereto under the caption “Proportionate Share” or in the Assignment and
Assumption (in accordance with the terms of this Agreement) pursuant to which
such Lender became a party hereto, in any case, as such percentage may be
Modified in the most recent Assignment and Assumption (in accordance with the
terms of this Agreement) to which such Lender is a party.  The aggregate Proportionate Shares of all
Lenders shall equal one hundred percent (100%).

 

“Proposed Lender” shall have the meaning
assigned to such term in Section 5.07.

 

“Qualified Real Estate Interest” shall mean any
real estate asset of a type and quality, located in markets, consistent with
the Projects or any Residential Property as of the date this Agreement is
entered into or which is otherwise consistent with the investment practices
prior to the date hereof of the Douglas Emmett Realty Funds taken as a whole and
which is acquired after the Closing Date directly by the Borrower or by a
Qualified Sub-Tier Entity.

 

“Qualified Successor Entity” shall have the
meaning set forth in Section 9.03(a)(iii).

 

“Qualified Sub-Tier Entity” means an entity
wholly- or majority-owned and controlled by the Borrower.

 

“Real Estate Taxes” shall mean all real estate
taxes and all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents and charges, all charges for utilities
and all other public charges whether of a like kind or different nature,
imposed upon or assessed against the Borrower, the Projects or any part thereof
or upon the revenues, rents, issues, income and profits of the Projects or
arising in respect of the occupancy, use or possession thereof.

 

“Register” shall have the meaning assigned to
such term in Section 14.07(b)(iv).

 

27

 

“Regulations A, D, T, U and X” shall mean,
respectively, Regulations A, D, T, U and X of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be Modified and in
effect from time to time.

 

“Regulatory Change” shall mean, with respect to
any Lender, any change after the Closing Date in federal, state or foreign law
or regulations (including Regulation D) or the adoption or making after such
date of any interpretation, directive or request applying to a class of banks
including such Lender of or under any federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any Governmental Authority or
monetary authority charged with the interpretation or administration thereof.

 

“REIT” shall mean a real estate investment
trust as defined in Sections 856-860 of the Code.

 

“REIT
Merger Sub 1” shall have the meaning set forth in Section 14.31.

 

“REIT
Merger Sub 2” shall have the meaning set forth in Section 14.31.

 

“Rejecting Lender” shall have the meaning set
forth in Section 9.03(c).

 

“Related Entity” shall mean, as to any Person, (a) any
other Person which directly or indirectly owns 51% or more of the partnership,
membership or other ownership interests of such Person and directly or
indirectly controls such Person; (b) any other Person into which, or with
which, such Person is merged, consolidated or reorganized, or which is
otherwise a successor to such Person by operation of law, or which acquires all
or substantially all of the assets of such Person; (c) any other Person
which is a successor to the business operations of such Person and engages in
substantially the same activities; or (d) any other Person in which a
Person described in clauses (b) and (c) of this
definition directly or indirectly owns 51% or more of the partnership,
membership or other ownership interests of such Person and directly or
indirectly controls such Person.  As used
in this definition, “control” (including, with its correlative meanings,
“controlled by” and “under common control with”) shall mean
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).

 

“Related Party” shall mean:

 

(i)                                     any
family member of any Named Principal; or

 

(ii)                                  any
trust, corporation, partnership, limited liability company or other entity, in
which any Named Principal and/or such other persons referred to in the
immediately preceding clause (i) have a controlling interest.

 

“Release” shall mean any release, spill, emission,
leaking, pumping, injection, pouring, dumping, deposit, disposal, discharge,
dispersal, leaching, seeping or migration into the indoor or outdoor
environment, including the movement of Hazardous Substances through ambient
air, soil, surface water, ground water, wetlands, land or subsurface strata.

 

28

 

“Remediation” shall mean, without limitation,
any investigation, site monitoring, response, remedial, removal, or corrective
action, any activity to cleanup, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Substance, any actions to prevent, cure or mitigate any
Release of any Hazardous Substance, any action to comply with any Environmental
Laws or with any permits issued pursuant thereto, any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or evaluation relating to any Hazardous
Substances.  “Remediate” shall have a
correlative meaning.

 

“Rents” means all rents (whether denoted as
base rent, advance rent, minimum rent, percentage rent, additional rent or
otherwise), issues, income, royalties, profits, revenues, proceeds, bonuses,
deposits (whether denoted as security deposits or otherwise), termination fees,
rejection damages, buy-out fees and any other fees made or to be made in lieu
of rent to the Borrower, any award made hereafter to the Borrower in any court
proceeding involving any tenant, lessee, licensee or concessionaire under any
of the Leases in any bankruptcy, insolvency or reorganization proceedings in
any state or federal court, and all other payments, rights and benefits of
whatever nature from time to time due to the Borrower under the Leases
(including any Leases with respect to signage), including (i) rights to
payment earned under the Leases, (ii) any payments or rights to payment
with respect to parking facilities or other facilities in any way contained
within or associated with the Projects, and (iii) all other income,
consideration, issues, accounts, profits or benefits of any nature arising from
the possession, use and operation of the Projects.

 

“Requesting Lender” shall have the meaning
assigned to such term in Section 5.07.

 

“Required Lenders” shall mean Lenders holding
at least 66.67% of the Outstanding Principal Amount.

 

“Required Payment” shall have the meaning
assigned to such term in Section 4.06.

 

“Reserve Requirement” shall mean, for any
Interest Period for any Eurodollar Loan, the average maximum rate at which
reserves (including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against “Eurocurrency liabilities” (as such term
is used in Regulation D).  Without
limiting the effect of the foregoing, the Reserve Requirement shall include any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change with respect to (i) any category of liabilities that
includes deposits by reference to which the LIBO Rate is to be determined as
provided in the definition of “LIBO Rate” in this Section 1.01 or (ii) any
category of extensions of credit or other assets that includes Eurodollar
Loans.

 

“Residential Properties” shall have no meaning
for purposes of this Agreement.

 

“Restoration” shall have the meaning assigned
to such term in Section 10.01(a).

 

“Restoration Consultant” shall have the meaning
assigned to such term in Section 10.03(e).

 

29

 

“Restoration Retainage” shall have the meaning
assigned to such term in Section 10.03(f).

 

“Restricted Payment” shall mean all
distributions of the Borrower or the Borrower’s Member (in cash, Property or other
obligations) on, or other payments or distributions on account of (or the
setting apart of money for a sinking or other analogous fund for) the purchase,
redemption, retirement or other acquisition of, any portion of any Equity
Interest in the Borrower or the Borrower’s Member or of any warrants, options
or other rights to acquire any such Equity Interest.

 

“Rollover
Breakage Costs” shall have the meaning assigned to such term in Section 2.08.

 

“Security Accounts” shall mean, collectively,
the Cash Trap Account, the Project-Level Account and any Controlled Account.

 

“Security Documents” shall mean, collectively,
the Deed of Trust, the Hedge Agreement Pledge, the Cash Trap Account Security
Agreement, the Project-Level Account Security Agreement, the Controlled Account
Agreement, the General Assignment and such other security documents as the
Administrative Agent may reasonably request and all Uniform Commercial Code
financing statements required by this Agreement, the Deed of Trust, the Hedge
Agreement Pledge, the Cash Trap Account Security Agreement, the Project-Level
Account Security Agreement, the Controlled Account Agreement, the General
Assignment or any other security document the Administrative Agent may
reasonably request to be filed with respect to the applicable security
interests.

 

“Significant Casualty Event” shall have the
meaning assigned to such term in Section 10.01(b).

 

“SNDA Agreement” shall mean (i) the form
of Subordination, Non-Disturbance, and Attornment Agreement attached hereto as Exhibit K,
(ii) any form attached to a Major Lease currently in effect or which has
been approved by the Administrative Agent pursuant to the terms of this
Agreement or (iii) such other form as is reasonably satisfactory to the
Administrative Agent.

 

“Solvent” shall mean, when used with respect to
any Person, that at the time of determination: (i) the fair saleable value
of its assets is in excess of the total amount of its liabilities (including
contingent liabilities); (ii) the present fair saleable value of its
assets is greater than its probable liability on its existing debts as such
debts become absolute and matured; (iii) it is then able and expects to be
able to pay its debts (including contingent debts and other  commitments) as they mature; and (iv) it
has capital sufficient to carry on its business 
as conducted and as proposed to be conducted.

 

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

 

“Stated Maturity Date” shall mean the date that
is seven (7) years from the expiration of the Stub Interest Period,
subject to Section 2.10.

 

30

 

“Stub Interest Period”
shall mean the period commencing on the Closing Date and ending on (but
not including) the first calendar day
of the first month following the Closing Date (or if such day is not a Business
Day, the next Business Day thereafter).

 

“Subsidiary” shall mean, with respect to any
Person, any corporation, limited liability company, partnership or other entity
of which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such corporation,
limited liability company, partnership or other entity (irrespective of whether
or not at the time securities or other ownership interests of any other class
or classes of such corporation, limited liability company, partnership or other
entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.

 

“Swap Agreement” means any agreement (whether
one or more) with respect to any swap, forward, future or derivative
transaction or option or similar agreement (including, without limitation, any
cap or collar) involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk
or value or any similar transaction or any combination of these transactions.  For purposes hereof, the credit exposure at
any time of any Person under a Swap Agreement to which such Person is a party
shall be determined at such time in accordance with the standard methods of
calculating credit exposure under similar arrangements as reasonably prescribed
from time to time by the Administrative Agent, taking into account (a) potential
interest rate movements, (b) the respective termination provisions, (c) the
notional principal amount and term of such Swap Agreement and (d) any provisions
providing for the netting of amounts 
payable by and to a Person thereunder (or simultaneous payments of
amounts by and to such Person).

 

“Syndication” shall have the meaning assigned
to such term in Section 14.26.

 

“Taking” means a taking or voluntary conveyance
during the term hereof of all or part of any Project or any interest therein or
right accruing thereto or use thereof, as the result of, or in settlement of,
any condemnation or other eminent domain proceeding by any Governmental
Authority affecting such project or any portion thereof whether or not the same
shall have actually been commenced.

 

“Taxes” shall mean any and all present or
future taxes, levies, imposts, duties, deductions, charges or withholdings
imposed by any Governmental Authority.

 

“Third Party Counterparty” shall have the
meaning assigned to such term in Section 8.19(a).

 

“Third Party Hedge Agreement” shall have the
meaning assigned to such term in Section 8.19(c).

 

“Title Company” shall mean Chicago Title
Insurance Company and any one or more reinsurers identified on Schedule 1.01(9) attached
hereto; provided, however, that (i) in no

 

31

 

event shall the amount
insured by any such title insurer exceed the limits shown on Schedule 1.01(9) and
(ii) any reinsurance shall be subject to direct access agreements from
such reinsurers.

 

“Title Policy” shall have the meaning assigned
to such term in Section 6.01(k).

 

“Trading with the Enemy Act” shall mean 50
U.S.C. App. 1 et seq.

 

“Transactions” shall mean, collectively, (a) the
execution, delivery and performance by the Borrower of this Agreement and the
other Loan Documents to which it is a party, the borrowing of the Loans and the
use of the proceeds thereof and (b) the execution, delivery and
performance by the other Borrower Parties of the other Loan Documents to which
they are a party and the performance of their obligations thereunder.

 

“Transfer” shall mean any transfer, sale,
assignment, mortgage, encumbrance, pledge or conveyance, whether voluntary or
involuntary.

 

“Type” shall have the meaning assigned to such
term in Section 1.03.

 

“Uniform Commercial Code” shall mean the
Uniform Commercial Code of the State of California, except with respect to
those circumstances in which the Uniform Commercial Code of the State of
California shall require the application of the Uniform Commercial Code of
another state, in which case, for purposes of such circumstances, the “Uniform
Commercial Code” shall mean the Uniform Commercial Code of such other state.

 

“Use” shall mean, with respect to any Hazardous
Substance, the generation, manufacture, processing, distribution, handling,
use, treatment, recycling or storage of such Hazardous Substance or
transportation to or from the property of such Person of such Hazardous
Substance.

 

“Withdrawal Liability” means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan.

 

1.02                           Accounting
Terms and Determinations.

 

(a)                                  Except
as otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time.

 

(b)                                 Without
first obtaining the Administrative Agent’s consent, the Borrower will not change
the last day of its fiscal year from December 31, or the last days of the
first three fiscal quarters in each of its fiscal years.

 

1.03                           Types
of Loans.  Loans hereunder are
distinguished by “Type”.  The “Type” of a
Loan refers to whether such Loan is a Base Rate Loan or a Eurodollar Loan, each
of which constitutes a Type.

 

1.04                           Terms
Generally.  The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words

 

32

 

“include”, “includes” and “including” shall be deemed
to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time Modified (subject to any restrictions on such
Modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the
words “herein”, “hereof” and “hereunder,” and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement, (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights and (f) whenever this Agreement provides that
any consent or approval will not be “unreasonably withheld” or words of like
import, the same shall be deemed to include within its meaning that such
consent or approval will not be unreasonably delayed or conditioned.

 

ARTICLE II

 

COMMITMENTS, LOANS, NOTES AND PREPAYMENTS

 

2.01                           Loans.  Each Lender severally agrees, on the terms
and conditions of this Agreement, to make a loan (each such loan being a “Loan”
and collectively, the “Loans”) on a non-revolving basis to the Borrower
in Dollars on the Closing Date in a principal amount up to but not exceeding
the amount of the Commitment of such Lender. 
Thereafter the Borrower may Convert all or a portion of the Outstanding
Principal Amount of one Type of Loan into another Type of Loan (as provided in Section 2.05)
or Continue one Type of Loan as the same Type of Loan (as provided in Section 2.05),
subject in all cases to the limit on the number of Interest Periods that may be
outstanding at any one time as set forth in the definition of “Interest Period”.

 

2.02                           Funding
of Loans.  On the Closing Date, each
Lender shall make available from its Applicable Lending Office the amount of
the Loan to be made by it on such date to the Administrative Agent as specified
by the Administrative Agent, in immediately available funds, for account of the
Borrower.  The amount so received by the
Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower in immediately available funds,
for the uses and purposes identified on a sources and uses statement approved
by the Administrative Agent and the Borrower.

 

2.03                           Several
Obligations.  The failure of any
Lender to make any Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan on such date,
but neither any Lender nor the Administrative Agent shall be responsible for
the failure of any other Lender to make a Loan to be made by such other Lender.  The amounts payable by the Borrower at any
time hereunder and under the Note to each Lender shall be a separate and
independent debt.  It is understood and
agreed that the Closing hereunder shall not occur unless each of the Lenders
shall have funded the amount of the Loan to be made by it.

 

33

 

2.04                           Notes.

 

(a)                                  Notes.  The Loan made by each Lender shall be
evidenced by its Note.

 

(b)                                 Substitution,
Exchange and Subdivision of Notes. 
No Lender shall be entitled to have its Note substituted or exchanged
for any reason, or subdivided for promissory notes of lesser denominations,
except (i) in connection with a permitted assignment of all or any portion
of such Lender’s Commitment, Loan and Note pursuant, and subject to the terms
and conditions of, Section 14.07(b) (and, if requested by any
Lender in connection with such permitted assignment, the Borrower agrees to so
exchange any such Note provided the original Note subject to such exchange has
been delivered to the Borrower) or (ii) as provided in Section 14.30
with respect to severance of Notes if elected by Eurohypo, provided the
original Note severed, split, divided or otherwise replaced pursuant to Section 14.30
has been delivered to the Borrower.

 

(c)                                  Loss,
Theft, Destruction or Mutilation of Notes. 
In the event of the loss, theft or destruction of any Note, upon the
Borrower’s receipt of a reasonably satisfactory indemnification agreement
executed in favor of the Borrower by the holder of such Note, or in the event
of the mutilation of any Note, upon the surrender of such mutilated Note by the
holder thereof to the Borrower, the Borrower shall execute and deliver to such
holder a replacement Note in lieu of the lost, stolen, destroyed or mutilated
Note.

 

2.05                           Conversions
or Continuations of Loans.

 

(a)                                  Subject
to Section 4.04, the Borrower shall have the right to Convert Loans
of one Type into Loans of another Type or Continue Loans of one Type as Loans
of the same Type, at any time or from time to time; provided that:  (i) the Borrower shall give the
Administrative Agent notice of each such Conversion or Continuation as provided
in Section 4.05; (ii) Eurodollar Loans may be Converted only
on the last day of an Interest Period for such Loans unless the Borrower
complies with the terms of Section 5.05 and (iii) subject to Sections 5.01(a) and
5.03, any Conversion or Continuation of Loans shall be pro rata among
the Lenders.  Notwithstanding the
foregoing, and without limiting the rights and remedies of the Administrative
Agent and the Lenders under Article XII, in the event that any
Event of Default exists, the Administrative Agent may (and at the request of
the Required Lenders shall) suspend the right of the Borrower to Convert any
Loan into a Eurodollar Loan, or to Continue any Loan as a Eurodollar Loan for
so long as such Event of Default exists, in which event all Loans shall be
Converted (on the last day(s) of the respective Interest Periods therefor)
into, or Continued as, as the case may be, Base Rate Loans.  In connection with any such Conversion, a Lender
may (at its sole discretion) transfer a Loan from one Applicable Lending Office
to another.

 

(b)                                 Notwithstanding
anything to the contrary contained in this Agreement, at any time that a Hedge
Agreement is in effect, the Borrower shall have the right to choose only an
Interest Period which is the same as the Interest Rate Hedge Period, provided
that the foregoing shall only apply to a Hedge Agreement that is required by Section 8.19(a) of
this Agreement.

 

34

 

2.06                           Prepayment.

 

(a)                                  Prepayment
of the Loans.  Upon not less than ten
(10) days’ prior written notice to the Administrative Agent, the Borrower
may prepay the Loans, in whole or in part, in minimum increments of One Million
Dollars ($1,000,000) except as otherwise provided by Section 2.06(c),
subject to the following:

 

(i)                                     any
such prepayment shall be accompanied by the amount of interest theretofore
accrued but unpaid in respect of the principal amount so prepaid, in accordance
with Section 2.08;

 

(ii)                                  except
as provided below, any such prepayment (except as a result of a Casualty Event
or Taking or any prepayment made pursuant to Section 10.03(j) or Section 14.25))
shall be accompanied by a prepayment premium equal to the following percentage
of the principal amount so prepaid:

 

	
  If the prepayment occurs during the following period:

  	
   

  	
  The percentage is as follows:

  
	
   

  	
   

  	
   

  
	
  During the period from the Closing Date to and including the date
  which occurs six (6) months after the Closing Date

  	
   

  	
  1.00%

  
	
   

  	
   

  	
   

  
	
  During the period from the day immediately following the date which
  occurs six (6) months after the Closing Date to and including the date
  which occurs twelve (12) months after the Closing Date

  	
   

  	
  0.50%

  
	
   

  	
   

  	
   

  
	
  Thereafter

  	
   

  	
  0.00%

  

 

and

 

(iii)                               such prepayment shall be
accompanied by any amounts payable to a Lender pursuant to Section 5.05
as a result of such prepayment while a Eurodollar Loan is in effect, in
accordance with Section 2.08.

 

If the
Loans are paid or prepaid in whole or in part for any reason (including
acceleration of the Loans or because the Loans automatically become due and
payable in accordance with Section 12.02(a)), other than by a
Casualty Event or Taking or any prepayment made pursuant to Section 10.03(j)
or Section 14.25) at any time, the Borrower shall pay to the
Administrative Agent (on behalf of the Lenders) the amount(s) described in clauses
(i), (ii), as applicable, and (iii), of the immediately
preceding sentence.  Notwithstanding the
foregoing, no prepayment premium pursuant to clause (ii) of Section 2.06(a) shall
be payable in connection with any prepayment of principal made other than
pursuant to

 

35

 

Section 2.09(a),
if such prepayment, when aggregated with all past prepayments made other than
pursuant to Section 2.09(a), would not exceed $65,000,000.

 

(b)                                 Treatment
of Prepayments.  Except for any mandatory
prepayment made pursuant to Section 2.07 and any prepayment made
under Sections 2.06(c) and 2.09, and notwithstanding when
such prepayment is made, each partial prepayment of the Loans shall be deemed
to reduce the Allocated Loan Amounts pro-rata in accordance with the Allocated
Loan Amount for each Project.

 

(c)                                  Prepayment
Upon Release of Projects. 
Notwithstanding anything to the contrary contained in this Section 2.06,
any prepayment made in connection with the release in accordance with the terms
contained in Section 2.09 of any one or more of the Projects may be
made at any time upon not less than ten (10) days’ prior written notice to
the Administrative Agent, and without reference to the minimum One Million
Dollars ($1,000,000) increment requirements of Section 2.06(a), but
subject to payment of any applicable prepayment premium under clause (ii) of
Section 2.06(a) and compliance with the provisions set forth
in clause (iii) of Section 2.06(a) above, and the
applicable provisions set forth in Section 2.09.

 

(d)                                 Acknowledgments
Regarding Prepayment Premium.  The
prepayment premiums required by this Section 2.06 are acknowledged
by the Borrower to be partial compensation to the Lenders for the costs of
reinvesting the proceeds of the Loans and for the loss of the contracted rate
of return on the Loans and shall be due in accordance with the terms of this Section 2.06
upon any prepayment of the Loans, including any prepayment occurring after an
acceleration resulting from a violation of the provisions restricting Transfers
set forth in this Agreement. 
Furthermore, the Borrower acknowledges that the loss that may be
sustained by the Lenders as a result of such a prepayment by the Borrower is
not susceptible of precise calculation, and the prepayment premium represents
the good faith effort of the Borrower and the Lenders to compensate the Lenders
for such loss and the parties’ reasonable estimate of such loss, and is not a
penalty.  By initialing this provision
where indicated below, the Borrower waives any rights it may have under
California Civil Code Section 2954.10, or any successor statute, and the
Borrower confirms that the Lenders’ agreement to make the Loans at the interest
rate and on the other terms set forth herein constitutes adequate and valuable
consideration, given individual weight by the Borrower, for the prepayment
provisions set forth in this Section 2.06.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Borrower’s
  Initials

  	
   

  

 

2.07                           Mandatory
Prepayments.  If a Casualty Event or
Taking shall occur with respect to any Project, the Borrower, upon the Borrower’s
or the Administrative Agent’s receipt of the applicable Insurance Proceeds or
Condemnation Awards, shall prepay the Loan, if required by the provisions of Article X,
on the dates and in the amounts specified therein without premium (but subject
to the provisions of Sections 2.08 and 5.05) or, at the
instruction of the Borrower (provided no Event of Default is then continuing),
shall be held in a Controlled Account by the Administrative Agent and applied
to prepayment of the Loan on the next Payment Date (in which case the amount so
held shall continue to bear interest at the rate(s) provided in this Agreement
until so applied to prepay the Loan). 
Nothing in this Section 2.07

 

36

 

shall be deemed to limit any obligation of the
Borrower under the Deeds of Trust or any other Security Document, including any
obligation to remit to the Cash Trap Account, Project-Level Account, or a
Controlled Account pursuant to the Deeds of Trust or any of the other Security
Documents the Insurance Proceeds, Condemnation Awards or other compensation
received in respect of any Casualty Event or Taking.

 

2.08                           Interest
and Other Charges on Prepayment.  If
the Loans are prepaid, in whole or in part, pursuant to Section 2.06
or 2.07, each such prepayment shall be made together with (a) the
accrued and unpaid interest on the principal amount prepaid, and (b) any
amounts payable to a Lender pursuant to Section 5.05 as a result of
such prepayment while an Adjusted LIBO Rate is in effect (provided the Borrower
is notified of such amount or an estimate thereof), including, without
limitation, any such amounts that may result from a prepayment other than on
the last day of an Interest Period for a Eurodollar Loan the Interest Period of
which has been automatically Continued pursuant to Section 4.05
during any period on which a prepayment date has been postponed in accordance
with the provisions set forth below in this Section 2.08; provided,
however, that any such prepayment shall be applied first, to the
prepayment of any portions of the Outstanding Principal Amount that are Base
Rate Loans and, second, to the prepayment of any portions of the
Outstanding Principal Amount that are Eurodollar Loans applying such sums first
to Eurodollar Loans of the shortest maturity so as to minimize Rollover Breakage
Costs (as defined below); provided  further, however, that
if an Event of Default exists, the Administrative Agent may distribute such
payment to the Lenders for application in such manner as it or the Required
Lenders, subject to Section 4.02, may determine to be appropriate.  Each prepayment pursuant to Section 2.06
shall be made on the prepayment date specified in the notice of prepayment
delivered pursuant to Section 4.05, unless such notice is revoked
(or the date of prepayment is postponed) by a further written notice (which may
be delivered by the Borrower by facsimile to the Administrative Agent).  Any notice revoking a
notice of prepayment (or postponing a previously-specified prepayment date)
shall be delivered not less than one (1) Business Day prior to the date of
prepayment specified in the notice of prepayment; provided, however,
in the event that the Borrower revokes or postpones such notice during the last
three (3) Business Days of any Interest Period for a Eurodollar Loan, and
provided that the Borrower has not elected to Convert such Eurodollar Loan into
a Base Rate Loan pursuant to Section 2.05, the Borrower
acknowledges that losses, costs and expenses for which the Borrower is
responsible pursuant to Section 5.05(b) shall include, without
limitation, losses, costs and expenses that may subsequently result from the
early repayment, termination, cancellation or failure of the Borrower to borrow
any Eurodollar Loan that was to have been automatically continued pursuant to Section 4.05
(“Rollover Breakage Costs”).

 

2.09                           Release
of Projects.  Except as set forth in
this Section 2.09, or unless the Obligations have been paid in
full, the Borrower shall have no right to obtain the release of any Project
from the Lien of the Loan Documents, and no repayment or prepayment of any
portion of the Loans shall cause, give rise to a right to require, or otherwise
result in, the release of the Lien of the Deed of Trust on any Project or any
other collateral securing the Loans.  Any
release upon payment of the Obligations in full shall be in accordance with the
provisions of the Deeds of Trust governing releases.

 

(a)                                  Release
of Projects.  At any time following
the Closing Date, the Borrower on one or more occasions may obtain, and the
Administrative Agent shall take such

 

37

 

actions as are necessary to effectuate pursuant to this Section 2.09(a),
the release of the entirety of any Project from the Lien of the Deeds of Trust
(and related Loan Documents) thereon and the release of the Borrower’s
obligations under the Loan Documents with respect to such Project (other than
those which expressly survive repayment, including, but not limited to, those
set forth in the Environmental Indemnity), upon satisfaction of each of the
following conditions:

 

(i)                                     The
Borrower shall submit to the Administrative Agent (on behalf of the Lenders),
by 3:00 P.M., New York City time, at least ten (10) days prior to the
date of the proposed release, written notice of its election to obtain such
release (which notice shall include a certification by an Authorized Officer of
the Borrower that the proposed release complies with all of the conditions set
forth in this Section 2.09(a)), together with the form or forms for
a release of Lien and related Loan Documents (or, in the case of a Deed of
Trust, a request for reconveyance) for such Project for execution by the
Administrative Agent, which the Administrative Agent shall execute and deliver
to the Borrower for recordation upon satisfaction of all conditions set forth
in this Section 2.09(a). 
Such release shall be in a form appropriate in each jurisdiction in
which the applicable Project is located and reasonably satisfactory to the
Administrative Agent and its counsel. 
Any notice of a proposed release of a Project pursuant to this Section 2.09(a) may
be revoked (or the date proposed for such release may be postponed) by a
further written notice (which may be delivered by the Borrower by facsimile to
the Administrative Agent).  Any notice revoking a
proposed release (or postponing the date for a proposed release) shall be
delivered not less than one (1) Business Day prior to the date of such
release specified in the notice of release; provided, however, in
the event that the Borrower revokes or postpones such notice during the last
three (3) Business Days of the Interest Period for any Eurodollar Loan, and
provided that the Borrower has not elected to Convert such Eurodollar Loan into
a Base Rate Loan pursuant to Section 2.05, the Borrower
acknowledges that the losses, costs and expenses for which the Borrower shall
be responsible under Section 5.05(b) shall include Rollover
Breakage Costs;

 

(ii)                                  The
Borrower shall remit to the Administrative Agent an amount equal to one hundred
ten percent (110%) of the Allocated Loan Amount for the applicable Project (for
application to the principal balance of the Loans), plus any prepayment premium
payable in connection with such prepayment pursuant to clause (ii) of
Section 2.06(a).  The minimum
One Million Dollar ($1,000,000) increment requirements of Section 2.06(a) shall
not apply to a prepayment of the Loans made in accordance with this Section 2.09(a);

 

(iii)                               The
Borrower shall pay to the Administrative Agent all sums, including, but not
limited to, interest payments and principal payments, if any, that are then due
and payable under the Notes, this Agreement, the Deeds of Trust and the other
Loan Documents, and all costs due pursuant to Section 5.05 and clause
(viii) of this Section 2.09(a) (it being agreed that
accrued interest on the principal amount to be paid pursuant to clause (ii) of
this Section 2.09(a) shall not be due and payable in
connection with such release (unless such accrued interest is otherwise due and
payable), but shall be due and payable on the next Payment Date);

 

(iv)                              [Reserved];

 

38

 

(v)                                 Immediately
prior to such release, the Debt Service Coverage Ratio as calculated for all of
the Projects then securing the Loans other than the Project proposed to be
released (and assuming for purposes of the calculation of the DSCR Debt Service
that the principal of the Loans shall have been reduced by the principal amount
payable with respect to the Project to be released in accordance with clause
(ii) of this Section 2.09(a)) shall be equal to or greater
than 1.50-to-1.00;

 

(vi)                              After
giving effect to such release and the payment of principal required to be made
in connection therewith, the Outstanding Principal Amount of the Loans (unless
the Loans shall be repaid in full) shall not be less than $130,000,000.

 

(vii)                           No
Default or Event of Default exists at the time of the Borrower’s request or on
the date of the proposed release or after giving effect thereto (other than a
Default or Event of Default that would be cured by effectuating such release); and

 

(viii)                        The
Borrower shall pay all costs and expenses (including, but not limited to,
reasonable legal fees and disbursements, escrow and trustee fees, costs for
title insurance endorsements required by the Administrative Agent to confirm
the continued priority of the Liens in favor of the Lenders on the Projects not
being released and other out-of-pocket costs and expenses) incurred by the
Administrative Agent in connection with such release.

 

It is understood and agreed that no such release shall
impair or otherwise adversely affect the Liens, security interests and other
rights of the Administrative Agent or the Lenders under the Loan Documents not
being released (or as to the parties to the Loan Documents and Projects subject
to the Loan Documents not being released).

 

(b)                                 Any
Project released from the Lien of the Deed of Trust and other Loan Documents
pursuant to this Section 2.09 shall, effective upon such release,
no longer be considered a “Project” for purposes of this Agreement or the other
Loan Documents, except for purposes of those indemnification obligations and
other covenants which, by their terms, expressly survive any such release.

 

2.10                           Call
Date.  Notwithstanding anything to
the contrary contained in this Agreement, (i) the Outstanding Principal
Amount under all Notes shall become automatically due and payable on the fifth
(5th) anniversary of the expiration of the Stub Interest Period if on or prior
to such date the Borrower has not paid to the Administrative Agent in
accordance with the Fee Letter for the benefit of the Lenders an extension fee
equal to five (5) basis points (0.05%) times the Outstanding Principal
Amount under all Notes as of the fifth (5th) anniversary of the expiration of
the Stub Interest Period or if on such date an Event of Default exists and (ii) the
Outstanding Principal Amount under all Notes shall become automatically become
due and payable on the sixth (6th) anniversary of the expiration of the Stub
Interest Period if on such date the Borrower has not paid to the Administrative
Agent in accordance with the Fee Letter for the benefit of the Lenders an
extension fee equal to five (5) basis points (0.05%) times the Outstanding
Principal Amount under all Notes as of the sixth (6th) anniversary of the
expiration of the Stub Interest Period or if on such date an Event of Default
exists.

 

39

 

ARTICLE III

 

PAYMENTS OF PRINCIPAL AND INTEREST

 

3.01                           Repayment
of Loans.  The Borrower hereby
promises to pay to the Administrative Agent for the account of each Lender the
principal amount of such Lender’s outstanding Loans to the Borrower, together with
accrued and unpaid interest, any applicable fees and all other amounts due
under the Loan Documents with respect to such Loans, which amounts, to the
extent not previously paid, shall, without notice, demand or other action, be
due and payable on the Maturity Date.

 

3.02                           Interest.

 

(a)                                  The
Borrower hereby promises to pay to the Administrative Agent for the account of
each Lender interest on the unpaid principal amount of each Loan (which may be
Base Rate Loans and/or Eurodollar Loans) made by such Lender for the period
from and including the date of such Loan to but excluding the date such Loan
shall be paid in full if paid in the time and manner provided for in Section 4.01,
at the following rates per annum:

 

(i)                                     during
such periods as such Loan is a Base Rate Loan, the Base Rate plus the
Applicable Margin; and

 

(ii)                                  during
such periods as such Loan is a Eurodollar Loan, for each Interest Period
relating thereto, the Adjusted LIBO Rate for such Loan for such Interest Period
plus the Applicable Margin.

 

(b)                                 Accrued
interest on each Loan shall be payable (i) monthly in arrears on each
Payment Date for all interest accrued through but not including the relevant
Payment Date and (ii) in the case of any Loan, upon the payment or
prepayment thereof (except as expressly provided in Section 2.09(a)(iii))
or the Conversion of such Loan to a Loan of another Type (but only on the
principal amount so paid, prepaid or Converted), except that interest payable
hereunder at the Post-Default Rate shall be payable from time to time on
demand.

 

(c)                                  Notwithstanding
anything to the contrary contained herein, after the Maturity Date and during
any period when an Event of Default exists, the Borrower shall pay to the
Administrative Agent for the account of each Lender interest at the applicable
Post-Default Rate on the outstanding principal amount of any Loan made by such
Lender, any interest payments thereon not paid when due and on any other amount
due and payable by the Borrower hereunder, under the Notes and any other Loan
Documents.

 

(d)                                 Promptly
after the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall give notice thereof to the Lenders to
which such interest is payable and to the Borrower, but the failure of the
Administrative Agent to provide such notice shall not affect the Borrower’s
obligation for the payment of interest on the Loans.

 

(e)                                  In
addition to any sums due under this Section 3.02, the Borrower
shall pay to the Administrative Agent for the account of the Lenders a late
payment premium in the

 

40

 

amount of four percent (4%) of (i) any payments of principal under
the Loans not made when due, and (ii) any payments of interest or other
sums under the Loans not made when due, provided, in each case, that such
payments are not made within the earlier of (i) two (2) Business Days
after the Borrower receives written notice from the Administrative Agent of
Borrower’s failure to make such payment when due and (ii) five (5) days
after the date the same became due, which late payment premium shall be due
with any such late payment or upon demand by the Administrative Agent.  Such late payment charge represents the
reasonable estimate of the Borrower, the Administrative Agent and the Lenders
of a fair average compensation for the loss that may be sustained by the
Lenders due to the failure of the Borrower to make timely payments.  Such late charge shall be paid without
prejudice to the right of the Administrative Agent and the Lenders to collect
any other amounts provided herein or in the other Loan Documents to be paid or
to exercise any other rights or remedies under the Loan Documents.

 

(f)                                    Reserved.

 

3.03                           Project-Level
Account.  The Borrower shall, and
shall cause the Property Manager to (a) deposit all Rents from the
Projects, and all amounts received by the Borrower or the Property Manager
constituting Rent or other revenue or sums of any kind from the Projects, into
the applicable Project-Level Account for such Project in accordance with the
Project-Level Account Security Agreement and (b) upon an Event of Default,
and upon written request of the Administrative Agent, deliver irrevocable written
instructions to all tenants under Leases to deliver all Rents payable
thereunder directly to the applicable Project-Level Account for such
Project.  The Borrower shall not maintain
any checking, money market or other deposit accounts for the deposit and
holding of any revenues or sums derived from the ownership or operation of the
Projects other than the Project-Level Account (except for such replacement or
additional deposit accounts in which the Administrative Agent shall have been
granted, pursuant to a written instrument in form and substance satisfactory to
the Administrative Agent, a first priority security interest on the terms
provided herein, in which case the “Project-Level Account” referred to herein
shall include such replacement or additional account), other than (i) accounts
into which funds initially deposited in a Project-Level Account have been, or
may be, transferred in compliance with the Project-Level Account Security
Agreement and (ii) any Cash Trap Account or Controlled Account required
hereunder.

 

ARTICLE IV

 

PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.

 

4.01                           Payments.

 

(a)                                  Payments
by the Borrower.  Except to the
extent otherwise provided herein, all payments of principal, interest and other
amounts to be made by the Borrower under this Agreement, the Notes and any
other Loan Document, shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to the Administrative Agent at the
Administrative Agent’s Account, not later than 3:00 p.m., New York City
time, on the date on which such payment shall become due (each such payment
made after such time on such due date to be deemed to have been made on the
next succeeding Business Day).

 

41

 

(b)                                 Application
of Payments.  The Borrower may, at
the time of making each payment under this Agreement, any Note or any other
Loan Document for the account of any Lender (if such payment is not comprised
solely of interest), specify to the Administrative Agent (which shall so notify
the intended recipient(s) thereof) the Loans or other amounts to which such
payment is to be applied (and in the event that the Borrower fails to so
specify, or if an Event of Default exists, the Administrative Agent may apply
such payment to amounts then due to the Lenders, subject to Section 4.02,
pro rata in accordance with their Proportionate Share and, thereafter, may apply
any remaining portion of such payment in such manner as it or the Required
Lenders, subject to Section 4.02, may determine to be
appropriate).  To the extent that the
Borrower has the right pursuant to this Section 4.01(b) to
designate the obligations to which a payment made by the Borrower under the
Loan Documents is to be applied, the Borrower shall exercise such rights in
such a manner as shall result in the application of such payment to the
designated obligation in a manner that will result in each Lender receiving its
pro rata share of the amount so paid by
the Borrower on account of the designated obligation in proportion to the respective amounts then due
and payable on account of the designated obligation to all Lenders entitled
to payment of the designated obligation. 
Notwithstanding the foregoing and to avoid any potential ambiguity
between this provision and Section 2.06, nothing in the foregoing
sentence is intended to modify or supersede Section 2.06.

 

(c)                                  Payments
Received by the Administrative Agent. 
Each payment received by the Administrative Agent under this Agreement,
any Note or any other Loan Document for account of any Lender shall be paid by
the Administrative Agent promptly to such Lender (and in any event, the
Administrative Agent shall use commercially reasonable efforts to pay such sums
to such Lender on the same Business Day such sums are received by the
Administrative Agent provided the Administrative Agent has actually received
such sums prior to 3:00 p.m. on such Business Day), in immediately
available funds, for account of such Lender’s Applicable Lending Office for the
Loan or other obligation in respect of which such payment is made.  In the event that the Administrative Agent
fails to make such payment to such Lender within two (2) Business Days of
receipt, subject to any delays resulting from force majeure, then such Lender
shall be entitled to interest from the Administrative Agent at the Federal
Funds Rate from the date that such payment should have been paid by the
Administrative Agent to such Lender until the Administrative Agent makes such
payment.

 

(d)                                 Extension
to Next Business Day.  If the due
date of any payment under this Agreement or any Note would otherwise fall on a
day that is not a Business Day, such date shall be extended to the next
succeeding Business Day, and interest shall be payable for any principal so
extended for the period of such extension.

 

4.02                           Pro
Rata Treatment.  Except to the extent
otherwise provided herein:  (a) each
borrowing from the Lenders under Section 2.01 shall be made from
the Lenders on a pro rata basis according to the amounts of their respective
Commitments; (b) except as otherwise provided in Section 5.04,
Eurodollar Loans having the same Interest Period shall be allocated pro rata
among the Lenders according to the amounts of their respective Commitments (in
the case of the making of Loans) or their respective Loans (in the case of
Conversions and Continuations of Loans); (c) each payment or prepayment of
principal of Loans by the Borrower shall be made for account of the Lenders on
a pro rata basis in accordance with the respective unpaid principal amounts of
the Loans held by them; and (d) each payment of interest on Loans by the
Borrower

 

42

 

shall be made for the account of the Lenders on a pro
rata basis in accordance with the amounts of interest on such Loans then due
and payable to the respective Lenders.  Notwithstanding
anything to the contrary contained in this Agreement or in any of the other
Loan Documents, (a) all payments received by the Administrative
Agent on account of interest, principal (including, without limitation,
prepayments), fees or other amounts which are required under this Agreement to
be paid to the Lenders pro rata, or in accordance with their respective
Proportionate Shares, shall be paid to the Lenders pro rata in proportion to
the respective amounts of interest, principal, fees or other amounts, as
applicable, then due and payable to all Lenders pursuant to the Loan Documents,
and (b) during the existence of an Event of Default, all payments
received by the Administrative Agent with respect to the Loan shall be applied
as provided in that certain Co-Lender Agreement to be entered into by and among
the Lenders and the Administrative Agent, as the same may be Modified from time
to time.

 

4.03                           Computations.  Interest on all Loans shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first
day but excluding the last day) occurring in the period for which payable.

 

4.04                           Minimum
Amounts.  Except for (a) mandatory
prepayments made pursuant to Section 2.07, 8.19(g), 10.03(j)
or 14.25 of this Agreement or Section 7.08 of the Deed of
Trust, (b) Conversions or prepayments made pursuant to Section 5.04,
and (c) prepayments made pursuant to Section 2.06 or Section 2.09
(which shall be governed by such Sections) each borrowing, Conversion,
Continuation and partial prepayment of principal other than made pursuant to Section 2.09
(collectively, “Loan Transactions”) of Loans shall be in an aggregate
amount at least equal to $1,000,000 (Loan Transactions of or into Loans of
different Types or Interest Periods at the same time hereunder shall be deemed
separate Loan Transactions for purposes of the foregoing, one for each Type or
Interest Period); provided that if any Loans or borrowings would otherwise
be in a lesser principal amount for any period, such Loans shall be Base Rate
Loans during such period. 
Notwithstanding the foregoing, the minimum amount of $1,000,000 shall
not apply to Conversions of lesser amounts into a tranche of Loans that has (or
will have upon such Conversion) an aggregate principal amount exceeding such
minimum amount and one Interest Period.

 

4.05                           Certain
Notices.  Notices by the Borrower to
the Administrative Agent regarding Loan Transactions and the selection of Types
of Loans and/or of the duration of Interest Periods shall be effective only if
received by the Administrative Agent not later than 3:00 PM, New York City
time, on the date which is the number of calendar days or Business Days, as
applicable, prior to the date of the proposed Loan Transaction specified
immediately below:

 

	
  Notice

  	
   

  	
  Number of Days Prior

  
	
   

  	
   

  	
   

  
	
  Optional
  Prepayment

  	
   

  	
  10 calendar days

  
	
   

  	
   

  	
   

  
	
  Conversions
  into, Continuations as,

  	
   

  	
   

  
	
  or borrowings in
  Base Rate Loans

  	
   

  	
  3 Business Days

  
	
   

  	
   

  	
   

  
	
  Conversions
  into, Continuations

  	
   

  	
  3 Business Days

  
	
  as, borrowings
  in, or changes in

  	
   

  	
  (prior to first
  day of next

  
	
  duration of
  Interest Periods for,

  	
   

  	
  applicable
  Interest Period

  
	
  Eurodollar Loans

  	
   

  	
  for such
  Conversion

  
	
   

  	
   

  	
  Continuation or
  change)

  

 

43

 

Notices of the selection of Types of Loans and/or of
the duration of Interest Periods shall be irrevocable.  Each notice of a Loan Transaction shall
specify the amount (subject to Section 4.04), Type, and Interest
Period of such proposed Loan Transaction, and the date (which shall be a
Business Day) of such proposed Loan Transaction.  Notices for Conversions and Continuations
shall be in the form of Exhibit L attached hereto.  Each such notice specifying the duration of
an Interest Period shall specify the portion of the Loans to which such
Interest Period is to relate.  The
Administrative Agent shall promptly notify the Lenders of the contents of each
such notice.  If the Borrower fails to
select (i) the Type of Loan or (ii) the duration of any Interest
Period for any Eurodollar Loan within the time period (i.e., three (3) Business
Days prior to the first day of the next applicable Interest Period) and
otherwise as provided in this Section 4.05, such Loan (if
outstanding as a Eurodollar Loan) will automatically be continued as a
Eurodollar Loan as of the last day of the then current Interest Period for such
Loan, with such Eurodollar Loan having an Interest Period of one month, and the
Borrower shall be deemed to have provided to the Administrative Agent three (3) Business
Days prior to the first day of such Interest Period a duly completed and
unqualified notice requesting such Continuation in the form of Exhibit L.

 

4.06                           Non-Receipt
of Funds by the Administrative Agent. 
Unless the Administrative Agent shall have been notified by a Lender or
the Borrower (each, for purposes of this Section 4.06, a “Payor”)
prior to the date on which such Payor is to make payment to the Administrative
Agent of (in the case of a Lender) the proceeds of a Loan to be made by such
Payor hereunder or (in the case of the Borrower) a payment to the
Administrative Agent for the account of one or more of the Lenders hereunder
(such payment being herein called a “Required Payment”), which notice
shall be effective upon receipt, that such Payor does not intend to make such
Required Payment to the Administrative Agent, the Administrative Agent may
assume that such Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient(s) on such date; and, if such Payor has not in fact made
the Required Payment to the Administrative Agent, the recipient(s) of such
payment from the Administrative Agent shall, on demand, repay to the Administrative
Agent the amount so made available together with interest thereon in respect of
each day during the period commencing on the date (the “Advance Date”)
such amount was so made available by the Administrative Agent until the date
the Administrative Agent recovers such amount at a rate per annum equal to (a) the
Federal Funds Rate for such day in the case of payments returned to the
Administrative Agent by any of the Lenders or (b) the applicable interest
rate due hereunder with respect to payments returned by the Borrower to the
Administrative Agent and, if such recipient(s) shall fail to promptly make such
payment, the Administrative Agent shall be entitled to recover such amount, on
demand, from such Payor, together with interest at the same rates as aforesaid;
provided that if neither the recipient(s) nor such Payor shall return
the Required Payment to the Administrative Agent within three (3) Business
Days (five (5) days in the case the Borrower is the Payor) of the Advance
Date, then, retroactively to the Advance Date, such Payor and the recipient(s)
shall each be obligated to pay interest on the Required Payment as follows:

 

44

 

(i)                                     if
the Required Payment shall represent a payment to be made by the Borrower to
the Administrative Agent for the benefit of the Lenders, the Borrower and the
recipient(s) shall each be obligated to pay interest retroactively to the
Advance Date in respect of the Required Payment at the Post-Default Rate
(without duplication of the obligation of the Borrower under Section 3.02
to pay interest on the Required Payment at the Post-Default Rate), it being
understood that the return by the recipient(s) of the Required Payment to the
Administrative Agent shall not limit such obligation of the Borrower under Section 3.02
to pay interest at the Post-Default Rate in respect of the Required Payment,
and it being further understood that to the extent the Administrative Agent
actually receives from the Borrower any such interest at the Post-Default Rate
on such Required Payment, such amount so received shall be credited against the
amount of interest (if any) payable by the applicable recipient(s), and

 

(ii)                                  if
the Required Payment shall represent proceeds of a Loan to be made by the
Lenders to the Borrower, such Payor and the Borrower shall each be obligated
retroactively to the Advance Date to pay interest in respect of the Required
Payment pursuant to whichever of the rates specified in Section 3.02
is applicable to the Type of such Loan, it being understood that the return by
the Borrower of the Required Payment to the Administrative Agent shall not
limit any claim that the Borrower may have against such Payor in respect of
such Required Payment and shall not relieve such Payor of any obligation it may
have hereunder or under any other Loan Documents to the Borrower and no advance
by the Administrative Agent to the Borrower under this Section 4.06
shall release any Lender of its obligation to fund such Loan except as set
forth in the following sentence.  If any
such Lender shall thereafter advance any such Required Payment to the
Administrative Agent, together with interest on such Required Payment as
provided herein, such Required Payment shall be deemed such Lender’s applicable
Loan to the Borrower and shall be advanced by the Administrative Agent to the
Borrower to the extent the Borrower has remitted the Required Payment and such
interest to the Administrative Agent.

 

4.07                           Sharing
of Payments, Etc.

 

(a)                                  Sharing.  If any Lender shall obtain payment of any
principal of or interest on any Loan owing to it or payment of any other amount
under this Agreement or any other Loan Document through the exercise (subject
to the provisions of Section 14.10) of any right of set-off, banker’s
lien or counterclaim or similar right or otherwise (other than from the
Administrative Agent as provided herein), and, as a result of such payment,
such Lender shall have received a greater percentage of the principal of or
interest on the Loans or such other amounts then due hereunder or thereunder by
the Borrower to such Lender than the percentage received by any other Lender,
it shall promptly purchase from such other Lenders participations in (or, if
and to the extent specified by such Lender, direct interests in) the Loans or
such other amounts, respectively, owing to such other Lenders (or in interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such excess payment (net of any expenses
that may be incurred by such Lender in obtaining or preserving such excess
payment) pro rata in accordance with the unpaid principal of and/or interest on
the Loans or such other amounts, respectively, owing to each of the
Lenders.  To such end all the Lenders
shall make appropriate

 

45

 

adjustments among themselves (by the resale of participations sold or
otherwise) if such payment is rescinded or must otherwise be restored.  Each Lender agrees that it shall turn over to
the Administrative Agent (for distribution by the Administrative Agent to the
other Lenders in accordance with the terms of this Agreement) any payment
(whether voluntary or involuntary, through the exercise of any right of setoff
or otherwise) on account of the Loans held by it in excess of its ratable
portion of payments on account of the Loans obtained by all the Lenders.

 

(b)                                 Consent
by the Borrower.  The Borrower agrees
that any Lender so purchasing such a participation (or direct interest) may
exercise (subject, as among the Lenders, to Section 14.10) all
rights of set-off, banker’s lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender were a direct holder of Loans
or other amounts (as the case may be) owing to such Lender in the amount of
such participation.

 

(c)                                  Rights
of Lenders; Bankruptcy.  Nothing
contained herein shall require any Lender to exercise any right of set-off, banker’s
lien or counterclaim or similar right or otherwise or shall affect the right of
any Lender to exercise, and retain the benefits of exercising, any such right
with respect to any other indebtedness or obligation of the Borrower.  If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 4.07 applies, then such Lender
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section 4.07 to share in the benefits of any recovery on
such secured claim.

 

ARTICLE V

 

YIELD PROTECTION, ETC.

 

5.01                           Additional
Costs.

 

(a)                                  Costs
of Making or Maintaining Eurodollar Loans. 
The Borrower shall pay directly to each Lender from time to time such
amounts as such Lender may determine to be necessary to compensate such Lender
for any costs that such Lender determines are attributable to its making or
maintaining of any Eurodollar Loans, or its obligation to make any Eurodollar
Loans, hereunder, or, subject to the following provisions of this Article V,
any reduction in any amount receivable by such Lender hereunder in respect of
any of such Eurodollar Loans or such obligation (such increases in costs and
reductions in amounts receivable being herein called “Additional Costs”),
provided such Additional Costs result from any Regulatory Change that:

 

(i)                                     shall
subject any Lender (or its Applicable Lending Office for any of such Eurodollar
Loans) to any tax, duty or other charge in respect of such Eurodollar Loans or
its Note or changes the basis of taxation of any amounts payable to such Lender
under this Agreement or its Note in respect of any of such Eurodollar Loans
(other than Excluded Taxes); or

 

(ii)                                  imposes
or Modifies any reserve, special deposit or similar requirements (other than
the Reserve Requirement utilized in the determination of the Adjusted LIBO Rate
for such Eurodollar Loan) relating to any extensions of credit or

 

46

 

other assets of, or any
deposits with or other liabilities of, any Lender (including any of such
Eurodollar Loans or any deposits referred to in the definition of “LIBO Rate”
in Section 1.01), or any commitment of such Lender (including the
Commitment of such Lender hereunder); or

 

(iii)                               imposes
any other condition affecting this Agreement or the Note of any Lender (or any
of such extensions of credit or liabilities) or its Commitment.

 

If any Lender requests compensation from the Borrower
under this Section 5.01(a) or Section 5.01(b), the
Borrower may, by notice to such Lender (with a copy to the Administrative
Agent), suspend the obligation of such Lender thereafter to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until
the Regulatory Change giving rise to such request ceases to be in effect or
until the Borrower notifies such Lender that the Borrower is lifting such
suspension (in which case the provisions of Section 5.04 shall be
applicable), provided that such suspension shall not affect the right of
such Lender to receive the compensation so requested for so long as any
Eurodollar Loan remains in effect.

 

(b)                                 Costs
Attributable to Regulatory Change or Risk-Based Capital Guidelines.  Without limiting the effect of the provisions
of this Section 5.01 (but without duplication), the Borrower shall
pay to each Lender from time to time on request such amounts as such Lender may
determine to be necessary to compensate such Lender (or, without duplication,
the bank holding company or other legal entity of which such Lender is a
subsidiary) for any costs that it determines are attributable to the
maintenance of its Eurodollar Loans hereunder by such Lender (or any Applicable
Lending Office or such bank holding company or other legal entity), pursuant to
any law or regulation or any interpretation, directive or request (whether or
not having the force of law and whether or not failure to comply therewith
would be unlawful) of any Governmental Authority (i) following any
Regulatory Change with respect to such law, regulation, interpretation,
directive or request resulting in such costs or (ii) implementing any risk-based
capital guideline or other requirement of capital (whether or not having the
force of law and whether or not the failure to comply therewith would be
unlawful) hereafter issued by any Governmental Authority implementing at the
national level the Basel Accord, in respect of its Commitment or its Eurodollar
Loans (such compensation to include an amount equal to any reduction of the
rate of return on assets or equity of such Lender (or any Applicable Lending
Office or such bank holding company or other legal entity) to a level below
that which such Lender (or any Applicable Lending Office or such bank holding
company or other legal entity) could have achieved but for such law,
regulation, interpretation, directive or request).

 

(c)                                  Notification
and Certification.  Each Lender shall
notify the Borrower of any event occurring after the date hereof entitling such
Lender to compensation under subsections (a) or (b) of
this Section 5.01 (setting forth in reasonable detail the basis of
such determination) as promptly as practicable, but in any event within sixty
(60) days, after such Lender obtains actual knowledge thereof; provided
that (i) if any Lender fails to give such notice within sixty (60) days
after it obtains actual knowledge of such an event, such Lender shall, with
respect to compensation payable pursuant to this Section 5.01 in
respect of any costs resulting from such event, be entitled to payment under
this Section 5.01 only for costs incurred from and after the date
sixty (60) days prior to the date that such Lender does give such notice and

 

47

 

(ii) each Lender shall designate a different Applicable Lending
Office (if applicable) for the Eurodollar Loans of such Lender affected by such
event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender.  Each
Lender shall furnish to the Borrower a certificate setting forth the basis and
amount of each request by such Lender for compensation under subsection (a) or (b) of
this Section 5.01. 
Determinations and allocations by any Lender for purposes of this Section 5.01
of the effect of any Regulatory Change pursuant to subsection (a) or
(b) of this Section 5.01, or of the effect of capital
maintained pursuant to subsection (b) of this Section 5.01,
on its costs or rate of return of maintaining Eurodollar Loans or its
obligation to make Eurodollar Loans, or on amounts receivable by it in respect
of Eurodollar Loans, and of the amounts required to compensate such Lender
under this Section 5.01, as set forth in the certificate of the
Lender, shall be prima facie evidence of the accuracy of the determinations and
calculations contained or asserted therein. 
Notwithstanding anything to the contrary contained herein, it shall be a
condition to the Borrower’s obligation to pay compensation under subsections
(a) or (b) of this Section 5.01 that such
compensation requirements are also being imposed on substantially all other
similar classes or categories of commercial loans or commitments of such Lender
similarly affected by the Regulatory Change and the other guidelines and
requirements referred to in this Section 5.01.

 

5.02                           Limitation
on Eurodollar Loans.  Anything herein
to the contrary notwithstanding, if, on or prior to the determination of any
LIBO Rate for any Interest Period for any Eurodollar Loan:

 

(a)                                  after
making reasonable efforts, the Administrative Agent determines, which
determination shall be conclusive absent manifest error, that quotations of
interest rates for the relevant deposits referred to in the definition of “LIBO
Rate” in Section 1.01 are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining rates of
interest for Eurodollar Loans as provided herein; or

 

(b)                                 the
Administrative Agent determines, which determination shall be conclusive absent
manifest error, that, as a result of circumstances arising after the Closing
Date, the relevant rates of interest referred to in the definition of “LIBO
Rate” in Section 1.01 upon the basis of which the rate of interest
for Eurodollar Loans for such Interest Period is to be determined are not
likely adequately to cover the cost to such Lenders of making or maintaining
Eurodollar Loans for such Interest Period;

 

then the Administrative Agent shall give the Borrower
and each Lender prompt notice thereof and, so long as such condition remains in
effect, the Lenders shall be under no obligation to make additional Eurodollar
Loans, to Continue Eurodollar Loans or to Convert Base Rate Loans into
Eurodollar Loans, and the Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Eurodollar Loans, either prepay
such Eurodollar Loans in accordance with Sections 2.06 and 2.07 or,
in accordance with Section 2.05, Convert such Eurodollar Loans into
Base Rate Loans or other Eurodollar Loans in amounts and maturities which are
still being provided.  Notwithstanding
the foregoing, (i) if the applicable conditions under clauses (a) or
(b) of this Section 5.02 affect only a portion of the
Eurodollar Loans, the balance of the Eurodollar Loans may continue as
Eurodollar Loans and (ii) if the applicable conditions under clauses (a) and
(b) of this Section 5.02 only affect certain Interest
Periods, the

 

48

 

Borrower, subject to the terms and conditions of this
Agreement, may elect to have Eurodollar Loans with such other Interest Periods.

 

5.03                           Illegality.  Notwithstanding any other provision of this
Agreement, if it becomes unlawful for any Lender or its Applicable Lending
Office to honor its obligation to make or maintain Eurodollar Loans hereunder
(and, in the sole opinion of such Lender, the designation of a different
Applicable Lending Office would either not avoid such unlawfulness or would be
disadvantageous to such Lender), then such Lender shall promptly notify the
Borrower thereof (with a copy to the Administrative Agent) and such Lender’s
obligation to make or Continue, or to Convert portions of its Loan of any other
Type into, Eurodollar Loans shall be suspended until such time as such Lender
may again make and maintain Eurodollar Loans (in which case the provisions of Section 5.04
shall be applicable).

 

5.04                           Treatment
of Affected Loans.  If the obligation
of any Lender to make Eurodollar Loans or to Continue, or to Convert Base Rate
Loans into, Eurodollar Loans shall be suspended pursuant to Sections 5.01
or 5.03, then such Lender’s Eurodollar Loans shall be automatically
Converted into Base Rate Loans on the last day(s) of the then current Interest
Period(s) for Eurodollar Loans (or, in the case of a Conversion resulting from
a circumstance described in Section 5.03, on such earlier date as
such Lender may specify to the Borrower with a copy to the Administrative
Agent) and, unless and until either (a) such Lender gives notice as
provided below that the circumstances specified in Sections 5.01
or 5.03 that gave rise to such Conversion no longer exist or (b) the
Borrower, in the case of Section 5.01, ends any suspension by the
Borrower:

 

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

 

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

 

If such Lender gives notice to the Borrower with a
copy to the Administrative Agent that the circumstances specified in Section 5.01
or 5.03 that gave rise to the Conversion of such Lender’s
Eurodollar Loans pursuant to this Section 5.04 no longer exist
(which notice such Lender agrees to give promptly upon such circumstances
ceasing to exist) or the Borrower terminates its applicable suspension at a
time when Eurodollar Loans made by other Lenders are outstanding, such Lender’s
Base Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to
the extent necessary so that, after giving effect thereto, all Base Rate and
Eurodollar Loans are allocated among the Lenders ratably (as to principal
amounts, Types and Interest Periods) in accordance with their respective
Commitments.

 

5.05                           Compensation.  The Borrower shall pay to the Administrative
Agent for account of each Lender, upon the request of such Lender through the
Administrative Agent, such

 

49

 

amount as shall be sufficient to compensate it for any
loss, cost or expense that such Lender reasonably determines is attributable
to:

 

(a)                                  any
payment, mandatory or optional prepayment or Conversion of a Eurodollar Loan
made by such Lender for any reason (including the acceleration of the Loans
pursuant to Article XII) on a date other than the last day of the
Interest Period for such Loan;

 

(b)                                 any
failure by the Borrower for any reason to prepay a Eurodollar Loan pursuant to
a notice of prepayment given in accordance with Section 2.06 (or
any notice timely given postponing the date for prepayment given in accordance
with Section 2.08), unless such notice is timely revoked pursuant
to a notice of revocation given in accordance with Section 2.08; or

 

(c)                                  the
assignment of any Eurodollar Loan other than on the last day of the applicable
Interest Period as a result of a request by the Borrower pursuant to Section 5.07.

 

Without limiting the effect of the preceding
provisions, such compensation shall include an amount equal to the excess, if
any, of (i) the amount of interest that otherwise would have accrued on
the principal amount so paid, prepaid, Converted or not borrowed for the period
from the date of such payment, prepayment, Conversion or failure to borrow to
the last day of the then current Interest Period for such Loan (or, in the case
of a failure to borrow, the Interest Period for such Loan that would have
commenced on the date specified for such borrowing) at the applicable Adjusted
LIBO Rate for such Loan provided for herein over (ii) the amount of
interest that such Lender would earn on such principal amount for such period
if such Lender would have bid in the London interbank market for Dollar
deposits of leading banks in amounts comparable to such principal amount and
with maturities comparable to such period (as reasonably determined by such
Lender), or if such Lender shall not, or shall cease to, make such bids, the
equivalent rate, as reasonably determined by such Lender, derived from Page 3750
of the Dow Jones Markets Service (Telerate) or other publicly available source
as described in the definition of “LIBO Rate” in Section 1.01,
plus, in the case of Section 5.05(c), the amount of interest for
such period paid to such Lender pursuant to Section 5.07.  A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this Section 5.05
shall be delivered to the Borrower and shall be prima facie evidence of the
accuracy of the determinations and calculations contained or asserted
therein.  The Borrower shall pay such
Lender the amount shown as due on any such certificate within ten (10) days
after receipt thereof.  Any payment due
to any of the Lenders pursuant to this Section 5.05 shall be deemed
additional interest under such Lender’s Note.

 

5.06                           Taxes.

 

(a)                                  Payments
Free of Taxes.  Any and all payments
by or on account of any obligation of the Borrower hereunder or under any other
Loan Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 5.06) the Administrative Agent and
each Lender (as the case may be) receives an amount

 

50

 

equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

 

(b)                                 Payment
of Other Taxes by the Borrower.  In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

 

(c)                                  Indemnification
by the Borrower.  The Borrower shall
indemnify the Administrative Agent and each Lender, within ten (10) days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Administrative Agent or such Lender, as the case may
be, on or with respect to any payment by or on account of any obligation of the
Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 5.06)
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to the Borrower by a Lender or by
the Administrative Agent on its own behalf or on behalf of a Lender, shall be
prima facie evidence of the accuracy of the determinations and calculations
contained or asserted therein.

 

(d)                                 Evidence
of Payments.  As soon as practicable
after any payment of Indemnified Taxes or Other Taxes by the Borrower to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

 

(e)                                  Foreign
Lenders.  Any Foreign Lender that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.  Until such documentation is provided, the
Borrower shall be entitled to take all actions that are required to comply with
Applicable Laws with respect to payments payable hereunder on account of Loans
made to the Borrower by any Foreign Lender who has not complied with the
requirements of this Section 5.06(e), and such actions shall not
constitute a Default or an Event of Default.

 

(f)                                    Refunds.  If the Administrative Agent or a Lender
determines, in its sole discretion, that it has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this Section 5.06,
provided no Major Default or Event of Default exists, it shall pay over such
refund to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 5.06
with respect to the Taxes or Other Taxes giving rise to such refund), net of
all out-of-pocket expenses of the Administrative Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower,
upon the

 

51

 

request of the Administrative Agent or such Lender, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent or
such Lender in the event the Administrative Agent or such Lender is required to
repay such refund to such Governmental Authority.  This Section 5.06(f) shall
not be construed to require the Administrative Agent or any Lender to make
available its tax returns (or any other information relating to its taxes which
it deems confidential) to the Borrower or any other Person.

 

5.07                           Replacement
of Lenders.  If any Lender requests
compensation pursuant to Section 5.01 or 5.06, or any Lender’s
obligation to Continue Loans of any Type, or to Convert Loans of any Type into
the other Type of Loan, shall be suspended pursuant to Section 5.01
or 5.03 (any such Lender requesting such compensation, or whose
obligations are so suspended, being herein called a “Requesting Lender”),
the Borrower, upon five (5) Business Days notice to such Requesting Lender
and the Administrative Agent, may require that such Requesting Lender transfer
all of its right, title and interest under this Agreement and such Requesting
Lender’s Note and its interest in the other Loan Documents to an Eligible
Assignee (a “Proposed Lender”) identified by the Borrower that is
satisfactory to the Administrative Agent in its sole discretion (i) if
such Proposed Lender agrees to assume all of the obligations of such Requesting
Lender hereunder, and to purchase all of such Requesting Lender’s Loan
hereunder for consideration equal to the aggregate outstanding principal amount
of such Requesting Lender’s Loan, together with interest thereon to the date of
such purchase (to the extent not paid by the Borrower), and satisfactory
arrangements are made for payment to such Requesting Lender of all other
amounts accrued and payable hereunder to such Requesting Lender as of the date
of such transfer (including any fees accrued hereunder and any amounts that
would be payable under Section 5.05 as if all of such Requesting
Lender’s Loan were being prepaid in full on such date) and (ii) if such
Requesting Lender has requested compensation pursuant to Section 5.01
or 5.06, such Proposed Lender’s aggregate requested compensation, if
any, pursuant to Section 5.01 or 5.06 with respect to such
Requesting Lender’s Loan is lower than that of the Requesting Lender.  Subject to the provisions of Section 14.07(b),
such Proposed Lender shall be a “Lender” for all purposes hereunder.  Without prejudice to the survival of any
other agreement of the Borrower hereunder the agreements of the Borrower
contained in Sections 5.01, 5.06, 14.03 and 14.04
(without duplication of any payments made to such Requesting Lender by the
Borrower or the Proposed Lender) shall survive for the benefit of such
Requesting Lender under this Section 5.07 with respect to the time
prior to such replacement.

 

ARTICLE VI

 

CONDITIONS PRECEDENT

 

6.01                           Conditions
Precedent to Effectiveness of Loan Commitments.  The effectiveness of the Commitments and the
obligation of the Lenders to make the Loans are subject to the conditions
precedent that, on or prior to the Closing Date, (i) the Administrative
Agent shall have received each of the documents (duly executed and completed by
the part(y)(ies) thereto and acknowledged when applicable) referred to below in
this Section 6.01, (ii) each of the other conditions listed
below in this Section 6.01 is satisfied, the satisfaction of each
of such conditions to be satisfactory to the Administrative Agent (and to the
extent

 

52

 

specified below, to each Lender) in form and substance
(or any such condition shall have been waived in accordance with Section 14.05),
(iii) all of the representations and warranties of the Borrower (without
giving effect to any qualification therein which limits any such
representations and warranties to the “knowledge” or “best knowledge” of the
Borrower or any other Borrower Party) shall be true and correct on the Closing
Date, (iv) the Liens granted by the Security Documents shall have attached
and been perfected, with the priority as required pursuant to the terms hereof
or thereof (or, in the case of the Liens encumbering the Projects the Title
Policies insuring the effectiveness and priority of such Liens shall have been
unconditionally delivered to the Administrative Agent in accordance with the
closing instructions delivered on its behalf), and (v) no Default or Event
of Default shall exist or shall result therefrom.

 

(a)                                  Agreement.  From each party hereto either (i) a
counterpart of this Agreement signed on behalf of such party or (ii) written
evidence satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such party
has signed a counterpart of this Agreement.

 

(b)                                 Notes.  The Notes for each Lender.

 

(c)                                  Deed
of Trust.  Each Deed of Trust, in
form for recording.

 

(d)                                 Environmental
Indemnity.  The Environmental
Indemnity.

 

(e)                                  Project-Level
Account Security Agreement.  The
Project-Level Account Security Agreement.

 

(f)                                    General
Assignment.  The General Assignment.

 

(g)                                 Property
Manager’s Consent.  The Property
Manager’s Consent.

 

(h)                                 Other
Loan Documents.  The Guarantor
Documents and all other Loan Documents.

 

(i)                                     Opinion
of Counsel to the Borrower Parties. 
A favorable written opinion, dated the Closing Date, of Cox, Castle &
Nicholson LLP, counsel to the Borrower and furnishing such opinions at the
Borrower’s request on behalf of the other Borrower Parties, and covering such
matters relating to the Borrower Parties, this Agreement, the other Loan
Documents, and the Transactions as the Administrative Agent shall reasonably
request.  The Borrower hereby requests
such counsel to deliver such opinion to the Lenders and the Administrative
Agent.

 

(j)                                     Organizational
Documents.  Copies of (i) the
Certificate of Incorporation, Certificate of Formation, Certificate of Limited
Partnership or similar formation document of each of the Borrower Parties,
certified by the Secretary of State of the state of formation of such Person as
of a recent date, (ii) the other Organizational Documents of each of the
Borrower Parties certified by any Authorized Officer on behalf of such Borrower
Party, (iii) the applicable resolutions of each of the Borrower Parties
authorizing the execution and delivery of the Loan Documents to which they are
a party, in each case certified by an Authorized Officer on behalf of such
Borrower Party as of the date of this Agreement as being accurate and complete,
all in

 

53

 

form and substance satisfactory to the Administrative Agent and its
counsel, (iv) certificates signed by an Authorized Officer on behalf of
the applicable Person certifying the name, incumbency and signature of each
individual authorized to execute the Loan Documents to which such Person is a
party and the other documents or certificates to be delivered pursuant hereto
or thereto, on which the Administrative Agent and the Lenders may conclusively
rely unless a revised certificate is similarly so delivered in the future, and (v) good
standing certificates with respect to each Borrower Party that is organized
under the laws of any state of the United States of America from such state and
good standing certificates and authority to conduct business with respect to
the Borrower, the Borrower’s Member and the Borrower’s Manager from the State
of California.

 

(k)                                  Title
Insurance; Priority.  An ALTA policy or policies (or pro
forma policy or policies) of title insurance for each Project satisfactory to
the Administrative Agent (collectively, the “Title Policy”), together
with evidence of the payment of all premiums due thereon, issued by the Title
Company (i) each insuring the Administrative Agent for the benefit of the
Lenders in an amount equal to the aggregate amount of the Commitments (to the
extent advanced) in effect on the Closing Date (with a tie-in endorsement satisfactory
to the Administrative Agent) that the Borrower is lawfully seized and possessed
of a valid and subsisting fee simple (or other applicable) interest in the
Projects subject to no Liens other than Permitted Title Exceptions and (ii) providing
such other affirmative insurance and endorsements as the Administrative Agent
may require in each case as approved by the Administrative Agent.  In addition, the Borrower shall have paid to
the Title Company all expenses and premiums of the Title Company in connection
with the issuance of such policies and all recording and filing fees payable in
connection with recording the Deeds of Trust and the filing of the Uniform
Commercial Code financing statements related thereto in the appropriate
offices.

 

(l)                                     Survey.  An “as-built” survey of each Project, each
satisfactory to the Administrative Agent in form and content and made by a
registered land surveyor satisfactory to the Administrative Agent, each survey
showing, among other things through the use of course bearings and distances, (i) all
easements and roads or rights of way (including all access to public roads) and
setback lines, if any, affecting the Improvements and that the same are
unobstructed or any such obstructions are acceptable to the Administrative Agent;
(ii) the dimensions of all existing buildings and distance of all material
Improvements from the lot lines; (iii) no encroachments by improvements
located on adjoining property that are not acceptable to the Administrative
Agent; and (iv) such additional information which may be reasonably
required by the Administrative Agent. 
Each said survey shall be dated a date reasonably satisfactory to the
Administrative Agent, bear a proper certificate substantially in the form of Exhibit M
attached hereto by the surveyor in favor of the Administrative Agent (on behalf
of the Lenders) and the Title Company and include the legal description of the
Project.

 

(m)                               Certificates
of Occupancy.  Copies of permanent
and unconditional certificates of occupancy permitting the fully functioning
operation and occupancy of the Projects and of such other permits necessary for
the use and operation of the Projects issued by the respective Governmental
Authorities having jurisdiction over the Projects, together with such other evidence
as may be requested by the Administrative Agent with respect to the compliance
of the Projects with zoning requirements.

 

54

 

(n)                                 Insurance.  A copy of the insurance policies required by Section 8.05
or certificates of insurance with respect thereto, such policies or
certificates, as the case may be, to be in form and substance, and issued by
companies, acceptable to the Administrative Agent and otherwise in compliance
with the terms of Section 8.05, together with evidence of the
payment of all premiums therefor.

 

(o)                                 Environmental
Report.  The Environmental Reports.

 

(p)                                 Leases.  (i) An affidavit (the “Leasing
Affidavit”) of an Authorized Officer of the Borrower certifying that except
as disclosed in the estoppel certificates delivered to the Administrative Agent
prior to the Closing Date, that certain Douglas, Emmett & Company
Delinquency/Aging Report (Summarized) dated 7/20/2005 provided to the
Administrative Agent, or the rent rolls delivered to the Administrative Agent pursuant
to Section 7.22, (A) each tenant lease listed in the Leasing
Affidavit is in full force and effect; (B) the tenant lease summaries
provided by the Borrower to the Administrative Agent are true and correct and,
as to all matters contained therein relating to rent, term, termination rights,
options to renew, extend or expand, rights of first refusal or offer, tenant
improvement allowances, security deposits and other credit enhancements,
insurance, tax and operating expense recovery, and obligations with respect to
subordination, non-disturbance and attornment, complete in all material
respects, and such summaries do not fail to disclose any material term of any
Lease which would adversely affect the obligation of the tenant thereunder to
pay rent or perform any of its other material obligations for the entire term
thereof consistent with the terms disclosed in such summary and the rent rolls
delivered to the Administrative Agent pursuant to Section 7.22; (C) no
defaults exist under any of the Leases (other than the Major Leases) by any
party (including any guarantor) thereto that, individually or in the aggregate
with respect to all such defaults, would result in a Material Adverse Effect
and, to the knowledge of the Borrower, no material default exists under any of
the Major Leases; and (D) to the Borrower’s knowledge, no event which
would result in a material adverse change in the financial condition,
operations or business of one or more tenants under Major Leases has occurred
which the Borrower has determined would adversely affect the ability of such
tenant to pay its rent and perform its other material obligations under such
Major Lease and (ii) the standard office lease form and the standard
retail lease form (both as approved by the Administrative Agent) to be used for
the Projects.

 

(q)                                 Estoppels.   Estoppel certificates in form and
substance satisfactory to the Administrative Agent from tenants covering at
least seventy-five percent (75%) of all the leased space in the Projects,
except to the extent that the Administrative Agent agrees in writing to defer
the receipt of any estoppel certificate to a date subsequent to the Closing
Date, in which case the Borrower shall use commercially reasonable efforts to
obtain such deferred estoppel certificates as promptly as possible following
the Closing Date.  For purposes of this
requirement, it is agreed that the form tenant estoppels required by any
applicable Approved Lease shall be acceptable to the Administrative Agent.

 

(r)                                    SNDA
Agreements.  The Borrower will
distribute and use commercially reasonable efforts to obtain the SNDA
Agreements duly executed by each tenant under a Major Lease.

 

55

 

(s)                                  Non-Foreign
Status.  A certificate by an
Authorized Officer certifying the Borrower’s tax identification number and the
fact that the Borrower is not a foreign person under the Code.

 

(t)                                    UCC
Searches.  Uniform Commercial Code
searches with respect to the Borrower, the Borrower’s Member and the Borrower’s
Manager as required by the Administrative Agent.

 

(u)                                 Appraisal.  The Appraisals indicating an “as-is” value for
each of the Projects, such that the Allocated Loan Amount for each Project
shall not exceed sixty percent (60%) of the Appraised Value of such Project.

 

(v)                                 Property
Management and Leasing Agreements. 
The Property Management Agreement and all brokerage and/or leasing
agreements affecting the Projects and certified by an Authorized Officer to be
true, correct and complete in all respects.

 

(w)                               Financial
Statements.  Copies of the most
recent audited and unaudited annual and quarterly financial statements of the Borrower’s
Member, and a certificate dated the Closing Date and signed by an Authorized
Officer on behalf of the Borrower’s Member stating that (i) such financial
statements are true, complete and correct in all material respects and (ii) no
event that could reasonably be expected to have a Material Adverse Effect has
occurred since the date of such financial statements, all of the foregoing to
be satisfactory to the Administrative Agent and each Lender in their reasonable
discretion.

 

(x)                                   Approved
Annual Budget.  A copy of the Annual
Budget for each Project for the current calendar year.

 

(y)                                 Property
Condition Report.  A survey of the
physical condition of the Projects prepared by a licensed engineer selected by
the Administrative Agent and in accordance with the Administrative Agent’s
scope.

 

(z)                                   Project-Level
Accounts.  The Project-Level Accounts
shall have been established pursuant to the terms of this Agreement and any
other Loan Document.

 

(aa)                            Seismic
Report.  A seismic report for each
Project prepared by a firm of licensed engineers selected by the Administrative
Agent and prepared in accordance with the Administrative Agent’s scope for such
reports and otherwise acceptable to the Administrative Agent in all respects.

 

(bb)                          Fees
and Expenses.  The Borrower shall
have paid (i) all fees then due and payable to the Administrative Agent
pursuant to the Fee Letter, (ii) any other fees then due to the
Administrative Agent, Eurohypo or the Arranger and (iii) any fees and
expenses due to the Administrative Agent or the Arranger pursuant to Section 14.03,
including the reasonable fees and expenses of Morrison & Foerster LLP,
counsel to the Administrative Agent and Eurohypo.

 

(cc)                            Other
Documents.  Such other documents as
the Administrative Agent may reasonably request.

 

56

 

ARTICLE VII

 

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the
Administrative Agent and the Lenders as of the date hereof that:

 

7.01                           Organization;
Powers.  Each of the Borrower Parties
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to
carry on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.  The Borrower Parties are each qualified to do
business and in good standing in the State of California.

 

7.02                           Authorization;
Enforceability.  The Transactions applicable
to each Borrower Party are within such Borrower Party’s organizational powers
and have been duly authorized by all necessary organizational action under
their respective Organizational Documents. 
This Agreement and the other Loan Documents have been duly executed and
delivered by the Borrower Parties party thereto and each of the Loan Documents
to which a Borrower Party is a party when delivered will constitute, a legal,
valid and binding obligation of the applicable Borrower Party, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

7.03                           Government
Approvals; No Conflicts.  The
Transactions (a) do not require any Government Approvals of, registration
or filing with, or any other action by, any Governmental Authority, except for (i) such
as have been obtained or made and are in full force and effect and (ii) filings
and recordings in respect of the Liens created pursuant to the Security
Documents, (b) will not violate any Applicable Law applicable to the
Borrower Parties or the Organizational Documents of any of the Borrower
Parties, (c) will not violate or result in a default under any material
indenture, agreement or other instrument binding upon any of the Borrower
Parties, or give rise to a right thereunder to require any payment to be made
by any of the Borrower Parties, and (d) except for the Liens created
pursuant to the Security Documents, will not result in the creation or
imposition of any Lien on any asset of any of the Borrower Parties.

 

7.04                           Financial
Condition.  The Borrower has
heretofore furnished to the Administrative Agent certain financial statements
of the Borrower’s Member.  All such
financial statements are complete and correct in all material respects and
fairly present the financial condition of Borrower’s Member, as of the dates of
such financial statements, all in accordance with GAAP.  Each of the Borrower and Borrower’s Member,
on the date hereof, does not have any Indebtedness (other than security
deposits and tenant improvement allowances under the Leases that are described
in the tenant lease summaries provided by the Borrower to the Administrative
Agent and that are in amounts and on terms consistent with market terms and in
the ordinary course of business), material contingent liabilities, liabilities
for taxes, unusual

 

57

 

forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in said financial statements as of said dates and except
for Real Estate Taxes and Other Charges that are not yet delinquent.  Since the applicable dates of such financial
statements, except as disclosed in Schedule 7.04 attached hereto,
there has been no event that could reasonably be expected to have a Material
Adverse Effect.

 

7.05                           Litigation.  Except as disclosed in Schedule 7.05
hereto, there are no legal or arbitral proceedings, or any proceedings by or
before any Governmental Authority or agency of which the Borrower, Borrower’s
Member or Borrower’s Manager has received written notice, now pending or (to
the knowledge of the Borrower) threatened in writing against the Borrower, the
Projects, the Borrower’s Member or Borrower’s Manager except for those which (a) (subject
to applicable deductibles or self-insurance) are fully covered by insurance
maintained by or for the Borrower, the Borrower’s Member or the Borrower’s
Manager or (b) involve uninsured claims that do not exceed $75,000
individually, or in the aggregate for all such claims.

 

7.06                           ERISA.  Neither the Borrower nor Borrower’s Member has
established any Plan which would cause the Borrower or the Borrower’s Member to
be subject to ERISA and none of the Borrower’s or the Borrower’s Member’s
assets constitutes or will constitute “plan assets” of one or more Plans.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be expected
to result in a Material Adverse Effect. 
Each Plan established by a Borrower Party and, to the knowledge of the
Borrower Parties, each of its ERISA Affiliates and each Multiemployer Plan, is
in compliance with, the applicable provisions of ERISA, the Code and any other
Applicable Law.

 

7.07                           Taxes.  Each of the Borrower Parties has timely filed
or timely caused to be filed (or obtained effective extensions for filing) all
tax returns and reports required to have been filed and has paid or caused to
be paid all Taxes required to have been paid by it, except Taxes that are being
contested in good faith by appropriate proceedings and (a) for which such
Borrower Party has set aside on its books adequate reserves in accordance with
GAAP or (b) to the extent that the failure to do so could not reasonably
be expected to result in a Material Adverse Effect.

 

7.08                           Investment
and Holding Company Status.  None of
the Borrower Parties is (a) an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a “holding
company”, or an “affiliate” of a “holding company” or a “subsidiary company” of
a “holding company”, as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

 

7.09                           Environmental
Matters.  Except for matters expressly
and specifically set forth in the Environmental Reports or the Property
Condition Reports or matters disclosed in Schedule 7.09 or Schedule 8.11
attached hereto, to the Borrower’s knowledge:

 

(a)                                  The
Borrower and each Project is in compliance with all applicable Environmental
Laws, except where the failure to comply with such laws is not reasonably
likely to result in a Material Adverse Effect.

 

58

 

(b)                                 There
is no Environmental Claim of which the Borrower has received written notice
pending, or to the Borrower’s knowledge, threatened in writing, and no
penalties arising under Environmental Laws have been assessed, against the
Borrower, any Project or, to the Borrower’s knowledge, against any Person whose
liability for any Environmental Claim the Borrower or the Borrower’s Member has
or may have retained or assumed either contractually or by operation of law,
and the Borrower has received no written notice of any investigation or review
which is pending or, to the knowledge of the Borrower, threatened in writing by
any Governmental Authority, citizens group, employee or other Person with
respect to any alleged failure by the Borrower, the Borrower’s Member or any
Project to have any environmental, health or safety permit, license or other
authorization required under, or to otherwise comply with, any Environmental
Law or with respect to any alleged liability of the Borrower or the Borrower’s
Member for any Use or Release of any Hazardous Substances.

 

(c)                                  There
have been no past, and there are no present, Releases of any Hazardous
Substance that could reasonably be anticipated to form the basis of any
Environmental Claim against the Borrower, the Borrower’s Member, any Project
or, to the knowledge of the Borrower, against any Person whose liability for
any Environmental Claim the Borrower or the Borrower’s Member has or may have
retained or assumed either contractually or by operation of law.

 

(d)                                 To
the Borrower’s knowledge, there is no Release of Hazardous Substances migrating
to any Project which could require Remediation or require the Borrower to
provide notice to any Governmental Authority.

 

(e)                                  There
is not present at, on, in or under any Project, PCB-containing equipment,
asbestos or asbestos containing materials, underground storage tanks or surface
impoundments for Hazardous Substances, lead in drinking water (except in
concentrations that comply with all Environmental Laws), or lead-based paint
(except in compliance with all applicable Environmental Laws).

 

(f)                                    No
Liens are presently recorded with the appropriate land records under or
pursuant to any Environmental Law with respect to any Project and, to the
Borrower’s knowledge no Governmental Authority has been taking or is in the
process of taking any action that could subject any Project to Liens under any
Environmental Law.

 

(g)                                 The
Borrower has provided to the Administrative Agent’s environmental consultant
prior to the Closing Date true and correct copies of all materials,
environmental reports and other documents pertaining to the Projects requested
by the consultant and in the Borrower’s possession or control.

 

7.10                           Organizational
Structure.  The Borrower has heretofore
delivered to the Administrative Agent a true and complete copy of the Organizational
Documents of each Borrower Party.  The
sole member of the Borrower on the date hereof is the Borrower’s Member.  The sole manager of Borrower and general
partner of Borrower’s Member on the date hereof is Borrower’s Manager.

 

59

 

7.11                           Subsidiaries.  The Borrower’s Member has no Subsidiaries
except for Borrower and those specifically disclosed on Schedule 7.11.  No other Borrower Party has any Subsidiaries
except for those specifically disclosed on Schedule 7.11.

 

7.12                           Title.  On the Closing Date, the Borrower will own
and on such date will have good, indefeasible and insurable fee simple title to
the portion of the Projects consisting of real property free and clear of all
Liens, other than Permitted Title Exceptions. 
On the Closing Date, the Borrower will own or (in compliance with Section 9.04(d))
lease and will have good title to all other portions of the Project free and
clear of all Liens, other than Permitted Title Exceptions and rights of equipment
lessors under equipment leases currently in effect which comply with the
requirements set forth in Sections 9.02(h) and 9.04(d).  There are no outstanding options to purchase
or rights of first refusal to purchase affecting the Projects.

 

7.13                           No
Bankruptcy Filing.  Neither the
Borrower nor the Borrower’s Member is contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property, and neither
the Borrower nor Borrower’s Member has knowledge of any Person contemplating
the filing of any such petition against the Borrower, the Borrower’s Member or
the Borrower’s Manager.

 

7.14                           Executive
Offices; Places of Organization.  The
location of the Borrower’s, the Borrower’s Member’s and the Borrower’s Manager’s
principal place of business and chief executive office is the address
identified in the “Address for Notices” area beneath the Borrower’s name on the
Borrower’s signature page to this Agreement, except to the extent changed
in accordance with Section 9.07. 
The Borrower was organized in the State of Delaware, and the Borrower’s
Member and the Borrower’s Manager were organized in the State of California.

 

7.15                           Compliance;
Government Approvals.  Except as
expressly set forth in the Property Condition Report for each Project, the
Environmental Reports, or the seismic reports delivered for the Projects
pursuant to Section 6.01(aa), the Borrower, each Project and the
Borrower’s use thereof and operations thereat comply in all material respects
with all Applicable Laws.  All material
Government Approvals necessary under Applicable Law in connection with the
operation of the Projects as contemplated by the Loan Documents have been duly
obtained, are in full force and effect, are not subject to appeal, are held in
the name of the Borrower (or Borrower’s Member for the benefit of the Borrower)
and are free from conditions or requirements compliance with which could
reasonably be expected to have a Material Adverse Effect or which the Borrower
does not reasonably expect to be able to satisfy.  To the best knowledge of the Borrower, there
is no proceeding pending or threatened in writing that seeks, or may reasonably
be expected, to rescind, terminate, Modify or suspend any such Government
Approval.  Except for business licenses
and other licenses or permits that are not specifically applicable to the
Projects, the Borrower has no reason to believe that the Administrative Agent,
acting for the benefit of the Lenders, will not be entitled, without undue
expense or delay, to the benefit of each such Government Approval upon the
exercise of remedies under the Security Documents.

 

7.16                           Condemnation;
Casualty.  To the Borrower’s
knowledge, no Taking has been commenced or is presently contemplated with
respect to all or any portion of any Project or

 

60

 

for the relocation of roadways providing access to any
Project.  No Casualty Event of any
material nature that has not been substantially repaired has occurred with
respect to any Project.

 

7.17                           Utilities
and Public Access; No Shared Facilities. 
Each Project has adequate rights of access to public ways and is served
by adequate electric, gas, water, sewer, sanitary sewer and storm drain
facilities.  All public utilities
necessary to the use and enjoyment of each Project as intended to be used and
enjoyed are located in the public right-of-way abutting each Project except as
otherwise shown on the survey of such Project provided to the Administrative
Agent.

 

7.18                           Solvency.  On the Closing Date and after and giving
effect to the Loans occurring on the Closing Date, and the disbursement of the
proceeds of such Loans pursuant to the Borrower’s instructions, each Borrower
Party is and will be Solvent.

 

7.19                           Foreign
Person.  Neither the Borrower nor
Borrower’s Member is a “foreign person” within the meaning of Section 1445(f)(3) of
the Code.

 

7.20                           No
Joint Assessment; Separate Lots.  The
Borrower has not suffered, permitted or initiated the joint assessment of any
Project with any other real property constituting a separate tax lot.

 

7.21                           Security
Interests and Liens.  The Security
Documents create (and upon recordation of the Deeds of Trust, filing of the
applicable financing statements in the appropriate filing offices and the
execution and delivery by the Depository Bank of control agreements with
respect to any pledged deposit accounts there will be perfected as to any
portion of such collateral consisting of the deposit account itself and the
securities entitlements thereto), as security for the Obligations, valid,
enforceable, perfected and first priority security interests in and Liens on
all of the respective collateral intended to be covered thereunder, in favor of
the Administrative Agent as administrative agent for the ratable benefit of the
Lenders, subject to no Liens other than the Permitted Title Exceptions and
rights of equipment lessors under equipment leases currently in effect which
comply with the requirements set forth in Sections 9.02(h) and 9.04(d),
except as enforceability may be limited by applicable insolvency, bankruptcy,
reorganization, moratorium or other laws affecting creditors’ rights generally,
or general principles of equity, whether such enforceability is considered in a
proceeding in equity or at law.  Other
than in connection with any future change in the Borrower’s name or the
location in which the Borrower is organized or registered, no further
recordings or filings are or will be required in connection with the creation,
perfection or enforcement of such security interests and Liens, other than the
filing of continuation statements and Notices of Intent to Preserve Security
Interests in accordance with the Uniform Commercial Code and the California Civil
Code.  A financing statement covering all
property covered by any Security Document that is subject to a Uniform
Commercial Code financing statement has been filed and/or recorded, as
appropriate, (or irrevocably delivered to the Administrative Agent or a title
agent for such recordation or filing) in all places necessary to perfect a
valid first priority security interest with respect to the rights and property
that are the subject of such Security Document to the extent governed by the
Uniform Commercial Code and to the extent such security can be perfected by
such filing.

 

61

 

7.22                           Leases.  Except as disclosed in the estoppel
certificates delivered to the Administrative Agent prior to the Closing Date,
in that certain Douglas, Emmett & Company Delinquency/Aging Report
(Summarized) dated 7/20/2005 provided to the Administrative Agent prior to the
Closing Date, or (as to items (2) through (10) below) the rent rolls for
each Project attached hereto as Schedule 7.22, with respect to the
Leases (which term, for the purposes of this Section 7.22 is
limited to tenant leases): (1) the rent rolls attached hereto as Schedule 7.22
are true, correct and complete and the Leases referred to thereon are all valid
and in full force and effect; (2) the Leases (including Modifications
thereto) are in writing, and there are no oral agreements with respect thereto;
(3) the copies of each of the Leases (if any) delivered to the
Administrative Agent are true, correct and complete in all material respects
and have not been Modified (or further Modified); (4) the lease summaries
delivered to the Administrative Agent are true and correct in all material
respects and, as to all matters contained therein relating to rent, term, termination
rights, options to renew, extend or expand, rights of first refusal or offer,
tenant improvement allowances, security deposits and other credit enhancements,
insurance, tax and operating expense recovery, and obligations with respect to
subordination, non-disturbance and attornment, complete in all material
respects, and such summaries do not fail to disclose any material term of any
Lease which would materially impact the obligation of the tenant thereunder to
pay rent or perform any of its other material obligations for the entire term
thereof as disclosed in such summary and the rent rolls attached hereto as Schedule 7.22;
(5) to the Borrower’s knowledge, no defaults exist under any of the Leases
(other than the Major Leases) by any party (including any guarantor) thereto
that, individually or in the aggregate with respect to all such defaults would
result in a Material Adverse Effect and, to the knowledge of the Borrower, no
material default exists under any of the Major Leases; (6) the Borrower has
no knowledge of any presently effective notice of termination or notice of
default given by any tenant with respect to any Major Lease or under any other
Leases that individually or in the aggregate could be reasonably expected to
result in a Material Adverse Effect; (7) the Borrower has not made any
presently effective assignment or pledge of any of the Leases, the rents or any
interests therein except to the Administrative Agent; (8) no tenant or
other party has an option or right of first refusal to purchase all or any
portion of any Project; (9) except as disclosed in the lease summaries
delivered by the Borrower to the Administrative Agent, no tenant has the right
to terminate its lease prior to expiration of the stated term of such Lease
(except as a result of a casualty or condemnation); and (10) no tenant has
prepaid more than one month’s rent in advance (except for bona fide security
deposits and estimated payments of operating expenses, taxes and other
pass-throughs paid by tenants pursuant to their Leases not prepaid more than
one month prior to the date such estimated payments are due).

 

7.23                           Insurance.  The Borrower has in force, and has paid (in
each case to the extent now due and payable) the Insurance Premiums in respect
of all of the insurance required by Section 8.05.

 

7.24                           Physical
Condition.  Except as expressly and
specifically described and disclosed in the Property Condition Reports for the
Projects, the seismic reports delivered for the Projects pursuant to Section 6.01(aa),
the Environmental Reports for the Projects and the capital improvement
schedules contained in the 2005 budgets for the Projects previously delivered
to the Administrative Agent, and except for the work described in Schedule 8.21,
to the Borrower’s knowledge, each Project, including all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems,

 

62

 

electrical systems, equipment, elevators, exterior
sidings and doors, landscaping, irrigation systems and all structural
components, is in good condition, order and repair in all material respects; to
the Borrower’s knowledge, there exists no structural or other material defects
or damages in any Project, whether latent or otherwise, and the Borrower has not
received written notice from any insurance company or bonding company of any
defects or inadequacies in any Project, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond. 
Notwithstanding the provisions of Section 12.01(c), if any
representation or warranty contained in this Section 7.24 is untrue
at any time with respect to any Project, such Default or Event of Default may
be cured if the Borrower, within the cure period set forth in Section 12.01(r),
performs such acts as are sufficient to cause this representation and warranty
to be true by the end of such cure period.

 

7.25                           Flood
Zone.  Except as may be disclosed on
the survey of the Project, or any flood zone certification delivered by the
Borrower to the Administrative Agent prior to the Closing Date, no portion of
any Project is located in a flood hazard area as designated by the Federal
Emergency Management Agency or, if in a flood zone, flood insurance is
maintained therefor in full compliance with the provisions of Section 8.05(a)(i).

 

7.26                           Management
Agreement.  The Property Management
Agreement is the only management and/or leasing agreement related to each
Project, and is in full force and effect with no default or event of default
existing thereunder, and the copy of the Property Management Agreement delivered
to the Administrative Agent is a true, correct and complete copy.

 

7.27                           Boundaries.  Except as may be disclosed on the surveys
delivered pursuant to Section 6.01(l) and in the Title Policy, to
the Borrower’s knowledge: (i) none of the Improvements is outside the
boundaries of any Project (or building restriction or setback lines applicable
thereto); (ii) no improvements on adjoining properties encroach upon any
Project; and (iii) no Improvements encroach upon or violate any easements
or (in any respect which would have a Material Adverse Effect) any other
encumbrance upon any Project.

 

7.28                           Illegal
Activity.  No portion of any Project
has been purchased with proceeds of any illegal activity and no part of the
proceeds of the Loans will be used in connection with any illegal activity.

 

7.29                           Permitted
Liens.  None of the Permitted Title
Exceptions or Permitted Liens individually or in the aggregate will have a
Material Adverse Effect.

 

7.30                           Foreign
Assets Control Regulations, Etc. 
Neither the execution and delivery of the Notes and the other Loan
Documents by the Borrower Parties nor the use of the proceeds of the Loan, will
violate the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or the
Anti-Terrorism Order or any enabling legislation or executive order relating to
any of the same.  Without limiting the
generality of the foregoing, no Borrower Party or any of their respective Subsidiaries
(a) is or will become a blocked person described in Section 1 of the
Anti-Terrorism Order or (b) knowingly engages or will engage in any
dealings or transactions or be otherwise associated with any person who is
known or who (after such

 

63

 

inquiry as may be required by Applicable Law) should
be known to such Borrower Party or Subsidiary to be such a blocked person.

 

7.31                           Defaults.  No Default exists under any of the Loan
Documents.

 

7.32                           Other
Representations.  All of the
representations in this Agreement and the other Loan Documents by the Borrower
and its Affiliates are true, correct and complete in all material respects as
of the date hereof.

 

7.33                           True
and Complete Disclosure.  The
information, reports, financial statements, exhibits and schedules furnished in
writing by or on behalf of the Borrower Parties to the Administrative Agent or
any Lender in connection with the negotiation, preparation or delivery of this
Agreement and the other Loan Documents or included herein or therein or
delivered pursuant hereto or thereto, do not contain any untrue statement of
material fact or omit to state any material fact known to the Borrower
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.  All written information furnished after the
date hereof by any Borrower Party to the Administrative Agent and the Lenders
in connection with this Agreement and the other Loan Documents and the Transactions
will, to the Borrower’s knowledge, be true, complete and accurate in every
material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or
certified.  There is no fact presently
known to the Borrower or the Borrower’s Manager that could reasonably be
anticipated to have a Material Adverse Effect that has not been disclosed
herein, in the other Loan Documents or in a report, financial statement,
exhibit, schedule, disclosure letter or other writing furnished to the
Administrative Agent or the Lenders for use in connection with the
Transactions.

 

7.34                           Reserved.

 

7.35                           Limited
Partners.  The Borrower represents
and warrants to the Lenders as follows:  (a) no
limited partner of the Borrower’s Member is presently asserting, or has
threatened to assert, by action or otherwise, any claims or other liability of
the Borrower’s Manager in its capacity as the general partner of Borrower’s
Member or otherwise or any person related to such general partner with respect
to the business, operations or financing of the Borrower or the Borrower’s
Member or the past, present or future offering of any limited partnership
interests in the Borrower’s Member or the making of the Loans or the grant of
the security therefor (an “LP Claim,” which term shall also refer to any
other claim that any such limited partner may make against the Borrower’s
Manager from time to time of a nature that would indicate that any assurance
contained in this Section may be incorrect); and (b) to the extent
required, the consent of such limited partners to the Loans has been obtained
and is fully effective.

 

7.36                           Non-Foreign
Status.  The Borrower represents and
warrants to the Lenders that its tax identification number is 16-1700675 under the Code and that the Borrower’s
Member’s tax identification number is 95-45303838 under the Code.

 

7.37                           Borrower’s
Member.  The Borrower’s Member is
permitted under the limited partnership agreement of the Borrower’s Member, as amended,
or pursuant to consents

 

64

 

obtained from the limited partners of the Borrower’s Member, to
enter into or authorize Borrower to enter into the Transactions including the
borrowing of the Loans by the Borrower. 
There is not, and after the Closing Date the original Borrower’s
Member  will not incur, any ‘Portfolio
Debt’ (as such term is defined in the limited partnership agreement of the
Borrower’s Member, as amended) that is not permitted under the limited partnership
agreement of the Borrower’s Member, as amended, or pursuant to consents
obtained from the limited partners of the Borrower’s Member.

 

ARTICLE VIII

 

AFFIRMATIVE COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees with the Lenders and
the Administrative Agent that, so long as any Commitment or Loan is outstanding
and until payment in full of all amounts payable by the Borrower hereunder:

 

8.01                           Information.  The Borrower shall deliver to the
Administrative Agent:

 

(a)                                  Within
one hundred (100) days after the end of each fiscal year of the Borrower’s
operation of the Project, the Borrower shall furnish to the Administrative
Agent (i) an annual report containing a summary of operating results for
such year, a history of operating results broken down by quarter and twelve
(12) month periods for the Borrower and the Borrower’s Member since inception
(which may be consolidated provided that such report contains notes clearly
identifying each item on such report which is attributable to the Borrower and the
Borrower’s Member), an investment summary broken down for each of the Borrower’s
properties, a comparison of actual results to budget for all of the Borrower’s
properties for such year, audited financial statements for such year for the
Borrower and the Borrower’s Member (which may be consolidated provided that
such financial statements contain notes clearly identifying each item on such
financial statements which is attributable to the Borrower, the Borrower’s
Member and the Projects) (including a balance sheet, statement of income,
statement of aggregate partners’ capital or member’s equity, statement of cash
flows, and notes), and the operating budget for each of the Projects for the
fiscal year then under way, all in the same form as the Borrower’s Member’s 2004
audited financial statements and related materials, which form is acceptable to
Administrative Agent, and (ii) an updated rent roll for each of the
Projects in the form delivered to the Administrative Agent prior to the Closing
Date; provided however,
following a Permitted Public REIT Transfer, in lieu of the items in clauses (i) and
(ii) above, the Borrower shall furnish to the Administrative Agent, within
the later of the time period for delivery of the annual report provided above
or five (5) Business Days after the annual Form 10-K of the Permitted
Public REIT becomes publicly available, the following:  (i) the annual Form 10-K of the
Permitted Public REIT, (ii) an annual summary of operating results for
each of the Projects for such year, (iii) a comparison of actual results
to budget for each of the Projects for such year, (iv) the operating
budget for each of the Projects for the fiscal year then under way, (v) an
unaudited balance sheet and income statement for such year for the Borrower (which
may be consolidated provided that such financial statements contain notes
identifying each item on such financial statements that is attributable to the
Borrower or the Projects) and (vi) an updated rent roll for each of the
Projects;

 

65

 

(b)                                 Within fifty (50) days after the end of each
calendar quarter (or, in the case of the fourth calendar quarter for each
fiscal year, within one hundred (100) days after the end of such quarter), the
Borrower shall furnish to the Administrative Agent (i) a quarterly report
containing a summary of operating results for such quarter and for the twelve
(12) months ending with such quarter, a history of operating results broken
down by quarter and twelve (12) month periods for the Borrower and Borrower’s
Member since inception (which may be consolidated provided that such report
contains notes clearly identifying each item on such report which is
attributable to the Borrower and the Borrower’s Member), an investment summary broken down for each of the Borrower’s
properties, a comparison of actual results to budget for all of the Borrower’s
properties for such quarter and for the twelve (12) months ending with such
quarter, unaudited financial statements for that quarter and for the twelve
(12) months ending with such quarter for the Borrower and the Borrower’s Member
(which may be consolidated provided that such financial statements
contain notes clearly identifying each item on such financial statements which
is attributable to the Borrower, the Borrower’s Member and the Projects) (including a balance sheet, statement of
income, statement of partners’ capital or member’s equity, statement of cash flows, and notes), and
in the same form as the most recent (as of the date hereof) quarterly report of
the Borrower’s Member provided to the Administrative Agent pursuant to Section 6.01(w),
which form is acceptable to Administrative Agent and (ii) an updated rent
roll for each of the Projects in the form delivered to the Administrative Agent
in connection with the Closing; provided however, following a Permitted Public REIT
Transfer, in lieu of the items in clauses (i) and (ii) above, the
Borrower shall furnish to the Administrative Agent, within the later of the
time period provided above for delivery of the quarterly report (which shall
instead be based on the Permitted Public REIT’s fiscal quarter) or five (5) Business
Days after the Form 10-Q of the Permitted Public REIT for such fiscal
quarter becomes publicly available, the following:  (i) the most recent Form 10-Q of
the Permitted Public REIT, (ii) a summary of operating results for each of
the Projects as of the end of the current quarter for the year-to-date, (iii) a
comparison of actual results to budget for each of the Projects as of the end
of the current quarter for the year-to-date, (iv) an unaudited balance
sheet and income statement for the Borrower as of the end of the current
quarter for the year-to-date (which may be consolidated provided that such
financial statements contain notes identifying each item on such financial
statements that is attributable to the Borrower or the Projects) and (v) an
updated rent roll for each of the Projects;

 

(c)                                  at
the time of the delivery of each of the financial statements provided for in subsection (a) and
subsection (b) of this Section 8.01, a certificate
of an Authorized Officer on behalf of the Borrower, certifying (i) that such
respective financial statements and reports as being true, correct, and
complete in all material respects; (ii) that such officer has no
knowledge, except as specifically stated, of any Default or if a Default has
occurred, specifying the nature thereof in reasonable detail and the action
which the Borrower is taking or proposes to take with respect thereto; (iii) that
the Borrower is in compliance with the restrictions on Indebtedness set forth
in Section 9.04; and (iv) containing a calculation in
such reasonable detail as is acceptable to the Administrative Agent setting
forth the Operating Income, Operating Expenses, Net Operating Income, Adjusted
Net Operating Income, DSCR Debt Service, and Debt Service Coverage Ratio of the
Borrower for the most recent calendar quarter;

 

(d)                                 from
time to time, within fifteen (15) days after request therefor, such other information
regarding the financial condition, operations, business or prospects of the

 

66

 

Borrower, the Projects, the other Borrower Parties, the Bankruptcy
Parties or status or terms of the Permitted Reorganization as the
Administrative Agent may reasonably request, including, without limitation, if
there is a material variation in the application of accounting principles as
further described herein (i) a description in reasonable detail of any
material variation between the application of accounting principles employed in
the preparation of any annual or quarterly financial statement under Section 8.01
and the application of accounting principles employed in the preparation of the
immediately preceding annual or quarterly financial statements and (ii) reasonable
estimates of the difference between such statements arising as a consequence
thereof; and

 

(e)                                  within
ten (10) Business Days after the end of each calendar month during a Low
DSCR Trigger Period, (i) an operating statement (showing monthly activity),
with such detail and in a form reasonably satisfactory to the Administrative
Agent, showing Operating Income, Operating Expenses, Net Operating Income,
Adjusted Net Operating Income, DSCR Debt Service, and the Borrower’s calculation
of Excess Cash for such month; (ii) the computations of Debt Service
Coverage Ratio as calculated as of the end of the most recent calendar month;
and (iii) a reconciliation of the results for such month and year-to-date
as compared to the Approved Annual Budget for such period.

 

(f)                                    In the event of a
Transfer to a Permitted REIT or its Permitted REIT Subsidiary in accordance
with Section 9.03(a)(iii), the Borrower shall furnish to the
Administrative Agent (a) if the Borrower shall have delivered a Guarantee
of the Guaranteed Line of Credit, all compliance certificates, financial
statements and all other financial and material reports required pursuant to
the terms of the Primary Credit Facility of the Permitted REIT on or prior to
the date(s) required for the delivery thereof by such Permitted REIT pursuant
to the terms of the Primary Credit Facility of such Permitted REIT and (b) at
all other times such compliance certificates, financial statements and all
other financial and material reports delivered by the Permitted REIT pursuant
to the terms of the Primary Credit Facility of the Permitted REIT as may be
requested by the Administrative Agent from time to time, promptly following
such request.

 

Any reports, statements or other information required to be delivered
under this Agreement (other than the Form 10-K and Form 10-Q of the
Permitted Public REIT, which may be delivered in paper or electronic form) shall
be delivered (1) in paper form, (2) on a diskette, and (3) if
requested by the Administrative Agent and within the capabilities of the
Borrower’s data systems without change or modification thereto, in electronic
form and prepared using a Microsoft Word for Windows or WordPerfect for Windows
files (which files may be prepared using a spreadsheet program and saved as
word processing files).

 

8.02                           Notices
of Material Events.  The Borrower
shall give to the Administrative Agent prompt written notice after becoming
aware of any of the following:

 

(a)                                  the
occurrence of any Default or Event of Default, including a description of the
same in reasonable detail;

 

(b)                                 the
commencement (or threatened commencement in writing) of all material legal or
arbitral proceedings whether or not covered by insurance policies maintained by

 

67

 

or for the Borrower, the Borrower’s Member or the Borrower’s Manager in
accordance herewith (it being understood that any monetary claims asserted in
any proceeding which, individually or in the aggregate, exceeds $3,000,000
shall be deemed material), and of all proceedings by or before any Governmental
Authority of a material nature, and any material development in respect of such
legal or other proceedings, affecting any of the Borrower Parties or any
Project;

 

(c)                                  the
occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower Parties in an aggregate amount exceeding $250,000;

 

(d)                                 promptly
after the Borrower knows or has reason to believe any default has occurred by
the Borrower or tenant under any Major Lease or the Borrower has received a
written notice of default from the tenant under any Major Lease, a notice of
such default;

 

(e)                                  copies
of any material notices or documents pertaining to or related to the Projects,
the Borrower or the Borrower’s Member received from any Governmental Authority;
and, with respect to Major Leases only, any notices received asserting a
material default by the landlord under such lease, or relating to an assignment
of the lease by the tenant, or a subletting of all or substantially all of the
premises thereunder, or the vacation of all or a material portion of the
premises by the tenant, or a change in control of the tenant, or an election by
the tenant to terminate the lease or any other event or condition which, as
reasonably determined by the Borrower, would impact the obligation of the
tenant thereunder to pay rent or perform any of its other material obligations
for the entire term thereof as previously disclosed to the Administrative Agent;

 

(f)                                    notice
of any Taking threatened in writing; or the occurrence of any Casualty Event
resulting in damage or loss in excess of $500,000; and

 

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

 

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

 

8.03                           Existence,
Etc.  The Borrower will, and will
cause each other Borrower Party to, preserve and maintain its legal existence
and all material rights, privileges, licenses and franchises necessary for the
maintenance of its existence and the conduct of its affairs.

 

8.04                           Compliance
with Laws; Adverse Regulatory Changes.

 

(a)                                  The
Borrower shall comply in all material respects (subject to such more stringent
requirements as may be set forth elsewhere herein) with all Applicable
Laws.  The Borrower shall maintain in
full force and effect all required Government Approvals and shall from time to
time obtain all Government Approvals as shall now or hereafter be necessary
under Applicable Law in connection with the operation or maintenance of the
Projects and shall comply, in all material respects, with all such Government
Approvals and keep them in full force

 

68

 

and effect.  Upon request from
time to time, the Borrower shall promptly furnish a true, correct and complete
copy of each such Government Approval to the Administrative Agent.  The Borrower shall, unless otherwise approved
by the Administrative Agent in writing, use its reasonable efforts to contest
any proceedings before any Governmental Authority and to resist any proposed
adverse changes in Applicable Law to the extent that such proceedings or
changes are directed specifically toward any Project or could reasonably be
expected to have a Material Adverse Effect, but only to the extent that
Borrower deems such action to be in the best interests of the affected Project
in the exercise of its business judgment.

 

(b)                                 The
Borrower, at its own expense, may contest by appropriate legal proceedings
promptly initiated and conducted in good faith and with due diligence, the
validity or application of any Applicable Law, and shall provide the
Administrative Agent with notice of any such contest of a material nature, provided
that:

 

(i)                                     Reserved;

 

(ii)                                  the
Borrower shall pay any outstanding fines, penalties or other payments under
protest unless such proceeding shall suspend the collection of such items;

 

(iii)                               such
proceeding shall be permitted under and be conducted in accordance with the
applicable provisions of any other instrument governing the contest of such
Applicable Laws to which the Borrower or any such Project is subject and shall
not constitute a default thereunder;

 

(iv)                              no
part of or interest in any Project (or the Borrower’s interest therein) will be
in danger of being sold, forfeited, terminated, canceled or lost during the
pendency of the proceeding;

 

(v)                                 such
proceeding shall not subject the Borrower, the Administrative Agent or any
Lender to criminal or civil liability (other than civil liability of the
Borrower as to which adequate security has been provided pursuant to clause (vi) below);

 

(vi)                              unless
paid under protest, the Borrower shall have furnished such security as may be
required in the proceeding, or as may be reasonably requested by the
Administrative Agent, to insure the payment of any such items, together with
all interest and penalties thereon, which shall not be less than 110% of the
maximum liability of the Borrower as reasonably determined by the
Administrative Agent; and

 

(vii)                           the
Borrower shall promptly upon final determination thereof pay the amount of such
items, together with all costs, interest and penalties.

 

8.05                           Insurance.

 

(a)                                  The
Borrower shall obtain and maintain, or cause to be maintained, for the benefit
of the Borrower, the Administrative Agent and the Lenders, insurance for each
Project providing at least the following coverages:

 

69

 

(i)                                     comprehensive
all risk insurance (A) in an amount equal to one hundred percent (100%) of
the full replacement cost (less deductible amounts provided for herein), which
for purposes of this Agreement shall mean actual replacement value (exclusive
of costs of excavations, foundations, underground utilities and footings) with
a waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and personal property at each Project waiving all
co-insurance provisions (if applicable); (C) providing for no deductible
in excess of Seventy-Five Thousand Dollars ($75,000) for all such insurance
coverage; and (D) containing an “Ordinance or Law Coverage” or “Enforcement”
endorsement if any of the Improvements or the use of each Project shall at any
time constitute legal non-conforming structures or uses.  In addition, the Borrower shall obtain: (y)
if any portion of the Improvements is currently or at any time in the future
located in a federally designated “special flood hazard area”, flood hazard
insurance in an amount equal to the lesser of (1) the Outstanding
Principal Amount of the Notes or (2) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as
each may be amended or such greater amount as the Administrative Agent shall
require; and (z) subject to Sections 8.05(a)(xi) and (xii), coverage
for terrorism, terrorist acts and earthquake; provided that the
insurance pursuant to clauses (y) and (z) hereof shall be on terms (other than
with respect to deductibles and self-insurance) consistent with the
comprehensive all risk insurance policy required under this subsection (i);

 

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

 

(iii)                               business
income insurance (A) with loss payable to the Administrative Agent (on
behalf of the Lenders); (B) covering all risks required to be covered by
the insurance provided for in subsection (i) above for a
period commencing at the time of loss for such length of time as it takes to
repair or replace with the exercise of due diligence and dispatch; (C) containing
an extended period of indemnity endorsement which provides that after the
physical loss to the Improvements and personal property has been repaired, the
continued loss of income will be insured until such income either returns to
the same level it was at prior to the loss, or the expiration of twelve (12) months
from the date that the Project is repaired or replaced and operations are
resumed, whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) if there is a separate sublimit
for business income insurance, such sublimit shall be not less than one hundred
percent (100%) of the projected gross income from the Project for a period of
eighteen (18) months.  The amount of such
business

 

70

 

income insurance shall be
determined prior to the date hereof and at least once each year thereafter
based on the Borrower’s reasonable estimate of the gross income from the
Project for the succeeding eighteen (18) month period.  All proceeds payable to the Administrative
Agent pursuant to this subsection (iii) shall be held by the
Administrative Agent and shall be applied to debt service that is due and
payable under the Notes with the amount in excess of such debt service during
the period of business interruption held in a Controlled Account and available
for release to the Borrower upon the completion of the restoration of the
Project provided no Major Default or Event of Default then exists; provided,
however, that nothing herein contained shall be deemed to relieve the
Borrower of its obligations to pay the obligations secured by the Loan
Documents on the respective dates of payment provided for in the Notes and the
other Loan Documents except to the extent such amounts are actually paid out of
the proceeds of such business income insurance;

 

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

 

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

 

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

 

(vii)                           umbrella
liability insurance in addition to primary coverage in an amount not less than
Fifty Million and No/100 Dollars ($50,000,000) per occurrence on terms
consistent with the commercial general liability insurance policy required
under subsection (ii) above and subsections (viii) and
(ix) below;

 

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

 

71

 

(ix)                                if
applicable to a particular Project, so-called “dramshop” insurance or other
liability insurance required in connection with the sale by the Borrower of
alcoholic beverages;

 

(x)                                   insurance
against employee dishonesty in an amount not less than one (1) month of
Operating Income from the Project and with a deductible not greater than Ten
Thousand and No/100 Dollars ($10,000.00);

 

(xi)                                such
coverages with respect to terrorism and terrorist acts as are then being
maintained by prudent owners of institutionally owned “Class A” office
buildings in the market where the Projects are located as reasonably determined
by the Borrower and the Administrative Agent; it being acknowledged and agreed
that the Administrative Agent and the Lenders have accepted the Borrower’s
existing coverages, deductibles and self-insurance limits in effect on the
Closing Date with respect to terrorism and terrorist acts;

 

(xii)                             such coverages
with respect to earthquake as are then being maintained by prudent owners of
institutionally owned “Class A” office buildings in the market where the Projects
are located as reasonably determined by the Borrower and the Administrative
Agent; it being acknowledged and agreed that the Administrative Agent and the
Lenders have accepted the Borrower’s existing coverages, deductibles and
self-insurance limits in effect on the Closing Date with respect to earthquake;
and

 

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

 

(b)                                 All
insurance provided for in Section 8.05(a) shall be obtained
under valid and enforceable policies (collectively, the “Policies” or in
the singular, the “Policy”) and, to the extent not specified above,
shall be subject to the approval of the Administrative Agent as to deductibles,
loss payees and insureds.  Not less than fifteen
(15) days prior to the expiration dates of the Policies theretofore furnished
to the Administrative Agent, certificates of insurance evidencing the Policies
accompanied by evidence satisfactory to the Administrative Agent of payment of
the premiums then due thereunder (the “Insurance Premiums”), shall be
delivered by the Borrower to the Administrative Agent; provided, however,
that no Event of Default shall result from the Borrower’s failure to deliver or
cause to be delivered such certificates or other evidence unless (i) on or
prior to the expiration date of the applicable Policy, the Administrative Agent
shall not have obtained certificates or other evidence satisfactory to it confirming
that the Policies required hereunder shall have been extended for an additional
period or shall have been replaced for an additional period with replacement
Policies that comply with the requirements set forth in this Section 8.05
and (ii) on or prior to the fifth (5th) Business Day after the
expiration of such expiring Policy, the Administrative Agent shall not have
received certificates of insurance evidencing the extension of the existing
Policies or replacement Policies for an additional period accompanied by
evidence satisfactory to the Administrative Agent of payment of the Insurance
Premiums then due thereunder.

 

72

 

(c)                                  Each
Policy shall (i) provide that adjustment and settlement of any claim equal
to or in excess of the Insurance Threshold Amount shall be subject to the
approval of the Administrative Agent in accordance with Section 10.01(b);
provided that so long as no Event of Default exists, the Borrower may,
upon notice to the Administrative Agent, settle and adjust any claim with
respect to a Casualty Event in excess of the Insurance Threshold Amount without
the prior consent of the Administrative Agent and the Borrower is hereby
authorized to collect the Insurance Proceeds with respect to any such claim; provided
that such adjustment is carried out in a competent and timely manner; (ii) include
permission by the insurer for the parties to the transaction to waive all
rights of subrogation against each other; (iii) to the extent such
provisions are reasonably obtainable, provide that such insurance shall not be
impaired or invalidated by virtue of (1) any act, failure to act or
negligence of, or violation of declarations, warranties or conditions contained
in such policy by, the Borrower, the Administrative Agent, the Lenders or any
other named insured, additional insured, or loss payee, except for the willful
misconduct of the Administrative Agent or the Lenders knowingly in violation of
the conditions of such Policy or (2) any foreclosure or other proceeding
or notice of sale relating to the Projects; (iv) be subject to a
deductible, if any, not greater than $10,000 (except as otherwise specifically
provided in or permitted by Section 8.05(a)); (v) contain an
endorsement providing that none of the Administrative Agent, the Lenders or the
Borrower shall be, or shall be deemed to be, a co-insurer with respect to any
risk insured by such Policy; (vi) include effective waivers by the insurer
of all claims  for insurance premiums
against any loss payees, additional insureds and named insureds (other than the
Borrower Parties); (vii) provide that if all or any part of such Policy
shall be canceled or terminated, or shall expire, the insurer will forthwith
give notice thereof to each named insured, additional insured and loss payee
and that no cancellation, termination, expiration, reduction in amount of, or
material change (other than an increase) in, coverage thereof shall be
effective until at least thirty (30) days after receipt by each named insured,
additional insured and loss payee of written notice thereof; and (viii) provide
that the Administrative Agent shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.

 

(d)                                 If
any such Insurance Proceeds required to be paid to the Administrative Agent are
instead made payable to the Borrower, the Borrower hereby appoints the
Administrative Agent as its attorney-in-fact, irrevocably and coupled with an
interest, to endorse and/or transfer any such payment to the Administrative
Agent (on behalf of the Lenders).

 

(e)                                  Except
as otherwise provided by the terms of the blanket insurance policies maintained
by the Borrower and/or its Affiliates with respect to the Borrower and the
Projects as of the Closing Date, or comparable blanket policies that may be
obtained by the Borrower and/or its Affiliates after the Closing Date, any
blanket insurance Policy shall specifically allocate to the Projects the amount
of coverage from time to time required hereunder and shall otherwise provide
the same protection as would a separate Policy insuring only the Projects in
compliance with the provisions of Section 8.05(a).

 

(f)                                    All
Policies of insurance provided for or contemplated by Section 8.05(a) shall
be primary coverage and, except for the Policy referenced in Section 8.05(a)(v),
shall name the Borrower as the insured and the Administrative Agent (on behalf
of the Lenders) and its successors and/or assigns as the additional insured (or
in the case of property insurance, as the “mortgagee”), as its interests may
appear, and in the case of property damage, boiler and

 

73

 

machinery, flood, earthquake and terrorism insurance, shall contain a
standard non-contributing mortgagee endorsement in favor of the Administrative
Agent providing that the loss thereunder shall be payable to the Administrative
Agent.  The Borrower shall not procure or
permit any of its constituent entities to procure any other insurance coverage
which would be on the same level of payment as the Policies or would adversely
impact in any way the ability of the Administrative Agent or the Borrower to
collect any proceeds under any of the Policies. 
All polices must EXACTLY state the following: Eurohypo AG, New York
Branch Its successors and assigns 1114 Avenue of the Americas 29th
Floor New York, NY 10036 Attn: Director of Portfolio Operations.

 

(g)                                 Without
limiting the obligations of the Borrower under the foregoing provisions of this
Section 8.05, if at any time the Administrative Agent is not in
receipt of written evidence that all insurance required hereunder is in full
force and effect, the Administrative Agent shall have the right, without notice
to the Borrower, to take such action as the Administrative Agent deems
necessary to protect its interest in the Projects, including, without
limitation, the obtaining of such insurance coverage as the Administrative
Agent in its sole discretion deems appropriate and all premiums incurred by the
Administrative Agent in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by the Borrower to the
Administrative Agent upon demand and until paid shall be secured by the Deed of
Trust and shall bear interest at the Post-Default Rate.

 

(h)                                 In
the event of foreclosure of the Deed of Trust or other transfer of title to any
Project in extinguishment in whole or in part of the obligations thereunder,
all right, title and interest of the Borrower in and to the Policies that are
not blanket Policies then in force concerning such Project and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
the Administrative Agent or other transferee in the event of such other transfer
of title.

 

(i)                                     The
Polices shall be issued by financially sound and responsible insurance
companies authorized to do business in the state in which the Projects are
located and be approved by the Administrative Agent.  The insurance companies shall have (i) a
general policy and claims paying ability rating of A or better and a financial
class of IX or better (and, as to the coverages for terrorism, terrorist acts
and earthquake, a general policy and claims paying ability rating of A minus or
better and a financial class of VII or better) by A.M. Best Company, Inc.;
provided, however, that the Borrower shall be permitted to
maintain (at levels other than the primary layer of insurance) up to twenty
percent (20%) of the total required all-risk insurance coverage required under subsection 8.05(a)(i) with
insurance companies having a general policy and claims paying ability rating of
less than A and a financial class of less than IX provided such companies have
at least a general policy and claims paying ability rating of A minus or better
and a financial class of VII or better, provided such insurance companies are
also issuing earthquake coverage to the Borrower or (ii) an investment
grade rating for claims paying ability of “AA” by S&P or the equivalent
rating by one or more credit rating agencies approved by the Administrative
Agent.

 

74

 

8.06                        Real
Estate Taxes and Other Charges.

 

(a)                                 Subject
to the provisions of subsection (b) of this Section 8.06,
the Borrower shall pay all Real Estate Taxes and Other Charges now or hereafter
levied or assessed or imposed against each Project or any part thereof before
fine, penalty, interest or cost attaches thereto.  Subject to the provisions of subsection (b) of
this Section 8.06, upon the request of the Administrative Agent,
the Borrower shall furnish to the Administrative Agent receipts for, or other
evidence reasonably satisfactory to the Administrative Agent of, the payment of
Real Estate Taxes and Other Charges in compliance with this Section 8.06.

 

(b)                                 After
prior written notice to the Administrative Agent, the Borrower, at its own
expense, may contest by appropriate legal proceedings or other appropriate
actions, promptly initiated and conducted in good faith and with due diligence,
the amount or validity or application in whole or in part of any Real Estate
Taxes and Other Charges, provided that:

 

(i)                                     Reserved;

 

(ii)                                  the
Borrower shall pay the Real Estate Taxes and Other Charges under protest unless
such proceeding shall suspend the collection of the Real Estate Taxes and Other
Charges;

 

(iii)                               such
proceeding shall be permitted under and be conducted in accordance with the
applicable provisions of any other instrument governing the contest of Real
Estate Taxes or Other Charges to which the Borrower or the Projects is subject
and shall not constitute a default thereunder;

 

(iv)                              such
proceeding shall be conducted in accordance with all Applicable Laws;

 

(v)                                 neither
the Projects nor any part thereof or interest therein will, in the reasonable
opinion of the Administrative Agent, be in danger of being sold, forfeited,
terminated, cancelled or lost during the pendency of the proceeding;

 

(vi)                              unless
paid under protest, the Borrower shall have furnished such security as may be
required in the proceeding, or as may be reasonably requested by the
Administrative Agent (but in no event less than 110% of the Real Estate Taxes
or Other Charges being contested), to insure the payment of any such Real
Estate Taxes and Other Charges, together with all interest and penalties
thereon; and

 

(vii)                           the
Borrower shall promptly upon final determination thereof or upon the failure of
the existence of (ii), (iii), (iv) or (v) above
pay the amount of such Real Estate Taxes or Other Charges, together with all
costs, interest and penalties.

 

8.07                        Maintenance
of the Projects; Alterations.  The
Borrower shall:

 

(i)                                     maintain
or cause to be maintained each Project in good condition and repair in a manner
consistent with a Class-A office building located in the relevant

 

75

 

submarket in which such
Project is located in Los Angeles County, California, and make all reasonably
necessary repairs or replacements thereto;

 

(ii)                                  except
for work that constitutes required work under Section 8.21, not
remove, demolish or structurally alter, or permit or suffer the removal,
demolition or structural alteration of, any of the Improvements or make any
alteration that may have a Material Adverse Effect or involve a cost in the
aggregate for such alteration and all other alterations involving a single work
of improvement (or related group of improvements) which is anticipated to
exceed the lesser of (A) $5,000,000 or (B) ten percent (10%) of the
Appraised Value of such Project, without the prior consent of the
Administrative Agent; provided, however, that the Administrative
Agent’s consent shall not be required for tenant improvement work performed
pursuant to the terms and provisions of an Approved Lease which (upon
completion of such work) does not adversely affect any structural component of
any Improvements, any utility or HVAC system contained in any Improvements or
the exterior of any building (excluding signage or other alterations that would
not otherwise require the consent of the Administrative Agent under this Section 8.07(ii) in
the absence of this proviso) constituting a part of any Improvements at any
Project; and provided, further, that the Administrative Agent’s
consent shall not be unreasonably withheld for any alterations that are required
by Applicable Law and otherwise require the consent of the Administrative Agent
under this Section 8.07(ii);

 

(iii)                               complete
promptly and in a good and workmanlike manner any Improvements which may be
hereafter constructed and, subject to the terms of the Loan Documents
(including, without limitation, Section 10.03), promptly restore
(in compliance with Section 10.03) in like manner any portion of
the Improvements which may be damaged or destroyed thereon from any cause
whatsoever, and pay when due all claims for labor performed and material
furnished therefor, subject to the Borrower’s right to contest any such claims
(as long as, with respect to any claim for which a mechanic’s lien has been
filed, such contested claims have been bonded over to the satisfaction of the
Administrative Agent within thirty (30) days of the date of filing);

 

(iv)                              not
commit, or permit, any waste of the Projects; and

 

(v)                                 not
remove any item from the Projects without replacing it with a comparable item
of equal quality, value and usefulness, except that the Borrower may sell or
dispose of in the ordinary course of the Borrower’s business any property which
is obsolete.

 

8.08                        Further
Assurances.  The Borrower will, and
will cause each of the other Borrower Parties to, promptly upon request by the
Administrative Agent, execute any and all further documents, agreements and
instruments, and take all such further actions which may be required under any
applicable law, or which the Administrative Agent may reasonably request, to
effectuate the Transactions, all at the sole cost and expense of the Borrower.  The Borrower, at its sole cost and expense,
shall take or cause to be taken all action required or requested by the
Administrative Agent to maintain and preserve the Liens of the Security
Documents and the priority thereof.  The
Borrower shall from time to time execute or cause to be executed any and all
further instruments, and register and record such instruments in all public and
other offices, 

 

76

 

and shall take all such
further actions, as may be necessary or requested by the Administrative Agent
for such purposes, including timely filing or refiling all continuations and
any assignments of any such financing statements, as appropriate, in the
appropriate recording offices.

 

8.09                        Performance
of the Loan Documents.  The Borrower
shall observe, perform and satisfy all the terms, provisions, covenants and
conditions required to be observed, performed or satisfied by it under the Loan
Documents, and shall pay when due all costs, fees and expenses required to be
paid by it under the Loan Documents.

 

8.10                        Books
and Records; Inspection Rights.  The
Borrower will, and will cause each of the other Borrower Parties to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities.  The Borrower will, and will
cause each of the other Borrower Parties to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties (subject to the proviso set forth
in Section 8.11(a)), to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times (during normal
business hours) and as often as reasonably requested.

 

8.11                        Environmental
Compliance.

 

(a)                                 Environmental
Covenants.  The Borrower covenants
and agrees that:

 

(i)                                     all
uses and operations on or of each Project, whether by the Borrower or any other
Person, shall be in compliance with all Environmental Laws and permits issued
pursuant thereto;

 

(ii)                                  except
for Releases incidental to the Use of Hazardous Substances permitted by clause
(iii) below and in compliance with all Applicable Laws, the Borrower
shall not permit a Release of Hazardous Substances in, on, under or from any
Project;

 

(iii)                               the
Borrower shall not knowingly permit Hazardous Substances in, on, or under any
Project, except those that are in compliance with all Environmental Laws and of
types and in quantities customarily used in the ownership, operation and
maintenance of buildings similar to the Projects (i.e., materials used in
cleaning and other building operations) and shall undertake to supervise and
inspect activities occurring on the Projects as may be reasonably prudent to
comply with the foregoing obligation;

 

(iv)                              except
as disclosed in Schedule 8.11 or as specifically described in the
Environmental Reports, the Borrower shall not permit any underground storage
tanks to be in, on, or under any Project, and shall operate, maintain, repair
and replace any such underground storage tank so disclosed in compliance with
all Applicable Laws;

 

(v)                                 Reserved;

 

(vi)                              the
Borrower shall keep each Project free and clear of all Liens and other encumbrances
imposed pursuant to any Environmental Law, whether due to any act or omission
of the Borrower or any other Person (collectively, “Environmental Liens”);

 

77

 

(vii)                           notwithstanding
clause (iii) above, the Borrower shall not, or knowingly permit any
other Person to, install any asbestos or asbestos containing materials on any
Project, and shall upon and following the Closing Date implement, comply with
and maintain in effect an operations and maintenance program with respect to
any existing asbestos or asbestos containing materials located at any Project;

 

(viii)                        the
Borrower shall cause the Remediation of such Hazardous Substances present on,
under or emanating from any Project, or migrating onto or into any Project, in
accordance with this Agreement and applicable Environmental Laws subject to the
right to contest such Remediation in accordance with Section 7(a) of
the Environmental Indemnity; and

 

(ix)                              the
Borrower shall provide the Administrative Agent, the Lenders and their
representatives (A) with access, upon prior reasonable notice, at
reasonable times (during normal business hours) to all or any portion of any
Project for purposes of inspection; provided that such inspections shall
not unreasonably interfere with the operation of such Project or the tenants or
occupants thereof, and shall be subject to the rights of tenants under their
Leases, and the Borrower shall cooperate with the Administrative Agent, the
Lenders and their representatives in connection with such inspections,
including, but not limited to, providing all relevant information and making
knowledgeable persons available for interviews and (B) promptly upon
request, copies of all environmental investigations, studies, audits, reviews or
other analyses conducted by or that are in the possession or control of the
Borrower in relation to any Project, whether heretofore or hereafter obtained.

 

(b)                                 Environmental
Notices.  The Borrower shall promptly
provide notice to the Administrative Agent of:

 

(i)                                     all
Environmental Claims asserted or threatened against the Borrower or any other
Person occupying any Project or any portion thereof or against any Project
which become known to the Borrower;

 

(ii)                                  the
discovery by the Borrower of any occurrence or condition on any Project or on
any real property adjoining or in the vicinity of any Project which could
reasonably be expected to lead to an Environmental Claim against the Borrower,
any Project, the Administrative Agent or any of the Lenders;

 

(iii)                               the
commencement or completion of any Remediation at any Project; and

 

(iv)                              any
Environmental Lien filed against any Project.

 

In connection therewith, the Borrower shall transmit
to the Administrative Agent copies of any citations, orders, notices or other
written communications received from any Person and any notices, reports or
other written communications and copies of any future Environmental Reports whether
or not submitted to any Governmental Authority with respect to the matters
described above.

 

78

 

8.12                        Management
of the Projects.

 

(a)                                 The
Borrower shall (i) cause each Project to be managed by the Property
Manager in accordance with the Property Management Agreement, (ii) promptly
perform and observe all of the material covenants required to be performed and
observed by the Borrower under the Property Management Agreement and do all
things necessary to preserve and to keep unimpaired its material rights
thereunder, (iii) promptly notify the Administrative Agent of any material
default under the Property Management Agreement of which it is aware and (iv) promptly
enforce the performance and observance of all of the material covenants
required to be performed and observed by the Property Manager under the
Property Management Agreement.

 

(b)                                 If
(i) an Event of Default exists, (ii) the Property Manager is
insolvent, or (iii) the Property Manager is in default of any material
covenant or obligation under the Property Management Agreement beyond the
expiration of any applicable grace period set forth therein, the Borrower
shall, at the request of the Administrative Agent, promptly terminate the
Property Management Agreement and replace the Property Manager with a property
manager approved by the Administrative Agent pursuant to a Property Management
Agreement on terms and conditions reasonably satisfactory to the Administrative
Agent.

 

8.13                        Leases.  The Borrower shall (a) upon the Closing
Date, assign to the Administrative Agent (on behalf of the Lenders) any and all
Leases, and/or all Rents payable thereunder, including, but not limited to, any
Lease which is now in existence or which may be executed after the Closing
Date, (b) promptly perform and fulfill, or cause to be performed and
fulfilled, each and every material term and provision of the Borrower’s
obligations under the Leases, including the performance of any tenant
improvement work required with respect thereto, (c) give to the
Administrative Agent a copy of each notice of default given to any tenant under
a Major Lease or sent by any tenant thereunder to the Borrower, (d) consistent
with good business practices and in the best interests of the affected Project,
enforce its rights with regard to all Leases unless otherwise approved by the
Administrative Agent, (e) use its commercially reasonable efforts to lease
the Projects, (f) diligently enforce the terms of each Lease with respect
to any construction work to be performed by the tenant thereunder so that such
work is performed in a manner which will cause a minimum amount of disruption
to the tenants then in occupancy at any such Project and in a manner so as not
to cause a default by the Borrower under any other tenants’ Leases or provide
the basis for any abatement or set off by any other tenant of the rent payable
under any such Lease, or a claim by any other tenant for breach of warranty of
habitability or similar claim and (g) prior to entering into any new Lease
with a retail tenant provide a copy of the Borrower’s standard form of retail
lease to the Administrative Agent for review and approval, which approval shall
not be unreasonably withheld or delayed.

 

8.14                        Tenant
Estoppels.  At the Administrative
Agent’s request, at any time while an Event of Default exists and otherwise
from time to time upon the joint agreement of the Borrower and the
Administrative Agent, with each acting reasonably, the Borrower shall request
and use commercially reasonable efforts to obtain and furnish to the
Administrative Agent written estoppels in form and substance satisfactory to
the Administrative Agent, executed by tenants under Leases in any Project and
confirming the term, rent, and other provisions and matters relating to the
Leases.  Borrower further hereby agrees that,
while an Event of Default

 

79

 

exists, the Administrative Agent may exercise all
rights of the Borrower under the Leases to request the delivery of estoppels
from the tenants thereunder.

 

8.15                        Subordination,
Non-Disturbance and Attornment Agreements. 
The Borrower shall use commercially reasonable efforts to provide to the
Administrative Agent SNDA Agreements executed by each tenant under a Major
Lease prior to the Closing Date; provided, however, that in
addition to the obligations set forth in Section 9.09(c), if the
Borrower does not obtain all such SNDA Agreements by the Closing Date, the
Borrower shall continue to use commercially reasonable efforts to obtain such
SNDA Agreements after the Closing Date.

 

8.16                        Operating
Plan and Budget.

 

(a)                                 Commencing
with the budget for the calendar year 2006 and then annually thereafter, the
Borrower shall submit to the Administrative Agent an annual budget for each
Project (each an “Annual Budget”), in form and substance reasonably
satisfactory to the Administrative Agent setting forth in detail budgeted
monthly Operating Income and monthly Operating Expenses for each such Project
(which may be in the form of the calendar year 2005 budget for each Project
provided to the Administrative Agent prior to the Closing Date).  The Annual Budget for each year shall be
delivered together with the annual financial statement for the preceding year
pursuant to Section 8.01(a). 
During any Low DSCR Trigger Period but not otherwise, the Administrative
Agent shall have the right to approve such Annual Budget (including, without
limitation, the Annual Budget for the portions of the calendar year in which
such Low DSCR Trigger Period occurs following after the commencement of such
Low DSCR Trigger Period).  Within fifty
(50) days following the end of any calendar quarter which comprises a Low DSCR
Trigger Period, the Borrower shall deliver to the Administrative Agent for its
approval the Annual Budget (in the format as described above) for the calendar
year in which such Low DSCR Trigger Period occurs (together with a
reconciliation to that Annual Budget of actual revenues and expenses
year-to-date), and shall thereafter deliver to Administrative Agent for its approval
the Annual Budget (in the format as described above) proposed by the Borrower
for the succeeding calendar year, by no later than the November 15
preceding such calendar year.  The
Administrative Agent shall not unreasonably withhold its approval of any Annual
Budget as required hereunder; provided, however, that if during any Low DSCR Trigger
Period the actual monthly Operating Expenses exceed budgeted Operating Expenses
in any month during any period by more than ten percent (10%), the
Administrative Agent shall have the right to require the Borrower to submit for
its approval a revised Annual Budget for review and approval by the
Administrative Agent in its sole discretion. 
If the Administrative Agent objects to any proposed Annual Budget for
which approval is required hereunder, the Administrative Agent shall advise the
Borrower of such objections within fifteen (15) Business Days after receipt
thereof (and deliver to the Borrower a reasonably detailed description of such
objections), and the Borrower shall within five (5) days after receipt of
notice of any such objections revise such Annual Budget and resubmit the same
to the Administrative Agent (such procedure to be repeated until such time as
the Administrative Agent shall approve such Annual Budget).  Each such Annual Budget submitted to and (to
the extent that such approval is required hereunder) approved by the
Administrative Agent in accordance with terms hereof, as well as the budget for
the current calendar year approved by the Administrative Agent on the Closing
Date, shall hereinafter be referred to as an “Approved Annual Budget”.  Until such time that the Administrative Agent
has approved a proposed Annual Budget for which its

 

80

 

approval is required hereunder, the most recently Approved Annual
Budget shall apply for purposes of this Section 8.16; provided
that such Approved Annual Budget shall be adjusted to reflect actual increases
in real estate taxes, insurance premiums, utilities expenses and other fixed
costs and shall otherwise be adjusted to reflect any change during the
preceding year in the Consumer Price Index. 
Notwithstanding the foregoing, the Administrative Agent and the Lenders
acknowledge that the Borrower is not required to operate under the terms of an
Approved Annual Budget during any period other than a Low DSCR Trigger Period.

 

(b)                                 During
any Low DSCR Trigger Period, the Borrower may at any time propose an amendment
to an Approved Annual Budget for any Project for the remainder of the calendar
year in which such Low DSCR Trigger Period has occurred, and, when approved as
provided below, such amended Approved Annual Budget for such Project shall be
deemed to be and shall be effective as the Approved Annual Budget for such
Project for such calendar year.  Prior to
making any expenditures not reflected in any current Approved Annual Budget in
excess of ten percent (10%) of the budgeted amount therefor, the Borrower shall
propose an amendment to such Approved Annual Budget to the Administrative Agent
for its approval in accordance with the standards for the granting or
withholding of consent to Annual Budgets set forth in Section 8.16(a).  The Administrative Agent shall have fifteen
(15) Business Days after receipt of any proposed amendment to such Approved
Annual Budget to approve or disapprove such proposed amendment.

 

8.17                        Operating
Expenses.  The Borrower shall pay all
known costs and expenses of operating, maintaining, leasing and otherwise
owning the Projects on a current basis and before same become delinquent
(subject however to the other provisions of this Agreement and the other Loan
Documents), including all interest, principal (when due) and other sums
required to be paid under this Agreement, the other Loan Documents and the
Hedge Agreement, before utilizing any revenues derived or to be derived from or
in respect of the Projects for any other purpose, including distributions or
other payments to the Borrower’s Member.

 

8.18                        Margin
Regulations.  No part of the proceeds
of the Loans will be used for the purpose of purchasing or acquiring any “margin
stock” within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation T, U, X or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements.

 

8.19                        Hedge
Agreements.

 

(a)                                 The
Borrower shall obtain, or cause to be obtained by an Other Swap Pledgor, no
later than thirty (30) days after the Closing Date and will at all times
thereafter maintain, or cause to be maintained by an Other Swap Pledgor, in
full force and effect one or more Hedge Agreements in the aggregate notional
amount equal to one hundred percent (100%) of the Outstanding Principal Amount
of the Loans from time to time (the “Aggregate Notional Amount”) approved
by the Administrative Agent in its reasonable discretion with (i) Eurohypo
or its Affiliates or (ii) one or more other banks or insurance companies
as counterparties (each a “Third-Party Counterparty”), which is
effective to cause the All-in-Rate as to the Aggregate Notional Amount
commencing no later than the date that is thirty (30) days after the Closing
Date (or, if such day is not a Business Day, the first Business Day thereafter)
to be not in excess

 

81

 

of eight percent (8.0%) per annum through the Hedging Termination
Date.  Upon the Closing Date, the
Borrower shall deliver, or cause to be delivered by an Other Swap Pledgor, a
Hedge Agreement Pledge, substantially in the form of Exhibit G-1
attached hereto, together with, within thirty (30) days after the Closing Date,
the applicable bid package, confirmation and other documentation for such Hedge
Agreement (including, without limitation, a certificate from an Authorized
Officer of the Borrower certifying that a Hedge Agreement has been entered into
on the terms set forth in the confirmation) as may be reasonably acceptable to
the Administrative Agent evidencing compliance with the Borrower’s obligations
under the provisions of this Section 8.19, and within ten (10) days
after the delivery of each such Hedge Agreement (or within the thirty (30) day
period referred to above)  shall deliver
the applicable counterparty acknowledgment. 
Any Hedge Agreement shall require monthly fixed rate and floating rate
payments and be based on a LIBO Rate of interest having, at the Borrower’s
option, successive Interest Periods (an “Interest Rate Hedge Period”) of
one, two, three, six or twelve months or such other Interest Periods
satisfactory to the Administrative Agent in its reasonable discretion.  Notwithstanding anything to the contrary
contained in this Section 8.19, the Borrower or any Other Swap
Pledgor shall be entitled to enter into one or more Hedge Agreements in excess
of the Aggregate Notional Amount, up to the total amount of the Commitments or
providing interest rate protection for periods that extend beyond the Hedging
Termination Date (each such agreement, but only to the extent that it, after
giving effect to all other Hedge Agreements maintained pursuant to this Section 8.19(a),
relates to a notional amount in excess of the Aggregate Notional Amount or
provides interest rate protection for periods that extend beyond the Hedging
Termination Date, is referred to herein as an “Excess Hedge Agreement”)
on terms acceptable to the Borrower or such Other Swap Pledgor; provided,
however, that Borrower shall deliver, or cause to be delivered by an
Other Swap Pledgor, upon the Administrative Agent’s request in accordance with
the time requirements set forth in this Section 8.19(a), a Hedge
Agreement Pledge with respect to each Excess Hedge Agreement, substantially in
the form of Exhibit G-2 attached hereto, together with the
counterparty’s acknowledgment and other instruments provided to be delivered
thereunder.

 

(b)                                 The
Borrower’s obligations under any Hedge Agreement shall not be secured by the
Deeds of Trust and shall not be secured by any Lien on or in all or any portion
of the collateral under the Security Documents, any direct or indirect interest
in the Borrower or any other Property (other than as permitted pursuant to Section 9.02(i)).

 

(c)                                  Any
Hedge Agreement with a Third-Party Counterparty is herein called a “Third-Party
Hedge Agreement.”  With respect to each
Third-Party Hedge Agreement maintained with respect to the Aggregate Notional
Amount and each Excess Hedge Agreement pledged to the Administrative Agent
pursuant to Section 8.19(a):  (i) the Third-Party Counterparty
providing such Third-Party Hedge Agreement must have a long term credit rating
no lower than “A” from S&P or “A2” from Moody’s at the time of entry into
such Third-Party Hedge Agreement; provided, however, if there is
a difference in the then current S&P rating and the Moody’s rating, the
lesser rating shall be applicable; (ii) the form and substance thereof must
be satisfactory to the Administrative Agent in its reasonable discretion and in
all respects and (iii) each counterparty thereunder shall have delivered
to the Administrative Agent a counterparty’s acknowledgment in the form
attached to the Hedge Agreement Pledge applicable thereto (or in such other
form as may be acceptable to the Administrative Agent in its reasonable
discretion).

 

82

 

(d)                                 Reserved.

 

(e)                                  If
the Borrower fails for any reason or cause whatsoever to secure and maintain,
or cause to be secured and maintained by an Other Swap Pledgor, a Hedge
Agreement with respect to the Aggregate Notional Amount as and when required to
do so hereunder, such failure shall constitute an Event of Default and the
Administrative Agent shall be entitled to exercise all rights and remedies
available to it under this Agreement (for the benefit of the Lenders) and the
other Loan Documents or otherwise, including the right (but not the obligation)
of the Administrative Agent to secure or otherwise enter into one or more Hedge
Agreements with respect to the Aggregate Notional Amount with a Lender for and
on behalf of the Borrower without such action constituting a cure of such Event
of Default and without waiving the Administrative Agent’s or the Lenders’
rights arising out of or in connection with such Event of Default.  If the Administrative Agent shall enter into
a Hedge Agreement with a Lender in accordance with its right to do so pursuant
to this subsection (e), then (i) the terms and provisions of
any such Hedge Agreement, including the term thereof, shall be determined by
the Administrative Agent in its sole discretion (except that the maximum
notional amount of all such Hedge Agreements shall not exceed the Aggregate
Notional Amount) and (ii) the Borrower shall pay all of the Administrative
Agent’s costs and expenses in connection therewith, including any fees charged
by the applicable counterparty, attorneys’ fees and disbursements, and the cost
of additional title insurance in an amount determined by the Administrative
Agent to be necessary to protect the Administrative Agent and the Lenders from
potential funding losses under any Hedge Agreement provided by a Lender.

 

(f)                                   Reserved.

 

(g)                                  If
the Borrower or Other Swap Pledgor is entitled to receive a payment upon the
termination of any Hedge Agreement required by this Section 8.19,
or, while any Event of Default exists, under any Excess Hedge Agreement pledged
to the Administrative Agent pursuant to Section 8.19(a) (it
being understood that any termination payment paid with respect to any Excess
Hedge Agreement shall be delivered to the Borrower or Other Swap Pledgor at any
time while an Event of Default does not exist) such payment shall be delivered
to the Administrative Agent and applied by the Administrative Agent to any
amounts due to the Administrative Agent or the Lenders under the Loan Documents
evidencing the Loans (it being understood that any such payment applied to the principal
of the Loans shall be deemed a prepayment of such principal, and shall be
accompanied by any applicable prepayment premium resulting from such
prepayment, or such termination payment shall be applied in part to pay such
principal and in part to pay such prepayment premium) in such order and
priority as the Administrative Agent shall determine in its sole
discretion.  Notwithstanding the
foregoing, if (i) at any time upon or following any principal prepayment made
pursuant to Section 2.06 the Outstanding Principal Amount is
reduced and the Borrower or Other Swap Pledgor elects at its option to
terminate or partially to terminate, or to reduce the notional amount of, any
Hedge Agreement (or is required under the terms of such Hedge Agreement to do
so) in a notional amount (in either such case) not exceeding, respectively, the
amount by which the aggregate notional amount in effect under the Hedge
Agreements then maintained pursuant hereto (other than Excess Hedge Agreements
unless pledged pursuant to the Hedge Agreement Pledge substantially in the form
of Exhibit G-1 attached hereto) exceeds the Aggregate Notional Amount
then required to be hedged pursuant hereto or (ii) the Borrower or Other
Swap Pledgor

 

83

 

elects, in full compliance with the terms of each Hedge Agreement
Pledge, to deliver to the Administrative Agent, in substitution for a Hedge
Agreement, a substitute Hedge Agreement, then the Borrower or Other Swap
Pledgor shall have the right to do so, and if the Borrower or Other Swap
Pledgor is entitled (in the case of either (i) or (ii) above) to
receive a termination payment from the counterparty in connection therewith, then,
provided that no Event of Default then exists, the Borrower or Other Swap
Pledgor shall have the right to receive and retain such termination payment
free and clear of the Lien of the Hedge Agreement Pledge, provided, that, after
giving effect to any such termination or substitution, the Borrower remains in
compliance with its obligations under Section 8.19(a) with
respect to the maintenance of Hedge Agreements with respect to the Aggregate
Notional Amount then required to be hedged pursuant hereto and has complied (or
caused the Other Swap Pledgor to comply) with the applicable conditions
precedent set forth in Section 6(e) of the Hedge Agreement Pledge
and the certification obligations with respect thereto set forth in the
applicable Hedge Agreement Pledge and the Acknowledgment of Security Interest
delivered pursuant thereto.  The Borrower
or Other Swap Pledgor shall have the right to terminate, reduce the notional
amount of or modify any Excess Hedge Agreement and to receive any payments from
the counterparty thereunder resulting therefrom, provided that if an Event of
Default exists and such Excess Hedge Agreement has been pledged to the
Administrative Agent, then the rights and obligations of the Borrower (or Other
Swap Pledgor) and the Administrative Agent with respect thereto shall be the
same as their respective rights and obligations with respect to Hedge
Agreements maintained with respect to the Aggregate Notional Amount.

 

(h)                                 Upon
securing any Hedge Agreement required under this Section 8.19, or
any Excess Hedge Agreement pledged to the Administrative Agent pursuant to Section 8.19(a) the
Borrower agrees that the economic and other benefits of such Hedge Agreement
and all of the other rights of the Borrower or Other Swap Pledgor thereunder
shall be collaterally assigned to the Administrative Agent as additional
security for the Loans for the ratable benefit of the Lenders, pursuant to a
Hedge Agreement Pledge.  All Hedge
Agreement Pledges shall be accompanied by (i) Uniform Commercial Code
financing statements, in duplicate, with respect to such pledges and (ii) within
ten (10) days after delivery of the applicable Hedge Agreement Pledge (or
within such longer period as provided in Section 8.19(a) above),
a counterparty’s acknowledgment in the form attached to the Hedge Agreement
Pledge applicable thereto (or in such other form as may be acceptable to the
Administrative Agent in its reasonable discretion) from each counterparty under
each Hedge Agreement.

 

(i)                                     Notwithstanding
the provisions of Section 8.19(a), following the delivery of any
notice of full or partial prepayment delivered by the Borrower pursuant to Section 2.06(a) or
any notice of a proposed release of a Project pursuant to Section 2.06(c),
Borrower’s obligation to maintain, or cause to be maintained, any Hedge
Agreement required under Section 8.19(a) shall be suspended with respect to the
full Aggregate Notional Amount (in the case of a notice of full prepayment) or
the portion of the Aggregate Notional Amount equal to the amount to be prepaid in
the case of a partial prepayment or pursuant to Section 2.09(a)(ii) in
connection with the release of a Project (in the case of a notice of partial
prepayment or notice of the release of a Project), and Borrower or the
Other Swap Pledgor may terminate or reduce the notional amount of any Hedge
Agreement theretofore entered into with respect to such suspended portion of the Aggregate
Notional Amount; provided, however, that if such notice of prepayment or
release is subsequently revoked, or if such prepayment or release does not
occur on or prior to

 

84

 

the date identified in such notice of prepayment or release (as such
date may be postponed in accordance with the provisions of this Agreement),
then the suspension of such obligation shall terminate, and Borrower shall be obligated
to enter into and thereafter maintain, or to cause an Other Swap Pledgor to
enter into and thereafter maintain, one or more Hedge Agreements in full
compliance with Section 8.19(a) by not later than the end of a
cumulative period during which the Hedge Agreements otherwise required under Section 8.19(a) are
not being maintained (with respect to all such notices of prepayment or release
in the aggregate) which shall not exceed (60) days in the aggregate.

 

(j)                                    If
any Hedge Agreement delivered by the Borrower or Other Swap Pledgor to the
Administrative Agent shall, by its terms, expire during any period in which
Borrower remains obligated to maintain a Hedge Agreement in effect pursuant to Section 8.19(a),
and as a result thereof the Borrower would not be in compliance with its
obligations under Section 8.19(a) with respect to the
maintenance of Hedge Agreements covering the Aggregate Notional Amount, then,
subject to the provisions of Section 8.19(i), the Borrower shall
deliver, or cause an Other Swap Pledgor to deliver, to the Administrative Agent
a replacement Hedge Agreement at least ten (10) Business Days prior to the
expiration date of the then current Hedge Agreement (so as to remain in
compliance with its obligations under Section 8.19(a) with respect
to the maintenance of Hedge Agreements) which replacement Hedge Agreement shall
be acceptable to the Administrative Agent in its reasonable discretion and
otherwise satisfy the requirements of this Section 8.19.

 

8.20                        Reserved.

 

8.21                        Required
Work.  The Borrower shall cause the
work described on Schedule 8.21 attached hereto to be completed on
or before the applicable dates set forth on said schedule.  Such work shall be completed in a good and
workmanlike manner, lien-free and in accordance with all Applicable Laws.  The Administrative Agent shall have the right
to inspect such work and the reasonable costs of such inspection shall be paid
by the Borrower.  In addition, the
Borrower acknowledges receipt of the Environmental Reports and the Property Condition
Reports and agrees to address in its prudent business judgment the
recommendations contained in such reports.

 

ARTICLE IX

 

NEGATIVE COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees that, until the
payment in full of the Obligations, it will not do or permit, directly or
indirectly, any of the following:

 

9.01                        Fundamental
Change.

 

(a)                                 Mergers;
Consolidations; Disposal of Assets.  Except
as expressly provided for in Section 14.31, none of the Borrower
Parties will merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or sell, transfer, lease
(other than tenant leases pursuant to and in accordance with Sections 8.13
and 9.09 of this Agreement) or otherwise dispose of (in one transaction
or in a series of transactions) any

 

85

 

substantial part of its Properties and assets whether now owned or
hereafter acquired (but excluding any Transfer permitted by Section 9.03
(including, without limitation, any sale or disposition of any Excluded
Projects) or any sale or disposition of Projects subject to and in accordance
with Section 2.09 of this Agreement or of obsolete or excess
furniture, fixture and equipment in the ordinary course of business if same is
unnecessary or is replaced with furniture, fixtures and equipment of equal or
greater value and utility), or wind up, liquidate or dissolve, or enter into
any agreement to do any of the foregoing.

 

(b)                                 Organizational
Documents.  Without the prior written
consent of the Administrative Agent, the Borrower will not, and will not permit
any of the other Borrower Parties to, make any Modification of the terms or
provisions of its Organizational Documents, except: (i) Modifications
necessary to clarify existing
provisions of such Organizational Documents, (ii) Modifications which
would have no adverse, substantive effect on the rights or interests of the
Lenders in conjunction with the Loans or under the Loan Documents, (iii) Modifications
necessary to effectuate Transfers to the extent expressly permitted in this
Agreement; or (iv) Modifications of the Organizational Documents for
Borrower Parties other than the Borrower which are necessary to effectuate the
Permitted Reorganization.

 

9.02                        Limitation
on Liens.  None of the Borrower, the
Borrower’s Member nor any of their respective Subsidiaries shall create, incur,
assume or suffer to exist any Lien upon or with respect to any of its Property,
now owned or hereafter acquired; provided, however, that the
following shall be permitted Liens except (in the case of any Lien described in
clauses (d), (f) or (g) below) to the extent
that they would encumber any interest in any Project, any other asset which is
collateral for the Loans or any interest in Borrower:

 

(a)                                 the
Liens created by the Loan Documents; any Permitted Title Exceptions affecting
the Projects; any Permitted Liens; and any Lien for the performance of work or
the supply of materials affecting any Property (unless, in the case of any such
Lien affecting any Project, the Borrower or the Borrower’s Member fails to
discharge such Lien by payment or bonding (in accordance with statutory bonding
requirements the effect of which is to release such Lien from the affected
Project and to limit the Lien claimant’s rights to a recovery on the bond) on
or prior to the date that is the earlier of (i) thirty (30) days after the
date of filing of such lien against such Project and (ii) the date on
which the Project (or the Borrower’s interest therein) is in danger of being
sold, forfeited, terminated, canceled or lost);

 

(b)                                 Liens
for taxes or assessments or other government charges or levies if not yet
delinquent or if they are being contested in good faith by appropriate
proceedings in accordance with Sections 8.04(b) and/or 8.06(b),
if applicable;

 

(c)                                  Liens
imposed by law, such as mechanic’s, materialmen’s, landlord’s, warehousemen’s
and carrier’s Liens, and other similar Liens securing obligations incurred in
the Borrower’s or the Borrower’s Member’s or their respective Subsidiary’s ordinary
course of business which, in the case of the Projects, are not past due for
more than thirty (30) days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been established;

 

86

 

(d)                                 Liens
or pledges to secure the performance of bids, tenders, contracts (other than
contracts for the payment of money), leases, public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of the Borrower’s or the
Borrower’s Member’s or their respective Subsidiary’s business;

 

(e)                                  Judgment
and other similar Liens (which shall be subordinate to the Liens of the Deeds
of Trust, in the case of any such Lien encumbering any Project or the Borrower’s
interest therein) in an aggregate amount not in excess of $1,000,000 arising in
connection with court proceedings, but only if the execution or other enforcement
of such Liens is effectively stayed (or bonded over through the posting of a
bond in accordance with a statutory bonding procedure the effect of which is to
release such Lien from any Property of the Borrower or the Borrower’s Member and
to limit the Lien claimant’s rights to recovery under the bond) and the claims
secured thereby are being actively contested in good faith by appropriate
proceedings and for which appropriate reserves have been established;

 

(f)                                   Easements,
rights-of-way, restrictions and other similar non-monetary encumbrances
encumbering assets other than the Projects or any other collateral for the
Loans;

 

(g)                                  Liens
on any of the Qualified Real Estate Interests (it being understood that the
Liens permitted under this Section 9.02(g) shall also include
Liens encumbering interests in accounts, rents, leases, management and other
contracts, personal property and other items related to the applicable
Qualified Real Estate Interest and Liens on Swap Agreements entered into in
connection therewith), but only to the extent created to secure Indebtedness
incurred in connection with the acquisition, financing or refinancing thereof,
in compliance with Section 9.04(e) or (g);

 

(h)                                 Liens
consisting of the rights of the lessor to the property covered by any equipment
lease entered into in compliance with Section 9.04(d), provided
that such lien consists solely of such rights with respect to the leased
property;

 

(i)                                     Liens
encumbering cash and other liquid assets (not constituting collateral for the
Loans to the Borrower) in the aggregate
amount not to exceed the sum required to be pledged by the Borrower or
any of its Subsidiaries in order to secure its respective obligations with
respect to the negative value of any Hedge Agreement or Excess Hedge Agreement entered
into by the Borrower or Other Swap Pledgor in compliance with Section 8.19
hereof or the negative value of any Hedge Agreement entered into by the
Borrower or the Borrower’s Member or their respective Subsidiaries in
connection with the Indebtedness permitted by Section 9.04(e), (f) or
(g);

 

(j)                                    Liens
securing the Indebtedness permitted by Section 9.04(e) or (f),
and encumbering the specific Residential Properties or Excluded Projects
financed pursuant to such section or sections (it being understood that
the Liens permitted under this Section 9.02(j) shall also include
Liens encumbering interests in accounts, rents, leases, management and other
contracts, personal property and other items related to the applicable
Residential Properties and/or Excluded Projects and Liens on Swap Agreements
entered into in connection therewith); and

 

87

 

(k)                                 Liens
securing the obligations of Borrower or its Subsidiaries on account of
Guarantees described in Section 9.04(h) provided that such Liens
encumber Excluded Projects (which may include Liens on any interests in
accounts, rents, leases, management and other contracts, personal property and,
other items related thereto) exclusively.

 

9.03                        Due on
Sale; Transfer; Pledge.  Without the
prior written consent of the Administrative Agent and (subject to the last
paragraph of this Section 9.03) the Required Lenders:

 

(a)                                 None
of the Borrower, nor any Borrower Party, nor any Principal shall (w) directly
or indirectly Transfer any interest in any Project or any part thereof
(including any direct or indirect interest in any partnership, membership or
other ownership interest or other Equity Interest in the Borrower, the Borrower’s
Member or the Borrower’s Manager); (x) directly or indirectly grant any
Lien on any direct or, prior to the Permitted Public REIT Transfer, indirect
interest in any Project or any part thereof (including any direct or, prior to
the Permitted Public REIT Transfer, indirect interest in any partnership,
membership or other ownership interest or other Equity Interest in the Borrower,
the Borrower’s Member or the Borrower’s Manager), whether voluntarily or
involuntarily; (y) except for arrangements which result from the Permitted
Reorganization pursuant to which the Permitted Public REIT or its Operating
Partnership or another Permitted Public REIT Subsidiary thereof shall acquire
such rights or powers, enter into any arrangement granting any direct or
indirect right or power to direct the operations, decisions and affairs of the
Borrower, the Borrower’s Member or the Borrower’s Manager, whether through the
ability to exercise voting power, by contract or otherwise; or (z) except
as described in clause (e) of the definition of “Permitted Liens,” enter
into any easement or other agreement granting rights in or restricting the use
or development of any Project except for easements and other agreements which,
in the reasonable opinion of the Administrative Agent, have no Material Adverse
Effect; provided, however, that, the foregoing restrictions shall
not apply with respect to:

 

(i)                                     any
Transfer of direct or indirect ownership interests in the Borrower’s Member, or
a successor to the Borrower’s Member (other than the ownership interests that
are covered by Section 9.03(a)(ii)), unless (A) in the case of
any such Transfer prior to the Permitted Public REIT Transfer, the acquisition
by any one investor of ownership interests in the Borrower’s Member would
result in the direct or indirect ownership by that investor of more than forty-nine
percent (49%) of the ownership interests in the Borrower’s Member, or successor
to the Borrower’s Member, in which case the consent of the Administrative
Agent, which shall not be unreasonably withheld or delayed, shall be required
or (B) in the case of any such Transfer following the Permitted Public
REIT Transfer, the Permitted Public
REIT, following such Transfer, shall not directly or indirectly own fifty-one
percent (51%) or more of the ownership interests in the Borrower or shall not
directly or indirectly control the Borrower, or a Change in Control shall
result from such Transfer;

 

(ii)                                  the
Transfer of direct or indirect ownership interests in, or the admission or
withdrawal of any partner, member or shareholder to or from, the Borrower’s
Manager (or any replacement manager referred to in Section 9.03(b) or
any general partner, manager or managing member of any successor to the
Borrower or the

 

88

 

Borrower’s Member referred
to in Section 9.03(a)(iii)), so long as, after such Transfer,
admission or withdrawal, the provisions of Section 9.03(c) are
not violated;

 

(iii)                               the
conveyance of all of the Projects to a Qualified Successor Entity which assumes
all of the obligations of the Borrower under the Loan Documents in form and
substance satisfactory to the Administrative Agent and in recordable form; provided,
however, that such Qualified Successor Entity and the general partner,
manager or managing member of such Qualified Successor Entity, after giving
effect to such Transfer, is in compliance with all of the covenants of the
Borrower or applicable to the Borrower’s Member, the Borrower’s Manager or any
Borrower Party (as applicable) contained in the Loan Documents except as
otherwise provided in the definition of “Borrower’s Member” or “Borrower’s
Manager” (with all references herein to “Borrower” to mean such Qualified
Successor Entity, all references herein to the “Borrower’s Member” to mean (except
as otherwise provided in the definition of “Borrower’s Member”) the controlling
entity for such Qualified Successor Entity, and all references herein to “Borrower’s
Manager” to mean (except as otherwise provided in the definition of “Borrower’s
Manager”) any general partner, manager or managing member of the Qualified
Successor Entity; no Default or Event of Default is then existing or would
result therefrom; and upon the transfer of the Projects to such Qualified
Successor Entity, such Qualified Successor Entity, its controlling entity and
the general partner, manager or managing member of such Qualified Successor
Entity are in compliance in all material respects with all of the
representations and warranties of the Borrower or applicable to the Borrower’s
Member or the Borrower’s Manager (whether directly or as a Borrower Party) (as
applicable) contained herein and in the other Loan Documents (after giving
effect to the modifications reflecting the identity of the transferee resulting
from such transfer) except as otherwise provided in the definition of “Borrower’s
Member” or “Borrower’s Manager” (with all references herein to “Borrower” to
mean such Qualified Successor Entity, all references herein to the “Borrower’s
Member” to mean (except as otherwise provided in the definition of “Borrower’s
Member”) the controlling entity for such Qualified Successor Entity, and all
references herein to “Borrower’s Manager” to mean (except as otherwise provided
in the definition of “Borrower’s Manager”) any general partner, manager or
managing member of the Qualified Successor Entity); and provided, further,
that from and after such Transfer, in the case of a Transfer to a Qualified
Successor Entity consisting of a Permitted Public REIT Subsidiary, the
Properties may be managed by the Permitted Public REIT or any property
management company owned or controlled directly or indirectly by the Permitted
Public REIT.  Prior to such Transfer, the
Administrative Agent shall have received and approved (which approval shall not
be unreasonably withheld) the Organizational Documents of such Qualified
Successor Entity and the general partner, manager or managing member of such
Qualified Successor Entity (except
that, in the case of a Qualified Successor Entity which is a Permitted Public
REIT Subsidiary of the Permitted Public REIT, there shall be no approval rights
over the Organizational Documents of such general partner, manager or managing
member if it is the Permitted Public REIT or the Operating Partnership of the
Permitted Public REIT), together with such financial information
relating to such Qualified Successor Entity as the Administrative Agent may
reasonably request, and concurrently with such Transfer, the Administrative
Agent shall have received such endorsements to the Title Policies

 

89

 

insuring ownership of the
Projects by such Qualified Successor Entity and the continued priority of the
Liens of the Deeds of Trust after giving effect to the delivery by such entity
of the assumption agreement referred to above (subject only to Permitted Title
Exceptions), in form and substance satisfactory to the Administrative Agent,
and such confirmation as the Administrative Agent may require that the Hedge
Agreements required under Section 8.19(a) remain in full force
and effect, in compliance with Section 8.19 hereof, as to the Loans
as assumed by such Qualified Successor Entity. 
In connection with any such Transfer, the assumption agreement to be
entered into by the Borrower and the Qualified Successor Entity (and such other
parties deemed appropriate by the Administrative Agent) shall include such
modifications to this Agreement and the other Loan Documents as the
Administrative Agent may reasonably require, including, without limitation,
such modifications to the covenants and other provisions that are contained
herein and that relate to the Borrower, Borrower’s Member or Borrower’s Manager,
as shall be deemed necessary by the Administrative Agent to allocate to the
Qualified Successor Entity, its controlling entity, and its general partner or
manager responsibility for the performance of the covenants of, and
satisfaction of the other provisions set forth herein that relate to, the
Borrower, Borrower’s Member or Borrower’s Manager, and of such limited indemnity
agreements and guaranties as shall be deemed necessary by the Administrative
Agent to obtain recourse liability from the general partner or manager of the
Qualified Successor Entity as shall be consistent with the obligations of the
Guarantor under the Guarantor Documents immediately upon the Closing Date.  Upon
compliance with the foregoing requirements in connection with such Transfer,
the original Borrower and the original Guarantor, in their capacities as such,
shall be released from their respective obligations under the Loan Documents
arising from and after such Transfer, but such release shall not limit the
obligations of such parties to comply with any requirements applicable to them (if
any) in other capacities (including, without limitation, in capacities such as
the general partner, managing member, manager or controlling entity for such
Qualified Successor Entity).  As
used herein, “Qualified Successor Entity” shall mean either (I) so long as
the provisions of Section 9.03(c) are not violated, an entity
(other than a REIT, its Operating Partnership or any Subsidiary of such REIT),
majority-owned, directly or indirectly, by (A) the Borrower and/or (B) the
Borrower’s Member and/or (C) at least two (2) of the Named Principals,
so long as at least one of the Named Principals is either Dan A. Emmett or
Jordan L. Kaplan, and provided that in the case of this clause (I)(C) the
general partner, managing member or manager of such Qualified Successor Entity
must be controlled, directly or indirectly, by such Named Principals, (II) a Permitted
Public REIT Subsidiary of the Permitted Public REIT (other than such Permitted
Public REIT’s Operating Partnership), or (III) a Permitted Private REIT Subsidiary
of a private REIT, provided that at least two (2) of the Named Principals
are senior officers of such private REIT and own, directly or indirectly, not
less than one percent (1%) of the beneficial interest in such private REIT, and
at least one of the Named Principals is either Dan A. Emmett or Jordan L. Kaplan;
such private REIT has an institutional character substantially the same as the
institutional character of the Borrower as of the date hereof; and all of the
investors in such private REIT are “accredited investors” within the meaning of
Regulation D promulgated under the Securities Act of 1933 (such private REIT is
referred to as a “Permitted Private REIT”); and, provided further, however, that in the case of clauses (I),

 

90

 

(II)
and (III) above, such Qualified Successor Entity shall, from the date of its
formation, have been in compliance with the provisions of Sections 9.02,
9.04 and 9.05 hereof as if each reference therein to “Borrower”
were to mean and refer to such Qualified Successor Entity;

 

(iv)                              entering
into Approved Leases or the granting of Liens expressly permitted by the Loan
Documents;

 

(v)                                 any
Transfers of direct or indirect Equity Interests in the Borrower or any of the
Borrower Parties to the Permitted Public REIT, its Operating Partnership or any
Permitted Public REIT Subsidiary in connection with a Permitted Public REIT
Transfer;

 

(vi)                              any
Transfers constituting part of the Permitted Reorganization which are permitted
under Section 14.31;

 

(vii)                           any
Transfers expressly permitted by the Loan Documents; and

 

(viii)                        following
the Permitted Public REIT Transfer, any of the following so long as no Change
of Control shall result therefrom:  (A) any Transfer or issuance (whether through public offerings,
private placements or other means) of shares or Equity Interests in the
Permitted Public REIT or its Operating Partnership; (B) any  conversion, into securities of the Permitted
Public REIT, of partnership units or other Equity Interests of the Operating
Partnership of the Permitted Public REIT; (C) any issuance or Transfer of
any Equity Interests in any Permitted Public REIT Subsidiary owning any direct
or indirect Equity Interests in any Borrower Party, so long as following such
issuance or Transfer the Permitted Public REIT shall directly or indirectly own
fifty-one percent (51%) or more of the ownership interests in the Borrower and
shall directly or indirectly control the Borrower; and/or (C) any merger,
consolidation, dissolution, liquidation, reorganization, sale, lease or other
transaction involving any Person other than the Borrower so long as the
Permitted Public REIT (or, as applicable, a Permitted Public REIT Subsidiary)
is the surviving entity and the Permitted Public REIT thereafter directly or
indirectly owns fifty-one percent (51%) or more of the ownership interests in
the Borrower and directly or indirectly controls the Borrower.  As used herein, “control” (including, with
its correlative meanings, “controlled by” and “under common control with”)
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise) of such Person.

 

(b)                                 Prior
to a Permitted Public REIT Transfer, except for Transfers constituting part of the
Permitted Reorganization which are permitted under Section 14.31, no
new general partner, manager or managing member that is not owned and
controlled, directly or indirectly, by at least two (2) of the Named
Principals shall be admitted to or created in the Borrower or the Borrower’s
Member (nor shall the Borrower’s Manager withdraw or be replaced as the
Borrower’s sole manager or the Borrower’s Manager withdraw or be replaced as
the Borrower’s Member’s general partner) unless the new or replacement general
partner, manager or managing member is owned and controlled, directly or indirectly,
by at least two (2) Named

 

91

 

Principals and the general partners or managers owned and controlled,
directly or indirectly, by at least two (2) of the Named Principals own,
directly or indirectly, not less than one percent (1%) of the beneficial
interest in the Borrower’s Member following such admission or replacement and,
without the prior written consent of the Administrative Agent, no other change
in the Borrower’s or the Borrower’s Member’s Organizational Documents (except
as permitted in Section 9.01(b)) shall be effected in connection
with such replacement;

 

(c)                                  Except
for Transfers constituting part of the Permitted Reorganization which are
permitted under Section 14.31, prior to a Permitted Public REIT
Transfer, no Transfer shall be permitted which would cause the Borrower’s
Manager or any replacement general partner, manager or managing member referred
to in Section 9.03(b) (or any general partner, manager or
managing member of any Qualified Successor Entity unless the Borrower is,
itself, such manager or managing member) (i) to own, directly or
indirectly, less than one percent (1%) of the beneficial interest in the
Borrower, the Borrower’s Member or such successor to the Borrower or the
Borrower’s Member or (ii) to cease to be “controlled” directly or
indirectly by at least two (2) of the Named Principals (at least one of
which shall be Dan A. Emmett or Jordan L. Kaplan in the case of a Qualified
Successor Entity referred to in clause (I)(A) of the definition of
the term “Qualified Successor Entity”); and

 

(d)                                 As
used in Sections 9.03(a)(iii), (b) and (c) above,
“control” (including, with its correlative meanings, “controlled by” and “under
common control with”) shall mean possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise) of such Person.

 

Notwithstanding the
foregoing provisions of this Section 9.03, any Transfer of a direct
or indirect ownership interest in the Borrower, the Borrower’s Member, the Borrower’s
Manager or any Qualified Successor Entity or any general partner, manager or
managing member of any Qualified Successor Entity shall be further subject to
the requirement that, after giving effect to such Transfer, the Borrower, the
Borrower’s Member, the Borrower’s Manager, any Qualified Successor Entity and
its controlling entity and general partner or manager shall be in compliance
with all applicable laws applicable to such Persons and relating to such
Transfer, including the USA Patriot Act and regulations issued pursuant thereto
and “know your customer” laws, rules, regulations and orders.  In addition, any such Transfer (except for the
Permitted Public REIT Transfer, any Transfer of publicly-traded stocks in the
Permitted Public REIT or any Transfers following a Permitted Public REIT
Transfer that are permitted by Section 9.03(a)(viii)) shall be
further subject to (w) the Borrower providing prior written notice to
Administrative Agent of any such Transfer, (x) no Default or Event of Default then
existing, (y) the proposed transferee being a corporation, partnership, limited
liability company, joint venture, joint-stock company, trust or individual
approved in writing by each Lender subject to a Limiting Regulation in its
discretion, and (z) payment to the Administrative Agent on behalf of the
Lenders of all reasonable costs and expenses incurred by the Administrative
Agent or any Lenders in connection with such Transfer.  Each Lender at the time subject to a Limiting
Regulation shall, within ten (10) Business Days after receiving the
Borrower’s notice of a proposed Transfer subject to this Section 9.03,
furnish to the Borrower a certificate (which shall be conclusive absent
manifest error) stating that it is subject to a Limiting Regulation, whereupon
such Lender shall have the approval right contained in clause (y) above.  Each Lender which fails to furnish such a
certificate to the Borrower during

 

92

 

such ten (10) Business
Day period shall be automatically and conclusively deemed not to be subject to
a Limiting Regulation with respect to such Transfer.  If any Lender subject to a Limiting
Regulation fails to approve a proposed transferee under clause (y) above (any
such Lender being herein called a “Rejecting Lender”),
the Borrower, upon three (3) Business Days’ notice, may (A) notwithstanding
the terms of Sections 2.06, prepay such Rejecting Lender’s
outstanding Loans or (B) require that such Rejecting Lender transfer all
of its right, title and interest under this Agreement and such Rejecting Lender’s
Note to any Eligible Assignee or Proposed Lender selected by the Borrower that
is reasonably satisfactory to the Administrative Agent if such Eligible Lender
or Proposed Lender (x) agrees to assume all of the obligations of such
Rejecting Lender hereunder, and to purchase all of such Rejecting Lender’s
Loans hereunder for consideration equal to the aggregate outstanding principal
amount of such Rejecting Lender’s Loans, together with interest thereon to the
date of such purchase (to the extent not paid by the Borrower), and
satisfactory arrangements are made for payment to such Rejecting Lender of all
other amounts accrued and payable hereunder to such Rejecting Lender as of the
date of such transfer (including any fees accrued hereunder and any amounts
that would be payable under Section 2.06 as if all such Rejecting
Lender’s Loans were prepaid in full on such date) and (y) approves the proposed
transferee.  Subject to the provisions of
Section 14.07 such Eligible Assignee or Proposed Lender shall be a “Lender”
for all purposes hereunder.  Without
prejudice to the survival of any other agreement of the Borrower hereunder, the
agreements of the Borrower contained in Section 5.05 shall survive
for the benefit of such Rejecting Lender with respect to the time period prior
to such replacement.

 

9.04                        Indebtedness.  None of the Borrower, the Borrower’s Member
nor any of their respective Subsidiaries shall create, incur, assume, suffer to
exist, or otherwise become or remain directly or indirectly liable with respect
to, any Indebtedness or enter into any equipment leases (whether or not
constituting Indebtedness), except for the following:

 

(a)                                 Indebtedness
Under the Loan Documents. 
Indebtedness of such Borrower Party and its Subsidiaries in favor of the
Administrative Agent and the Lenders pursuant to this Agreement and the other
Loan Documents;

 

(b)                                 Accounts
Payable.  Accounts payable to trade
creditors for goods and services and current operating liabilities (not the
result of the borrowing of money) incurred in the ordinary course of such Borrower
Party’s or Subsidiary’s business in accordance with customary terms and paid
within the specified time, unless contested in good faith by appropriate
actions or proceedings and reserved for in accordance with GAAP, and provided
such trade payables and accrued expenses are not outstanding for more than
sixty (60) days;

 

(c)                                  Contingent
Obligations.  Indebtedness consisting
of (i) endorsements by such Borrower Party or such Subsidiary for
collection or deposit in the ordinary course of business or (ii) unsecured
Swap Agreements entered into by the Borrower, the Borrower’s Member or their
respective Subsidiaries with respect to Indebtedness permitted under Section 9.04
(a), (e), (f) or (g);

 

(d)                                 Indebtedness
for Capital Improvements.  Unsecured
Indebtedness of the such Borrower Party and its Subsidiaries (including
obligations under equipment leases or other personal property used in the
ownership or operation of their respective Properties), in the

 

93

 

aggregate amount during the term of the Loans not to exceed $30,000,000
(inclusive of the portion of the value of the equipment covered by equipment
leases entered into pursuant to this Section 9.04(d) amortized
through the rental payments under such leases) incurred in connection with
capital or tenant improvements to (or other tenant concessions made in
connection with) such Borrower Party’s and such Subsidiaries’ Properties
(including, without limitation, the Projects and the Residential Properties) or
the acquisition of equipment or other assets for the benefit of such Borrower
Party’s and such Subsidiaries’ Properties (including, without limitation, the
Projects and the Residential Properties), and that is not used for the purposes
of making Restricted Payments.  Not more
than Two Million Dollars ($2,000,000) of the foregoing $30,000,000 maximum may
be incurred in the form of equipment leases (as measured by the value of the
equipment covered by such equipment leases amortized through the rental
payments under such leases); provided that such equipment leases relate
to equipment constituting neither fixtures nor personal property material to
the operation, maintenance or management of any of the Projects; and

 

(e)                                  Additional
Indebtedness of Borrower Parties and Wholly-Owned Subsidiaries.  Indebtedness of the Borrower, the Borrower’s
Member or their wholly-owned Subsidiaries for borrowed money incurred in
connection with the acquisition, financing or  refinancing of one or more of the Excluded
Projects, but only if such Indebtedness satisfies the following requirements:

 

(i)                                     the
obligation to repay such Indebtedness is non-recourse to the Borrower, the
Borrower’s Member, the Bankruptcy Parties and the Named Principals (except for “carve-outs”
(or Guarantees guarantying the debtor’s liability with respect to “carve-outs”)
for fraud, misrepresentation, misappropriation and other exceptions-from-non-recourse
customary in the real estate finance industry and not materially more favorable
to such lender than the exceptions-from-non-recourse set forth in the second
sentence of Sections 14.23(a));

 

(ii)                                  such
Indebtedness is secured solely by Liens on the Excluded Projects owned by the Borrower
or one or more of its wholly-owned Subsidiaries (if the Borrower or any such
Subsidiary is the borrower of the Indebtedness secured thereby), or by Liens on
the Excluded Projects owned by the Borrower’s Member or one or more of its
wholly-owned Subsidiaries (other than the Borrower or its wholly-owned
Subsidiaries) (if the Borrower’s Member or any such wholly-owned Subsidiary of
the Borrower’s Member is the borrower of the Indebtedness secured thereby), together
with Liens on any interests in accounts, rents, leases, management and other
contracts, personal property and other items (including, without limitation,
Swap Agreements) related thereto;

 

(iii)                               the
amount of such Indebtedness, when incurred, does not exceed sixty percent (60%)
of the fair market value of the Excluded Projects, as determined by the lender’s
appraisal (or, in the case of financing for the acquisition of Excluded Projects,
sixty percent (60%) of the acquisition cost of the Excluded Projects so
acquired) encumbered as collateral for
such Indebtedness, and, so long as the original Borrower’s Member remains a
member of the Borrower, such Indebtedness complies with the limitations
on indebtedness contained in the limited partnership agreement of the original

 

94

 

Borrower’s Member, as
amended, or has otherwise received the requisite approval of the limited
partners of the original Borrower’s Member, if required; provided that, in the
case of any Excluded Project consisting of a Residential Property, the “sixty
percent (60%)” limitation set forth above in this clause (iii) shall mean “seventy-five
percent (75%)”; and

 

(iv)                              no Major
Default or Event of Default shall have occurred or be continuing immediately
prior to the incurrence of such Indebtedness or would occur after giving effect
thereto.

 

(f)                                   Additional
Indebtedness of Residential Properties. 
Indebtedness for borrowed money incurred in connection with the
financing or refinancing of any residential property that is a Qualified Real
Estate Interest by the Borrower or one or more of its wholly-owned Subsidiaries
(if the Borrower or any such Subsidiary is the borrower of the Indebtedness
secured thereby), or by the Borrower’s Member or one or more of its
wholly-owned Subsidiaries (other than the Borrower or its wholly-owned
Subsidiaries) (if the Borrower’s Member or any such wholly-owned Subsidiary of
the Borrower’s Member is the borrower of the Indebtedness secured thereby), but
only if such Indebtedness satisfies the following requirements:

 

(i)                                     the
obligation to repay such Indebtedness is non-recourse to the Bankruptcy Parties
and the Named Principals (except for “carve-outs” (or Guarantees guarantying
the debtor’s liability with respect to “carve-outs”) for fraud,
misrepresentation, misappropriation and other exceptions-from-non-recourse
customary in the real estate finance industry);

 

(ii)                                  such
Indebtedness is secured solely by Liens on the residential properties so
financed and, if applicable, Liens on other Excluded Projects owned by the
Borrower or one or more of its wholly-owned Subsidiaries (if the Borrower or
any such Subsidiary is the borrower of the Indebtedness secured thereby), or by
Liens on Excluded Projects owned by the Borrower’s Member or one or more of its
wholly-owned Subsidiaries (other than the Borrower or its wholly-owned
Subsidiaries) (if the Borrower’s Member or any such wholly-owned Subsidiary of
the Borrower’s Member is the borrower of the Indebtedness secured thereby), together
with Liens on any interests in accounts, rents, leases, management and other
contracts, personal property and other items (including, without limitation,
Swap Agreements) related thereto;

 

(iii)                               the amount of such
Indebtedness, when incurred, does not exceed seventy-five percent (75%) of the
fair market value of such residential properties, as determined by the lender’s
appraisal, plus sixty percent (60%) of the fair market value, as determined by
the lender’s appraisal, of any Excluded Projects encumbered as security
therefore that are non-residential and seventy-five percent (75%) of the fair
market value, as determined by the lender’s appraisal, of any Excluded Projects
encumbered as security therefore that are residential and, so long as the original Borrower’s Member
remains a member of the Borrower, such Indebtedness complies with the
limitations on indebtedness contained in the limited partnership agreement of
the original Borrower’s Member, as amended, or has otherwise received the
requisite approval of the limited partners of the original Borrower’s Member,
if required; and

 

95

 

(iv)                              no
Major Default or Event of Default shall have occurred or be continuing
immediately prior to the incurrence of such Indebtedness or would occur after
giving effect thereto.

 

(g)                                  Additional
Indebtedness of Qualified Sub-Tier Entities.  Indebtedness of any Qualified Sub-Tier Entity
for borrowed money incurred in connection with the acquisition, financing or
refinancing by such Qualified Sub-Tier Entity of Qualified Real Estate
Interests, but only if the obligation to repay such Indebtedness is
non-recourse to such Qualified Sub-Tier Entity, Bankruptcy Parties, and the
Named Principals (except for “carve-outs” (or Guarantees guarantying the debtor’s
liability with respect to “carve-outs”) for fraud, misrepresentation,
misappropriation and other exceptions-from-nonrecourse customary in the real
estate finance industry and not materially more favorable to the holder of such
Indebtedness than the exceptions from non-recourse set forth in the second
sentence of Sections 14.23(a)) and such Indebtedness otherwise is
in compliance with the requirements set forth in Sections 9.04(e) above
(unless such Qualified Real Estate
Interests consist of residential projects, in which case the applicable
requirements shall be as set forth in Section 9.04(f)).

 

(h)                                 Guarantees of Permitted Public REIT or
Operating Partnership Line of Credit.  Following the Permitted Public
REIT Transfer, Guarantees by the Borrower or its Subsidiaries of one or more
credit facilities provided to the Permitted Public REIT, its Operating
Partnership or another Permitted Public REIT Subsidiary (each, a “Guaranteed
Line of Credit”), which Guarantees, if secured, shall be secured only in
compliance with Section 9.02(k) and shall in no event be secured by
any of the Projects or other Collateral encumbered by the Security Documents;
provided that no Major Default or Event of Default shall exist or be
continuing immediately prior to the incurrence of such Guarantees or would
occur after giving effect thereto.

 

9.05                        Investments.  Neither the Borrower nor the Borrower’s
Member nor any of their respective Subsidiaries will make or permit to remain
outstanding any Investments except (a) operating deposit accounts or money
market accounts with banks, (b) Permitted Investments, (c) Borrower’s
Member’s 100% membership in Borrower, (d) the Projects, (e) the
Excluded Projects (including, without limitation, any of the Residential
Properties (or Borrower’s Member’s Equity Interest in the owner of any of the
Residential Properties) which may hereafter be acquired by the Borrower or any
Subsidiary thereof), (f) Borrower’s or Borrower’s Member’s Equity
Interests in any Subsidiary of Borrower or Borrower’s Member existing on the
Closing Date, (g) Borrower’s Equity Interests in any Qualified Sub-Tier
Entity or any Subsidiary permitted or contemplated by this Agreement, (h) other
investments which are permitted by the respective Organizational Documents of
the Borrower or the Borrower’s Member as in effect on the Closing Date, (i) other
investments required or permitted by the Loan Documents, and (j) other
investments (including, without limitation, investments owned by Subsidiaries)
which are consistent with the investment practices prior to the date hereof of
the Douglas Emmett Realty Funds taken as a whole.

 

9.06                        Restricted
Payments.  Neither the Borrower nor
the Borrower’s Member will make any Restricted Payment at any time during the
existence of a Major Default or Event of Default.

 

96

 

9.07                        Change
of Organization Structure; Location of Principal Office.  The Borrower or any Qualified Successor
Entity that may hereafter acquire title to any of the Projects shall not change
its name or change the location of its chief executive office, state of
formation or organizational structure unless, in each instance, Borrower shall
have (a) given the Administrative Agent at least thirty (30) days’ prior
written notice thereof, and (b) made all filings or recordings, and taken
all other action, reasonably requested by the Administrative Agent that is
reasonably necessary under Applicable Law to protect and continue the priority
of the Liens created by the Security Documents.

 

9.08                        Transactions
with Affiliates.  Except as expressly
permitted by this Agreement, prior to the Permitted Public REIT Transfer, neither
the Borrower nor the Borrower’s Member shall enter into, or be a party to, any
transaction with an Affiliate of the Borrower or Borrower’s Member, except in
full compliance with the Organizational Documents of the Borrower’s Member as
in effect on the Closing Date.  This Section shall
not prohibit any transfer of the Excluded Projects to Affiliates of the
Borrower or Borrower’s Member.

 

9.09                        Leases.

 

(a)                                 Negative
Covenants.  The Borrower shall not (i) accept
from any tenant, nor permit any tenant to pay, Rent for more than one month in
advance except for payment in the nature of security for performance of a
tenant’s obligations, escalations, percentage rents and estimated payments (not
prepaid more than one month prior to the date such estimated payments are due)
of operating expenses, taxes and other pass-throughs paid by tenants pursuant
to their Leases, (ii) Modify (other than ministerial changes), terminate,
or accept surrender of, any Major Lease now existing or hereafter made, without
the prior written consent of the Administrative Agent; notwithstanding the
foregoing, the Borrower shall retain the right to Modify, terminate, or accept
surrender of any Approved Lease that is not a Major Lease; provided that
(A) any such Modification, is (1) consistent with fair market terms
and (2) is entered into pursuant to arm’s-length negotiations with a
tenant not affiliated with the Borrower, and (B) any such termination is (1) in
the ordinary course of business, (2) consistent with good business
practice and (3) in the best interests of the affected Project, (iii) except
for the Deed of Trust, assign, transfer (except for a Transfer thereof together
with the transfer of the Projects to the entity described in Section 9.03(a)(iii) in
full compliance with the provisions of such Section), pledge, subordinate or
mortgage any Lease or any Rent without the prior written consent of the
Administrative Agent and the Required Lenders, (iv) waive or release any
nonperformance of any material covenant of any Major Lease by any tenant
without the Administrative Agent’s prior written consent, (v) release any
guarantor from its obligations under any guaranty of any Major Lease or any
letter of credit or other credit support for a tenant’s performance under any
Major Lease, except as expressly permitted pursuant to the terms of such Lease
or (vi) enter into any master lease for any space at the Projects.  Notwithstanding the foregoing or anything to
the contrary contained herein, the Borrower shall have the right, at its
option, to terminate or accept the surrender of any Lease (including any Major
Lease), and to pursue any other rights and remedies the Borrower may have
against any tenant, following an uncured material default by a tenant under its
Lease.

 

97

 

(b)                                 Approvals.  The Borrower shall not enter into any Lease
for any space at any Project (unless such proposed Lease is held in escrow
pending the receipt of any approval required below) except as follows:

 

(i)                                     Non-Major
Leases.  The Borrower may enter into
Leases that do not constitute Major Leases, and extensions, Modifications and
renewals thereof without the approval of the Administrative Agent or any
Lender; provided that such Lease, extension, renewal or Modification (A) in
the case of a Lease, is substantially in the form of the Borrower’s standard
form office lease or standard form retail lease, as applicable, previously
approved by the Administrative Agent, (B) is consistent with fair market
terms and (C) is entered into pursuant to arm-length negotiations with a
tenant not affiliated with the Borrower. 
Any proposed Lease that is not a Major Lease, or any extension, renewal
or modification of any such Lease, that does not comply with the preceding
sentence shall require the prior approval of the Administrative Agent.

 

(ii)                                  Major
Leases.  The Borrower shall not enter
into any Major Lease or any extension, renewal or Modification of any Major
Lease without the prior written approval of the Administrative Agent.

 

(iii)                               Information.  With respect to any Lease or Modification of
Lease that requires approval of the Administrative Agent, the Borrower shall
provide the Administrative Agent with the following information (collectively,
the “Lease Approval Package”):  (A) all
material information available to the Borrower concerning the lessee and its
business and financial condition; (B) a draft of the lease (or lease modification);
and (C) a summary (the “Lease Information Summary”) substantially
in the form attached hereto as Exhibit N, of the material terms of
such lease or lease modification.  Within
ten (10) Business Days after the Administrative Agent shall have received
a Lease Approval Package, the Administrative Agent shall either consent or
refuse to consent to such Lease Approval Package.  If the Administrative Agent shall fail to
respond within such ten (10) Business Day period, the Administrative Agent
shall be deemed to have approved such lease or lease modification; provided
that such lease or lease modification is documented pursuant to a lease or
lease modification which is consistent with the draft and lease summary and
Lease Approval Package previously delivered to the Administrative Agent in all
material respects.

 

(c)                                  Additional
Requirements as to all Leases. 
Notwithstanding anything to the contrary set forth in this Section 9.09,
the following requirements shall apply with respect to all Leases and all
Modifications of Leases entered into after the date hereof:

 

(i)                                     The
Borrower shall within ten (10) days after the Administrative Agent’s
request, provide the Administrative Agent with a true, correct and complete
copy thereof as signed by all such parties, including any Modifications and
Guarantees thereof.

 

(ii)                                  All
Leases must be subordinate to the Deed of Trust, and all existing and future
advances thereunder, and to any Modification thereof.

 

98

 

(iii)                               Notwithstanding
anything to the contrary set forth above, the Administrative Agent may require
that the Borrower and the tenant under any Major Lease execute and deliver an
SNDA Agreement (with such commercially reasonable changes thereto as may be
requested by such tenant).  The
Administrative Agent (on behalf of the Lenders) shall, if requested by the
Borrower, and as a condition to a tenant’s obligation to subordinate its lease
(if necessary or if requested by the Borrower) or attorn, enter into an SNDA
Agreement with such tenant (with such commercially reasonable changes thereto
as may be requested by such tenant).  The
Administrative Agent’s execution thereof shall be conditioned upon the prior
execution thereof by both the tenant and the Borrower.

 

(iv)                              All
Leases shall be substantially in the form of the Borrower’s standard form
office lease or standard form retail lease, as applicable, approved by the
Administrative Agent and the Borrower on the Closing Date, with such
Modifications as the Administrative Agent shall thereafter approve prior to the
execution of such Leases.

 

9.10                        Reserved.

 

9.11                        No
Joint Assessment; Separate Lots.  The
Borrower shall not suffer, permit or initiate the joint assessment of any
Project with any other real property constituting a separate tax lot.

 

9.12                        Zoning.  The Borrower shall not, without the
Administrative Agent’s prior written consent, seek, make, suffer, consent to or
acquiesce in any change or variance in any zoning or land use laws or other
conditions of any Project or any portion thereof.  Except as disclosed on the Appraisals
delivered to the Administrative Agent prior to the Closing Date or any other existing
non-conforming use disclosed on Schedule 9.12, the Borrower shall
not use or permit the use of any portion of any Project in any manner that
could result in such use becoming a non-conforming use under any zoning or land
use law or any other applicable law, or Modify any agreements relating to
zoning or land use matters or permit the joinder or merger of lots for zoning,
land use or other purposes, without the prior written consent of the
Administrative Agent.  Without limiting
the foregoing, in no event shall the Borrower take any action that would reduce
or impair either (a) the number of parking spaces at any Project or (b) access
to any Project from adjacent public roads.

 

Further,
without the Administrative Agent’s prior written consent, the Borrower shall
not file or subject any part of any Project to any declaration of condominium
or co-operative or convert any part of any Project to a condominium,
co-operative or other direct or indirect form of multiple ownership and
governance.

 

9.13                        ERISA.  The Borrower shall not shall not take any
action, or omit to take any action, which would (a) cause the Borrower’s
assets to constitute “plan assets” for purposes of ERISA or the Code or (b) cause
the Transactions to be a nonexempt prohibited transaction (as such term is
defined in Section 4975 of the Code or Section 406 of ERISA) that
could subject the Administrative Agent and/or the Lenders, on account of any
Loan or execution of the Loan Documents hereunder, to any tax or penalty on
prohibited transactions imposed under Section 4975 of the Code or Section 502(i) of
ERISA.

 

99

 

9.14                        Reserved.

 

9.15                        Property
Management.  The Borrower will not,
without the prior written approval of the Administrative Agent, (i) enter
into any new Property Management Agreement; (ii) terminate or make any
material changes to the Property Management Agreement, either orally or in
writing, in any respect; or (iii) consent to, approve or agree to any
assignment or transfer by or with respect to the Property Manager (including
transfers of beneficial interests in the Property Manager or assignments or
transfers by the Property Manager of any or all of its rights under any
Property Management Agreement) except as otherwise permitted by Section 9.03
or Section 14.31.  Notwithstanding
the foregoing, the Borrower may, on prior written notice to the Administrative
Agent, subject to the limitations set forth herein with respect to the
Administrative Agent’s approval of any new manager for any Project, terminate a
Property Management Agreement in accordance with its terms as a result of a
material default by a Property Manager thereunder, and the limited partners in the
Borrower’s Member  may remove any
Property Manager or terminate any Property Management Agreement provided a
replacement Property Manager satisfactory to the Administrative Agent is immediately
appointed pursuant to a Property Management Agreement acceptable to the
Administrative Agent which permits termination by the Borrower on thirty (30)
days’ notice so long as the new property manager delivers a Property Manager’s
Consent.  Any change in ownership or
control of the Property Manager other than as specifically set forth herein
shall be cause for the Administrative Agent to re-approve such Property Manager
and Property Management Agreement.  If at
any time the Administrative Agent consents to the appointment of a new Property
Manager, such new Property Manager and the Borrower shall, as a condition of
the Administrative Agent’s consent,
execute a Property Manager’s Consent in the form then used by the
Administrative Agent.  Each Property Manager
shall be required to hold and maintain all necessary licenses, certifications
and permits required by Applicable Law. 
The Borrower may, on prior written notice to the Administrative Agent,
transfer a Property Management Agreement to, or terminate and enter into a new
Property Management Agreement on substantially the same terms with, another
entity owned and controlled by, or under common control with, Douglas, Emmett
and Company or the Borrower’s Manager; provided that such new management
entity is majority-owned and controlled, directly or indirectly, by at least
two (2) of the four (4) Named Principals, and such entity delivers a
Property Manager’s Consent with respect to such Property Management Agreement.

 

9.16                        Foreign
Assets Control Regulations.  Neither
the Borrower nor any Borrower Party shall use the proceeds of the Loan in any
manner that will violate the Trading with the Enemy Act, as amended, or any of
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or the Anti-Terrorism Order or any
enabling legislation or executive order relating to any of the same.  Without limiting the foregoing, neither the
Borrower nor any Borrower Party will permit itself nor any of its Subsidiaries
to (a) become a blocked person described in Section 1 of the
Anti-Terrorism Order or (b) knowingly engage in any dealings or
transactions or be otherwise associated with any person who is known by such
Borrower Party or who (after such inquiry as may be required by Applicable Law)
should be known by such Borrower Party to be a blocked person.

 

100

 

ARTICLE X

 

INSURANCE AND CONDEMNATION PROCEEDS

 

10.01                 Casualty
Events.

 

(a)                                 If
a Casualty Event shall occur as to any Project which results in damage in
excess of $500,000, the Borrower shall give prompt notice of such damage to the
Administrative Agent and shall, subject to the provisions of Section 10.03,
promptly commence and diligently prosecute in accordance with Section 8.07
and this Article X the completion of the repair and restoration of
such Project in accordance with Applicable Law to, as nearly as reasonably
possible, the condition such Project was in immediately prior to such Casualty
Event, with such alterations as may be reasonably approved by the
Administrative Agent (a “Restoration”) for any Restoration for which
such approval is otherwise required pursuant to Section 10.03(e) or
alteration for which such approval is otherwise required pursuant to Section 8.07.  The Borrower shall pay all costs of such
Restoration whether or not such costs are covered by Insurance Proceeds.  The Administrative Agent may, but shall not
be obligated to make proof of loss if not made promptly by the Borrower.  All Net Proceeds with respect to a
Significant Casualty Event, shall, at the Administrative Agent’s option, be
applied to the payment of the Obligations unless required to be made available
to the Borrower for Restoration hereunder, in which case such Net Proceeds
shall, subject to the provisions of this Agreement, be made available to the
Borrower to pay the costs incurred in connection with the Restoration.  All Net Proceeds with respect to a Casualty
Event that is not a Significant Casualty Event shall, subject to the provisions
of this Agreement, be made available to the Borrower to pay the costs incurred
in connection with the Restoration of the affected Project.

 

(b)                                 If
Restoration of any Project following a Casualty Event is reasonably expected to
cost not more than the lesser of (i) $5,000,000 and (ii) ten percent
(10%) of the Appraised Value of such Project (the “Insurance Threshold
Amount”), provided no Event of Default exists, the Borrower may, upon
notice to the Administrative Agent, settle and adjust any claim with respect to
such Casualty Event without the prior consent of the Administrative Agent and
the Borrower is hereby authorized to collect the Insurance Proceeds with
respect to any such claim; provided such adjustment is carried out in a manner
consistent with good business practice. 
In the event that Restoration of any Project is reasonably expected to
cost an amount equal to or in excess of the Insurance Threshold Amount (a “Significant
Casualty Event”), provided no Event of Default exists, the Borrower may,
with the prior written consent of the Administrative Agent (which consent shall
not be unreasonably withheld), settle and adjust any claim of the Borrower and
agree with the insurer(s) on the amount to be paid on the loss, and the Insurance
Proceeds shall be due and payable solely to the Administrative Agent (on behalf
of the Lenders); notwithstanding the foregoing, the Administrative Agent shall
retain the right to participate (not to the exclusion of the Borrower) in any
such insurance settlement at any time. 
If an Event of Default exists, with respect to any Casualty Event, the
Administrative Agent, in its sole discretion, may settle and adjust any claim
without the consent of the Borrower and agree with the insurer(s) on the amount
to be paid on the loss, and the Insurance Proceeds shall be due and payable
solely to the Administrative Agent (on behalf of the Lenders) and deposited in
a Controlled Account and disbursed in accordance herewith.  If the Borrower or any party other than the Administrative
Agent is a payee on any check representing Insurance Proceeds with

 

101

 

respect to a Significant Casualty Event, the Borrower shall immediately
endorse, and cause all such third parties to endorse, such check payable to the
order of the Administrative Agent.  The
Borrower hereby irrevocably appoints the Administrative Agent as its
attorney-in-fact, coupled with an interest, to endorse such check payable to
the order of the Administrative Agent. 
The reasonable out-of-pocket expenses incurred by the Administrative
Agent in the settlement, adjustment and collection of the Insurance Proceeds shall
become part of the Obligations and shall be reimbursed by the Borrower to the
Administrative Agent upon demand to the extent not already deducted by the
Administrative Agent from such Insurance Proceeds in determining Net Proceeds.

 

10.02                 Condemnation
Awards.

 

(a)                                 The
Borrower shall promptly give the Administrative Agent notice of any actual
Taking or any Taking that has been threatened in writing and shall deliver to
the Administrative Agent copies of any and all papers served in connection with
such actual or threatened Taking.  The
Administrative Agent may participate in any Taking proceedings (not to the
exclusion of the Borrower), and the Borrower shall from time to time deliver to
the Administrative Agent all instruments requested by it to permit such
participation.  The Borrower shall, at
its expense, diligently prosecute any such proceedings, and shall consult with
the Administrative Agent, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings.  The Administrative Agent may participate in
any such proceedings (not to the exclusion of the Borrower) and may be
represented therein by counsel of the Administrative Agent’s selection at the
Borrower’s cost and expense.  Without the
Administrative Agent’s prior consent, the Borrower (i) shall not agree to
any Condemnation Award and (ii) shall not take any action or fail to take
any action which would cause the Condemnation Award to be determined; provided,
however, that if no Event of Default exists, and upon prior written
notice to the Administrative Agent, the Borrower shall have the right to
compromise and collect or receive any Condemnation Award that does not exceed
the lesser of (i) $5,000,000 and (ii) ten percent (10%) of the
Appraised Value of such Project, provided that such condemnation does not
result in any material adverse effect upon the Project affected thereby.  In the event of such Taking, the Condemnation
Award payable is hereby assigned to and (except as provided in the preceding
sentence) shall be paid to the Administrative Agent (on behalf of the Lenders)
and, except as expressly set forth in Section 10.03 hereof, shall
be applied to the repayment of the Obligations. 
If any Project or any portion thereof is subject to a Taking, the
Borrower shall promptly commence and diligently prosecute the Restoration of
such Project in accordance with this Article X and otherwise comply
with the provisions of Section 10.03.  If such Project is sold, through foreclosure
or otherwise, prior to the receipt by the Administrative Agent of the
Condemnation Award, the Administrative Agent and the Lenders shall have the
right, whether or not a deficiency judgment on the Notes shall have been
sought, recovered or denied, to receive the Condemnation Award, or a portion
thereof sufficient to pay the Obligations.

 

10.03                 Restoration.

 

(a)                                 If
each of the Net Proceeds and the cost of completing the Restoration shall be
not more than the Insurance Threshold Amount, the Net Proceeds will be
disbursed by the Administrative Agent to the Borrower upon receipt; provided
that no Major Default or Event

 

102

 

of Default then exists and, except where the Restoration has already
been completed by the Borrower and the Borrower seeks reimbursement for costs
of the Restoration, the Borrower delivers to the Administrative Agent a written
undertaking to expeditiously commence and to satisfactorily complete with due
diligence the Restoration in accordance with the terms of this Agreement; and
the Borrower thereafter commences and diligently proceeds with the Restoration
thereof in compliance with Section 8.07 and this Article X.

 

(b)                                 If
either the Net Proceeds or the costs of completing the Restoration is equal to
or greater than the Insurance Threshold Amount, the Administrative Agent shall
make the Net Proceeds available for the Restoration in accordance with the
provisions of this Section 10.03. 
The term “Net Proceeds” for purposes of this Article X
shall mean:  (i) the net amount of
all Insurance Proceeds received by the Administrative Agent pursuant to the
Policies as a result of such damage or destruction, after deduction of the
Administrative Agent’s reasonable out-of-pocket costs and expenses (including,
but not limited to, reasonable counsel fees), if any, in collecting same, or (ii) the
net amount of the Condemnation Award, after deduction of the Administrative
Agent’s reasonable out-of-pocket costs and expenses (including, but not limited
to, reasonable counsel fees), if any, in collecting same, whichever the case
may be.

 

(c)                                  The
Net Proceeds shall be made available to the Borrower for Restoration; provided
that each of the following conditions is met:

 

(i)                                     no
Major Default or Event of Default exists;

 

(ii)                                  (A) in
the event the Net Proceeds are Insurance Proceeds, less than twenty-five
percent (25%) of the total (gross) floor area of the Improvements on such
Project has been damaged, destroyed or rendered unusable as a result of such
Casualty Event or (B) in the event the Net Proceeds are Condemnation
Awards, less than ten percent (10%) of the land constituting such Project is
taken, and such land is located along the perimeter or periphery of such
Project, and no portion of the Improvements (other than sidewalks, paved areas
and decorative non-structural elements of the Improvements) is located on such
land;

 

(iii)                               Reserved;

 

(iv)                              the
Debt Service Coverage Ratio projected (with Operating Income and Operating
Expenses also being projected rather than being based on the previous calendar
quarter) by the Administrative Agent for a period of one year after the
Administrative Agent’s estimated date for the stabilization of the affected
Project following completion of the Restoration will be equal to or greater
than 1:50:1.00 based on Leases with respect to which the tenants do not have
the right to or have waived any right to terminate their respective Leases;

 

(v)                                 subject
to the applicable provisions of Section 10.03(l), the Borrower
shall commence the Restoration as soon as reasonably practicable (but in no
event later than ninety (90) days after such Casualty Event or Taking, as the
case may be, occurs) and shall diligently pursue the same to completion to the
reasonable satisfaction of the Administrative Agent;

 

103

 

(vi)                              the
Administrative Agent shall be satisfied that any operating deficits, including
all scheduled payments of principal and interest under the Notes, which will be
incurred with respect to the subject Project as a result of the occurrence of
any such Casualty Event or Taking, as the case may be, will be covered out of (A) the
Net Proceeds, (B) the proceeds of Business Interruption Insurance, if
applicable, or (C) other funds of the Borrower;

 

(vii)                           the
Administrative Agent shall be satisfied that the Restoration will be completed
on or before the earliest to occur of (A) six (6) months prior to the
Stated Maturity Date, (B) such time as may be required under Applicable
Law in order to repair and restore the subject Project to the condition it was
in immediately prior to such Casualty Event or to as nearly as possible the
condition it was in immediately prior to such Taking, as the case may be, and (C) six
(6) months prior to the expiration of the Business Interruption Insurance
unless the Borrower delivers to the Administrative Agent such additional
security to the Administrative Agent in an amount reasonably determined by the
Administrative Agent which additional security shall consist of cash or a
letter of credit reasonably satisfactory to the Administrative Agent;

 

(viii)                        the
subject Project and the use thereof after the Restoration will be in
substantial compliance with and permitted under all Applicable Laws;

 

(ix)                              the
Borrower shall deliver, or cause to be delivered, to the Administrative Agent
satisfactory evidence that after Restoration, the subject Project would be at
least as valuable as immediately before the Casualty Event or Taking occurred;

 

(x)                                 such
Casualty Event or Taking, as the case may be, does not result in the permanent
loss of any current access to the subject Project;

 

(xi)                              the
Borrower shall deliver, or cause to be delivered, to the Administrative Agent a
signed detailed budget approved in writing by the Borrower’s architect or
engineer stating the entire cost of completing the Restoration, which budget
shall be reasonably acceptable to the Administrative Agent and any architect or
engineer the Administrative Agent may engage (at the Borrower’s expense); and

 

(xii)                           the Net
Proceeds together with any cash or cash equivalent deposited by the Borrower
with the Administrative Agent are sufficient in the Administrative Agent’s
judgment to cover the cost of the Restoration.

 

(d)                                 Except
for proceeds of a Casualty Event or Taking received and retained by the
Borrower in compliance with the provisions of this Article X, the
Net Proceeds shall be held by the Administrative Agent in a Controlled Account,
until disbursed in accordance with the provisions of this Section 10.03,
and shall constitute additional security for the Obligations.  Upon receipt of evidence reasonably
satisfactory to the Administrative Agent that all the conditions precedent to
such advance, including those set forth in subsection (c) above,
have been satisfied, the Net Proceeds shall be disbursed by the Administrative
Agent to, or as directed by, the Borrower from time to time during the course
of the Restoration in substantially the same

 

104

 

manner and subject to similar conditions as if such advances were being
made in connection with a construction loan, such manner of disbursement and
conditions to be determined by the Administrative Agent, including the
Administrative Agent’s receipt of (i) advice from the Restoration
Consultant (who shall be employed by the Administrative Agent at the Borrower’s
sole expense) that the work completed or materials installed conform to said
budget and plans, as approved by the Administrative Agent, (ii) evidence
that all materials installed and work and labor performed to the date of the
applicable advance (except to the extent that they are to be paid for out of
the requested disbursement) in connection with the Restoration have been paid
for in full, including the receipt of waivers of lien, contractor’s
certificates, surveys, receipted bills, releases, title policy endorsements and
such other evidences of cost, payment and performance satisfactory to the
Administrative Agent, and (iii) evidence that there exist no notices of
pendency, stop orders, mechanic’s or materialman’s liens or notices of
intention to file same, or any other Liens of any nature whatsoever on the subject
Project which have not either been fully bonded to the reasonable satisfaction
of the Administrative Agent and discharged of record or in the alternative
fully insured to the reasonable satisfaction of the Administrative Agent under
the Title Policy.

 

(e)                                  All
plans and specifications required in connection with any Restoration resulting
in Net Proceeds in excess of the Insurance Threshold Amount shall be subject to
prior review and approval (such approval not to be unreasonably withheld) in
all respects by the Administrative Agent and by an independent consulting
engineer selected by the Administrative Agent (the “Restoration Consultant”).  All plans and specifications required in
connection with any Restoration resulting in Net Proceeds not in excess of the
Insurance Threshold Amount shall be provided to the Administrative Agent in the
ordinary course of business.  The
Administrative Agent shall have the use of the plans and specifications and all
permits, licenses and approvals required or obtained in connection with any
Restoration.  With respect to any
Restoration resulting in Net Proceeds in excess of the Insurance Threshold
Amount (whether resulting from a Casualty Event or a Taking), the identity of
the contractors, subcontractors and materialmen engaged in the Restoration, as
well as all contracts having a cost in excess of $100,000, shall be subject to
the prior review and approval (such approval not to be unreasonably withheld)
of the Administrative Agent and the Restoration Consultant.  All costs and expenses incurred by the
Administrative Agent in connection with making the Net Proceeds available for
the Restoration including reasonable counsel fees and disbursements and the
Restoration Consultant’s fees, shall be paid by the Borrower.  The Borrower shall also obtain, at its sole
cost and expense, all necessary Government Approvals as and when required in
connection with such Restoration and provide copies thereof to the
Administrative Agent and the Restoration Consultant.

 

(f)                                   In
no event shall the Administrative Agent be obligated to make disbursements of
the Net Proceeds in excess of an amount equal to the costs actually incurred
from time to time for work in place as part of the Restoration, as certified by
the Restoration Consultant, minus the Restoration Retainage.  The term “Restoration Retainage” shall
mean the greater of (i) an amount equal to ten percent (10%) of the hard
costs actually incurred for work in place as part of the Restoration, as
certified by the Restoration Consultant and (ii) the amount actually held
back by the Borrower from contractors, subcontractors and materialmen engaged
in the Restoration.  The Restoration
Retainage shall not be released until the Restoration Consultant certifies to
the Administrative Agent that the Restoration has been substantially completed
in accordance with the provisions of this Section 10.03, subject to
punch-list items and other

 

105

 

non-material items of work and that all approvals necessary for the
re-occupancy and use of the subject Project have been obtained from all
appropriate Governmental Authorities, and the Administrative Agent receives
evidence reasonably satisfactory to the Administrative Agent that the costs of
the Restoration have been paid in full or will be paid in full out of the
Restoration Retainage; provided, however, that the Administrative
Agent will release the portion of the Restoration Retainage being held with
respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Restoration Consultant certifies to
the Administrative Agent that such contractor, subcontractor or materialman has
satisfactorily completed all work and has supplied all materials in accordance
with its contract, and the Administrative Agent receives lien waivers and
evidence of payment in full of all sums due to such contractor, subcontractor
or materialman as may be reasonably requested by the Administrative Agent or by
the Title Company issuing the Title Policy, and the Administrative Agent
receives an endorsement to the Title Policy insuring the continued priority of
the lien of the Deed of Trust and evidence of payment of any premium payable
for such endorsement.  If required by the
Administrative Agent, the release of any such portion of the Restoration
Retainage shall be approved by the surety company, if any, which has issued a
payment or performance bond with respect to such contractor, subcontractor or
materialman.

 

(g)                                  The
Administrative Agent shall not be obligated to make disbursements of the Net
Proceeds more frequently than once per month.

 

(h)                                 If
at any time the Net Proceeds or the undisbursed balance thereof shall not, in
the reasonable opinion of the Administrative Agent in consultation with the
Restoration Consultant, be sufficient to pay in full the balance of the costs
which are estimated by the Restoration Consultant to be incurred in connection
with the completion of the Restoration, the Borrower shall deposit the
deficiency (the “Net Proceeds Deficiency”) with the Administrative Agent
within ten (10) Business Days of the Administrative Agent’s request and
before any further disbursement of the Net Proceeds shall be made.  The Net Proceeds Deficiency shall be held in
a Controlled Account and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and, until so disbursed, shall constitute
additional security for the Obligations.

 

(i)                                     After
the Restoration Consultant certifies to the Administrative Agent that a
Restoration has been substantially completed in accordance with the provisions
of this Section 10.03, and the receipt by the Administrative Agent
of evidence satisfactory to the Administrative Agent that all costs incurred in
connection with the Restoration have been paid in full, the excess, if any, of
the Net Proceeds and the remaining balance, if any, of the Net Proceeds
Deficiency deposited in a Controlled Account shall be remitted to the Borrower,
provided that no Event of Default shall exist.

 

(j)                                    All
Net Proceeds not required (i) to be made available for the Restoration or (ii) to
be returned to the Borrower as excess Net Proceeds pursuant to subsection (i) above
may (A) be retained and applied by the Administrative Agent toward the
payment of the Obligations, whether or not then due and payable, in such order,
priority and proportions as the Administrative Agent in its sole discretion
shall deem proper (but without premium or penalty) or (B) at the sole
discretion of the Administrative Agent, be paid, either in whole or in part, to
the Borrower for such purposes and upon such conditions as the Administrative
Agent shall

 

106

 

designate.  In the event the Net
Proceeds are applied to the Obligations and all of the Obligations have been
performed or are discharged by the application of less than all of the Net
Proceeds, then any remaining Net Proceeds will be paid over to the Borrower or
any other party legally entitled thereto.

 

(k)                                 Notwithstanding
any Casualty or Taking, the Borrower shall continue to pay the Obligations in
the manner provided in the Notes, this Agreement and the other Loan Documents
and the Outstanding Principal Amount shall not be reduced unless and until (i) any
Insurance Proceeds or Condemnation Award shall have been actually received by
the Administrative Agent, (ii) the Administrative Agent shall have
deducted its reasonable expenses of collecting such proceeds and (iii) the
Administrative Agent shall have applied any portion of the balance thereof to
the repayment of the Outstanding Principal Amount in accordance with Section 10.03(j).  The Lenders shall not be limited to the
interest paid on any Condemnation Award but shall continue to be entitled to
receive interest at the rate or rates provided in the Notes and this Agreement
if such interest is then due hereunder.

 

(l)                                     Notwithstanding
anything to the contrary contained in this Article X or Section 8.07,
if pursuant to the provisions of this Article X the Net Proceeds
are required to be made available to the Borrower for Restoration of the damage
caused by a Casualty Event or any Taking, the Borrower’s obligation to commence
or thereafter to proceed with such Restoration shall be conditioned upon the
Borrower’s receipt of the Net Proceeds attributable to such Casualty Event or
Taking, respectively; provided, however, that nothing contained
in this sentence (or any other provision of this Article X) shall (i) defer,
limit or excuse in any respect the Borrower’s obligation to commence or proceed
with the Restoration of any Project: (A) if the Borrower does not
diligently pursue the collection of such Net Proceeds; (B) where the
relevant Casualty Event is not a Significant Casualty Event or the Taking
involves a claim of not more than the lesser of $5,000,000 or ten percent (10%)
of the Appraised Value of the affected Project; (C) in the case of a
Casualty Event, to the extent that the costs of such Restoration are included
within any applicable deductible or self-insurance retention, or exceed the
applicable limits of insurance, under any insurance policy maintained
hereunder; (D) in the case of a Casualty Event, if the Borrower is, at the
time of such Casualty Event, in default in its obligation to maintain the
insurance policies required under Section 8.05 in any respect which
would reduce the amount of Net Proceeds available to the Borrower on account of
such Casualty Event below the amount which would have been available had the
Borrower not been in default of such obligation, then to the extent of such reduction;
or (E) to the extent that the Net Proceeds available to the Borrower on
account of such Casualty Event or Taking are reasonably anticipated to be
reduced as a result of any defense to coverage or other defense available to
the insurer or condemning authority, whether as a result of any act or omission
of the Borrower or otherwise (provided that the undisputed portion of such Net
Proceeds shall have been paid by the insurer or condemning authority and made
available to the Borrower); (ii) defer, limit or excuse in any respect the
Borrower’s obligation to undertake such prudent measures (subject in all cases
to any applicable provisions in Section 8.07) as may be necessary
to keep any Project, following any Casualty Event or Taking, safe, secure and
protected and as may be appropriate to avoid further deterioration or damage;
or (iii) defer, limit or excuse any obligation of the Borrower under this
Agreement or the other Loan Documents (other than the obligation to commence
and diligently prosecute the Restoration of such damage).

 

107

 

ARTICLE XI

 

CASH TRAP ACCOUNT

 

11.01                 Low DSCR
Trigger Event.  Upon the occurrence
of a Low DSCR Trigger Event and on each day that the required monthly report is
due under Section 8.01(e) and continuing for each month
thereafter during any Low DSCR Trigger Period, the Borrower shall cause all
Excess Cash from the Projects to be paid each month directly to the
Administrative Agent for deposit into a Cash Trap Account established for the
Borrower as additional collateral for its Obligations.

 

(a)                                 Establishment
and Maintenance of the Cash Trap Account.

 

(i)                                     The
Cash Trap Account (A) shall be a separate and identifiable account from
all other funds held by the Depository Bank and (B) shall contain only
funds required to be deposited pursuant to this Section 11.01.  Any interest which may accrue on the amounts
on deposit in a Cash Trap Account shall be added to and shall become part of
the balance of the Cash Trap Account. 
The Borrower shall enter into with the Administrative Agent and the
applicable Depository Bank a Cash Trap Account Security Agreement (with such
changes thereto as may be required by the Depository Bank and satisfactory to
the Administrative Agent) which shall govern the Cash Trap Account established
for it and the rights, duties and obligations of each party to such Cash Trap
Account Security Agreement.

 

(ii)                                  The
Cash Trap Account Security Agreement shall provide that (A) the Cash Trap
Account shall be established in the name of the Administrative Agent, (B) the
Cash Trap Account shall be subject to the sole dominion, control and discretion
of the Administrative Agent, and (C) neither the Borrower nor any other
Person, including, without limitation, any Person claiming on behalf of or
through the Borrower, shall have any right or authority, whether express or
implied, to make use of or withdraw, or cause the use or withdrawal of, any
proceeds from the Cash Trap Account or any of the other proceeds deposited in
the Cash Trap Account, except as expressly provided in this Agreement or in the
Cash Trap Account Security Agreement.

 

(b)                                 Deposits
to, Disbursements and Release from the Cash Trap Account.  All deposits to and disbursements of all or
any portion of the deposits to the Cash Trap Account shall be in accordance
with this Agreement and the Cash Trap Account Security Agreement.  The Borrower hereby agrees to pay any and all
fees charged by Depository Bank in connection with the maintenance of the Cash
Trap Account and the performance of its duties. 
During any Low DSCR Trigger Period, provided that no Event of Default
exists at the time of any request by the Borrower for a disbursement from the Cash
Trap Account, the Administrative Agent will direct the Depository Bank to
transfer amounts credited to the Cash Trap Account to the Borrower’s Account to
pay or reimburse the Borrower for (i) Real Estate Taxes or Insurance
Premiums, (ii) capital expenditures incurred pursuant to an Approved
Annual Budget (such capital expenditures, “Approved Capital Expenditures”),
(iii) actual costs of tenant improvements and/or leasing commissions
pursuant to an Approved Lease and set forth in an Approved Annual Budget (such
expenditures, “Approved Leasing Expenditures”), or (iv) capital
expenditures

 

108

 

which have been approved by the Administrative Agent in accordance with
subsection (c)(iv) below or leasing expenditures incurred
pursuant to an Approved Lease, in either case which are not set forth in an
Approved Annual Budget (such expenditures, “Extraordinary Capital or Leasing
Expenditures”), in accordance with the terms and conditions set forth below
in subsection (c).  Provided
no Default or Event of Default then exists, any funds held in the Cash Trap
Account shall be released to the Borrower for the account of the Borrower upon
the occurrence of a Low DSCR Release Event and, in such event the Borrower
shall no longer be required to cause the deposit of the subsequent Excess Cash
into the Cash Trap Account unless a Low DSCR Trigger Event occurs with respect
to any future calendar quarter.

 

(c)                                  Conditions
to Disbursements from Cash Trap Account.  Each disbursement from a Cash Trap Account is
subject to the satisfaction of each of the following conditions:

 

(i)                                     Disbursements
shall be utilized solely for Real Estate Taxes, Insurance Premiums, Approved
Capital Expenditures, Approved Leasing Expenditures or Extraordinary Capital or
Leasing Expenditures and shall be in an amount no greater than the actual cost
of such Real Estate Taxes or Insurance Premiums, Approved Capital Expenditures,
Approved Leasing Expenditures or Extraordinary Capital or Leasing Expenditures
to the extent not theretofore paid from Operating Income;

 

(ii)                                  Disbursements
for Approved Capital Expenditures, Approved Leasing Expenditures and
Extraordinary Capital or Leasing Expenditures shall not be made more frequently
than monthly, and each disbursement (if any) shall be in an amount not less
than $25,000.00 (unless the disbursement represents the final disbursement for
a particular Approved Capital Expenditure or Approved Leasing Expenditure);

 

(iii)                               Not less than ten (10) days
prior to the requested funding date for a disbursement, the Administrative
Agent shall have received a written request for such disbursement executed by
an Authorized Officer, which request shall specify the date on which the
Borrower requests the disbursement to be made and the Person(s) or account(s)
to whom such disbursement should be made (such duly completed request is
referred to herein as a “Disbursement Request”);

 

(iv)                              Not
less than ten (10) days prior to each disbursement for Approved Capital
Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing
Expenditures, the Administrative Agent shall have received, reviewed and
approved (A) a certificate executed by the Borrower, or, if such Person
was engaged for such work, the Borrower’s architect or engineer, as applicable,
certifying that, to the knowledge of such Person, the work for which such
disbursement is being requested has been completed to the percentage of
completion specified in the Disbursement Request substantially in accordance
with the applicable plans and specifications therefor and in a good and
workmanlike manner; (B) sworn statements and conditional lien waivers from
all contractors, subcontractors and materialmen with respect to such work; (C) sworn

 

109

 

statements
and final lien waivers from all contractors and subcontractors and materialmen
with respect to work theretofore completed and for which a disbursement was
made to the Borrower in a prior month; (D) copies of paid invoices for
prior disbursements and open invoices for requested disbursements, and an all
bills paid affidavit from the Borrower; (E) with respect to the final
payment for a work of improvement, certificates of occupancy (or similar
documentation), as required by Applicable Law, relating to the work for which
such disbursement is being made; and (F) such other supporting
documentation as may be reasonably required by the Administrative Agent, all in
form and substance reasonably satisfactory to the Administrative Agent.  Notwithstanding the foregoing, in lieu of
complying with the requirements in clauses (A) through (F) above with
respect to any requested disbursement for Approved Capital Expenditures,
Approved Leasing Expenditures or Extraordinary Capital or Leasing Expenditures
which consists of leasing commissions or sums due pursuant to any contract or
subcontract providing for an aggregate contract sum of not more than $50,000,
the Borrower may, not less than ten (10) days prior to the requested funding
date for any disbursement on account thereof, deliver to the Administrative
Agent, together with (or as part of) its Disbursement Request, a certificate
executed by an Authorized Officer on behalf of the Borrower certifying that
such sums so requested are due and payable and are Approved Capital
Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing
Expenditures which have been incurred in compliance with this Agreement and
containing copies of the relevant invoices, contracts or other back-up
documentation to confirm that such sums are then owing; and

 

(v)                                 Based
on the most recent reconciliation report delivered by the Borrower pursuant to Section 8.01(e)(iii) prior
to the delivery of such Disbursement Request (or, if the most recent such
report has not been delivered pursuant to such section or article, based
on such other information as the Administrative Agent shall determine in its
reasonable discretion), the results from the operations of the Projects for the
month and year-to-date covered by such reconciliation report shall be equal to
or better than the results contemplated by the Approved Annual Budget for such
month and year-to-date, except for Extraordinary Capital or Leasing
Expenditures or other expenses or items approved by the Administrative Agent.

 

ARTICLE XII

 

EVENTS OF DEFAULT

 

12.01                 Events of
Default.  Any one or more of the
following events shall constitute an “Event of Default”:

 

(a)                                 The
Borrower shall: (i) fail to pay any principal of any Loan when due (whether
at stated maturity, mandatory prepayment or otherwise); or (ii) fail to
pay any interest on any Loan, any fee or any other amount (other than an amount
referred to in clause (i) above) payable by it under this Agreement
or under any other Loan Document, when and as the same

 

110

 

shall become due and payable, and, in the case of this clause (ii),
such default shall continue for a period of five (5) days; or

 

(b)                                 The
Borrower (or, if applicable, any Borrower Party) shall default in the
performance of any of its obligations under any of Sections 8.05, 8.06,
8.12, 8.17, 8.19 or Article IX (other than Section 9.06);
or any Change in Control shall occur; or the Borrower shall default in the
performance of any of its obligations under Section 8.16 which are
required to be performed during any Low DSCR Trigger Period; or the Borrower
shall make any Restricted Payment while any Event of Default exists; or the
Borrower shall make a Restricted Payment while any other Major Default exists
unless such Major Default is cured within the applicable cure or grace period
therefor; or

 

(c)                                  Any
representation, warranty or certification made or deemed made herein or in any
other Loan Document (or in any Modification hereto or thereto) by the Borrower
or any request, notice or certificate furnished by or on behalf of any Borrower
Party pursuant to the provisions hereof or thereof, shall prove to have been
false or misleading as of the time made or furnished in any material respect;
or

 

(d)                                 Any
of the Bankruptcy Parties shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or

 

(e)                                  An
involuntary proceeding shall be commenced or an involuntary petition shall be
filed, seeking (i) liquidation, reorganization or other relief in respect
of any of the Bankruptcy Parties or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any of the Bankruptcy Parties or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall continue
undismissed for a period of sixty (60) days or an order or decree approving or
ordering any of the foregoing shall be entered; or

 

(f)                                   Any
Bankruptcy Party shall (i) voluntarily commence as to itself any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (e) of this Section 12.01,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for it or for a
substantial part of any of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing; or

 

(g)                                  The
Borrower shall default in the payment when due of any principal of or interest
on any of its Indebtedness (other than the Obligations) in excess of Five
Million Dollars ($5,000,000) and such default shall not be cured within any
applicable notice or cure period provided with respect to such Indebtedness; or
any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Indebtedness shall occur if the effect of
such event is to cause, or (with the giving of any notice or the lapse of time
or both) to

 

111

 

permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due, or to be prepaid in full (whether by redemption,
purchase, offer to purchase or otherwise), prior to its stated maturity; or

 

(h)                                 Any
of the Bankruptcy Parties shall be terminated, dissolved or liquidated (as a
matter of law or otherwise) or proceedings shall be commenced by any Person
(including any Bankruptcy Party) seeking the termination, dissolution or
liquidation of any Bankruptcy Party, except, in each case, in connection with a
merger, termination, dissolution or liquidation permitted by Section 9.03(a) or
Section 14.31; or

 

(i)                                     One
or more (i) judgments for the payment of money (exclusive of judgment
amounts fully covered by insurance (other than permitted deductibles) where the
insurer has admitted liability in respect of the full amount of such judgment)
aggregating in excess of One Million Dollars ($1,000,000) shall be rendered
against one or more of the Borrower Parties or (ii) non-monetary
judgments, orders or decrees shall be entered against any of the Borrower
Parties which have or would reasonably be expected to have a Material Adverse
Effect, and, in either case, the same shall remain undischarged for a period of
thirty (30) consecutive days during which execution shall not be effectively
stayed (or bonded over through the posting of a bond in accordance with a
statutory bonding procedure the effect of which is to limit the judgment creditor’s
claim to recovery under the bond), or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of such Borrower Party to
enforce any such judgment; or

 

(j)                                    An
ERISA Event shall have occurred that, in the opinion of the Administrative
Agent, when taken together with all other such ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect; or

 

(k)                                 The
Liens created by the Security Documents shall at any time not constitute a valid
and perfected first priority Lien (subject to the Permitted Title Exceptions)
on the collateral intended to be covered thereby in favor of the Administrative
Agent, free and clear of all other Liens (other than the Permitted Title
Exceptions and Liens which are described in clauses (b), (c), (e) and
(g) of the definition of “Permitted Liens” or which are described in
clauses (a), (b), (c), (e) and (h) of Section 9.02
of this Agreement, and which are in the case of Liens described in clause (e) of
the definition of “Permitted Liens” and Section 9.02 (e) of
this Agreement subordinate to the Lien of the Deed of Trust encumbering the
affected Project), or, except for expiration in accordance with its terms or
releases or terminations contemplated by this Agreement, any of the Security
Documents shall for whatever reason be terminated or cease to be in full force
and effect, or the enforceability thereof shall be contested by any Borrower
Party or any of their Affiliates (controlled by the Permitted Public REIT, in
the case of contest occurring after a Permitted Public REIT Transfer); or

 

(l)                                     The
Guarantor shall (i) default under any of the Guarantor Documents beyond
any applicable notice and grace period; or (ii) revoke or attempt to
revoke, contest or commence any action against its obligations under any of the
Guarantor Documents; or

 

(m)                             At
any time while a Guarantee furnished by the Borrower or any Subsidiary of the
Borrower is in effect with respect to any Guaranteed Line of Credit, any event

 

112

 

of default shall occur under any of the applicable documents evidencing
or securing such Guaranteed Line of Credit; or any event specified in any of
the applicable documents evidencing or securing such Guaranteed Line of Credit
shall occur and the effect of such event is to cause, or (with the giving of
any notice or the lapse of time or both) to permit the lenders providing such
Guaranteed Line of Credit to cause, all amounts outstanding under Guaranteed
Line of Credit to become immediately due and payable prior to the stated
maturity date; or

 

(n)                                 Reserved

 

(o)                                 The
Borrower uses, or permits the use of, funds from the Security Accounts for any purpose other than the purpose for which
such funds were disbursed from the Security Accounts; or

 

(p)                                 Except
as permitted by Section 8.19(i), the failure of Borrower to
maintain, or cause to be maintained, Hedge Agreements with respect to the
Aggregate Notional Amount in accordance with Section 8.19; or the
occurrence of any default by or termination event as to the Borrower or Other
Swap Pledgor under any Hedge Agreement maintained with respect to the Aggregate
Notional Amount which is not cured within the applicable notice and grace or cure
periods provided therein; or

 

(q)                                 Reserved;

 

(r)                                    Any
of the Borrower Parties shall default under any of the other terms, covenants
or conditions of this Agreement or any other Loan Document not set forth above
in this Section 12.01 and such default shall continue for thirty
(30) days after notice from the Administrative Agent to the Borrower; provided,
however, that if (i) such default is susceptible of cure but the
Administrative Agent reasonably determines that such non-monetary default
cannot be reasonably cured within such thirty (30) day period, (ii) the
Administrative Agent determines, in its sole discretion, that such default does
not create a material risk of sale or forfeiture of, or substantial impairment
in value to, any material portion of the Projects, and (iii) the Borrower
has provided the Administrative Agent with security reasonably satisfactory to
the Administrative Agent against any interruption of payment or impairment of
collateral that is reasonably likely to result from such continuing failure,
then, so long as the relevant Borrower Party shall have commenced to cure such
default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for such time as is reasonably necessary for the relevant Borrower
Party in the exercise of due diligence to cure such default, but in no event
shall such period exceed ninety (90) days after the original notice from the
Administrative Agent or extend beyond the Maturity Date; or

 

(s)                                   At
any time following a Transfer to a Qualified Successor Entity consisting of a
Permitted Private REIT or its Permitted Private REIT Subsidiary pursuant to Section 9.03(a)(iii),
the senior officers of and members of the Board of Directors of the Permitted
Private REIT shall include less than two (2) of the Named Principals; or
at the time of a Permitted Public REIT Transfer, the senior officers of and
members of the Board of Directors of the Permitted Public REIT shall include
less than two (2) of the Named Principals.

 

113

 

12.02                 Remedies.  Upon the occurrence of an Event of Default
and at any time thereafter during the existence of such event, the
Administrative Agent may (subject to, and in accordance with, the provisions of
Section 13.03) and, upon request of the Required Lenders shall, by
written notice to the Borrower, pursue any one or more of the following
remedies, concurrently or successively, it being the intent hereof that none of
such remedies shall be to the exclusion of any other:

 

(a)                                 In
the case of an Event of Default other than one referred to in clause (e) or (f) of
Section 12.01 with respect to any Borrower Party, terminate the
Commitments and/or declare the Outstanding Principal Amount of the Loans, and
the accrued interest on the Loans and all other amounts payable by the Borrower
hereunder (including any amounts payable under Section 5.05) and
under the Notes and the Obligations of the Borrower under the other Loan
Documents to be forthwith due and payable and, if the Administrative Agent or
an Affiliate is a counterparty to a Hedge Agreement, then the Administrative
Agent may designate a default or similar event under such Hedge Agreement
whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower. 
In the case of the occurrence of an Event of Default referred to in clause (e) or (f) of
Section 12.01 with respect to a Borrower Party, the Commitments
shall automatically be terminated and the Outstanding Principal Amount of the
Loans, and the accrued interest on, the Loans and all other amounts payable by
the Borrower hereunder (including any amounts payable under Section 5.05)
and under the Notes and the Obligations of the Borrower under the other Loan
Documents shall automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower;

 

(b)                                 If
the Borrower shall fail, refuse or neglect to make any payment or perform any
Obligations under the Loan Documents, then, while any Event of Default exists
and without notice to or demand upon the Borrower and without waiving or
releasing any other right, remedy or recourse the Administrative Agent may have
because of such Event of Default, the Administrative Agent may (but shall not
be obligated to) make such payment or perform such Obligation for the account
of and at the expense of the Borrower, and shall have the right to enter upon
the Projects for such purpose and to take all such action thereon and with
respect to the Projects as it may deem necessary or appropriate.  If the Administrative Agent shall elect to
pay any sum due with respect to the Projects, the Administrative Agent may do
so in reliance on any bill, statement or assessment procured from the
appropriate Governmental Authority or other issuer thereof without inquiring
into the accuracy or validity thereof. 
Similarly, in making any payments to protect the security intended to be
created by the Loan Documents, the Administrative Agent shall not be bound to
inquire into the validity of any apparent or threatened adverse title, Lien,
encumbrance, claim or charge before making an advance for the purpose of
preventing or removing the same. 
Additionally, if any Hazardous Substance affects or threatens to affect
any of the Projects, the Administrative Agent may (but shall not be obligated to)
give such notices and take such actions as it deems necessary or advisable in
order to abate the discharge of or remove any Hazardous Substance; and/or

 

(c)                                  Exercise
or pursue any other remedy or cause of action permitted under this Agreement,
any or all of the Security Documents or any other Loan Document, or conferred
upon the Administrative Agent and the Lenders by operation of law.

 

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ARTICLE XIII

 

THE ADMINISTRATIVE AGENT

 

13.01                     Appointment,
Powers and Immunities.  Each Lender
hereby irrevocably appoints and authorizes the Administrative Agent to act as
its agent hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and of the other Loan Documents, together with such other powers as
are reasonably incidental thereto.  The
Administrative Agent (which term as used in this sentence and in Section 13.05
and the first sentence of Section 13.06 shall include reference to
its Affiliates and its own and its Affiliates’ officers, directors, employees
and agents):

 

(a)                                  shall
have no duties or responsibilities except those expressly set forth in this Agreement
and in the other Loan Documents, and shall not by reason of this Agreement or
any other Loan Document be a fiduciary or trustee for any Lender except to the
extent that the Administrative Agent acts as an agent with respect to the
receipt or payment of funds, nor shall the Administrative Agent have any
fiduciary duty to the Borrower nor shall any Lender have any fiduciary duty to
the Borrower or any other Lender;

 

(b)                                 shall
not be responsible to the Lenders for any recitals, statements, representations
or warranties contained in this Agreement or in any other Loan Document, or in
any certificate or other document referred to or provided for in, or received
by any of them under, this Agreement or any other Loan Document, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, any Note or any other Loan Document or any other document
referred to or provided for herein or therein or for any failure by the
Borrower or any other Person to perform any of its obligations hereunder or
thereunder;

 

(c)                                  shall
not be responsible for any action taken or omitted to be taken by it hereunder
or under any other Loan Document or under any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence, bad faith or willful
misconduct;

 

(d)                                 shall
not, except to the extent expressly instructed by the Required Lenders with
respect to collateral security under the Security Documents, be required to
initiate or conduct any litigation or collection proceedings hereunder or under
any other Loan Document; and

 

(e)                                  shall
not be required to take any action which is contrary to this Agreement or any
other Loan Document or Applicable Law.

 

The relationship between the Administrative Agent and
each Lender is a contractual relationship only, and nothing herein shall be
deemed to impose on the Administrative Agent any obligations other than those
for which express provision is made herein or in the other Loan Documents.  The Administrative Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good
faith.  The Administrative Agent may deem
and treat the payee of a Note as the holder thereof for all purposes hereof
unless and until a notice of the assignment or transfer thereof shall have

 

115

 

been filed with the Administrative Agent, any such
assignment or transfer to be subject to the provisions of Section 14.07.  Except to the extent expressly provided in Sections
13.08 and 13.10, the provisions of this Article XIII are
solely for the benefit of the Administrative Agent and the Lenders, and the
Borrower shall not have any rights as a third-party beneficiary of any of the
provisions hereof and the Lenders may Modify or waive such provisions of this Article XIII
in their sole and absolute discretion.

 

13.02                     Reliance
by Administrative Agent.  The
Administrative Agent shall be entitled to rely upon any certification, notice,
document or other communication (including any thereof by telephone, telecopy,
telegram or cable) reasonably believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel, independent accountants and other
experts selected by the Administrative Agent in good faith.  As to any matters not expressly provided for
by this Agreement or any other Loan Document, the Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders,
and such instructions of the Required Lenders and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders.

 

13.03                     Defaults.

 

(a)                                  The
Administrative Agent shall give the Lenders notice of any material Default of
which the Administrative Agent has knowledge or notice.  Except with respect to (i) the
nonpayment of principal, interest or any fees that are due and payable under
any of the Loan Documents, (ii) Defaults with respect to which the
Administrative Agent has actually sent written notice of to the Borrower and (iii) material
Defaults with respect to which the Administrative Agent is given written notice
(or copied on such written notice) from a third party specifying such Default,
the Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default unless the Administrative Agent has received notice
from a Lender or the Borrower specifying such Default and stating that such
notice is a “Notice of Default”.  If the
Administrative Agent has such knowledge or receives such a notice from the
Borrower or a Lender in accordance with the immediately preceding sentence with
respect to the occurrence of a material Default, the Administrative Agent shall
give prompt notice thereof to the Lenders. 
Within ten (10) days of delivery of such notice of Default from the
Administrative Agent to the Lenders (or such shorter period of time as the
Administrative Agent determines is necessary), the Administrative Agent and the
Lenders shall consult with each other to determine a proposed course of action.  The Lenders agree that the Administrative
Agent shall (subject to Section 13.07) take such action with
respect to such Default as shall be directed by the Required Lenders, provided
that, (A) unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may while a Default exists (but shall
not be obligated to) take such action, or refrain from taking such action,
including decisions (1) to make protective advances that the
Administrative Agent determines are necessary to protect or maintain the
Projects and (2) to foreclose on any of the Projects or exercise any other
remedy, with respect to such Default as it shall deem advisable in the interest
of the Lenders and (B) no actions approved by the Required Lenders shall
violate the Loan Documents or Applicable Law. 
Each of the Lenders acknowledges and agrees that no individual Lender
may separately enforce or exercise any of the provisions of any of the Loan Documents
(including the Notes) other than through the Administrative Agent.  The Administrative Agent shall advise the
Lenders of all material actions

 

116

 

which the Administrative Agent takes in accordance with the provisions
of this Section 13.03(a) and shall continue to consult with
the Lenders with respect to all of such actions.  Notwithstanding the foregoing, if the
Required Lenders shall at any time direct that a different or additional
remedial action be taken from that already undertaken by the Administrative
Agent, including the commencement of foreclosure proceedings, such different or
additional remedial action shall be taken in lieu of or in addition to, the
prosecution of such action taken by the Administrative Agent; provided
that all actions already taken by the Administrative Agent pursuant to this Section 13.03(a) shall
be valid and binding on each Lender.  All
money (other than money subject to the provisions of Section 13.03(f))
received from any enforcement actions, including the proceeds of a foreclosure
sale of the Projects, shall be applied, first, to the payment or
reimbursement of the Administrative Agent for expenses and advances incurred in
accordance with the provisions of Sections 13.03(a) and (d) and
13.05 and to the payment of any fees owing to the Administrative Agent
pursuant to the Loan Documents, second, to the payment or reimbursement
of the Lenders for expenses incurred in accordance with the provisions of Sections
13.03(b), (c) and (d) and 13.05; third,
to the payment or reimbursement of the Lenders for any advances made pursuant
to Section 13.03(b); fourth, pari passu to the Lenders in accordance with their respective
Proportionate Shares until the Obligations have been fully paid and discharged
in full; and fifth to the person(s) legally entitled thereto.

 

(b)                                 All
losses with respect to interest (including interest at the Post-Default Rate)
and other sums payable pursuant to the Notes or incurred in connection with the
Loans, the enforcement thereof or the realization of the security therefor,
shall be borne by the Lenders in accordance with their respective Proportionate
Shares of the Loan, and the Lenders shall promptly, upon request, remit to the
Administrative Agent their respective Proportionate Shares of (i) any
expenses incurred by the Administrative Agent in connection with any Default to
the extent any expenses have not been paid by the Borrower, (ii) any
advances made to pay taxes or insurance or otherwise to preserve the Lien of
the Security Documents or to preserve and protect the Projects, whether or not
the amount necessary to be advanced for such purposes exceeds the amount of the
Obligations,  (iii) any other
expenses incurred in connection with the enforcement of the Deeds of Trust or
other Loan Documents, and (iv) any expenses incurred in connection with
the consummation of the Loans not paid or provided for by the Borrower.  To the extent any such advances are recovered
in connection with the enforcement of the Deeds of Trust or the other Loan
Documents, each Lender shall be paid its Proportionate Share of such recovery
after deduction of the expenses of the Administrative Agent and the Lenders.

 

(c)                                  If,
at the direction of the Required Lenders or otherwise as provided in Section 13.03(a),
any action(s) is brought to collect on the Notes or enforce the Security
Documents or any other Loan Document, such action shall (to the extent
permitted under applicable law and the decisions of the court in which such
action is brought) be an action brought by the Administrative Agent and the
Lenders, collectively, to collect on all or a portion of the Notes or enforce
the Security Documents or any other Loan Document and counsel selected by the
Administrative Agent shall prosecute any such action at the direction of the
Administrative Agent on behalf of the Administrative Agent and the Lenders, and
the Administrative Agent and the Lenders shall consult and cooperate with each
other in the prosecution thereof.  All
decisions concerning the appointment of a receiver while such action is
pending, the conduct of such receivership, the conduct of such action, the
collection of any judgment entered in such action and the settlement of such
action shall be made by the

 

117

 

Administrative Agent.  The costs
and expenses of any such action shall be borne by the Lenders in accordance
with each of their respective Proportionate Shares (without diminishing or
releasing any obligation of the Borrower to pay for such costs).

 

(d)                                 If,
at the direction of the Required Lenders or otherwise as provided in Section 13.03(a),
any action(s) is brought to foreclose any Deed of Trust, such action shall (to
the extent permitted under applicable law and the decisions of the court in
which such action is brought) be an action brought by the Administrative Agent
and the Lenders, collectively, to foreclose all or a portion of the Deed of
Trust and collect on the Notes.  Counsel
selected by the Administrative Agent shall prosecute any such foreclosure at
the direction of the Administrative Agent on behalf of the Administrative Agent
and the Lenders and the Administrative Agent and the Lenders shall consult and
cooperate with each other in the prosecution thereof.  All decisions concerning the appointment of a
receiver, the conduct of such foreclosure, the manner of taking and holding
title to any such Project (other than as set forth in subsection (e) below),
and the commencement and conduct of any deficiency judgment proceeding shall be
made by the Administrative Agent (subject to the rights of the Required Lenders
under Section 13.03(a)), and all decisions concerning the
acceptance of a deed in lieu of foreclosure and the bid on behalf of the
Administrative Agent and the Lenders at the foreclosure sale of any Project
shall be made by the Administrative Agent with the approval of the Required
Lenders.  The costs and expenses of
foreclosure will be borne by the Lenders in accordance with their respective
Proportionate Shares.

 

(e)                                  If
title is acquired to any Project after a foreclosure sale, nonjudicial
foreclosure or by a deed in lieu of foreclosure, title shall be held by the
Administrative Agent in its own name in trust for the Lenders or, at the
Administrative Agent’s election, in the name of a wholly owned subsidiary of
the Administrative Agent on behalf of the Lenders.

 

(f)                                    If
the Administrative Agent (or its subsidiary) acquires title to any Project or is
entitled to possession of any Project during or after the foreclosure, all
material decisions with respect to the possession, ownership, development,
construction, control, operation, leasing, management and sale of such Project
shall be made by the Administrative Agent.  All income or other money received after so
acquiring title to or taking possession of such Project with respect to the
Project, including income from the operation and management of such Project and
the proceeds of a sale of such Project, shall be applied, first, to the
payment or reimbursement of the Administrative Agent and the expenses incurred
in accordance with the provisions of this Article XIII and to the
payment of any fees owed to the Administrative Agent, second, to the
payment of operating expenses with respect to such Project; third, to
the establishment of reasonable reserves for the operation of such Project; fourth,
to the payment or reimbursement of the Lenders for any advances made pursuant
to Section 13.03(b); fifth to fund any capital improvement,
leasing and other reserves; and sixth, to the Lenders in accordance with
their respective Proportionate Shares.

 

13.04                     Rights as
a Lender.  With respect to its
Commitment and the Loans made by it, Eurohypo (and any successor acting as
Administrative Agent) in its capacity as a Lender hereunder shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as the Administrative Agent, and the term “Lender” or
“Lenders” shall, unless the context otherwise indicates, include the
Administrative

 

118

 

Agent in its individual capacity.  Subject to the provisions of Sections 4.07
and 14.10, Eurohypo (and any successor acting as Administrative Agent)
and any of its Affiliates may (without having to account therefor to any other
Lender) accept deposits from, lend money to, make investments in and generally
engage in any kind of banking, investment banking, trust or other business with
the Borrower (and any of its Affiliates) as if it were not acting as the
Administrative Agent and Eurohypo (and any such successor) and any of its
Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.

 

13.05                     Indemnification.  Each Lender agrees to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower, but without
limiting the obligations of the Borrower under Section 14.03) in
accordance with their Proportionate Shares, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against the Administrative Agent in its capacity as
Administrative Agent (including by any Lender) arising out of or by reason of
any investigation in or in any way relating to or arising out of this Agreement
or any other Loan Document or any other documents contemplated by or referred
to herein or therein or the Transactions (including the costs and expenses that
the Borrower is obligated to pay under Section 14.03, but
excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof, provided
that no Lender shall be liable for any of the foregoing to the extent they
arise from the gross negligence, bad faith or willful misconduct of the
Administrative Agent.

 

13.06                     Non-Reliance
on Administrative Agent and Other Lenders. 
Each Lender agrees that it has, independently and without reliance on
the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and its decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or under any other Loan
Document.  The Administrative Agent shall
not be required to keep itself informed as to the performance or observance by
the Borrower of this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
Properties or books of the Borrower. 
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Administrative Agent hereunder
or under the other Loan Documents, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) that may come into the possession of the
Administrative Agent or any of its Affiliates.

 

13.07                     Failure to
Act.  Except for action expressly
required of the Administrative Agent hereunder and under the other Loan
Documents, the Administrative Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction from the Lenders of their
indemnification obligations under Section 13.05 against any and all
liability and expense that may be incurred by it by reason

 

119

 

of taking or continuing to take any such action,
subject to the limitations on such obligations contained in such Section 13.05.

 

13.08                     Resignation
of Administrative Agent.  It is
agreed by the Lenders that subject to the terms of this Loan Agreement, the
Administrative Agent will remain the Administrative Agent under this Agreement
and the other Loan Documents throughout the term of the Loans; provided,
however, that (a) the Administrative Agent may assign all its
rights as the Administrative Agent to any Related Entity of Eurohypo, and such
Related Entity shall assume the obligations of Administrative Agent hereunder arising
after the date of such assignment, (b) subject to the appointment and
acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving at least thirty (30) days’
prior written notice thereof to the Lenders and the Borrower and (c) the
Administrative Agent may be removed upon the unanimous consent of the Lenders
(excepting therefrom the Administrative Agent in its capacity as a Lender) on
account of the gross negligence, bad faith or willful misconduct of the
Administrative Agent.  Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Administrative Agent that shall be a Person that, provided that no Event
of Default then exists, meets the qualifications of an Eligible Assignee with
an office in the United States through which it will act as the servicer of the
Loans; who is knowledgeable and experienced in servicing real estate secured
syndicated commercial loans in the United States; who (together with its
Affiliates and Related Entities and any Approved Funds managed by it or by any
of its Affiliates or Related Entities) then holds (and agrees in writing for
the benefit of the Borrower to maintain, for so long as it shall remain the
Administrative Agent and provided that no Event of Default has occurred), minimum
Loans and Commitments either (i) in an aggregate principal amount not less
than ten percent (10%) of the aggregate Outstanding Principal Amount of the
Loans, (ii) comprising
Loans and Commitments evidenced by a Note C, which comprise at least two and
one-half percent (21⁄2%) of the aggregate Loans and Commitments of all Lenders and
which, determined collectively with the Loans and Commitments evidenced by a
Note C of Eurohypo and Barclays Capital Real Estate Inc. and their respective
Affiliates, Related Entities and Approved Funds managed by either of them or
their respective Affiliates or Related Entities, comprise at least five percent
(5%) of the aggregate Loans and Commitments of all Lenders, but only (in the
case of this clause (ii)) if such replacement Administrative Agent also
qualifies and is named as the replacement Administrative Agent pursuant to the
loan agreements entered into by Eurohypo as administrative agent with Douglas
Emmett 1993, LLC, Douglas Emmett 1996, LLC, Douglas Emmett 1997, LLC, Douglas
Emmett 1998, LLC, Douglas Emmett 2000, LLC, and Douglas Emmett 2002, LLC and
certain co-borrowers named therein to the extent then outstanding or (iii) only
if the replacement Administrative Agent is Barclays Capital Real Estate Inc. or
one of its Affiliates, Related Entities or Approved Funds managed by Barclays
Capital Real Estate Inc or one of its Affiliates or Related Entities, comprising
Loans and Commitments evidenced by a Note C, which comprise at least two and
one-half percent (21⁄2%) of the aggregate Loans and Commitments of all Lenders, and
who agrees in writing for the benefit of the Borrower not to resign except in
accordance with the provisions of this Loan Agreement.  If such successor Administrative Agent is not
a Lender (or is a Lender, but such Lender does not comply with the requirements
of the second sentence of this Section 13.08), as long as no Major
Default exists, the Borrower shall have the right to approve such successor
Administrative Agent, such approval not to be unreasonably withheld or delayed
and which consent shall be deemed to have been given unless written notice of
disapproval is delivered by the Borrower to the resigning

 

120

 

Administrative Agent within five (5) Business
Days after notice of such proposed successor Administrative Agent has been
delivered to the Borrower.  If, in the
case of a resignation by the Administrative Agent, no successor Administrative
Agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring
Administrative Agent’s giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, that shall be a Person that meets the requirements of the
second sentence of this Section 13.08.  If any successor Administrative Agent is not
a Lender (or is a Lender, but such Lender does not comply with the requirements
of the second sentence of this Section 13.08), the Borrower, as
long as no Major Default exists, shall have the right to approve such successor
Administrative Agent, such approval not to be unreasonably withheld or delayed
and which consent shall be deemed to have been given unless, in the case of a
resignation, written notice of disapproval is delivered by the Borrower to the
resigning Administrative Agent within five (5) Business Days after notice
of such proposed successor Administrative Agent has been delivered to the
Borrower.  Upon the acceptance of any
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and such successor Administrative Agent shall
assume all obligations of the Administrative Agent hereunder arising after the
date of such acceptance, and the retiring or removed Administrative Agent shall
be discharged from its duties and obligations hereunder; provided, however,
that the retiring or removed Administrative Agent shall not be discharged from
any liabilities which existed prior to the effective date of such
resignation.  The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor.  After any retiring
Administrative Agent’s resignation hereunder as the Administrative Agent, the
provisions of this Article XIII shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Administrative Agent.

 

13.09                     Consents
under Loan Documents.  Subject to the
provisions of Section 14.05, the Administrative Agent may (a) grant
any consent or approval required of it or (b) consent to any Modification
or waiver under any of the Loan Documents. 
If the Administrative Agent solicits any consents or approvals from the
Lenders under any of the Loan Documents, each Lender shall within ten (10) Business
Days of receiving such request, give the Administrative Agent written notice of
its consent or approval or denial thereof; provided that, if any Lender
does not respond within such ten (10) Business Days or within any such
shorter period as required in this Agreement or any other Loan Document, such
Lender shall be deemed to have authorized the Administrative Agent to vote such
Lender’s interest with respect to the matter which was the subject of the
Administrative Agent’s solicitation as the Administrative Agent elects.  Any such solicitation by the Administrative
Agent for a consent or approval shall be in writing and shall include a
description of the matter or thing as to which such consent or approval is
requested and shall include the Administrative Agent’s recommended course of
action or determination in respect thereof.

 

13.10                     Authorization.  The Administrative Agent is hereby authorized
by the Lenders to execute, deliver and perform in accordance with the terms of
each of the Loan Documents to which the Administrative Agent is or is intended
to be a party and each Lender agrees to be bound by all of the agreements of
the Administrative Agent contained in such Loan

 

121

 

Documents.  The
Borrower shall be entitled to rely on all written agreements, approvals and
consents received from the Administrative Agent as being that also of the
Lenders, without obtaining separate acknowledgment or proof of authorization of
same.

 

13.11                     Amendments
Concerning Agency Function. 
Notwithstanding anything to the contrary contained in this Agreement,
the Administrative Agent shall not be bound by any waiver, amendment,
supplement or Modification of this Agreement or any other Loan Document which
affects its duties, rights and/or functions hereunder or thereunder unless it
shall have given its prior written consent thereto.

 

13.12                     Liability
of the Administrative Agent.  The
Administrative Agent shall not have any liabilities or responsibilities to the
Borrower on account of the failure of any Lender (other than the Administrative
Agent in its capacity as a Lender) to perform its obligations hereunder or to
any Lender on account of the failure of the Borrower to perform its obligations
hereunder or under any other Loan Document.

 

13.13                     Transfer
of Agency Function.  Without the
consent of the Borrower or any Lender, the Administrative Agent may at any time
or from time to time transfer its functions as the Administrative Agent
hereunder to any of its offices wherever located in the United States; provided
that the Administrative Agent shall promptly notify the Borrower and the Lenders
thereof.

 

13.14                     Co-Lead
Arranger and Joint Bookrunner.  No
Lender identified on the cover page of or elsewhere in this Agreement as a
“Co-Lead Arranger” or “Joint Bookrunner” shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders under this Agreement and the other Loan
Documents as a Lender.

 

ARTICLE XIV

 

MISCELLANEOUS

 

14.01                     Non-Waiver;
Remedies Cumulative.  No failure on
the part of the Administrative Agent or any Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement or any other Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement or any other Loan Documents preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.  The remedies provided herein
and in the other Loan Documents are cumulative and not exclusive of any
remedies provided by law.

 

14.02                     Notices.

 

(a)                                  All
notices, requests, demands, statements, authorizations, approvals, directions,
consents and other communications provided for herein and under the Loan
Documents shall be given or made in writing and shall be deemed sufficiently
given or served for all purposes as of the date (a) when hand delivered, (b) three
(3) days after being sent by

 

122

 

postage pre-paid registered or certified mail, return receipt
requested, (c) one (1) Business Day after being sent by reputable
overnight courier service, or (d) with a simultaneous delivery by one of
the means in clause (a), (b) or (c) above, by
facsimile, when sent, with confirmation and a copy sent by first class mail, in
each case addressed to the intended recipient at the “Address for Notices”
specified below its name on the signature pages hereof; or, as to any
party, at such other address as shall be designated by such party in a notice
to each other party hereto.  Unless
otherwise expressly provided in the Loan Documents, the Borrower shall only be
required to send notices, requests, demands, statements, authorizations,
approvals, directions, consents and other communications to the Administrative
Agent on behalf of all of the Lenders.

 

(b)                                 Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to
notices pursuant to Article II or notices pursuant to Section 13.03
unless otherwise agreed by the Administrative Agent and the applicable
Lender.  The Administrative Agent or the
Borrower may, in its discretion, agree (in writing) to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures by
such party may be limited to particular notices or communications.

 

(c)                                  Any
person shall have the right to specify, from time to time, as its address or
addresses for purposes of this Agreement, any other address or addresses upon
giving notice thereof to each other person then entitled to receive notices or
other instruments hereunder at least five (5) days before such change of
address shall become effective for purposes of this Agreement.

 

14.03                     Expenses,
Etc.  Subject to the limitation set
forth in Section 14.26:

 

(a)                                  The
Borrower agrees to pay on demand or reimburse on demand to the applicable party
all reasonable out-of-pocket costs and expenses of the Administrative Agent and
the Arranger incurred prior to the Closing Date or otherwise in connection with
the closing of the Loans (including customary post-closing follow-through) and
in connection with the satisfaction of the requirements of Section 8.19
following the Closing Date, including, but not limited to, (i) the
reasonable fees and expenses for Morrison & Foerster LLP, counsel to
the Administrative Agent and Eurohypo; such legal fees to be paid on the
Closing Date; provided, however, that
payment of ten percent (10%) of such legal fees shall be deferred and payable
promptly upon the Borrower’s receipt of a closing binder and legal invoices
prepared by Morrison & Foerster LLP and payment of any such legal fees
relating to the satisfaction of the requirements of Section 8.19
following the Closing Date shall be payable promptly following the Borrower’s
receipt of any legal invoice therefor (if delivered subsequent to the invoices
covering the 10% retention referred to above), (ii) due diligence
expenses, including title insurance reports and policies, surveys, title and
lien searches and appraisals (including the Appraisal and the Environmental
Reports) and (iii) fees and expenses for the services of an insurance
consultant, in connection with:  the
negotiation, preparation, execution and delivery of this Agreement and the
other Loan Documents and initial funding of the Loans hereunder and the
creation and perfection of the Liens to be created by the Security Documents.

 

123

 

(b)                                 The
Borrower also agrees to pay on demand or reimburse on demand to the applicable
party all reasonable out-of-pocket costs and expenses of the Administrative
Agent incurred after the Closing Date (including, but not limited to, the
reasonable fees and expenses of legal counsel, but excluding any travel
expenses incurred for travel by the personnel of the Administrative Agent (but
not any of its consultants when engaged in services for which the Borrower is
required to reimburse the Administrative Agent hereunder, with the
understanding that the Administrative Agent shall use good faith efforts to
attempt to engage qualified local consultants to provide such services) and
also excluding the Administrative Agent’s internal overhead) in connection with
(i) any release of a Project under Section 2.09, (ii) the
negotiation or preparation of any Modification or waiver of any of the terms of
this Agreement or any of the other Loan Documents (whether or not consummated),
(iii) the protection and maintenance of the perfection and priority of the
Liens created pursuant to the Security Documents, (iv) the negotiation
with any tenant, execution, delivery or recordation of any SNDA Agreement, (v) any
review or inspection of the work undertaken pursuant to Section 8.21
(including, without limitation, any seismic review undertaken to measure the
probable maximum loss with respect to the affected Projects following the
completion of such work); any monitoring or evaluation of environmental
conditions occurring at any Project following the occurrence of (A) any
event for which notice is required under Section 8.11(b), (B) any
violation by the Borrower of any of its covenants contained in Section 8.11(a) or
(C) any act or occurrence for which the Borrower is obligated to indemnify
the Administrative Agent or any Lender pursuant to the terms set forth in the
Environmental Indemnity Agreement; any review, inspection or evaluation
undertaken by the Restoration Consultant; and the preparation of any reports or
studies in connection with any of the foregoing, (vi) any review of
documents or requests, consideration for approval or disapproval or exercise of
rights outside of the ordinary day-to-day administration of the Loans and the
Loan Documents, and (vii) any other act, condition, request, delivery or
other item, if any other applicable provision of this Agreement or the other
Loan Documents provides for the costs and expenses of the Administrative Agent
in connection therewith to be paid by the Borrower and are not in violation of the
limitations contained herein.

 

(c)                                  The
Borrower also agrees to pay on demand or reimburse on demand to the applicable
party all reasonable out-of-pocket costs and expenses of the Lenders and the
Administrative Agent (including, but not limited to, the reasonable fees and
expenses of legal counsel) in connection with (i) any Default and any
enforcement or collection proceedings resulting therefrom, including all manner
of participation in or other involvement with (A) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, (B) judicial
or regulatory proceedings and (C) workout, restructuring or other
negotiations or proceedings (whether or not the workout, restructuring or
transaction contemplated thereby is consummated) and (ii) the enforcement
of this Section 14.03.

 

(d)                                 The
Borrower also agrees to pay on demand or reimburse on demand to the applicable
party all transfer, stamp, documentary or other similar taxes, assessments or
charges levied by any Governmental Authority in respect of this Agreement or
any of the other Loan Documents or any other document referred to herein or
therein and all costs, expenses, taxes, assessments and other charges incurred
in connection with any filing, registration, recording or perfection of any
security interest contemplated by any Security Document or any other document
referred to therein.

 

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14.04                     Indemnification.  (a) The Borrower hereby agrees to (i) protect
and indemnify the Indemnified Parties from, and hold each of them harmless,
from and against all damages, losses, claims, actions, liabilities (or actions,
investigations or other proceedings commenced or threatened in respect thereof)
penalties, fines, costs and expenses including reasonable attorneys’ fees and
expenses (collectively and severally, “Losses”) which may be imposed
upon, asserted against or incurred or paid by any of them resulting from the
claims of any third party relating to or arising out of (A) the Projects, (B) any
of the Loan Documents or the Transactions, (C) any ERISA Events, (D) any
Environmental Losses and (E) any act performed or permitted to be
performed by any Indemnified Party under any of the Loan Documents, except for
Losses to the extent determined by a court of competent jurisdiction to be
caused by the gross negligence, bad faith or willful misconduct of an
Indemnified Party (but the effect of this exception only eliminates the
liability of the Borrower with respect to the Indemnified Party (and if such
Indemnified Party is not a Lender, the Lender on whose behalf such Indemnified
Party was acting) to the extent such Indemnified Party has been adjudged to
have so acted and not with respect to any other Indemnified Party), and (ii) reimburse
each Indemnified Party on demand for any expenses (including the reasonable
attorneys’ fees and disbursements) reasonably incurred in connection with the
investigation of, preparation for or defense of any actual or threatened claim,
action or proceeding arising therefrom (excluding any action or proceeding
where the Indemnified Party is not a party to such action or proceeding out of
which any such expenses arise unless such Indemnified Party is required to
participate or respond in connection with such action or proceeding (e.g., by
way of deposition, discovery requests, testimony, subpoena or similar
reason)).  The Obligations shall not be
considered to have been paid in full unless all obligations of the Borrower
under this Section 14.04(a) shall have been fully performed
(except for contingent indemnification obligations for which no claim has
actually been made pursuant to this Agreement). 
This Section 14.04(a) shall survive repayment in full
of the Obligations and, as to any Project, the release of that Project as
collateral for the Loans in accordance with Section 2.09 of this
Agreement, and in addition, shall survive the assignment, sale or other
transfer of the Administrative Agent’s or any Lender’s interest hereunder.

 

(b)                                 Reserved.

 

14.05                     Amendments,
Etc.  Except as otherwise expressly
provided in this Agreement or the other Loan Documents, this Agreement and the
other Loan Documents may be Modified only by an instrument in writing signed by
the Borrower and the Administrative Agent acting with the consent of the
Required Lenders; provided that:  (a) no
Modification or waiver shall, unless by an instrument signed by all of the
Lenders or by the Administrative Agent acting with the written consent of all
of the Lenders:  (i) extend the date
fixed for the payment of principal of or interest on any Loan or any fee
hereunder or under the Loan Documents, including, without limitation, any
extension of the Maturity Date, (ii) reduce the amount of any such payment
of principal, (iii) reduce the rate at which interest is payable thereon
or any fee is payable hereunder, (iv) alter the rights or obligations of
the Borrower to prepay Loans, (v) alter the manner in which payments or
prepayments of principal, interest or other amounts hereunder shall be applied
as between the Lenders or Types of Loans, (vi) alter the terms of this Section 14.05,
(vii) Modify the definition of the term “Required Lenders” or Modify in
any other manner the number or percentage of the Lenders required to make any
determinations or waive any rights hereunder or to Modify any provision hereof,
(viii) alter the several nature of the Lenders’

 

125

 

obligations hereunder, (ix) release the Borrower,
any collateral or the Guarantor or otherwise terminate any Lien under any
Security Document providing for collateral security (except that no such
consent shall be required, and the Administrative Agent is hereby authorized,
to release any Lien covering the collateral under the Security Documents, and to
release (or terminate the liability of) the Borrower under the Loan Documents, and
to release the Guarantor under the Guarantor Documents:  (A) as expressly provided in the Loan
Documents and (B) upon payment of the Obligations in full in accordance
with the terms of the Loan Documents), (x) agree to additional obligations
being secured by such collateral security, or (xi) alter the relative
priorities of the obligations entitled to the benefits of the Liens created
under the Security Documents; (b) any Modification of Article XIII,
or of any of the rights or duties of the Administrative Agent hereunder, shall
require the consent of the Administrative Agent and the Required Lenders; and (c) no
Modification shall increase the Commitment of any Lender without the consent of
such Lender.  Notwithstanding anything to
the contrary contained in this Agreement or the other Loan Documents, the
Administrative Agent is hereby authorized by the Lenders to enter into
Modifications to the Loan Documents which are ministerial in nature, including
the preparation and execution of Uniform Commercial Code forms, Assignments and
Assumptions and SNDA Agreements and any amendment to the definition of “Change
of Control” that would eliminate the exclusions set forth in clause (i) or
(ii) of such definition.

 

14.06                     Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

 

14.07                     Assignments
and Participations.

 

(a)                                  Consent
Required for Assignments by the Borrower. 
Except as otherwise expressly permitted by this Agreement, the Borrower
may not assign any of its rights or obligations hereunder or under the Loan
Documents without the prior consent of all of the Lenders and the
Administrative Agent.

 

(b)                                 Assignments
by Lenders.

 

(i)                                     Subject
to the conditions set forth in subsection (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent of:

 

(A)                              the
Borrower, whose consent shall not be unreasonably withheld, conditioned or delayed;
provided that (1) such consent shall be deemed granted should the
Borrower fail to respond within five (5) Business Days upon receipt of a
notice of such assignment and (2) should the Borrower not give such
consent, the Borrower shall provide to the Administrative Agent and the Lender
requesting such assignment its specific reasons for such disapproval; provided
that no consent of the Borrower shall be required for an assignment to a
Lender, an Affiliate of a Lender that is engaged in making, purchasing, holding
or investing in bank loans and similar extensions of credit in the ordinary
course of its business (and which is not engaged in the business of acquiring
direct or indirect ownership interests in commercial real estate projects), an
Eligible Assignee or, if a Major Default exists, any other assignee; and

 

126

 

(B)                                the
Administrative Agent, whose consent shall not be unreasonably withheld,
conditioned or delayed; provided that no consent of the Administrative
Agent shall be required for an assignment of all or a portion of any Commitment
or Loans to an assignee that is a Lender with a Commitment immediately prior to
giving effect to such assignment or an Affiliate of the assigning Lender if
also an Eligible Assignee.

 

(ii)                                  Assignments
shall be subject to the following additional conditions:

 

(A)                              except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
or Loan, the amount of the Commitment or Loan of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent; provided that no such consent of
the Borrower shall be required if an Event of Default exists;

 

(B)                                each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement;

 

(C)                                the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $4,500; and

 

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

 

(iii)                               Subject
to acceptance and recording thereof pursuant to subsection (b)(iv) of
this Section 14.07, from and after the effective date specified in
each Assignment and Assumption the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 5.01, 5.05, 5.06 and 14.04);
provided, however, that in no event shall such assigning Lender
be released with respect to any defaults by or liabilities of such Lender under
the Loan Documents which accrued prior to such assignment.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 14.07
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with subsection (c) of
this Section 14.07.

 

127

 

(iv)                              The
Administrative Agent shall maintain at its Principal Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loan owing to, each Lender pursuant to the terms hereof from time
to time (the “Register”).  The
entries in the Register shall be conclusive absent manifest error, and the
Borrower, the Administrative Agent, and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Administrative Agent shall
record all entries in the Register promptly upon their being effected.  The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

(v)                                 Upon
its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire, the processing and recordation fee referred to in subsection (b) of
this Section 14.07 and any written consent to such assignment
required by subsection (b) of this Section 14.07,
the Administrative Agent shall accept such Assignment and Assumption and record
the information contained therein in the Register.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this subsection.

 

(c)                                  Participations.

 

(i)                                     Any
Lender may, without the consent of the Borrower or the Administrative Agent,
sell participations to one or more banks or other financial institutions (including,
without limitation, life insurance companies), or an Affiliate of the Lender
that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business (and which
is not engaged in the business of acquiring direct or indirect ownership
interests in commercial real estate projects) (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement and
the other Loan Documents (including all or a portion of its Commitment and the
Loans owing to it); provided that (A) such Lender’s obligations
under this Agreement and the other Loan Documents shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the performance
of such obligations and (C) the Borrower, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
the other Loan Documents.  Any agreement
or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement
and the other Loan Documents and to approve any Modification or waiver of any
provision of this Agreement or any other Loan Document; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of such Participant, agree to (1) increase or extend the term of
such Lender’s Commitment to the extent that it affects such Participant, (2) extend
the date fixed for the payment of principal of or interest on the related Loan
or Loans, (3) reduce the amount of any such payment of principal or (4) reduce
the rate at which interest is payable thereon to a level below the rate at
which the Participant is entitled to receive such interest.  Subject to

 

128

 

subsection (c)(ii) of
this Section 14.07, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 5.01, 5.05 and 5.06
to the same extent, but subject to the same limitations, conditions and duties
set forth in such sections, as if it were a Lender and had acquired its
interest by assignment pursuant to subsection (b) of this Section 14.07.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 14.10
as though it were a Lender; provided that such Participant agrees to be
subject to Section 14.10 as though it were a Lender.

 

(ii)                                  A
Participant shall not be entitled to receive any greater payment under Section 5.01
or 5.06 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent.  A Participant that
would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 5.06 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees in writing,
for the benefit of the Borrower, to comply with Section 5.06 as
though it were a Lender.

 

(d)                                 Pledges.  In addition to the assignments and
participations permitted under the foregoing provisions of this Section 14.07:  (a) any Lender may (without notice to
the Borrower, the Administrative Agent or any other Lender and without payment
of any fee) assign and pledge all or any portion of its Loans and its Note to
any Federal Reserve Bank as collateral security pursuant to Regulation A and
any Operating Circular issued by such Federal Reserve Bank, and such Loans and
Note shall be transferable as provided therein; and (b) any Lender may
(upon notice to the Administrative Agent and without payment of any fee) assign
and pledge all or any portion of its Loans and its Note as collateral for
financing, and such Loans and Note shall be fully transferable as provided
therein.  No such assignment shall
release the assigning Lender from its obligations hereunder.

 

(e)                                  Provision
of Information to Assignees and Participants.  A Lender may furnish any information
concerning the Borrower, the Projects, the Loans, the Borrower’s Member or any
Borrower Party in the possession of such Lender from time to time to assignees,
pledgees and participants (including prospective assignees, pledgees and
participants), subject, however, to the party receiving such information
confirming in writing that such party and such information is subject to the
provisions of Section 14.24.

 

(f)                                    No
Assignments to the Borrower or Affiliates. 
Anything in this Section 14.07 or Section 14.27
to the contrary notwithstanding, each Lender agrees for itself that it shall
not assign or participate any interest in any Loan held by it hereunder to the
Borrower or any of its Affiliates without the prior consent of each Lender.

 

14.08                     Survival.  The obligations of the Borrower under Sections
3.02(e), 5.01, 5.05, 5.06, 14.03, 14.04
and 14.12, and the obligations of the Lenders under Sections 13.05,
shall survive the repayment of the Obligations, the termination of the
Commitments and, as to any Project, the release of that Project as collateral
for the Loans in accordance with Section 2.09 of this Agreement,
and in addition, in the case of any Lender that may assign any interest under
the Loan Documents in accordance with the terms thereof including any Lender’s
interest in its Commitment or Loan hereunder, shall survive the making of such
assignment, notwithstanding

 

129

 

that such assigning Lender may cease to be a “Lender”
hereunder.  In addition, each
representation and warranty made herein or pursuant hereto by the Borrower
shall survive the making of such representation and warranty, and no Lender
shall be deemed to have waived, by reason of making any Loan, any Default that
may arise by reason of such representation or warranty proving to have been
false or misleading, notwithstanding that such Lender or the Administrative
Agent may have had notice or knowledge or reason to believe that such
representation or warranty was false or misleading at the time such Loan was
made.

 

14.09                     Reserved.

 

14.10                     Right of
Set-off.

 

(a)                                  Upon
the occurrence and during the continuance of any Event of Default, each of the
Lenders is, subject (as between the Lenders) to the provisions of subsection (c) of
this Section 14.10, hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being expressly waived by
the Borrower) and to the fullest extent permitted by law, to set-off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held, and other indebtedness at any time owing, by such Lender in
any of its offices, in Dollars or in any other currency, to or for the credit
or the account of the Borrower against any and all of the respective
obligations of the Borrower now or hereafter existing under the Loan Documents,
irrespective of whether or not such Lender or any other Lender shall have made
any demand hereunder and although such obligations may be contingent or
unmatured and such deposits or indebtedness may be unmatured.  Each Lender and the Administrative Agent
acknowledges that it is aware of the implications of the anti-deficiency laws
and “one form of action” laws of various jurisdictions in which the Collateral
may be located.  These laws, in general,
restrict or prohibit the exercise of remedies under loans secured by real
property, and the violation of those laws can result in severe consequences to
a lender, including a loss of the real property security.  These laws include, for example, Section 726
of the California Code of Civil Procedure. 
Therefore, anything obtained in this Section 14.10 to the
contrary notwithstanding, no Lender shall exercise any right of set-off against
any Borrower Party with respect to the Obligations under the Loan Documents
without the prior written consent of all of the Lenders.  In the event that any Lender exercises any
right of set-off without all of the Lenders’ prior consent, such Lender shall
protect, indemnify, defend and hold harmless the Administrative Agent and each
of the other Lenders from and against any liability, loss, cost, damage, or
injury that may result from such Person’s exercise of its right of
set-off.  This Section 14.10
shall inure only for the benefit of the Lenders and the Administrative Agent,
and may not be relied upon by any third party, including but not limited to the
Borrower and its Subsidiaries.

 

(b)                                 Each
Lender shall promptly notify the Borrower and the Administrative Agent after
any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application.  The rights of the Lenders under this Section 14.10
are in addition to other rights and remedies (including other rights of
set-off) which the Lenders may have.

 

(c)                                  If
an Event of Default has resulted in the Loans becoming due and payable prior to
the stated maturity thereof, each Lender agrees that it shall turn over to the
Administrative Agent any payment (whether voluntary or involuntary, through the
exercise of

 

130

 

any right of setoff or otherwise) on account of the Loans held by it in
excess of its ratable portion of payments on account of the Loans obtained by
all the Lenders.

 

14.11                     Remedies
of Borrower.  It is expressly
understood and agreed that, notwithstanding any Applicable Law or any provision
of this Agreement or the other Loan Documents to the contrary, the liability of
the Administrative Agent and each Lender (including their respective successors
and assigns) and any recourse of the Borrower against the Administrative Agent
and each Lender shall be limited solely and exclusively to their respective
interests in the Loans and/or Commitments or the Projects.  Without limiting the foregoing, in the event
that a claim or adjudication is made that the Administrative Agent, any of the
Lenders, or their agents, acted unreasonably or unreasonably delayed acting in
any case where by Applicable Law or under this Agreement or the other Loan
Documents, the Administrative Agent, any Lender or any such agent, as the case
may be, has an obligation to act reasonably or promptly, or otherwise violated
this Agreement or the Loan Documents, the Borrower agrees that none of the
Administrative Agent, the Lenders or their agents shall be liable for any
incidental, indirect, special, punitive, consequential or speculative damages
or losses resulting from such failure to act reasonably or promptly in
accordance with this Agreement or the other Loan Documents.

 

14.12                     Brokers.  The Borrower hereby represents to the
Administrative Agent and each Lender that it has not dealt with any broker,
underwriter, placement agent, or finder in connection with the Transactions,
except for Secured Capital.  The Borrower
hereby agrees that it shall pay any and all brokerage commissions or finders
fees owing to Secured Capital in connection with the Transactions and agrees
and acknowledges that payment of all such brokerage commissions or finders fees
shall be the Borrower’s sole responsibility. 
The Borrower hereby agrees to protect and indemnify and hold the
Administrative Agent and each Lender harmless from and against any and all
claims, liabilities, costs and expenses of any kind in any way relating to or
arising from a claim by Secured Capital and any Person that such Person acted
on behalf of the Borrower in connection with the Transactions.

 

14.13                     Estoppel
Certificates.

 

(a)                                  The
Borrower, within ten (10) days after the Administrative Agent’s request,
shall furnish to the Administrative Agent a written statement, duly
acknowledged, certifying to the Administrative Agent and each Lender and/or,
subject to the terms of Section 14.07, any proposed assignee of any
portion of the interests hereunder:  (i) the
amount of the Outstanding Principal Amount then owing under this Agreement and
each of the Notes, (ii) the terms of payment and Stated Maturity Date of
the Loans (or if earlier, the Maturity Date), (iii) the date to which
interest has been paid under each of the Notes, (iv) whether, to the
Borrower’s knowledge, any offsets or defenses exist against the repayment of
the Loans and, if any are alleged to exist, a reasonably detailed description
thereof, (v) the extent to which the Loan Documents have been Modified by
the Borrower and (vi) such other information as the Administrative Agent
shall reasonably request.

 

(b)                                 The
Administrative Agent, within ten (10) days after the Borrower’s reasonable
request therefor, shall furnish to the Borrower a written statement, duly acknowledged,
certifying to any prospective permitted purchaser of an interest in the
Borrower

 

131

 

or any prospective permitted lender to the Borrower or any lender providing
any Guaranteed Line of Credit, as to which the Borrower or any Subsidiary
thereof remains or will be obligated under a Guarantee: (i) the amount of
the Outstanding Principal Amount, (ii) the terms of payment and Stated
Maturity Date of the Loans (or if earlier, the Maturity Date), (iii) the date
to which interest has been paid under each of the Notes, (iv) whether, to
the actual knowledge of the Person signing on behalf of the Administrative
Agent, there are any Defaults on the part of the Borrower under this Agreement or
under any of the other Loan Documents, and, if any are alleged to exist, a
detailed description thereof and (v) the extent to which the Loan
Documents have been Modified.

 

14.14                     Preferences.  To the extent that the Borrower makes a
payment or payments to the Administrative Agent and/or any Lender, which
payment or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Administrative Agent or a
Lender, as the case may be.

 

14.15                     Certain
Waivers.  The Borrower hereby
irrevocably and unconditionally waives (a) promptness and diligence, (b) notice
of any actions taken by the Administrative Agent or any Lender hereunder or
under any other Loan Document or any other agreement or instrument relating
thereto except to the extent (i) otherwise expressly provided herein or
therein or (ii) the Borrower is not, pursuant to Applicable Law, permitted
to waive the giving of such notice, (c) all other notices, demands and
protests, and all other formalities of every kind in connection with the
enforcement of the Borrower’s obligations hereunder and under the other Loan
Documents, the omission of or delay in which, but for the provisions of this Section 14.15,
might constitute grounds for relieving the Borrower of any of its obligations
hereunder or under the other Loan Documents, except to the extent otherwise
expressly provided herein or to the extent that the Borrower is not, pursuant
to Applicable Law, permitted to waive the giving of such notice, (d) any
requirement that the Administrative Agent or any Lender protect, secure,
perfect or insure any lien on any collateral for the Loans or exhaust any right
or take any action against the Borrower or any other Person or against any
collateral for the Loans, (e) any right or claim of right to cause a
marshalling of the Borrower’s assets and (f) until the Obligations are
paid in full and discharged, all rights of subrogation or contribution, whether
arising by contract or operation of law or otherwise by reason of payment by
the Borrower pursuant hereto or to the other Loan Documents.

 

14.16                     Entire
Agreement.  This Agreement, the Notes
and the other Loan Documents constitute the entire agreement between the
Borrower, the Administrative Agent and the Lenders with respect to the subject
matter hereof and all understandings, oral representations and agreements
heretofore or simultaneously had among the parties are merged in, and are
contained in, such documents and instruments.

 

14.17                     Severability.  If any provision of this Agreement shall be
held by any court of competent jurisdiction to be unlawful, void or
unenforceable for any reason as to any Person

 

132

 

or circumstance, such provision or provisions shall be
deemed severable from and shall in no way affect the enforceability and
validity of the remaining provisions of this Agreement.

 

14.18                     Captions.  The table of contents and captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.

 

14.19                     Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

 

14.20                     GOVERNING
LAW.  THIS
AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS ARE TO BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA
(AS PERMITTED BY SECTION 1646.5 OF THE CALIFORNIA CIVIL CODE OR ANY
SIMILAR SUCCESSOR PROVISION), WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW RULE
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA TO GOVERN THE RIGHTS AND DUTIES OF THE
PARTIES.

 

14.21                     SUBMISSION
TO JURISDICTION.  THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH OF THE LENDERS HEREBY IRREVOCABLY (I) AGREE THAT
ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES, ANY SECURITY DOCUMENT, OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN A COURT OF RECORD IN THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
OR IN THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN SUCH STATE AND
COUNTY, (II) CONSENT TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, (III) WAIVE ANY OBJECTION WHICH IT MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OF SUCH COURTS
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND (IV) AGREE AND CONSENT THAT ALL SERVICE OF PROCESS UPON
THE BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH STATE OR
FEDERAL COURT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO THE BORROWER, AT THE ADDRESS FOR NOTICES PURSUANT TO SECTION 14.02
HEREOF, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE SAME
SHALL HAVE BEEN SO MAILED.  NOTHING IN
THIS SECTION 14.21 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING ANY
SUIT, ACTION OR PROCEEDING AGAINST THE BORROWER OR THE PROPERTY OF THE BORROWER
IN THE COURTS OF ANY OTHER JURISDICTIONS.

 

14.22                     WAIVER OF
JURY TRIAL; COUNTERCLAIM.  EACH OF
THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE

 

133

 

LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS.  THE
BORROWER FURTHER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, IN CONNECTION
WITH ANY LEGAL PROCEEDING BROUGHT BY OR ON BEHALF OF THE ADMINISTRATIVE AGENT
OR THE LENDERS WITH RESPECT TO THIS AGREEMENT, THE NOTES , THE OTHER LOAN
DOCUMENTS OR OTHERWISE IN RESPECT OF THE LOANS, ANY AND EVERY RIGHT THE
BORROWER MAY HAVE TO (A) INTERPOSE ANY COUNTERCLAIM THEREIN, OTHER
THAN A MANDATORY OR COMPULSORY COUNTERCLAIM, AND (B) HAVE THE SAME
CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING.  NOTHING CONTAINED IN THE IMMEDIATELY
PRECEDING SENTENCE SHALL PREVENT OR PROHIBIT THE BORROWER FROM INSTITUTING OR
MAINTAINING A SEPARATE ACTION AGAINST THE ADMINISTRATIVE AGENT OR THE LENDERS
WITH RESPECT TO ANY ASSERTED CLAIM.  THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY WAIVE ANY DEFENSE OR OBJECTION TO
THE BORROWER INSTITUTING OR MAINTAINING SUCH A SEPARATE ACTION AGAINST THE
ADMINISTRATIVE AGENT OR THE LENDERS FOR ANY CLAIM WHICH THE BORROWER IS
PRECLUDED FROM INTERPOSING AS A COUNTERCLAIM IN OR CONSOLIDATING WITH ANY
PROCEEDING COMMENCED BY THE ADMINISTRATIVE AGENT OR THE LENDERS DESCRIBED IN
THIS SECTION 14.22, BUT THE DEFENSES AND OBJECTIONS SO WAIVED ARE
LIMITED SOLELY TO DEFENSES AND OBJECTIONS BASED ON THE ASSERTION OF SUCH CLAIM
IN A SEPARATE ACTION AND DO NOT INCLUDE ANY OTHER DEFENSES OR OBJECTIONS,
WHETHER PROCEDURAL OR SUBSTANTIVE.

 

14.23                     Limitation
of Liability.

 

(a)                                  Neither
the Borrower, nor any past, present or future member in or manager of Borrower,
nor any owner of any direct or indirect Equity Interests in the Borrower, shall
be personally liable for payments due hereunder or under any other Loan
Document or for the performance of any obligation of the Borrower hereunder or
thereunder, or breach of any representation or warranty made by the Borrower
hereunder or thereunder.  Notwithstanding
the foregoing provisions of this Section 14.23(a), the Borrower
shall be personally (and on a full recourse basis) liable for and shall protect,
indemnify and defend the Administrative Agent and the Lenders from and against,
and shall hold the Administrative Agent and the Lenders harmless of, from and
against any deficiency, liability, loss, damage, costs, and expenses (including
legal fees and disbursements) suffered by the Administrative Agent and/or the
Lenders and caused by, or related to or as a result of any of the
following:  (i) the commission of a
criminal act by or on behalf of the Borrower, (ii) fraud, intentional
misrepresentation or intentionally inaccurate certification made at any time in
connection with the Loan Documents or the Loans by or on behalf of the
Borrower; (iii) misapplication or misappropriation of cash flow or other
revenue derived from or in respect of the Projects, including security deposits,
Insurance Proceeds, Condemnation Awards, or any rental, sales or other income
derived directly or indirectly from the Projects in violation of the Loan
Documents by or on behalf of the Borrower; and/or (iv) intentional or bad
faith commission of waste to or of the Projects or any portion thereof by or on
behalf of the Borrower.  In addition, the
Borrower (but not any past, present or future member

 

134

 

in or manager of Borrower, nor any owner of any direct or indirect
Equity Interests in the Borrower) shall be personally (and on a full recourse
basis) liable for and shall protect, indemnify and defend the Administrative
Agent and the Lenders from and against, and shall hold the Administrative Agent
and the Lenders harmless of, from and against any deficiency, liability, loss,
damage, costs, and expenses (including legal fees and disbursements) suffered
by the Administrative Agent and/or the Lenders and caused by, or related to or
as a result of any of the following: (A) voluntary bankruptcy or collusion
in an involuntary bankruptcy of the Borrower by or on behalf of the Borrower, (B) any
violation of Section 8.11(a) or resulting from a failure to
perform under the Environmental Indemnity, and/or (C) interference with
foreclosure following an Event of Default by or on behalf of the Borrower.

 

(b)                                 Nothing
contained in this Section shall impair the validity of the indebtedness,
obligations or Liens arising under the Loan Documents. Notwithstanding anything
to the contrary contained herein, the Administrative Agent may pursue any power
of sale, bring any foreclosure action, any action for specific performance, or
any other appropriate action or proceedings against Borrower or any other
Person for the purpose of enabling the Administrative Agent and the Lenders to
realize upon the collateral for the Loans (including, without limitation, any Rents
and Net Proceeds to the extent provided for in the Loan Documents) or to obtain
the appointment of a receiver.

 

(c)                                  Notwithstanding
anything to the contrary contained herein, the Guarantor shall have personal
liability on the terms contained in the Guarantor Documents (to the extent
provided therein).

 

14.24                     Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information that may be disclosed (a) to it and its
Subsidiaries’ and Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by Applicable Laws or by any subpoena or similar legal
process, (d) to any other party to this Agreement, (e) in connection
with the exercise of any remedies hereunder or under any other Loan Document or
any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this Section 14.24,
to (i) any assignee or pledgee of or Participant in, or any prospective
assignee or pledgee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the Borrower
and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section 14.24 or of arrangements entered
into pursuant hereto or (ii) becomes available to the Administrative Agent
or any Lender on a non-confidential basis from a source other than the Borrower;
provided, however, the obligation to maintain the confidentiality
of the Information provided hereunder shall expire twelve (12) months after the
date upon which the Obligations hereunder are indefeasibly paid in full.  For the purposes of this Section 14.24,
“Information” means all written information received from or on behalf
of the Borrower relating to the Borrower, its Subsidiaries or Affiliates or
their respective businesses, other than any such

 

135

 

information that is available to the Administrative
Agent or any Lender on a nonconfidential basis (and obtained from a Person not
known by the Administrative Agent or such Lender to have disclosed such
information in violation of a contractual confidentiality obligation of such
Person owed to the Borrower) prior to disclosure by the Borrower.  The Administrative Agent and each Lender, to the
extent required to maintain the confidentiality of Information as provided in
this Section 14.24, shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as a commercial banker
exercising reasonable and customary business practices would accord to its own
confidential information. 
Notwithstanding anything herein to the contrary, the information subject
to this Section 14.24 shall not include, and the Administrative
Agent and each Lender may disclose without limitation of any kind, any
information with respect to the “tax treatment” and “tax structure” (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Administrative Agent
or such Lender relating to such tax treatment and tax structure; provided
that with respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transactions
as well as other information, this sentence shall only apply to such portions
of the document or similar item that relate to the tax treatment or tax
structure of the Loans and transactions contemplated hereby.

 

14.25                     Usury
Savings Clause.  It is the intention
of the Borrower, the Administrative Agent and the Lenders to conform strictly
to the usury and similar laws relating to interest from time to time in force,
and all Loan Documents between the Borrower, the Administrative Agent and the
Lenders, whether now existing or hereafter arising and whether oral or written,
are hereby expressly limited so that in no contingency or event whatsoever,
whether by acceleration of maturity hereof or otherwise, shall the amount paid
or agreed to be paid in the aggregate to the Lenders as interest (whether or
not designated as interest, and including any amount otherwise designated by or
deemed to constitute interest by a court of competent jurisdiction) hereunder
or under the other Loan Documents or in any other agreement given to secure the
Loans, or in any other document evidencing, securing or pertaining to the
Loans, exceed the maximum amount (the “Maximum Rate”) permissible under
Applicable Laws.  If under any
circumstances whatsoever fulfillment of any provision hereof, of this Agreement
or of the other Loan Documents, at the time performance of such provisions
shall be due, shall involve exceeding the Maximum Rate, then, ipso facto, the
obligation to be fulfilled shall be reduced to the Maximum Rate.  For purposes of calculating the actual amount
of interest paid and/or payable hereunder in respect of laws pertaining to
usury or such other laws, all sums paid or agreed to be paid to the Lenders for
the use, forbearance or detention of the Loans evidenced hereby, outstanding
from time to time shall, to the extent permitted by Applicable Law, be
amortized, pro-rated, allocated and spread from the date of disbursement of the
proceeds of the Notes until payment in full of all of such indebtedness, so
that the actual rate of interest on account of such Loans is uniform through
the term hereof.  If under any circumstances
any Lender shall ever receive an amount which would exceed the Maximum Rate,
such amount shall be deemed a payment in reduction of the principal amount of
the applicable Loans and shall be treated as a voluntary prepayment under this
Agreement (without prepayment penalty or premium) and shall be so applied in
accordance with the provisions of this Agreement, or if such excessive interest
exceeds the outstanding amount of the applicable Loans and any other

 

136

 

Obligations, the excess shall be deemed to have been a
payment made by mistake and shall be refunded to the Borrower.

 

14.26                     Cooperation
with Syndication.  The Borrower
acknowledges that Arranger intends to syndicate a portion of the Commitments to
one or more Lenders (the “Syndication”) and in connection therewith, the
Borrower will take all actions as Arranger may reasonably request to assist
Arranger in its Syndication effort. 
Without limiting the generality of the foregoing, the Borrower shall, at
the request of Arranger (i) facilitate the review of the Loan and the
Projects by any prospective Lender; (ii) assist Arranger and otherwise
cooperate with Arranger in the preparation of information offering materials
(which assistance may include reviewing and commenting on drafts of such information
materials and drafting portions thereof); (iii) deliver updated
information on the Borrower and the Projects; (iv) make representatives of
the Borrower available to meet with prospective Lenders at tours of the
Projects and bank meetings; (v) facilitate direct contact between the
senior management and advisors of the Borrower and any prospective Lender; and (vi) provide
Arranger with all information reasonably deemed necessary by it to complete the
Syndication successfully.  The Borrower
agrees to take such further action, in connection with documents and amendments
to the Loan Documents, as may reasonably be required to effect such
Syndication.  The Borrower shall not be
responsible for any costs or expenses incurred by the Administrative Agent, the
Arranger, any Lender or any other Person in connection with such Syndication,
other than Arranger’s attorneys’ fees incurred through the closing of the Loan.

 

14.27                     Reserved.

 

14.28                     Controlled
Account.  The Borrower hereby agrees
with the Administrative Agent, as to any Controlled Account into which this
Agreement requires the Borrower to deposit funds, as follows:

 

(a)                                  Establishment
and Maintenance of the Controlled Account.

 

(i)                                     Each
Controlled Account (A) shall be a separate and identifiable account from
all other funds held by the Depository Bank and (B) shall contain only
funds required to be deposited pursuant to this Agreement or any other Loan
Document.  Any interest which may accrue
on the amounts on deposit in a Controlled Account shall be added to and shall
become part of the balance of such Controlled Account.  The Borrower, the Administrative Agent and
the applicable Depository Bank shall enter into an agreement (the “Controlled
Account Agreement”), substantially in the form of Exhibit O
attached hereto (with such changes thereto as may be required by the Depository
Bank and satisfactory to the Administrative Agent) which shall govern the
Controlled Account and the rights, duties and obligations of each party to the
Controlled Account Agreement.

 

(ii)                                  The
Controlled Account Agreement shall provide that (A) the Controlled Account
shall be established in the name of the Administrative Agent, as agent for the
Lenders, (B) the Controlled Account shall be subject to the sole dominion,
control and discretion of the Administrative Agent, and (C) neither the Borrower
nor any other Person, including, without limitation, any Person claiming on
behalf of or through the Borrower, shall have any right or authority, whether
express or implied, to make use

 

137

 

of or
withdraw, or cause the use or withdrawal of, any proceeds from the Controlled
Account or any of the other proceeds deposited in the Controlled Account,
except as expressly provided in this Agreement or in the Controlled Account
Agreement.

 

(b)                                 Deposits
to and Disbursements from the Controlled Account.  All deposits to and disbursements of all or
any portion of the deposits to the Controlled Account shall be in accordance
with this Agreement and the Controlled Account Agreement.  The Borrower shall pay any and all fees
charged by Depository Bank in connection with the maintenance of the Controlled
Account required to be established by or for it hereunder, and the performance
of the Depository Bank’s duties.

 

(c)                                  Security
Interest.

 

(i)                                     The
Borrower hereby grants a perfected first priority security interest in favor of
the Administrative Agent for the ratable benefit of the Lenders in each
Controlled Account established by or for it hereunder and all financial assets
and other property and sums at any time held, deposited or invested therein,
and all security entitlements and investment property relating thereto,
together with any interest or other earnings thereon, and all proceeds thereof,
whether accounts, general intangibles, chattel paper, deposit accounts,
instruments, documents or securities (collectively, “Controlled Account
Collateral”), together with all rights of a secured party with respect
thereto (even if no further documentation is requested by the Administrative
Agent or the Lenders or executed by the Borrower).

 

(ii)                                  The
Borrower covenants and agrees:

 

(A)                              to
do all acts that may be reasonably necessary to maintain, preserve and protect the
Controlled Account Collateral;

 

(B)                                to
pay promptly when due all material taxes, assessments, charges, encumbrances
and liens now or hereafter imposed upon or affecting any Controlled Account
Collateral;

 

(C)                                to
appear in and defend any action or proceeding which may materially and
adversely affect the Borrower’s title to or the Administrative Agent’s interest
in the Controlled Account Collateral;

 

(D)                               following
the creation of each Controlled Account established by or for the Borrower and
the initial funding thereof, other than to the Administrative Agent pursuant to
this Agreement or a Controlled Account Agreement, not to transfer, assign,
sell, surrender, encumber, mortgage, hypothecate, or otherwise dispose of any
of the Controlled Account Collateral or rights or interests therein, and to
keep the Controlled Account Collateral free of all levies and security
interests or other liens or charges except the security interest in favor of
the Administrative Agent granted hereunder;

 

(E)                                 to
account fully for and promptly deliver to the Administrative Agent, in the form
received, all documents, chattel paper, instruments and

 

138

 

agreements constituting the
Controlled Account Collateral hereunder, endorsed to the Administrative Agent
or in blank, as requested by the Administrative Agent, and accompanied by such
powers as appropriate and until so delivered all such documents, instruments,
agreements and proceeds shall be held by the Borrower in trust for the
Administrative Agent, separate from all other property of the Borrower; and

 

(F)                                 from
time to time upon request by the Administrative Agent, to furnish such further
assurances of the Borrower’s title with respect to the Controlled Account
Collateral, execute such written agreements, or do such other acts, all as may
be reasonably necessary to effectuate the purposes of this agreement or as may
be required by law, or in order to perfect or continue the first-priority lien
and security interest of the Administrative Agent in the Controlled Account
Collateral.

 

(iii)                               All interest earned on the
Controlled Account shall be retained in such Controlled Account subject to the
Borrower’s withdrawal rights set forth herein. 
The Borrower shall treat all interest earned on the Controlled Account
as its income for federal income tax purposes.

 

(iv)                              Upon
the occurrence and during the continuation of an Event of Default, the
Administrative Agent may (and, upon the instruction of the Required Lenders,
shall):

 

(A)                              without
any advertisement or notice to or authorization from the Borrower (all of which
advertisements, notices and/or authorizations are hereby expressly waived),
withdraw, sell or otherwise liquidate the funds deposited into any Controlled
Account, and apply the proceeds thereof to the unpaid Obligations in such order
as the Administrative Agent may elect in its sole discretion, without liability
for any loss, and the Borrower hereby consents to any such withdrawal and
application as a commercially reasonable disposition of such funds and agrees
that such withdrawal shall not result in satisfaction of the Obligations except
to the extent the proceeds are applied to such sums;

 

(B)                                without
any advertisement or notice to or authorization from the Borrower (all of which
advertisements, notices and/or authorizations are hereby expressly waived),
notify any account debtor on any Controlled Account Collateral pledged by the
Borrower pursuant hereto to make payment directly to the Administrative Agent;

 

(C)                                foreclose
upon all or any portion of the Controlled Account Collateral pledged by the
Borrower or otherwise enforce the Administrative Agent’s security interest in
any manner permitted by law or provided for in this Agreement;

 

(D)                               sell
or otherwise dispose of all or any portion of the Controlled Account Collateral
pledged by the Borrower at one or more public or private sales, whether or not
such Controlled Account Collateral is present at the place of sale, for cash or
credit or future delivery, on such terms and in such manner as the
Administrative Agent may determine;

 

139

 

(E)                                 recover
from the Borrower all costs and expenses, including, without limitation,
reasonable attorneys’ fees, incurred or paid by the Administrative Agent in
exercising any right, power or remedy provided by this subsection (iv);
and

 

(F)                                 exercise
any other right or remedy available to the Administrative Agent or the Lenders
under Applicable Law or in equity.

 

(v)                                 Reserved.

 

14.29                     Financing Statements.  The Borrower authorizes the Administrative
Agent to file such financing statements (and any continuation statements with
respect thereto) as the Administrative Agent may deem necessary in order to
perfect or maintain the perfection of any security interest granted or to be
granted to the Administrative Agent pursuant to any of the Loan Documents, in
such jurisdictions as the Administrative Agent may elect.

 

14.30                     Severance of Loan.  Eurohypo
shall have the right, at any time, but at no additional cost to the Borrower,
to direct the Administrative Agent, with respect to all or any portion of the
Loan, to (a) cause the Notes, the Deeds of Trust and the other Security
Documents to be severed and/or split into two or more separate notes, deeds of
trust and other security agreements, so as to evidence and secure one or more
senior and subordinate mortgage loans, (b) create one more senior and
subordinate notes (i.e., an A/B or A/B/C structure) secured by the Deeds of
Trust and the other Security Documents, (c) create multiple components of
the Notes (and allocate or reallocate the Outstanding Principal Amount of the
Loan among such components or among the components of the Notes delivered upon
the Closing Date) or (d) otherwise sever the Loan into two or more loans
secured by the Deeds of Trust and the other Security Documents; in each such
case, in whatever proportions and priorities as Eurohypo may so direct in its
discretion to the Administrative Agent; provided, however, that
in each such instance (i) the Outstanding Principal Amount of all the
Notes evidencing the Loan (or (in any case involving the splitting, modification, componentization or
other severance of any previously-split, componentized or severed Note)
components of such Notes) immediately after the effective date of such
splitting, modification, componentization or other severance, equals the
Outstanding Principal Amount of the Loan (or (in any case involving the splitting, modification, componentization or
other severance of any previously-split, componentized or severed Note) the
applicable component thereof) immediately prior to such splitting,
modification, componentization or other severance, (ii) the weighted
average of the interest rates for all such Notes (or, if applicable, components
of such Notes) immediately after the effective date of such splitting,
modification, componentization or other severance equals the interest rate of
the original Note (or the applicable component thereof) immediately prior to
such splitting, modification, componentization or other severance thereof,
(iii) there shall be no modification of the Maturity Date, the Types of
Loans available to be selected by the Borrower (provided that the Applicable
Margins on the relevant Types may be modified, and may differ for each of such
split, modified, componentized or otherwise severed Notes or components, so
long as the restrictions set forth in clause (ii) above are not violated),
the due dates for mandatory principal payments, prepayment terms, Events of
Default (other than cross defaulting of any severed Notes or Security Documents)
or any other modifications which would result, in the aggregate, in an increase
in the economic obligations of the Borrower with respect to all Loans
outstanding

 

140

 

hereunder following such
splitting, modification, componentization or other severance as compared to the
obligations of the Borrower immediately prior thereto (other than changes in
the interest rate or Applicable Margins which do not violate the restrictions
in clause (ii) above), including, without limitation, any recourse
provisions, and (iv) except for modifications which do not violate the
restrictions set forth in clauses (ii) and (iii) above, such
modification shall not result, in the aggregate, in an increase in any
liability or obligation, or any change in any substantive rights, of the
Borrower, any Borrower Party or any Named Principal under the Loan Documents
following such splitting, modification, componentization or other severance as
compared to the respective liabilities, obligations or rights of such parties
immediately prior thereto.  If requested
by the Administrative Agent in writing, subject to the provisions of Section 2.04(b),
the Borrower shall execute within ten (10) Business Days after such
request, a severance agreement, amendments to or amendments and restatements of
any one or more Loan Documents, and such documentation as the Administrative
Agent may reasonably request to evidence and/or effectuate any such splitting,
modification, componentization or other severance, all in form and substance
reasonably satisfactory to Eurohypo, the Administrative Agent and the Borrower.

 

14.31                      Additional Permitted Public REIT Provisions.  In
connection with the Permitted Reorganization and following a Permitted Public
REIT Transfer, the following provisions shall apply:

 

(a)                                  The Borrower shall have the right from time to time upon notice to, but
without the consent of, the Administrative Agent to change the Borrower’s
Manager to the Permitted Public REIT or any other Permitted Public REIT
Subsidiary determined by the Permitted Public REIT.  Upon the occurrence of such change, the
Borrower shall notify the Administrative Agent of the name and principal place
of business or chief executive office of the new Borrower’s Manager within ten (10) Business
Days after any change in the same.

 

(b)                                 Notwithstanding the provisions of Section 1.02(b), the
Borrower shall have the right from time to time upon notice to, but without the
consent of, the Administrative Agent, to change its fiscal year, including the
last days of its fiscal year and fiscal quarters, to correspond with those of
the Permitted Public REIT.  The
Borrower shall provide written notice thereof to the Administrative Agent
within ten (10) Business Days after the occurrence of such change.

 

(c)                                  Nothing in Sections 8.03, 9.01 and 9.07 as to parties
other than the Borrower shall prohibit or restrict the actions taken pursuant
to the Permitted Reorganization, or any other actions expressly permitted by
this Section 14.31 (or any agreement to take any such
actions).  As used herein, the term “Permitted
Reorganization” shall mean a simultaneous transaction consisting of
one or more of the following elements, provided that, upon the consummation of
such transaction, the Borrower shall be in compliance with all covenants set
forth in this Agreement (after giving effect to the express terms thereof which
by their terms may be applicable or inapplicable upon the occurrence of the
Permitted Public REIT Transfer or Transfer of the Projects to a Qualified
Successor Entity), no Event of Default shall result therefrom, and the Permitted Public REIT shall directly or
indirectly own fifty-one percent (51%) or more of the ownership interests in
the Borrower and shall directly or indirectly control the Borrower:

 

141

 

(i)                                     The formation of a
limited liability company that is a wholly owned Subsidiary of the Operating
Partnership of the Permitted Public REIT (the “OP Merger Sub”) and the
merger of the Borrower’s Member into the OP Merger Sub with either the Borrower’s
Member or the OP Merger Sub as the surviving entity;

 

(ii)                                  The contribution to the
Operating Partnership of the Permitted Public REIT of all of the Equity
Interests in the Borrower’s Member that are not redeemed;

 

(iii)                               At the option of the
Permitted Public REIT, the contribution to the Operating Partnership of
the Permitted Public REIT or another Permitted Public REIT Subsidiary as part of a Permitted
Public REIT Transfer of all of the Equity Interests in the Borrower, the
withdrawal of the Borrower’s Member as the sole member of the Borrower and the
dissolution of the Borrower’s Member or the OP Merger Sub;

 

(iv)          The formation of a limited liability company that is a
wholly owned Subsidiary of the Permitted Public REIT (“REIT Merger Sub 1”)
and the merger of the Borrower’s Manager into REIT Merger Sub 1 with either the
Borrower’s Manager or REIT Merger Sub 1 as the surviving entity;

 

(v)           The formation of a limited liability company that is a
wholly owned Subsidiary of the Permitted Public REIT (“REIT Merger Sub 2”)
and the merger of the Property Manager into REIT Merger Sub 2 with either the
Property Manager or REIT Merger Sub 2 as the surviving entity;

 

(vi)                              The contribution to the
Operating Partnership of the Permitted Public REIT of all or substantially all
of the assets of the Borrower’s Manager and all or substantially all of the
assets of the Property Manager and, at the option of the Permitted Public REIT,
the subsequent dissolution of the Borrower’s Manager and/or the Property
Manager;

 

(vii)                           The withdrawal of the Borrower’s
Manager as the manager of the Borrower and any applicable Subsidiaries of the
Borrower or the Borrower’s Member and the appointment of the Permitted Public
REIT or any wholly-owned Permitted Public REIT Subsidiary determined by the
Permitted Public REIT as the new manager of such Person;

 

(viii)                        The termination of the
Property Management Agreement for each Project and the appointment, pursuant to
Section 14.31(d), of a new Property Manager for the Projects
consisting of the Permitted Public REIT or any wholly-owned Permitted Public
REIT Subsidiary determined by the Permitted Public REIT; and

 

(ix)                                Modifications to the
Organizational Documents of the Borrower Parties that do not violate Section 9.01(b);
and

 

(x)                                   The formation,
dissolution or termination of such other entities, the contribution or transfer
of such other assets, the execution of such contracts and agreements, and such
other deliveries and actions as the Borrower Parties shall determine to be
necessary or appropriate to accomplish the foregoing so long as, upon the
consummation of such transaction, the Borrower shall be in compliance with all
covenants set forth in this Agreement (after giving effect to the express terms
thereof which by their terms may be applicable or inapplicable upon

 

142

 

the occurrence of the
Permitted Public REIT Transfer or Transfer of the Projects to a Qualified
Successor Entity), no Event of Default shall result therefrom, and the Permitted Public REIT shall directly or
indirectly own fifty-one percent (51%) or more of the ownership interests in
the Borrower and shall directly or indirectly control the Borrower.

 

(d)                                 In connection with the Permitted Reorganization or at any time
thereafter, the Borrower shall have the right to terminate (or assign to the
new property manager) the existing Property Management Agreement for each
Project and to replace, pursuant to this Section 14.31(d), the Property Manager by the Permitted Public REIT or by a management
company controlled directly or indirectly by the Permitted Public REIT
(including, without limitation, the Operating Partnership of the Permitted
Public REIT or any other wholly-owned Permitted Public REIT Subsidiary).  If any Project is managed by the Permitted
Public REIT or a Permitted Public REIT Subsidiary, then the Borrower may
dispense with the requirement of entering into a property management agreement
or may enter into a new property management agreement for one or more of the
Projects on such terms as it deems satisfactory (which may include, without
limitation, a separate cost sharing agreement delegating responsibilities for
property management to the Permitted Public REIT or a Permitted Public REIT
Subsidiary); provided that, if a property management agreement is
entered into, such agreement shall in all events be subordinate to the Deeds of
Trust and the other Loan Documents, and, within thirty (30) days after entering
into a new property management agreement, the Borrower and the new property
manager will execute and deliver to the Administrative Agent a Property Manager’s
Consent, with such changes thereto as may be reasonably necessary for the
Permitted Public REIT or its Affiliates to comply with tax or other Applicable
Laws pertaining to their status.

 

(e)                                  The Borrower’s Manager’s Limited Indemnity and Guaranty shall be
replaced by replacement guaranties delivered by an entity reasonably satisfactory to the Administrative Agent with a
net worth at least equivalent to that of Borrower’s Manager as of the date of
this Agreement and which controls the Borrower, which may, at Borrower’s
option, be the Permitted Public REIT’s Operating Partnership
or another guarantor reasonably satisfactory to the Administrative Agent.  Without limiting the discretion of the
Administrative Agent in connection with the review of any such replacement
guarantor, it is understood and agreed that (i) such replacement guarantor
shall deliver to the Administrative Agent such certified organizational
documents and papers, authorizations, consents, resolutions, incumbency
certificates and legal opinions as the Administrative Agent may reasonably
require in its discretion in order to confirm the due formation, valid
existence and good standing of such replacement guarantor, due execution,
authorization, validity and enforceability of such replacement guaranties, the
enforceability with respect to such replacement guarantor of the obligations incurred
thereby and the adequacy of the consideration received by such replacement
guarantor for the incurrence of such obligations and such other matters
relating to such replacement guarantor as the Administrative Agent may
reasonably request; (ii) the Administrative Agent shall have received such
financial statements and obtained such background checks, searches of
governmental records and similar diligence items with respect to such
replacement guarantor as shall be in form and substance reasonably satisfactory
to the Administrative Agent; and (iii) the Borrower or replacement
guarantor shall pay upon demand all costs and expenses (including, without
limitation, reasonable attorneys’ fees and expenses) incurred by the
Administrative Agent in connection with the review, preparation, negotiation or
execution of any of the foregoing items. 
Upon the Administrative Agent’s approval of such

 

143

 

replacement guarantor and
satisfaction of the conditions set forth above, such replacement guarantor
shall be deemed a “Guarantor” hereunder in substitution for the named Guarantor
and the replacement guaranties delivered by such replacement guarantor shall be
deemed the “Guarantor Documents” hereunder.

 

(f)                                    The Borrower shall ̧ within ten (10) Business
Days, following the consummation of the Permitted Reorganization, deliver
written notice thereof to the Administrative Agent which shall identify in
reasonable detail any changes in the identity of the Borrower Parties or the
Property Manager, any changes in the Property Management Agreement, any changes
in the Organizational Documents of the Borrower Parties, or any change in the
fiscal year of the Borrower which were consummated in connection therewith.

 

[Signature Pages Follow]

 

144

 

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

 

	
   

  	
  BORROWER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS EMMETT
  1995, LLC,

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  DOUGLAS EMMETT
  REALTY ADVISORS,

  
	
   

  	
   

  	
  a California
  corporation, its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/
  William Kamer

  	
   

  
	
   

  	
   

  	
   

  	
  William Kamer

  
	
   

  	
   

  	
   

  	
  Senior Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
  Douglas Emmett
  1995, LLC

  
	
   

  	
  c/o Douglas
  Emmett Realty Advisors

  
	
   

  	
  808 Wilshire
  Boulevard, Suite 200

  
	
   

  	
  Santa Monica,
  California 90401

  
	
   

  	
  Attention:
  Jordan L. Kaplan

  
	
   

  	
  Telecopier No.:
  (310) 255-7702

  
	
   

  	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  	
   

  
	
   

  	
  Douglas Emmett
  1995, LLC

  
	
   

  	
  c/o Douglas
  Emmett Realty Advisors

  
	
   

  	
  808 Wilshire
  Boulevard, Suite 200

  
	
   

  	
  Santa Monica,
  California 90401

  
	
   

  	
  Attention:
  William Kamer

  
	
   

  	
  Telecopier No.:
  (310) 255-7702

  
						

 

 

	
   

  	
  LENDERS

  
	
   

  	
   

  
	
   

  	
  EUROHYPO AG, NEW
  YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Sarner

  	
   

  
	
   

  	
   

  	
  Name:  David Sarner

  
	
   

  	
   

  	
  Title:   Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Cox

  	
   

  
	
   

  	
   

  	
  Name:  Stephen Cox

  
	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  
	
   

  	
  Address for Notices
  to Eurohypo AG,

  
	
   

  	
  New York Branch:

  
	
   

  	
   

  
	
   

  	
  Eurohypo
  AG, New York Branch

  
	
   

  	
  1114 Avenue of the
  Americas, 29th Floor

  
	
   

  	
  New York, New York
  10036

  
	
   

  	
  Attention: Legal
  Director

  
	
   

  	
  Telecopier No.: (866)
  267-7680

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Eurohypo
  AG, New York Branch

  
	
   

  	
  1114 Avenue of the
  Americas, 29th Floor

  
	
   

  	
  New York, New York
  10036

  
	
   

  	
  Attention: Head of
  Portfolio Operations

  
	
   

  	
  Telecopier No.: (866)
  267-7680

  
	
   

  	
   

  
	
   

  	
  - and -

  
	
   

  	
   

  
	
   

  	
  Morrison
  & Foerster LLP

  
	
   

  	
  555 West Fifth Street,
  Suite 3500

  
	
   

  	
  Los Angeles, California
  90013

  
	
   

  	
  Attention: Thomas
  R. Fileti, Esq.

  
	
   

  	
  Telecopier No.: (213)
  892-5454

  

 

 

	
   

  	
  BARCLAYS CAPITAL
  REAL ESTATE INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ LoriAnn Rung

  	
   

  
	
   

  	
   

  	
  Name: LoriAnn Rung

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  Barclays
  Capital Real Estate Inc.

  
	
   

  	
  200 Park Avenue

  
	
   

  	
  New York, NY 10166

  
	
   

  	
  Attention: Larry
  Miller, Director

  
	
   

  	
  Telecopier No.: (212)
  412-1613

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Barclays
  Capital Real Estate Inc.

  
	
   

  	
  200 Park Avenue

  
	
   

  	
  New York, NY 10166

  
	
   

  	
  Attention: Lori Rung

  
	
   

  	
  Telecopier No.: (212)
  412-1664

  

 

 

	
   

  	
  ADMINISTRATIVE AGENT

  
	
   

  	
   

  
	
   

  	
  EUROHYPO AG, NEW
  YORK BRANCH,

  
	
   

  	
  as Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Sarner

  	
   

  
	
   

  	
   

  	
  Name: David
  Sarner

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Cox

  	
   

  
	
   

  	
   

  	
  Name: Stephen
  Cox

  
	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  
	
   

  	
  Address for Notices
  to

  
	
   

  	
  Eurohypo as Administrative
  Agent:

  
	
   

  	
   

  
	
   

  	
  Eurohypo
  AG, New York Branch

  
	
   

  	
  1114 Avenue of the
  Americas, 29th Floor

  
	
   

  	
  New York, New York
  10036

  
	
   

  	
  Attention: Legal
  Director

  
	
   

  	
  Telecopier No.: (866)
  267-7680

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Eurohypo
  AG, New York Branch

  
	
   

  	
  1114 Avenue of the
  Americas, 29th Floor

  
	
   

  	
  New York, New York
  10036

  
	
   

  	
  Attention: Head of
  Portfolio Operations

  
	
   

  	
  Telecopier No.: (866)
  267-7680

  
	
   

  	
   

  
	
   

  	
  - and -

  
	
   

  	
   

  
	
   

  	
  Morrison
  & Foerster LLP

  
	
   

  	
  555 West Fifth Street,
  Suite 3500

  
	
   

  	
  Los Angeles, California
  90013

  
	
   

  	
  Attention: Thomas
  R. Fileti, Esq.

  
	
   

  	
  Telecopier No.: (213)
  892-5454

  

 

 

SCHEDULE 1A

 

LIST OF PROJECTS

 

1.                                       Palisades
Promenade, 120
Broadway, Santa
Monica, California

 

2.                                       Wilshire
Plaza, 12400
Wilshire Blvd., Los
Angeles, California

 

3.                                       First
Federal Square, 401
Wilshire Blvd., Santa
Monica, California

 

4.                                       11777
Building, 11777
San Vicente Blvd., Los Angeles, California

 

5.                                       Landmark II, 11766
Wilshire Blvd., Los
Angeles, CaliforniaExhibit
10.44

 

 

 

LOAN AGREEMENT

 

dated as of

 

August 25, 2005

 

among

 

DOUGLAS EMMETT 1996, LLC,

A DELAWARE LIMITED LIABILITY COMPANY

 

the LENDERS Party Hereto,

 

and

 

EUROHYPO AG, NEW
YORK BRANCH,

as Administrative Agent

 

 

$215,000,000

 

 

EUROHYPO AG, NEW YORK BRANCH,

as Lead Arranger and Joint Bookrunner

 

and

 

BARCLAYS CAPITAL
REAL ESTATE INC.

as Co-Lead Arranger and Joint Bookrunner

 

 

 

 

	
  ARTICLE
  I

  	
   

  	
  DEFINITIONS AND ACCOUNTING
  MATTERS

  	
  2

  
	
  1.01

  	
   

  	
  Certain Defined Terms

  	
  2

  
	
  1.02

  	
   

  	
  Accounting Terms and Determinations

  	
  33

  
	
  1.03

  	
   

  	
  Types of Loans

  	
  33

  
	
  1.04

  	
   

  	
  Terms Generally

  	
  33

  
	
  ARTICLE
  II

  	
   

  	
  COMMITMENTS, LOANS, NOTES AND
  PREPAYMENTS

  	
  33

  
	
  2.01

  	
   

  	
  Loans

  	
  33

  
	
  2.02

  	
   

  	
  Funding of Loans

  	
  34

  
	
  2.03

  	
   

  	
  Several Obligations

  	
  34

  
	
  2.04

  	
   

  	
  Notes

  	
  34

  
	
  2.05

  	
   

  	
  Conversions or Continuations of Loans

  	
  35

  
	
  2.06

  	
   

  	
  Prepayment

  	
  35

  
	
  2.07

  	
   

  	
  Mandatory Prepayments

  	
  37

  
	
  2.08

  	
   

  	
  Interest and Other Charges on Prepayment

  	
  37

  
	
  2.09

  	
   

  	
  Release of Projects

  	
  38

  
	
  2.10

  	
   

  	
  Call Date

  	
  40

  
	
  ARTICLE
  III

  	
   

  	
  PAYMENTS OF PRINCIPAL AND
  INTEREST

  	
  40

  
	
  3.01

  	
   

  	
  Repayment of Loans

  	
  40

  
	
  3.02

  	
   

  	
  Interest

  	
  40

  
	
  3.03

  	
   

  	
  Project-Level Account

  	
  41

  
	
  ARTICLE
  IV

  	
   

  	
  PAYMENTS; PRO RATA TREATMENT;
  COMPUTATIONS; ETC.

  	
  42

  
	
  4.01

  	
   

  	
  Payments

  	
  42

  
	
  4.02

  	
   

  	
  Pro Rata Treatment

  	
  43

  
	
  4.03

  	
   

  	
  Computations

  	
  43

  
	
  4.04

  	
   

  	
  Minimum Amounts

  	
  43

  
	
  4.05

  	
   

  	
  Certain Notices

  	
  44

  
	
  4.06

  	
   

  	
  Non-Receipt of Funds by the Administrative Agent

  	
  45

  
	
  4.07

  	
   

  	
  Sharing of Payments, Etc.

  	
  46

  
	
  ARTICLE
  V

  	
   

  	
  YIELD PROTECTION, ETC.

  	
  47

  
	
  5.01

  	
   

  	
  Additional Costs

  	
  47

  
	
  5.02

  	
   

  	
  Limitation on Eurodollar Loans

  	
  49

  
	
  5.03

  	
   

  	
  Illegality

  	
  49

  
	
  5.04

  	
   

  	
  Treatment of Affected Loans

  	
  49

  

 

i

 

	
  5.05

  	
   

  	
  Compensation

  	
  50

  
	
  5.06

  	
   

  	
  Taxes

  	
  51

  
	
  5.07

  	
   

  	
  Replacement of Lenders

  	
  52

  
	
  ARTICLE
  VI

  	
   

  	
  CONDITIONS PRECEDENT

  	
  53

  
	
  6.01

  	
   

  	
  Conditions Precedent to Effectiveness of Loan
  Commitments

  	
  53

  
	
  ARTICLE
  VII

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
  57

  
	
  7.01

  	
   

  	
  Organization; Powers

  	
  57

  
	
  7.02

  	
   

  	
  Authorization; Enforceability

  	
  57

  
	
  7.03

  	
   

  	
  Government Approvals; No Conflicts

  	
  58

  
	
  7.04

  	
   

  	
  Financial Condition

  	
  58

  
	
  7.05

  	
   

  	
  Litigation

  	
  58

  
	
  7.06

  	
   

  	
  ERISA

  	
  59

  
	
  7.07

  	
   

  	
  Taxes

  	
  59

  
	
  7.08

  	
   

  	
  Investment and Holding Company Status

  	
  59

  
	
  7.09

  	
   

  	
  Environmental Matters

  	
  59

  
	
  7.10

  	
   

  	
  Organizational Structure

  	
  60

  
	
  7.11

  	
   

  	
  Subsidiaries

  	
  60

  
	
  7.12

  	
   

  	
  Title

  	
  60

  
	
  7.13

  	
   

  	
  No Bankruptcy Filing

  	
  60

  
	
  7.14

  	
   

  	
  Executive Offices; Places of Organization

  	
  61

  
	
  7.15

  	
   

  	
  Compliance; Government Approvals

  	
  61

  
	
  7.16

  	
   

  	
  Condemnation; Casualty

  	
  61

  
	
  7.17

  	
   

  	
  Utilities and Public Access; No Shared Facilities

  	
  61

  
	
  7.18

  	
   

  	
  Solvency

  	
  61

  
	
  7.19

  	
   

  	
  Foreign Person

  	
  61

  
	
  7.20

  	
   

  	
  No Joint Assessment; Separate Lots

  	
  62

  
	
  7.21

  	
   

  	
  Security Interests and Liens

  	
  62

  
	
  7.22

  	
   

  	
  Leases

  	
  62

  
	
  7.23

  	
   

  	
  Insurance

  	
  63

  
	
  7.24

  	
   

  	
  Physical Condition

  	
  63

  
	
  7.25

  	
   

  	
  Flood Zone

  	
  63

  
	
  7.26

  	
   

  	
  Management Agreement

  	
  64

  
	
  7.27

  	
   

  	
  Boundaries

  	
  64

  

 

ii

 

	
  7.28

  	
   

  	
  Illegal Activity

  	
  64

  
	
  7.29

  	
   

  	
  Permitted Liens

  	
  64

  
	
  7.30

  	
   

  	
  Foreign Assets Control Regulations, Etc.

  	
  64

  
	
  7.31

  	
   

  	
  Defaults

  	
  64

  
	
  7.32

  	
   

  	
  Other Representations

  	
  64

  
	
  7.33

  	
   

  	
  True and Complete Disclosure

  	
  64

  
	
  7.34

  	
   

  	
  Reserved

  	
  65

  
	
  7.35

  	
   

  	
  Limited Partners

  	
  65

  
	
  7.36

  	
   

  	
  Non-Foreign Status

  	
  65

  
	
  7.37

  	
   

  	
  Borrower’s Member

  	
  65

  
	
  ARTICLE
  VIII

  	
   

  	
  AFFIRMATIVE COVENANTS OF THE
  BORROWER

  	
  65

  
	
  8.01

  	
   

  	
  Information

  	
  66

  
	
  8.02

  	
   

  	
  Notices of Material Events

  	
  68

  
	
  8.03

  	
   

  	
  Existence, Etc.

  	
  69

  
	
  8.04

  	
   

  	
  Compliance with Laws; Adverse Regulatory Changes

  	
  69

  
	
  8.05

  	
   

  	
  Insurance

  	
  70

  
	
  8.06

  	
   

  	
  Real Estate Taxes and Other Charges

  	
  75

  
	
  8.07

  	
   

  	
  Maintenance of the Projects; Alterations

  	
  76

  
	
  8.08

  	
   

  	
  Further Assurances

  	
  77

  
	
  8.09

  	
   

  	
  Performance of the Loan Documents

  	
  77

  
	
  8.10

  	
   

  	
  Books and Records; Inspection Rights

  	
  77

  
	
  8.11

  	
   

  	
  Environmental Compliance

  	
  78

  
	
  8.12

  	
   

  	
  Management of the Projects

  	
  79

  
	
  8.13

  	
   

  	
  Leases

  	
  80

  
	
  8.14

  	
   

  	
  Tenant Estoppels

  	
  80

  
	
  8.15

  	
   

  	
  Subordination, Non-Disturbance and Attornment
  Agreements

  	
  80

  
	
  8.16

  	
   

  	
  Operating Plan and Budget

  	
  80

  
	
  8.17

  	
   

  	
  Operating Expenses

  	
  82

  
	
  8.18

  	
   

  	
  Margin Regulations

  	
  82

  
	
  8.19

  	
   

  	
  Hedge Agreements.

  	
  82

  
	
  8.20

  	
   

  	
  Reserved

  	
  86

  
	
  8.21

  	
   

  	
  Required Work

  	
  86

  

 

iii

 

	
  ARTICLE
  IX

  	
   

  	
  NEGATIVE COVENANTS OF THE
  BORROWER

  	
  86

  
	
  9.01

  	
   

  	
  Fundamental Change

  	
  86

  
	
  9.02

  	
   

  	
  Limitation on Liens

  	
  87

  
	
  9.03

  	
   

  	
  Due on Sale; Transfer; Pledge

  	
  88

  
	
  9.04

  	
   

  	
  Indebtedness

  	
  94

  
	
  9.05

  	
   

  	
  Investments

  	
  97

  
	
  9.06

  	
   

  	
  Restricted Payments

  	
  97

  
	
  9.07

  	
   

  	
  Change of Organization Structure; Location of
  Principal Office

  	
  97

  
	
  9.08

  	
   

  	
  Transactions with Affiliates

  	
  97

  
	
  9.09

  	
   

  	
  Leases

  	
  98

  
	
  9.10

  	
   

  	
  Reserved

  	
  99

  
	
  9.11

  	
   

  	
  No Joint Assessment; Separate Lots

  	
  99

  
	
  9.12

  	
   

  	
  Zoning

  	
  99

  
	
  9.13

  	
   

  	
  ERISA

  	
  99

  
	
  9.14

  	
   

  	
  Reserved

  	
  99

  
	
  9.15

  	
   

  	
  Property Management

  	
  99

  
	
  9.16

  	
   

  	
  Foreign Assets Control Regulations

  	
  101

  
	
  ARTICLE
  X

  	
   

  	
  INSURANCE AND CONDEMNATION
  PROCEEDS

  	
  101

  
	
  10.01

  	
   

  	
  Casualty Events

  	
  101

  
	
  10.02

  	
   

  	
  Condemnation Awards

  	
  102

  
	
  10.03

  	
   

  	
  Restoration

  	
  103

  
	
  ARTICLE
  XI

  	
   

  	
  CASH TRAP ACCOUNT

  	
  108

  
	
  11.01

  	
   

  	
  Low DSCR Trigger Event

  	
  108

  
	
  ARTICLE
  XII

  	
   

  	
  EVENTS OF DEFAULT

  	
  111

  
	
  12.01

  	
   

  	
  Events of Default

  	
  111

  
	
  12.02

  	
   

  	
  Remedies

  	
  114

  
	
  ARTICLE
  XIII

  	
   

  	
  THE ADMINISTRATIVE AGENT

  	
  115

  
	
  13.01

  	
   

  	
  Appointment, Powers and Immunities

  	
  115

  
	
  13.02

  	
   

  	
  Reliance by Administrative Agent

  	
  116

  
	
  13.03

  	
   

  	
  Defaults

  	
  117

  
	
  13.04

  	
   

  	
  Rights as a Lender

  	
  119

  
	
  13.05

  	
   

  	
  Indemnification

  	
  119

  
	
  13.06

  	
   

  	
  Non-Reliance on Administrative Agent and Other
  Lenders

  	
  120

  

 

iv

 

	
  13.07

  	
   

  	
  Failure to Act

  	
  120

  
	
  13.08

  	
   

  	
  Resignation of Administrative Agent

  	
  120

  
	
  13.09

  	
   

  	
  Consents under Loan Documents

  	
  122

  
	
  13.10

  	
   

  	
  Authorization

  	
  122

  
	
  13.11

  	
   

  	
  Amendments Concerning Agency Function

  	
  122

  
	
  13.12

  	
   

  	
  Liability of the Administrative Agent

  	
  122

  
	
  13.13

  	
   

  	
  Transfer of Agency Function

  	
  123

  
	
  13.14

  	
   

  	
  Co-Lead Arranger and Joint Bookrunner

  	
  123

  
	
  ARTICLE
  XIV

  	
  MISCELLANEOUS

  	
  123

  
	
  14.01

  	
   

  	
  Non-Waiver; Remedies Cumulative

  	
  123

  
	
  14.02

  	
   

  	
  Notices

  	
  123

  
	
  14.03

  	
   

  	
  Expenses, Etc.

  	
  124

  
	
  14.04

  	
   

  	
  Indemnification

  	
  125

  
	
  14.05

  	
   

  	
  Amendments, Etc.

  	
  126

  
	
  14.06

  	
   

  	
  Successors and Assigns

  	
  127

  
	
  14.07

  	
   

  	
  Assignments and Participations

  	
  127

  
	
  14.08

  	
   

  	
  Survival

  	
  130

  
	
  14.09

  	
   

  	
  Reserved

  	
  130

  
	
  14.10

  	
   

  	
  Right of Set-off

  	
  131

  
	
  14.11

  	
   

  	
  Remedies of Borrower

  	
  131

  
	
  14.12

  	
   

  	
  Brokers

  	
  132

  
	
  14.13

  	
   

  	
  Estoppel Certificates

  	
  132

  
	
  14.14

  	
   

  	
  Preferences

  	
  133

  
	
  14.15

  	
   

  	
  Certain Waivers

  	
  133

  
	
  14.16

  	
   

  	
  Entire Agreement

  	
  133

  
	
  14.17

  	
   

  	
  Severability

  	
  133

  
	
  14.18

  	
   

  	
  Captions

  	
  133

  
	
  14.19

  	
   

  	
  Counterparts

  	
  133

  
	
  14.20

  	
   

  	
  GOVERNING LAW

  	
  134

  
	
  14.21

  	
   

  	
  SUBMISSION TO JURISDICTION

  	
  134

  
	
  14.22

  	
   

  	
  WAIVER OF JURY TRIAL; COUNTERCLAIM

  	
  134

  
	
  14.23

  	
   

  	
  Limitation of Liability

  	
  135

  
	
  14.24

  	
   

  	
  Confidentiality

  	
  136

  

 

v

 

	
  14.25

  	
   

  	
  Usury Savings Clause

  	
  137

  
	
  14.26

  	
   

  	
  Cooperation with Syndication

  	
  137

  
	
  14.27

  	
   

  	
  Reserved

  	
  138

  
	
  14.29

  	
   

  	
  Financing Statements

  	
  141

  
	
  14.30

  	
   

  	
  Severance of Loan

  	
  141

  
	
  14.31

  	
   

  	
  Additional Permitted Public REIT Provisions

  	
  142

  

 

	
  SCHEDULES:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1A

  	
   

  	
  -

  	
   

  	
  List of Projects

  
	
  Schedule 1B

  	
   

  	
  -

  	
   

  	
  Legal Descriptions
  of Projects

  
	
  Schedule 1.01(1)

  	
   

  	
  -

  	
   

  	
  Allocated Loan
  Amounts

  
	
  Schedule 1.01(2)

  	
   

  	
  -

  	
   

  	
  List of
  Applicable Lending Offices

  
	
  Schedule 1.01(3)

  	
   

  	
  -

  	
   

  	
  Appraised Values

  
	
  Schedule 1.01(4)

  	
   

  	
  -

  	
   

  	
  List of
  Commitments and Proportionate Shares

  
	
  Schedule 1.01(5)

  	
   

  	
  -

  	
   

  	
  Certain Eligible
  Assignees

  
	
  Schedule 1.01(6)

  	
   

  	
  -

  	
   

  	
  List of
  Environmental Reports

  
	
  Schedule 1.01(7)

  	
   

  	
  -

  	
   

  	
  List of Property
  Condition Reports

  
	
  Schedule 1.01(8)

  	
   

  	
  -

  	
   

  	
  List of Property
  Management Agreements

  
	
  Schedule 1.01(9)

  	
   

  	
  -

  	
   

  	
  Title Companies

  
	
  Schedule 7.04

  	
   

  	
  -

  	
   

  	
  Financial
  Condition Events

  
	
  Schedule 7.05

  	
   

  	
  -

  	
   

  	
  Pending
  Litigation

  
	
  Schedule 7.09

  	
   

  	
  -

  	
   

  	
  Environmental
  Matters

  
	
  Schedule 7.11

  	
   

  	
  -

  	
   

  	
  Subsidiaries

  
	
  Schedule 7.22

  	
   

  	
  -

  	
   

  	
  Rent Roll

  
	
  Schedule 8.11

  	
   

  	
  -

  	
   

  	
  List of
  Underground Storage Tanks

  
	
  Schedule 8.21

  	
   

  	
  -

  	
   

  	
  Required Work

  
	
  Schedule 9.12

  	
   

  	
  -

  	
   

  	
  Existing
  Non-conforming Uses

  

 

vi

 

	
  EXHIBITS:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  -

  	
   

  	
  Form of
  Assignment and Assumption

  
	
  Exhibit B

  	
   

  	
  -

  	
   

  	
  Borrower’s
  Manager’s Limited Indemnity and Guarantee

  
	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Form of Cash Trap
  Account Security Agreement

  
	
  Exhibit D

  	
   

  	
  -

  	
   

  	
  Form of Deed of
  Trust

  
	
  Exhibit E

  	
   

  	
  -

  	
   

  	
  Form of
  Environmental Indemnity

  
	
  Exhibit F

  	
   

  	
  -

  	
   

  	
  Form of General
  Assignment

  
	
  Exhibit G-1

  	
   

  	
  -

  	
   

  	
  Form of Hedge
  Agreement Pledge (Required)

  
	
  Exhibit G-2

  	
   

  	
  -

  	
   

  	
  Form of Hedge
  Agreement Pledge (Optional)

  
	
  Exhibit H

  	
   

  	
  -

  	
   

  	
  Form of Notes

  
	
  Exhibit I

  	
   

  	
  -

  	
   

  	
  Form of
  Project-Level Account Security Agreement

  
	
  Exhibit J

  	
   

  	
  -

  	
   

  	
  Form of Property
  Manager’s Consent

  
	
  Exhibit K

  	
   

  	
  -

  	
   

  	
  Form of
  Subordination, Non-Disturbance and Attornment Agreement

  
	
  Exhibit L

  	
   

  	
  -

  	
   

  	
  Notice of
  Conversion or Continuation

  
	
  Exhibit M

  	
   

  	
  -

  	
   

  	
  Form of Survey
  Certification

  
	
  Exhibit N

  	
   

  	
  -

  	
   

  	
  Form of Lease
  Information Summary

  
	
  Exhibit O

  	
   

  	
  -

  	
   

  	
  Form of
  Controlled Account Agreement

  

 

vii

 

LOAN AGREEMENT

 

LOAN AGREEMENT dated as
of August 25, 2005 by Douglas Emmett 1996, LLC, a limited liability company
organized under the laws of the State of Delaware (the “Borrower”); each
of the lenders (including Eurohypo (as hereinafter defined) in its capacity as
a lender) that is a signatory hereto identified under the caption “LENDERS” on
the signature pages hereto and each lender that becomes a “Lender” after the
date hereof pursuant to Section 14.07(b) (individually, a “Lender”
and, collectively, the “Lenders”); and EUROHYPO AG, NEW YORK BRANCH, as
agent for the Lenders (in such capacity, together with its successors in such
capacity, the “Administrative Agent”).

 

RECITALS:

 

A.                                   The
Borrower is the fee owner of those certain office buildings listed in Schedule
1A attached hereto located in the County of Los Angeles, State of
California on certain land more fully described in Schedule 1B attached
hereto (each such office building and the rights of the Borrower with respect
to the land on which such office building is located, together with any air
rights and other rights, privileges, easements, hereditaments and appurtenances
thereunto relating or appertaining thereto, all Improvements thereon, together
with all fixtures and equipment required for the operation thereof, all personal
property related to the foregoing and the rights of the Borrower with respect
to all other items described in the granting clause of the Deed of Trust
relating to such office building and interest in land is referred to as a “Project”
and, collectively, the “Projects”).

 

B.                                     The
Projects consist in the aggregate of five (5) improved office and/or retail or
mixed use buildings, containing in the aggregate approximately 1,056,102 square
feet (each such Project and all other improvements constructed on each Project
being, individually and collectively, the “Improvements”).

 

C.                                     The
Borrower has requested and applied to the Lenders for a loan in the aggregate
principal amount of $215,000,000 in connection with the Projects for the
purposes provided herein.

 

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

 

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

 

 

ARTICLE
I

 

DEFINITIONS
AND ACCOUNTING MATTERS

 

1.01                       Certain Defined Terms. As
used herein, the following terms shall have the following meanings:

 

“Additional Costs” shall have the meaning
assigned to such term in Section 5.01.

 

“Adjusted LIBO Rate” shall mean, for any
Eurodollar Loan for any Interest Period therefor, a rate per annum (expressed
as a percentage and rounded upwards, if necessary, to the nearest 1/10000 of
1%) determined by the Administrative Agent to be equal to a fraction, the
numerator of which is equal to the LIBO Rate for such Eurodollar Loan for such
Interest Period and the denominator of which is equal to (x) 1 minus (y) the Reserve Requirement (if any) for such
Eurodollar Loan for such Interest Period.

 

“Adjusted Net Operating Income” shall mean Net
Operating Income, exclusive of any income from tenants subject to any
proceeding or case under the Bankruptcy Code (except to the extent such income
has been actually received).

 

“Administrative Agent” shall have the meaning
assigned to such term in the preamble.

 

“Administrative Agent’s Account” shall mean the
account maintained by the Administrative Agent and of which the Borrower shall
have been notified, with such bank as may from time to time be specified by the
Administrative Agent.

 

“Administrative Questionnaire” shall mean an administrative
questionnaire in a form supplied by the Administrative Agent.

 

“Advance Date” shall have the meaning assigned
to such term in Section 4.06.

 

“Affiliate” shall mean, with respect to any
Person, another Person that directly or indirectly controls, or is under common
control with, or is controlled by, such Person and, if such Person is an
individual, any member of the immediate family (including parents, spouse,
children and siblings) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, “control” (including, with its correlative meanings, “controlled
by” and “under common control with”) shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any
event, any Person that owns directly or indirectly securities having 10% or
more of the voting power for the election of directors or other governing body
of a publicly traded corporation or 10% or more of the partnership, membership
or other ownership interests of any other publicly traded Person (other than as
a limited partner of such other Person) shall be deemed to control such
corporation or other Person.

 

2

 

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

 

“Agreement” shall mean this Loan Agreement, as
the same may from time to time hereafter be Modified and in effect from time to
time.

 

“All-in-Rate” shall mean, for any period, an
annual interest rate equal to the weighted average of the following rates: (i)
as to any portions of the Outstanding Principal Amount which are covered by one
or more Hedge Agreements (including any Excess Hedge Agreement for which a
Hedge Agreement Pledge has been executed and delivered to the Administrative
Agent and remains in effect) which are in effect during such period
(collectively, the “Hedged Principal Amount”), an imputed rate equal to
the sum of all interest payments due with respect to such period on the Hedged
Principal Amount, plus all payments due by the Borrower or Other Swap
Pledgor with respect to such period under all Hedge Agreements maintained
pursuant to Section 8.19 (including any Excess Hedge Agreement for which
a Hedge Agreement Pledge has been executed and delivered to the Administrative
Agent and remains in effect), minus all payments due to the Borrower or
Other Swap Pledgor with respect to such period under all Hedge Agreements
maintained pursuant to Section 8.19 (including any Excess Hedge
Agreement for which a Hedge Agreement Pledge has been executed and delivered to
the Administrative Agent and remains in effect) (with all such interest and
other payments to be annualized), divided by the Hedged Principal Amount and
(ii) as to any portion of the Outstanding Principal Amount which is not covered
by any Hedge Agreement (or Excess Hedge Agreement for which a Hedge Agreement
Pledge has been executed and delivered to the Administrative Agent and remains
in effect) during such period, the weighted average annual interest rate
actually payable hereunder on such Loans during such period.  For purposes
of this calculation, the notional amount provided for in any Hedge Agreement (or
Excess Hedge Agreement) in effect during any period shall be deemed to “cover”
a portion of the Outstanding Principal Amount outstanding during such period in
proportion to the amount which the notional amount provided for in such Hedge
Agreement (or Excess Hedge Agreement) bears to the entire Outstanding Principal
Amount outstanding during such period.  If this Agreement requires the calculation
of the “All-in-Rate” based upon any monthly or quarterly periods, and the
period during which any Hedge Agreement (or Excess Hedge Agreement) covering
any portion of the Outstanding Principal Amount is in effect is less than the
entirety of the relevant month or quarter, the calculation required under this
definition shall be made separately with respect to the different periods
during such month or quarter during which such portion of the Outstanding
Principal Amount is covered by such Hedge Agreement (or Excess Hedge Agreement),
and such calculations shall be aggregated, on a weighted average basis, for the
relevant period of one month or quarter.

 

“Allocated Loan Amount” shall mean, solely for
the purposes of performing certain calculations hereunder: for any Project, the
portion of the Loans allocated to such Project in Schedule 1.01(1)
attached hereto. The Allocated Loan Amount of a Project suffering a Casualty
Event or a Taking shall be reduced by the amount of any Net Proceeds
attributable to such Project applied by the Administrative Agent in prepayment
of the Outstanding Principal Amount pursuant to Section 2.07.

 

“Annual Budget” shall have the meaning assigned
to such term in Section 8.16(a).

 

3

 

“Anti-Terrorism Order” shall mean Executive
Order No. 13,224, 66 Fed. Reg. 49,079 (2001), issued by the President of the
United States of America (Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism).

 

“Applicable Law” shall mean any statute, law
(including Environmental Laws), regulation, ordinance, rule, judgment, rule of
common law, order, decree, Government Approval, approval, concession, grant,
franchise, license, agreement, directive, guideline, policy, requirement, or
other governmental restriction or any similar form of decision of, or
determination by, or any interpretation or administration of any of the
foregoing by, any Governmental Authority, whether now or hereinafter in effect
and, in each case, as amended (including any thereof pertaining to land use,
zoning and building ordinances and codes).

 

“Applicable Lending Office” shall mean, for
each Lender and for each Type of Loan, the “Lending Office” of such Lender (or
of an Affiliate of such Lender) designated for such Type of Loan on Schedule
1.01(2) or such other office of such Lender (or of an Affiliate of such
Lender) as such Lender may from time to time specify to the Administrative
Agent and the Borrower as the office by which its Loans of such Type are to be
made and maintained.

 

“Applicable Margin” shall mean (a) with
respect to that portion of the Loan evidenced by Note A, the Note A
Applicable Margin, (b) with respect to that portion of the Loan evidenced
by Note B, the Note B Applicable Margin and (c) with respect to that
portion of the Loan evidenced by Note C, the Note C Applicable Margin.

 

“Appraisal” shall mean an appraisal of each
Project prepared by an Appraiser, each such Appraisal must comply in all
respects with the standards for real estate appraisal established pursuant to
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of
1989, as amended, and otherwise in form and substance satisfactory to the
Administrative Agent.

 

“Appraised Value” shall mean, for any Project,
the appraised value indicated as such for that Project in Schedule 1.01(3)
attached hereto, as determined by the Appraisal.

 

“Appraiser” shall mean CB Richard Ellis and/or
KTR Newmark, or any other “state certified general appraiser” as such term is
defined and construed under applicable regulations and guidelines issued
pursuant to Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended, which appraiser must have been licensed
and certified by the applicable Governmental Authority having jurisdiction in
the State of California, and which appraiser shall have been selected by the
Administrative Agent.

 

“Approved Annual Budget” shall have the meaning
assigned to such term in Section 8.16(a).

 

“Approved Capital Expenditures” shall have the
meaning assigned to such term in Section 11.01(b).

 

“Approved Fund” shall mean any Person (other
than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of

 

4

 

credit in the ordinary course of its business (and
which is not engaged in the business of acquiring direct or indirect ownership
interests in commercial real estate projects) and that is administered or
managed by (a) a Lender, or (b) a Person that meets the requirements
in clauses (i), (ii), (iii) or (iv) of the definition
of “Eligible Assignee.”

 

“Approved Lease” shall mean (a) each
existing Lease as of the Closing Date as set forth in the Leasing Affidavit and
(b) each Lease entered into after the Closing Date in accordance with the
terms and conditions contained in Section 9.09 as such leases and
related documents shall be Modified as permitted pursuant to the terms of this
Agreement.

 

“Approved Leasing Expenditures” shall have the
meaning assigned to such term in Section 11.01(b).

 

“Arranger” shall mean EUROHYPO AG, NEW YORK
BRANCH as lead arranger and joint bookrunner of the lending syndicate.

 

“Assignment and Assumption” shall mean an
Assignment and Assumption, duly executed by the parties thereto, in
substantially the form of Exhibit A attached hereto and, if required
pursuant to Section 14.07(b) consented to by the Borrower and the
Administrative Agent.

 

“Authorized Officer” shall mean, with respect
to the Borrower or the Borrower’s Member, any of the individual officers
serving as the President, Vice President, Chief Financial Officer, Secretary,
Treasurer or Assistant Treasurer of Borrower’s Manager, in its respective capacity
as the manager of Borrower or the sole general partner of Borrower’s Member,
and whose name appears on a certificate of incumbency executed by the Secretary
of Borrower’s Manager, in its respective capacity as the manager of Borrower and/or
the sole general partner of Borrower’s Member, and delivered concurrently with
the execution of this Agreement, as such certificate of incumbency may be amended
from time to time to identify the names of the individuals then holding such
offices and certified by the Secretary of Borrower’s Manager, in its respective
capacity as the manager of Borrower or the sole general partner of Borrower’s
Member.

 

“Bankruptcy Code” shall mean the Federal
Bankruptcy Code of 1978, as amended from time to time.

 

“Bankruptcy Party” shall mean any of the
Borrower Parties (including, in the case of a Borrower Party which is a
Qualified Successor Entity consisting of a Permitted Private REIT Subsidiary of
a Permitted Private REIT, such Permitted Private REIT, its Operating
Partnership and any Permitted Private REIT Subsidiary that holds direct or
indirect interests in the Borrower). Following a Permitted Public REIT
Transfer, “Bankruptcy Party” shall mean any of the Borrower Parties while such
Person qualifies as a “Borrower Party” under the definition of such term, the Permitted
Public REIT, its Operating Partnership, and any Permitted Public REIT
Subsidiary that holds direct or indirect interests in and controls the Borrower.
“Bankruptcy Party” shall also mean any Subsidiary of the Borrower while such
Person remains a Subsidiary of the Borrower, other than an Immaterial
Subsidiary.

 

5

 

“Barrington Plaza” shall mean that certain
residential project owned by a wholly-owned Subsidiary of the Borrower’s Member
and located at 11740 Wilshire Boulevard, Los Angeles, California 90025.

 

“Base Rate” shall mean, for any day, a rate per
annum equal to the Federal Funds Rate for such day. Each change in any interest
rate provided for herein based upon the Base Rate resulting from a change in
the Base Rate shall take effect at the time of such change in the Base Rate.

 

“Base Rate Loans” shall mean the portions of
the Outstanding Principal Amount that bear interest at rates based upon the
Base Rate.

 

“Basel Accord” shall mean the proposals for
risk-based capital framework described by the Basel Committee on Banking
Regulations and Supervisory Practices in its paper entitled “International
Convergence of Capital Measurement and Capital Standards” dated July 1988, as
Modified and in effect from time to time.

 

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

 

“Borrower Party” shall mean each of the
Borrower, the Borrower’s Member and the Borrower’s Manager (and in any event
shall not include any such Person that is not the general partner or manager of
the Qualified Successor Entity). Upon the acquisition of the Projects, but not
of direct or indirect Equity Interests in the Borrower by a Qualified Successor
Entity, “Borrower Party” shall also mean and include such Qualified Successor
Entity and the general partner or manager thereof (except as expressly provided
in this definition) and, unless the Borrower, the Borrower’s Member or the Borrower’s
Manager constitutes the general partner or manager of the Qualified Successor
Entity, shall no longer include the original Borrower, the original Borrower’s
Member or the original Borrower’s Manager (and in any event shall not include
any such Person that is not the general partner or manager of the Qualified
Successor Entity). Upon the acquisition of the Projects, but not of direct or
indirect Equity Interests in the Borrower, by a Qualified Successor Entity that
is a Permitted Public REIT Subsidiary in connection with a Permitted Public
REIT Transfer, “Borrower Party” shall include such Permitted REIT Subsidiary
and its general partner or manager; provided, however, if the general partner
or manager of such Permitted Public REIT Subsidiary is the Permitted Public
REIT or such REIT’s Operating Partnership, “Borrower Party” shall not include
the Permitted Public REIT or such Operating Partnership. Upon the acquisition
of direct or indirect Equity Interests in the Borrower by a Permitted Public
REIT Subsidiary, or by the Operating Partnership of the Permitted Public REIT,
or by the Permitted Public REIT, “Borrower Party” shall include the Borrower
and its general partner or manager, but shall not include such Permitted Public
REIT Subsidiary (unless it is the general partner or manager of the Borrower)
or such Operating Partnership or the Permitted Public REIT (regardless of
whether such Operating Partnership or the Permitted Public REIT is the general
partner or manager of the Borrower).

 

6

 

“Borrower’s Account” shall mean an account maintained
by the Borrower with such bank as may from time to time be specified by or
approved by the Administrative Agent to accept the deposit of funds in
accordance with this Agreement.

 

“Borrower’s Manager” shall mean DERA, in the
capacity of the manager of the Borrower or in the capacity of the sole general
partner of Borrower’s Member, under their respective Organizational Documents, and
its successors thereunder in one or more of such capacities as permitted under
the Loan Documents. Except as may otherwise be expressly provided herein or as
the context may require, each reference herein to Borrower’s Manager shall mean
Borrower’s Manager in both such capacities. It is understood that,
notwithstanding anything to the contrary contained in this Agreement, any
covenants, representations or warranties that are required to be observed under
this Agreement by the “Borrower’s Manager” shall not be required to be observed
by any manager of the Borrower consisting of the Permitted Public REIT or its
Operating Partnership.

 

“Borrower’s Manager’s Limited Indemnity and
Guarantee” shall mean that certain Limited Indemnity and Guarantee in the
form of Exhibit B attached hereto, to be executed, dated and
delivered by Borrower’s Manager to the Administrative Agent (on behalf of the
Lenders) on the Closing Date as the same may be Modified and in effect from
time to time.

 

“Borrower’s Member” shall mean Douglas Emmett
Realty Fund 1996, a California Limited Partnership, as sole member under the
Organizational Documents of Borrower, and its successors thereunder as sole
member of the Borrower as permitted under the Loan Documents. It is understood
that, notwithstanding anything to the contrary contained in this Agreement, any
covenants, representations or warranties that are required to be observed under
this Agreement by the “Borrower’s Member” shall not be required to be observed
by any member of the Borrower consisting of the Permitted Public REIT, its
Operating Partnership or any Permitted Public REIT Subsidiary that is not the
general partner or manager of the Borrower including, without limitation
Douglas Emmett Realty Fund 1996, the Borrower’s Member as of the date hereof,
if it is not the general partner or manager of the Borrower.

 

“Business Day” shall mean any day that is not a
Saturday, Sunday or other day on which commercial banks in New York City (or,
with respect only to payments to be made by the Borrower, in California) are
authorized or required by law to remain closed; provided that, when used
in connection with a borrowing, or Continuation of, a Conversion into, a
payment or prepayment of principal of or interest on, or an Interest Period
for, a Eurodollar Loan, or a notice by the Borrower with respect to any such
borrowing, Continuation, Conversion, payment, prepayment or Interest Period,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

 

“Business Interruption Insurance” shall mean
rental and/or business income insurance required pursuant to Section
8.05(a)(iii) or otherwise maintained in accordance with this Agreement.

 

“Capital Lease Obligations” shall mean, for any
Person, all obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) property to the extent
such obligations would generally be classified and accounted for as a

 

7

 

capital lease on a balance sheet of such Person under
GAAP, and, for purposes of this Agreement, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with GAAP.

 

“Cash Trap Account Security Agreement” shall
mean a Cash Trap Account Security Agreement, among the Borrower, the
Administrative Agent (on behalf of the Lenders) and the Depository Bank, substantially
in the form of Exhibit C attached hereto, and which is established
and maintained in accordance with Section 11.01.

 

“Cash Trap Account” shall have the meaning assigned
to such term in the Cash Trap Account Security Agreement.

 

“Casualty Event” shall mean any loss of or
damage to, any portion of any Project by fire or other casualty.

 

“Change of Control”
shall mean, with respect to any Permitted Public REIT, any event or series of
events by which any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding (i) any
person or group consisting of Named Principals or Related Parties, (ii) any “person”
or “group” which is controlled by one or more Named Principals or Related
Parties, (iii) the Depository Trust Company or its nominees, (iv) any “dealer”
(as defined in the Securities Act of 1933) who acquires securities of the
Permitted Public REIT with a view to, or in connection with, (A) the
distribution of such securities, (B) the resale of such securities in
accordance with the provisions of Rule 144A(d) promulgated under the
Securities Act of 1933 or (C) the resale of such securities in accordance with
the provisions of Rule 904 (promulgated under the Securities Act) applicable to
“Distributors” as defined in Rule 902 (promulgated under the Securities Act), (v) any
employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire (such right, an “option
right”), whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of forty percent (40%) or more of the
equity securities of the Permitted Public REIT entitled to vote for members of
the board of directors or equivalent governing body of the Permitted Public
REIT on a fully-diluted basis (and taking into account all such securities that
such person or group has the right to acquire pursuant to any option right).

 

“Closing Date” shall mean the date of this
Agreement, which date shall be the initial funding date of the Loans pursuant
to Section 2.02.

 

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

 

“Commitment” shall mean, as to each Lender, the
obligation of such Lender to make a Loan in a principal amount up to but not
exceeding the amount set opposite the name of such Lender on Schedule
1.01(4) attached hereto under the caption “Commitment” or, in the case of a
Person that becomes a Lender pursuant to an assignment permitted under Section
14.07(b),

 

8

 

as specified in the respective Assignment and
Assumption pursuant to which such assignment is effected, as such percentage
may be modified by any Assignment and Assumption.

 

“Condemnation Awards” shall mean all
compensation, awards, damages, rights of action and proceeds awarded to the
Borrower by reason of a Taking.

 

“Consumer Price Index” shall mean the “Consumer
Price Index — For all Items” for the Los Angeles-Riverside-Orange County
Consolidated Metropolitan Statistical Area, published monthly in the “Monthly
Labor Review” of the Bureau of Labor Statistics of the United States Department
of Labor. If at any time the Consumer Price Index is no longer available, then
the term “Consumer Price Index” shall be an index selected by the
Administrative Agent which, in the opinion of the Administrative Agent, is
comparable to the Consumer Price Index.

 

“Continue”, “Continuation” and “Continued”
shall refer to the continuation pursuant to Section 2.05 of
(a) a Eurodollar Loan from one Interest Period to the next Interest Period
or (b) Base Rate Loan at the Base Rate.

 

“Controlled Account” shall mean one or more
deposit accounts established by the Administrative Agent (for the benefit of
the Lenders) at a depository bank or financial institution that is acceptable
to the Administrative Agent, and which is established and maintained in
accordance with Section 14.28 hereof.

 

“Controlled Account Agreement” shall have the
meaning assigned to such term in Section 14.28(a)(i).

 

“Controlled Account Collateral” shall have the
meaning assigned to such term in Section 14.28(c)(i).

 

“Convert”, “Conversion” and “Converted”
shall refer to a conversion pursuant to Section 2.05 of one Type of
Loan into another Type of Loan, which may be accompanied by the transfer by a
Lender (at its sole discretion) of a Loan from one Applicable Lending Office to
another.

 

“Debt
Service Coverage Ratio” shall mean, with respect to any period being
measured, the ratio of (a) Adjusted Net Operating Income for such period to (b)
DSCR Debt Service for such period. For purposes of calculating Debt Service
Coverage Ratio pursuant to Section 2.09(a), Adjusted Net Operating
Income and DSCR Debt Service shall be calculated on an annualized basis, and the
Debt Service Coverage Ratio for such purposes shall be as determined by the
Administrative Agent, based upon the quarterly results reflected in the most
recent reports submitted by Borrower pursuant to Section 8.01 (or,
if the most recent report has not been submitted pursuant to such section,
based on such other information as the Administrative Agent shall determine in
its reasonable discretion), which determination shall be conclusive in the
absence of manifest error. For purposes of calculating Debt Service Coverage
Ratio pursuant to Section 10.03(c), Adjusted Net Operating Income and
DSCR Debt Service shall be projected for a period of one year in accordance
with Section 10.03(c)(iv).

 

9

 

“Deed of Trust” shall mean each Deed of Trust,
Assignment of Leases and Rents and Security Agreement and substantially in the
form of Exhibit D attached hereto, to be executed, dated and
delivered by the Borrower to the Administrative Agent (on behalf of the
Lenders) on the Closing Date, securing the obligations identified therein, as
each such deed of trust may be Modified and in effect from time to time.

 

“Default” shall mean an Event of Default or an
event that with notice or lapse of time or both would become an Event of
Default.

 

“Depository Bank” shall mean, at any time, the
depository bank which is party to the Cash Trap Account Security Agreement, the
Project-Level Account Security Agreement or a Controlled Account Agreement.

 

“DERA” shall mean Douglas Emmett Realty
Advisors, a California corporation.

 

“Disbursement Request” shall have the meaning
assigned to such term in Section 11.01(c)(iii).

 

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

 

“Douglas Emmett Realty Funds” shall mean
Douglas Emmett Joint Venture, Douglas Emmett Realty Fund 1995, Douglas Emmett
Realty Fund 1996, Douglas Emmett Realty Fund 1997, Douglas Emmett Realty Fund
1998, Douglas Emmett Realty Fund 2000, Douglas Emmett Realty Fund 2002 and
Douglas Emmett Realty Fund 2005 and their respective Subsidiaries.

 

“DSCR Debt Service” shall mean, for any period,
an amount equal to the payment of interest which would be required under the
Notes delivered by the Borrower based on the Outstanding Principal Amounts of
such Notes as of the end of such period and the All-in-Rate at such time. All
such calculations shall be subject to the approval of the Administrative Agent.
For purposes of Section 10.03, the calculation of DSCR Debt Service
shall be projected for a one year period in accordance with Section
10.03(c)(iv).

 

“Eligible Assignee” means any of (i) a
commercial bank organized under the Laws of the United States, or any state
thereof, and having (x) total assets in excess of $25,000,000,000 and
(y) a combined capital and surplus of at least $1,000,000,000; (ii) a
commercial bank organized under the laws of any other country which is a member
of the Organization of Economic Cooperation and Development (“OECD”), or
a political subdivision of any such country, and having (x) total assets
in excess of $25,000,000,000 and (y) a combined capital and surplus of at
least $1,000,000,000, provided that such bank is acting through a branch
or agency located in the United States or in the country in which it is
organized or another country which is also a member of OECD; (iii) a life
insurance company organized under the Laws of any state of the United States,
or organized under the Laws of any country which is a member of OECD and
licensed as a life insurer by any state within the United States and having
(x) admitted assets of at least $25,000,000,000 and (y) a combined
capital and surplus of at least $1,000,000,000; (iv) any Person described
in Schedule 1.01(5); or (v) an Approved Fund having
(1) total assets of at least $25,000,000,000 and (2) a net worth of
at least $1,000,000,000; provided that any such Person meeting the
requirements of (i) through (v) (or its holding

 

10

 

company) shall also have a long-term senior unsecured
indebtedness rating of BBB- or better by S&P (if rated by S&P) and Baa3
or better by Moody’s (if rated by Moody’s) at the time an interest in the Loans
is assigned to it.

 

“Environmental Claim” shall mean, with respect
to any Person, any written request for information by a Governmental Authority,
or any written notice, notification, claim, administrative, regulatory or
judicial action, suit, judgment, demand or other written communication by any
Person or Governmental Authority alleging or asserting liability with respect
to the Borrower or the Projects, whether for damages, contribution,
indemnification, cost recovery, compensation, injunctive relief, investigatory,
response, Remediation, damages to natural resources, personal injuries, fines
or penalties arising out of, based on or resulting from (i) the presence, Use
or Release into the environment of any Hazardous Substance originating at or
from, or otherwise affecting, the Projects, (ii) any fact, circumstance,
condition or occurrence forming the basis of any violation, or alleged
violation, of any Environmental Law by the Borrower or otherwise affecting the
health, safety or environmental condition of the Projects or (iii) any alleged
injury or threat of injury to the environment by the Borrower or otherwise
affecting the Projects.

 

“Environmental Indemnity” means that certain
Environmental Indemnity Agreement by the Borrower in favor of the
Administrative Agent and each of the Lenders substantially in the form of Exhibit
E attached hereto, to be executed, dated and delivered to the
Administrative Agent (on behalf of the Lenders) on the Closing Date, as the
same may be Modified and in effect from time to time.

 

“Environmental Laws” shall mean any and all
Applicable Laws relating to the regulation or protection of the environment or
the Release or threatened Release of Hazardous Substances into the indoor or
outdoor environment, including ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata, or otherwise relating to the Use of
Hazardous Substances; provided, however, that solely for purposes
of the Environmental Indemnity, “Environmental Laws” shall not include the
California Environmental Quality Act or statutes, laws, regulations or orders
which relate to zoning or otherwise regulating the permissible uses of land or
permissible structures to be developed thereon.

 

“Environmental Liens” shall have the meaning
assigned thereto in Section 8.11(a).

 

“Environmental Losses” shall mean any losses,
damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities
(including, but not limited to, strict liabilities), obligations, debts,
diminutions in value, fines, penalties, charges, costs of Remediation (whether
or not performed voluntarily), amounts paid in settlement, foreseeable and
unforeseeable consequential damages, litigation costs, reasonable attorneys’
fees and expenses, engineers’ fees, environmental consultants’ fees, and
investigation costs (including, but not limited to, costs for sampling, testing
and analysis of soil, water, air, building materials, and other materials and
substances whether solid, liquid or gas), of whatever kind or nature, and
whether or not incurred in connection with any judicial or administrative
proceedings, actions, claims, suits, judgments or awards relating to Hazardous
Substances, Environmental Claims, Environmental Liens and violation of
Environmental Laws. Notwithstanding the foregoing, “Environmental Losses” shall

 

11

 

not include any loss resulting from diminution in
value of any Project suffered by any Lender if the Lenders shall have been paid
in full all amounts payable by the Borrower under this Agreement and the other
Loan Documents to which the Borrower is a party or shall have otherwise
realized all such amounts upon or prior to foreclosure of the collateral for
the Loans; provided, that, subject to the provisions of Section 8
of the Environmental Indemnity, nothing contained in this sentence shall limit
any claim for a loss (otherwise included within the term “Environmental Losses”
as defined herein) suffered by the Administrative Agent, any Lender or any
Affiliate as a result of a claim for the diminution in value of the interest of
any Person (other than the interest of the Administrative Agent, any Lender or
any Affiliate of the Administrative Agent or any Lender) in any Project
(including the interest of any ground lessor, tenant, easement holder or other
third party, but excluding any Person who has purchased or acquired the
Borrower’s interest in such Project by foreclosure or deed-in-lieu of
foreclosure or any time thereafter) or the diminution in value of any other property
made against the Administrative Agent, any such Lender or any Affiliate by any
other Person as a result of the Administrative Agent, any Lender or any
Affiliate succeeding to the ownership of any Project through foreclosure or
other exercise of remedies (but not as a result of any contractual obligation
incurred by the Administrative Agent, any Lender or any Affiliate subsequent to
or in connection with its acquisition of the ownership of a Project).

 

“Environmental Reports” shall mean,
collectively, each environmental survey and assessment report prepared for the
Administrative Agent relating to each Project listed on Schedule 1.01(6)
attached hereto; each such environmental report shall include a certification
by the engineer (i) that such engineer has obtained and examined the list
of prior owners, (ii) has made an on-site physical examination of the applicable
Project and (iii) has made a visual observation of the surrounding areas
and has found no evidence of the presence of toxic or Hazardous Substances, or of
past or present Hazardous Substances activities that have not been remediated
or are not subject to an operation and maintenance program. The Administrative
Agent acknowledges receipt of copies of the Environmental Reports.

 

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

 

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

 

“ERISA Affiliate” shall mean any trade or
business (whether or not incorporated) that, together with any Borrower Party,
is treated as a single employer under Section 414(b) or (c) of the Code, or,
solely for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 (b), (c), (m) or (o) of the
Code.

 

“ERISA Event” means (a) any “reportable event”,
as defined in Section 4043 of ERISA or the regulations issued thereunder with
respect to a Plan which is subject to Title IV of ERISA (other than an event
for which the thirty (30) day notice period is waived); (b) the existence with
respect to any Plan subject to Section 412 of the Code or Section 302 of ERISA of
an “accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of

 

12

 

ERISA), whether or not waived; (c) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of an application for
a waiver of the minimum funding standard with respect to any Plan subject to
Section 412 of the Code or Section 302 of ERISA; (d) the incurrence by a
Borrower Party or any of its ERISA Affiliates of any liability under Title IV
of ERISA with respect to the termination of any Plan which is subject to Title
IV of ERISA; (e) the receipt by any Borrower Party or any ERISA Affiliate from
the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans which are subject to Title IV of ERISA or to
appoint a trustee to administer any such Plan; (f) the incurrence by a Borrower
Party or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan which is subject to Title IV of
ERISA or Multiemployer Plan; or (g) the receipt by a Borrower Party or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a
Borrower Party or any ERISA Affiliate of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.

 

“Eurodollar Loans” shall mean the portions of
the Outstanding Principal Amount that bear interest based on a “LIBO Rate”.

 

“Eurohypo” shall mean Eurohypo AG, New York
Branch.

 

“Event of Default” shall have the meaning
assigned to such term in Article XII.

 

“Excess Cash” shall mean with respect to any
calendar month, the amount by which the sum of Operating Income actually
received during such calendar month plus amounts actually paid during such
month to or for the account of the Borrower or Other Swap Pledgor by the
counterparty under and pursuant to the Hedge Agreement (but only on account of
any “regular” payments due thereunder (and not on account of any default or
termination thereunder or any obligation to deliver collateral pursuant thereto))
exceeds the sum of (i) Operating Expenses actually paid during such month plus
(ii) the sum of interest payments on the Loans and other amounts due and
payable under the Loan Documents plus amounts actually paid during such month
by the Borrower or Other Swap Pledgor to the counterparty under and pursuant to
the Hedge Agreement (but only on account of any “regular” payments due
thereunder (and not on account of any default or termination thereunder or any
obligation to deliver collateral pursuant thereto)) in each case, to the extent
actually paid during such month; provided, however, that for
purposes of determining Excess Cash, Operating Expenses shall exclude any
amounts due or accrued for Insurance Premiums, Real Estate Taxes, Approved
Capital Expenditures or Approved Leasing Expenditures, except for amounts
actually paid in cash during the relevant month for Insurance Premiums, Real
Estate Taxes and, if approved in accordance with the provisions of Article
XI, Approved Capital Expenditures or Approved Leasing Expenditures (and the
Borrower may utilize its Operating Income in such month to pay for Insurance
Premiums, Real Estate Taxes and, if approved in accordance with the provisions
of Article XI, Approved Capital Expenditures or Approved Leasing Expenditures).
For the avoidance of doubt, it is understood that the calculation of Excess
Cash for any month shall be based upon the cash method of accounting
notwithstanding references to GAAP or the imputation of any income or expense
item that is not actually received or paid in such month in the definitions of “Operating
Income” and “Operating Expenses.” 
Notwithstanding the provisions set forth in the definition of “Operating
Expenses” relating to the treatment of

 

13

 

reserves specifically required under this Agreement
and amounts paid from such reserves for purposes of that definition, for
purposes of the calculation of Excess Cash, the deposit of sums into any such
specifically-required reserve (but not the expenditure and release of sums from
any such reserve) shall be treated as an expense.

 

“Excess Hedge Agreement” shall have the meaning
assigned to such term in Section 8.19(a).

 

“Excluded Project” shall mean (a) any of the
Residential Properties, (b) any of the Properties owned by the Borrower on the
Closing Date other than the Projects which are identified on Schedule 1A,
(c) any Qualified Real Estate Interest that is acquired after the Closing Date
by the Borrower or by a wholly-owned Subsidiary or Qualified Sub-Tier Entity,
and (d) any Project which has been released from the Liens of the Loan
Documents in accordance with Section 2.09.

 

“Excluded Taxes” shall mean, with respect to
the Administrative Agent and any Lender, or any other recipient of any payment
to be made by or on account of any obligation of the Borrower hereunder,
(a) income or franchise taxes imposed on (or measured by) its net income
by the United States of America, or by the jurisdiction under the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its Applicable Lending Office is located,
(b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 5.07), any
withholding tax that is imposed on amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party to this Agreement (or designates a
new lending office) or is attributable to such Foreign Lender’s failure to
comply with Section 5.06(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation, to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 5.06(a).

 

“Extraordinary Capital or Leasing Expenditures”
shall have the meaning assigned to such term in Section 11.01(b).

 

“Federal Funds Rate” shall mean, for any day,
the weighted average (rounded upwards, if necessary, to the next 1/1000 of 1%)
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a Business Day, for the immediately preceding
Business Day) on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average (rounded upwards, if necessary, to the next 1/1000 of
1%) of the quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.

 

“Fee Letter” means that certain letter
agreement, dated as of the date of this Agreement, between the Borrower and the
Administrative Agent with respect to certain fees payable by the Borrower in
connection with the Commitments, as the same may be Modified from time to time.

 

14

 

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

 

“GAAP” shall mean generally accepted accounting
principles applied on a basis consistent with those that, in accordance with Section 1.02(a)
and, except as otherwise provided in this Agreement, are to be used in making
the calculations for purposes of determining compliance with this Agreement, it
being understood that the annual and quarterly financial statements to be
delivered by the Borrower shall be deemed prepared in accordance with “GAAP”
for purposes of this Agreement notwithstanding that such financial statements
contain adjustments for the market value of the Properties of the Borrower (as
reflected in the auditor’s statement that is contained in the most recent such
annual financial statement provided to the Administrative Agent on or before the
Closing Date) and that the treatment of depreciation charges in such quarterly
financial statements is consistent with the treatment of depreciation charges
in the most recent such quarterly financial statements provided to the
Administrative Agent on or before the Closing Date.

 

“General Assignment” shall mean that certain
Assignment of Contracts and Government Approvals substantially in the form of Exhibit
F attached hereto, to be executed, dated and delivered by the Borrower to
the Administrative Agent (on behalf of the Lenders) on the Closing Date, as the
same may be Modified and in effect from time to time.

 

“Government Approval” shall mean any action,
authorization, consent, approval, license, ruling, permit, tariff, rate,
certification, exemption, filing or registration by or with any Governmental
Authority, including all licenses, permits, allocations, authorizations,
approvals and certificates obtained by or in the name of, or assigned to, the
Borrower and used in connection with the ownership, construction, operation, use
or occupancy of the Projects, including building permits, certificates of
occupancy, zoning and planning approvals, business licenses, licenses to
conduct business, and all such other permits, licenses and rights.

 

“Governmental Authority” shall mean any
governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body, federal, state or
local, foreign or domestic, having jurisdiction over the matter or matters in
question.

 

“Guarantee” shall mean a guarantee, an
endorsement, a contingent agreement to purchase or to furnish funds for the
payment or maintenance of, or otherwise to be or become contingently liable
under or with respect to, the Indebtedness, other obligations, net worth,
working capital or earnings of any Person, or a guarantee of the payment of
dividends or other distributions upon the stock or equity interests of any
Person, or an agreement to purchase, sell or lease (as lessee or lessor)
Property, products, materials, supplies or services primarily for the purpose
of enabling a debtor to make payment of such debtor’s obligations or an
agreement to assure a creditor against loss, and including causing a bank or
other financial institution to issue a letter of credit or other similar
instrument for the benefit of another Person, but excluding endorsements for
collection or deposit in the ordinary course of business. The terms “Guarantee”
and “Guaranteed” used as a verb shall have a correlative meaning.

 

15

 

“Guaranteed Line of Credit” shall have the meaning set forth in Section 9.04(h).

 

“Guarantor” shall mean the Borrower’s Manager,
in its capacity as the guarantor under the Borrower’s Manager’s Limited
Indemnity and Guarantee.

 

“Guarantor Documents” shall mean the Borrower’s
Manager’s Limited Indemnity and Guarantee.

 

“Hazardous Substance” shall mean, collectively,
(a) any petroleum or petroleum products, flammable materials, explosives,
radioactive materials, asbestos, urea formaldehyde foam insulation, Mold, and
transformers or other equipment that contain polychlorinated biphenyls (“PCB’s”),
(b) any chemicals or other materials or substances that are now or hereafter
become defined as or included in the definition of “hazardous substances”, “hazardous
wastes”, “hazardous materials”, “extremely hazardous wastes”, “restricted
hazardous wastes”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants”
or words of similar import under any Environmental Law and (c) any other
chemical or other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.

 

“Hedge Agreement” shall mean any Swap Agreement
or Swap Agreements between the Borrower or Other Swap Pledgor and one or more
financial institutions providing for the transfer or mitigation of interest
risks with respect to the Loans, either generally or under specific
contingencies, as the same may be Modified and in effect from time to time in
accordance with Section 8.19.

 

“Hedge Agreement Pledge” shall mean that
certain Assignment, Pledge and Security Agreement substantially in the form of Exhibit G-1
or G-2, as applicable, attached hereto, to be executed, dated and
delivered by the Borrower or Other Swap Pledgor to the Administrative Agent (on
behalf of the Lenders) in accordance with Section 8.19 and at any
other time the Borrower elects or is required to enter into, or cause to be
delivered, a Hedge Agreement, covering the Borrower’s or Other Swap Pledgor’s right,
title and interest in and to any such Hedge Agreement, as the same may be
Modified and in effect from time to time.

 

“Hedging Termination Date” shall mean the date
which is three (3) months prior to August 1, 2011 as to fifty percent (50%) of
the Aggregate Notional Amount and three months prior to August 1, 2012 as to
the remainder of the Aggregate Notional Amount.

 

“Immaterial Subsidiary” shall mean any
Subsidiary of the Borrower which has incurred no Indebtedness other than (i)
Indebtedness which is non-recourse to such Subsidiary, the Bankruptcy Parties
and the Named Principals (except for “carve-outs” (or Guarantees guarantying
the debtor’s liability with respect to “carve-outs”) for fraud,
misrepresentation, misappropriation and other exceptions-from-non-recourse
customary in the real estate finance industry and not materially more favorable
to such lender than the exceptions-from-non-recourse set forth in the second
sentence of Sections 14.23(a) (and which shall in no event include
any recourse obligation of the Borrower on account of the occurrence with
respect to such Subsidiary or any other Person of any event of the type
described in Sections 12.01(d), (e) or (f) hereof)) and
(ii) Indebtedness which, in the aggregate for all such Immaterial Subsidiaries,
does not

 

16

 

exceed ten percent (10%) of the aggregate Indebtedness
of the Borrower and all Subsidiaries of the Borrower.

 

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

 

“Indebtedness” of any Person means, without
duplication, (a) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (e) all obligations of such Person in respect of the deferred
purchase price of property or services (excluding current accounts payable
incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others
or performance of obligations, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (j) all
obligations under or in respect of Swap Agreements and (k) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not
liable therefor.

 

“Indemnified Parties” shall mean the
Administrative Agent, the Arranger, the Affiliates of the Administrative Agent,
the Arranger, and each Lender and each of the foregoing parties’ respective
directors, officers, employees, attorneys, agents, successors and assigns.

 

“Indemnified Taxes” shall mean Taxes other than
Excluded Taxes.

 

“Information” has the meaning assigned to such
term in Section 14.24.

 

“Insurance Premiums” shall have the meaning
assigned to such term in Section 8.05(b).

 

“Insurance Proceeds” shall mean all insurance
proceeds, damages, claims and rights of action and the right thereto under any
insurance policies relating to the Projects.

 

“Insurance Threshold Amount” shall have the
meaning assigned to such term in Section 10.01(b).

 

“Interest Period” shall mean, at all times following the Stub Interest
Period, with respect to any Eurodollar Loan, each period commencing on
the date such Eurodollar Loan is made or Converted from a Base Rate Loan or (in
the event of a Continuation) the last day of the immediately preceding Interest
Period for such Loan and ending on the numerically corresponding day in the
first, second, third, sixth or (but only if available from all Lenders) twelfth calendar month thereafter, as the
Borrower may select as provided in Section 4.05;

 

17

 

provided that, (i) except for the Stub Interest Period,
each Interest Period that commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month; (ii) each Interest Period that
would otherwise end on a day that is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the immediately preceding Business Day); (iii) except for the Stub Interest Period, no
Interest Period shall have a duration of less than one month and, if the
Interest Period for any Eurodollar Loan would otherwise be a shorter period (other than for the Stub Interest Period),
such Loan shall bear interest at the Base Rate plus the Applicable Margin for
Base Rate Loans; (iv) in no event shall any Interest Period extend beyond the
Maturity Date; and (v) there may be no more than seven (7) separate Interest
Periods in respect of Eurodollar Loans outstanding from each Lender at any one
time. The first Interest Period shall
be the Stub Interest Period.

 

“Interest Rate Hedge Period” shall have the
meaning assigned to such term in Section 8.19(a).

 

“Investment” shall mean, for any Person:  (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of capital stock, bonds, notes,
debentures, partnership or other ownership interests or other securities of any
other Person or any agreement to make any such acquisition (including any “short
sale” or any sale of any securities at a time when such securities are not
owned by the Person entering into such sale); (b) the making of any
deposit with, or advance, loan or other extension of credit to, any other
Person (including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person), but excluding any such advance, loan or extension of credit
having a term not exceeding ninety (90) days arising in connection with the
sale of inventory or supplies by such Person in the ordinary course of
business; (c) the entering into of any Guarantee of, or other contingent
obligation with respect to, Indebtedness or other liability of any other Person
and (without duplication) any amount committed to be advanced, lent or extended
to such Person; or (d) the entering into of any Swap Agreement (other than
the Hedge Agreement or any Excess Hedge Agreement).

 

“Lease Approval Package” shall have the meaning
assigned to such term in Section 9.09(b)(iii).

 

“Lease Information Summary” shall have the
meaning assigned to such term in Section 9.09(b)(iii).

 

“Leases” shall mean all leases and other
agreements or arrangements with or assumed by the Borrower as landlord for the
use or occupancy of all or any portion of the Projects, including any signage
thereat, now in effect or hereafter entered into (including lettings,
subleases, licenses, concessions, tenancies and other occupancy agreements with
or assumed by the Borrower as landlord covering or encumbering all or any
portion of the Projects), together with any Guarantees, Modifications of the
same, and all additional remainders, reversions and other rights and estates
appurtenant thereto.

 

18

 

“Leasing Affidavit” shall have the meaning
assigned to such term in Section 6.01(p).

 

“Lender” shall have the meaning assigned to
such term in the preamble.

 

“LIBO Rate” shall mean, for any Interest Period
for any Eurodollar Loan, the rate per annum appearing on Page 3750 of the
Dow Jones Markets Service (Telerate) (or on any successor or substitute page of
such service, or any successor to or substitute for such service, providing
rate quotations comparable to those currently provided on such page of such
service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to Dollar
deposits in the London interbank market) at approximately 11:00 a.m.
London time on the date two (2) Business Days prior to the first day of such
Interest Period as the rate for Dollar deposits having a term comparable to
such Interest Period and in an amount comparable to the amount of the
applicable Eurodollar Loan, provided that if such rate does not appear
on such page as of the date of determination, or if such page shall cease to be
publicly available at such time, or if the information contained on such page,
in the sole judgment of the Administrative Agent shall cease accurately to
reflect the rate offered by leading banks in the London interbank market, the
LIBO Rate shall be based on the rate that appears as of 11:00 a.m. London time
on such date of determination on the LIBO Page of Reuters Screen for Dollar
deposits having a term comparable to such Interest Period and in an amount
comparable to the amount of the applicable Eurodollar Loan. If both of such
pages shall cease to be publicly available as of the time of determination, or
if the information contained on such page, in the sole but reasonable judgment
of the Administrative Agent shall cease accurately to reflect the rate offered
by leading banks in the London interbank market, the LIBO Rate shall be based
on the rate reported by any publicly available source of similar market data
selected by the Administrative Agent that, in its sole but reasonable judgment,
accurately reflects such rate offered by leading banks in the London interbank
market. The LIBO Rate for the Stub
Interest Period shall be 4.4120% per annum.

 

“Lien” shall mean, with respect to any Property
(including the Projects), any mortgage, deed of trust, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such Property. For
purposes of this Agreement and the other Loan Documents, a Person shall be
deemed to own subject to a Lien any Property that it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement (other than an
operating lease) relating to such Property.

 

“Limiting
Regulation” shall mean any law or regulation of any Governmental
Authority, or any interpretation, directive or request under any such law or
regulation (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or Governmental Authority
or monetary authority charged with the interpretation or administration
thereof, or any internal bank policy resulting therefrom (applicable to loans
made in the United States of America) which would or could in any way require a
Lender to have the approval right contained in the last paragraph of Section
9.03.

 

“Loan” and “Loans” shall have the
respective meanings assigned to such terms in Section 2.01 with
reference to the extensions of credit provided to the Borrower hereunder.

 

19

 

“Loan Documents” shall mean, collectively, this
Agreement, the Notes, the Security Documents, the Environmental Indemnity, the
Guarantor Documents and each other agreement, instrument or document (excluding
any Hedge Agreement or Excess Hedge Agreement) required to be executed and
delivered in connection with the Loans, together with any Modifications
thereof.

 

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

 

“Losses” shall have the meaning assigned to
such term in Section 14.04.

 

“Low DSCR Release Event” shall mean, at any
time after the occurrence of a Low DSCR Trigger Event, that the Debt Service
Coverage Ratio shall be at or above 1:20:1.00 for a period of at least two (2)
consecutive calendar quarters.

 

“Low DSCR Trigger Event” shall mean,
at any time prior to the Maturity Date, that the Debt Service Coverage Ratio
measured as of the end of any calendar quarter is less than 1:15:1.00.

 

“Low DSCR Trigger Period” shall mean the period
of time after a Low DSCR Trigger Event until the occurrence of a Low DSCR
Release Event.

 

“LP Claim” shall have the meaning set forth in Section
7.35.

 

“Major Default” shall mean (i) any Event of Default;
(ii) any Default arising from the failure to make any payment on account of
interest to any Lender required under the Loan Documents or any fees payable to
the Administrative Agent under the Fee Letter, in each case on or before the
due date therefor; and (iii) any other Default written notice of which has been
delivered by the Administrative Agent to the Borrower unless, in the case of
this clause (iii), the Borrower has provided
written notice to the Administrative Agent, within seven (7) days after
notice of such Default has been delivered to the Borrower, stating that the
Borrower shall undertake to cure
such Default on or prior to the expiration of the applicable cure period
therefor, if any, set forth in the definition of the term “Event of Default”
(and setting forth the steps that the Borrower intends to take in order to
effectuate such cure), and the Administrative Agent shall not have provided
notice to the Borrower within five (5) Business Days after receipt of such
notice from the Borrower, setting forth the Administrative Agent’s
determination, in its reasonable discretion, that the steps set forth in the
notice from the Borrower are not likely to result in the timely cure of such
default. Notwithstanding the foregoing, for purposes of Sections 13.08
and 14.07(b)(i)(A), a Major Default of the type described in clause (ii)
above shall not be deemed to “exist” unless the Borrower has received notice of
such Major Default and has failed to cure such Major Default within five (5)
Business Days.

 

“Major Lease” shall mean one or more Leases to
the same tenant or its Affiliates covering an aggregate of either (i) 20%
of the rentable square footage of any Project or (ii) 30,000 rentable
square feet or more.

 

“Material Adverse Effect” shall mean a material
adverse effect, as determined by the Administrative Agent, in its reasonable
judgment and discretion, on (a) any Project or the

 

20

 

business, operations, financial condition, liabilities
or capitalization of the Borrower, (b) the ability of the Borrower or any
other Borrower Party to pay or perform (or cause to be performed) its
respective material obligations under any of the Loan Documents to which it is
a party, including the timely payment of the principal of or interest on
the Loans or other amounts payable in connection therewith, (c) the
Administrative Agent’s Liens in any of the collateral securing the Loans or the
priority of any such Liens, (d) the validity or enforceability of any of
the Loan Documents or (e) the rights and remedies of the Lenders and the
Administrative Agent under any of the Loan Documents.

 

“Maturity Date” shall mean the earliest of (a)
the Stated Maturity Date or (b) the date as to any Loans on which the
Outstanding Principal Amounts under the Notes evidencing such Loans are
accelerated or automatically become due and payable pursuant to the terms of
the Notes or any other Loan Document.

 

“Maximum Rate” shall have the meaning assigned
to such term in Section 14.25.

 

“Modifications” shall mean any amendments,
supplements, modifications, renewals, replacements, consolidations, severances,
substitutions and extensions thereof from time to time; “Modify”, “Modified”,
or related words shall have meanings correlative thereto.

 

“Mold” shall mean any microbial or fungus contamination
or infestation in any Project of a type which could reasonably be anticipated
(after due inquiry and investigation) to pose a risk to human health or the
environment or could reasonably be anticipated (after due inquiry and
investigation) to negatively impact the value of such Project in any material
respect.

 

“Moody’s” shall mean Moody’s Investors Service,
Inc., or any successor thereto.

 

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

 

“Named Principals” shall mean Dan A.
Emmett, Christopher H. Anderson, Kenneth M. Panzer and Jordan L.
Kaplan.

 

“Net Operating Income” shall mean, for any
period, the excess, if any, of Operating Income for such period over Operating
Expenses for such period.

 

“Net Proceeds” shall have the meaning assigned
to such term in Section 10.03(b).

 

“Net Proceeds Deficiency” shall have the
meaning assigned to such term in Section 10.03(h).

 

“Note A” shall mean those certain notes or
note denominated “Note A” dated concurrently with the Loan Agreement,
executed by Borrower to the order of the Lender named therein, in the aggregate
original principal amount of $122,507,122.51, as the same may be Modified from
time to time. Each Note A shall constitute a “Note” for all purposes under
this Agreement and the other Loan Documents.

 

21

 

“Note A Applicable Margin” shall mean
(a) for Base Rate Loans, 80 basis points per annum; and (b) for
Eurodollar Loans, 65 basis points per annum.

 

“Note B” shall mean those certain notes or
note denominated “Note B” dated concurrently with the Loan Agreement,
executed by Borrower to the order of the Lender named therein, in the aggregate
original principal amount of $80,242,165.24, as the same may be Modified from
time to time. Each Note B shall constitute a “Note” for all purposes under
this Agreement and the other Loan Documents.

 

“Note B Applicable Margin” shall mean
(a) for Base Rate Loans, 110 basis points per annum; and (b) for
Eurodollar Loans, 85 basis points per annum.

 

“Note C” shall mean those certain notes or
note denominated “Note C” dated concurrently with the Loan Agreement,
executed by Borrower to the order of the Lender named therein, in the aggregate
original principal amount of $12,250,712.25, as the same may be Modified from
time to time. Each Note C shall constitute a “Note” for all purposes under
this Agreement and the other Loan Documents.

 

“Note C Applicable Margin” shall mean
(a) for Base Rate Loans, 410 basis points per annum; and (b) for
Eurodollar Loans, 285 basis points per annum.

 

“Notes” shall mean, collectively, each Note A,
Note B, Note C and each other promissory note hereafter executed by
the Borrower to the order of any of the Lenders evidencing such Lender’s
respective Commitment and Loans, as such notes may be Modified or substituted
and in effect from time to time. Subject to such modifications thereto as may
be deemed necessary by the Administrative Agent to reflect the Applicable Margin
applicable to such Notes or to denominate any such Note as a Note A,
Note B, Note C or similar reference, and subject to the provisions of
Section 14.30, each of the Notes shall be substantially in the form
of Exhibit H attached hereto.

 

“Obligations” means all obligations,
liabilities and indebtedness of every nature of the Borrower from time to time
owing to the Administrative Agent or any Lender under or in connection with
this Agreement, the Notes or any other Loan Document to which it is a party,
including principal, interest, fees (including fees of counsel), and expenses
whether now or hereafter existing under the Loan Documents to which it is a
party.

 

“OECD” has the meaning assigned to such term in
the definition of “Eligible Assignee”.

 

“OP
Merger Sub” shall have the meaning set forth in Section 14.31.

 

“Operating Expenses” shall mean, for any
period, all expenditures, computed in accordance with GAAP, of whatever kind or
nature relating to the ownership, operation, maintenance, repair or leasing of
the Projects that are incurred on a regular monthly or other periodic basis,
including (a) allocated amounts on account of Insurance Premiums and Real
Estate Taxes, prorated on an annual basis, (b) management fees in an
amount which is the greater of (i) management fees actually paid and
(ii) management fees at an imputed rate of 2.0% of Operating Income for
such period and (c) imputed capital expenditure in an amount equal to a

 

22

 

prorated portion of an annual amount equal to $0.20
per square foot; provided, however, that Operating Expenses shall
not include (i) depreciation, amortization and other non-cash charges or
capital expenditures (except as provided above), (ii) leasing commissions,
tenant improvement allowances or other expenditures incurred for tenant
improvements, (iii) any deposits to cash reserves (if any) required to be
maintained under the Loan Documents (except if and to the extent any sums are
withdrawn therefrom to pay (and are actually used to pay) expenses which
otherwise constitute Operating Expenses without duplication), (iv) any payment
or expense for which the Borrower was or is to be reimbursed by any third party
if the receipt of the related reimbursement payment is required to be excluded
in the calculation of Operating Income, (v) any payment payable by the Borrower
or any Other Swap Pledgor under the Hedge Agreement, (vi) any changes in value
of derivative contracts or of the Projects, and (vii) any principal,
interest or other debt service payable with respect to the Loans. Operating Expenses
shall be determined on an annualized basis based on the relevant quarterly
results for purposes of Section 2.09(a), and on a projected annual basis
for purposes of Section 10.03(c)(iv).

 

“Operating Income” shall mean, for any period,
all regular ongoing income, computed in accordance with GAAP (but without
taking into account any treatment of Rent on a straight-line amortization basis
over the term of a lease that would otherwise be required by GAAP), during such
period from the ownership or operation, or otherwise arising in respect, of the
Projects, including (a) all amounts payable to the Borrower by any Person
as Rents under Approved Leases, (b) business interruption proceeds and
rent loss insurance proceeds (except with respect to any Leases that have been
terminated as of the date of computation as a result of any Casualty Event or
Taking) and (c) all other amounts which are included in the Borrower’s
financial statements as operating income of the Projects, including, receipts
from leases and parking agreements, concession fees and charges, other
miscellaneous operating revenues, but excluding any extraordinary income,
including (i) any Condemnation Awards or Insurance Proceeds (other than
business interruption and rent loss proceeds as aforementioned), (ii) any
item of income otherwise includable in Operating Income but paid directly to a
Person other than the Borrower, its representative or its Affiliate (except, in
each case, to the extent the Borrower receives monetary credit for such payment
from the recipient thereof or such item is treated as an income item to the
Borrower, in accordance with GAAP), (iii) security deposits and earnest
money deposits received from tenants until forfeited or applied in accordance
with their Leases, (iv) lease buyout payments made by tenants in
connection with any surrender, cancellation or termination of their Leases,
(v) any disbursements to the Borrower from the Cash Trap Account (it being
understood that nothing set forth in this clause (v) shall prevent the receipt
of funds that have been deposited into the Cash Trap Account from being treated
as Operating Income when received to the extent such receipt otherwise
constitutes Operating Income as provided in the definition thereof), (vi) any
changes in value of derivative contracts or of the Projects, and (vii) any
payment payable to the Borrower or any Other Swap Pledgor under the Hedge
Agreement. Operating Income shall be determined on an annualized basis based on
the relevant quarterly results for purposes of Section 2.09(a), and
on a projected annual basis for purposes of Section 10.03(c).

 

“Operating Partnership” shall mean, with
respect to a Permitted REIT, its affiliated operating partnership
majority-owned and controlled, directly or indirectly, by such Permitted REIT
through which such REIT holds substantially all of its assets.

 

23

“Organizational Documents” shall mean
(a) for any corporation, the certificate or articles of incorporation, the
bylaws, any certificate of determination or instrument relating to the rights
of preferred shareholders of such corporation, any shareholder rights
agreement, and any amendments thereto, (b) for any limited liability
company, the articles of organization and any certificate relating thereto and
the limited liability company (or operating) agreement of such limited
liability company, and any amendments thereto, and (c) for any partnership
(general or limited), the certificate of limited partnership or other
certificate pertaining to such partnership and the partnership agreement of
such partnership (which must be a written agreement), and any amendments
thereto.

 

“Other Charges” shall mean all ground rents,
maintenance charges, impositions other than Real Estate Taxes, and any other
charges, including vault charges and license fees for the use of vaults, chutes
and similar areas adjoining the Projects, now or hereafter levied or assessed
or imposed against the Projects or any part thereof, other than Excluded Taxes.

 

“Other Swap Pledgor” shall mean
(i) Borrower’s Member, (ii) any Qualified Successor Entity to whom
the Projects are transferred pursuant to Section 9.03(a)(iii),
(iii) any entity that qualifies under clause (I) of the definition of
Qualified Successor Entity, (iv) a Permitted Public REIT, its Operating
Partnership or any Permitted Public REIT Subsidiary and/or (v) a Permitted
Private REIT or any Permitted Private REIT Subsidiary.

 

“Other Taxes” means any and all present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies arising from any payment made under any Loan Document
or from the execution, delivery, ownership or enforcement of, or otherwise with
respect to, any Loan Document.

 

“Outstanding Principal Amount” shall mean the outstanding principal amount of the
Loans at any point in time after giving effect to any repayment thereof
pursuant to Sections 2.06, 2.07, 2.09 and 3.01 or
other applicable provisions of this Agreement.

 

“Pacific Plaza” shall mean that certain
residential project owned by a wholly-owned Subsidiary of the Borrower’s Member
and located at 1431 Ocean Avenue, Santa Monica, California 90401.

 

“Participant” shall have the meaning assigned
to such term in Section 14.07(c)(i).

 

“Payment Date” shall mean the first Business
Day of each calendar month. The first Payment Date shall be October 1, 2005.

 

“Payor” shall have the meaning assigned to such
term in Section 4.06.

 

“PBGC” shall mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA and any successor entity
performing similar functions.

 

“Permitted Investments” shall mean:  (a) direct obligations of the United
States of America, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America, or by any agency
thereof, in either case maturing not more than ninety (90) days from the date
of acquisition thereof; (b) certificates of deposit issued by any bank or

 

24

 

trust company organized under the laws of the United States of America
or any state thereof and having capital, surplus and undivided profits of at
least $500,000,000, maturing not more than ninety (90) days from the date of
acquisition thereof; and (c) commercial paper rated A-1 or P-1 or better
by S&P or Moody’s, respectively, maturing not more than ninety (90) days
from the date of acquisition thereof; in each case so long as the same (i)
provide for the payment of principal and interest (and not principal alone or
interest alone) and (ii) are not subject to any contingency regarding the
payment of principal or interest.

 

“Permitted Liens” shall mean for each Project:
(a) any Lien created by the Loan Documents, (b) Liens for Real Estate
Taxes not yet delinquent and Liens for Other Charges imposed by any
Governmental Authority not yet due or delinquent, (c) rights of existing
and future tenants under Approved Leases as tenants only, (d) Permitted
Title Exceptions that constitute Liens, (e) utility and other easements entered
into by the Borrower in the ordinary course of business having no adverse
impact on the occupation, use, enjoyment, operation, value or marketability of
any Project and approved in advance in writing by the Administrative Agent in
its reasonable discretion, (f) any Lien for the performance of work or the
supply of materials affecting any Project unless the Borrower fails to discharge
such Lien by payment or bonding (in accordance with statutory bonding
requirements the effect of which is to release such Lien from the affected
Project and to limit the Lien claimant’s rights to a recovery on the bond) on
or prior to the date that is the earlier of (i) thirty (30) days after the
date of filing of such Lien and (ii) the date on which the Project or the
Borrower’s interest therein is subject to risk of sale, forfeiture,
termination, cancellation or loss, (g) any Lien consisting of the rights
of a lessor under equipment leases which are entered into in compliance with Sections
9.02(h) and 9.04(d), and (h) any other title and survey exceptions
(not referred to in clauses (a) through (g) above) affecting the Projects as
the Administrative Agent may approve in advance in writing and in its sole
discretion.

 

“Permitted Private REIT” shall have the meaning
set forth in Section 9.03(a)(iii).

 

“Permitted Private REIT Subsidiary” shall mean any
wholly-owned Subsidiary of a Permitted Private REIT or its Operating
Partnership.

 

“Permitted Public REIT” shall mean a REIT, in
which, at the time of the initial public offering of shares therein, at least
two (2) of the Named Principals are senior officers of such REIT.

 

“Permitted Public REIT Subsidiary” shall mean
any wholly-owned Subsidiary of the Permitted Public REIT or its Operating
Partnership.

 

“Permitted Public REIT Transfer” shall mean (a)
a transfer, through one or a series of related transactions, of one hundred
percent (100%) of the direct or indirect Equity Interests in the Borrower or
any Qualified Successor Entity to the Permitted Public REIT, its Operating
Partnership or a Permitted Public REIT Subsidiary in accordance with this
Agreement; provided that the Projects continue to be directly owned by
the Borrower or such Qualified Successor Entity, as the case may be, or (b) a
transfer, in compliance with Section 9.03(a)(iii), of all but not less
than all of the Projects to a Qualified Successor Entity that is a Permitted
Public REIT Subsidiary of the Permitted Public REIT (other than its Operating
Partnership).

 

25

 

“Permitted REIT” shall mean a Permitted Private
REIT or the Permitted Public REIT.

 

“Permitted REIT Subsidiary” shall mean a Permitted
Public REIT Subsidiary or a Permitted Private REIT Subsidiary.

 

“Permitted Reorganization” shall have the
meaning set forth in Section 14.31.

 

“Permitted Title Exceptions” shall mean as to
any Project, the outstanding liens, easements, restrictions, security interests
and other exceptions to title set forth in the policy of title insurance
insuring the lien of the Deed of Trust encumbering such Project approved by the
Administrative Agent.

 

“Person” shall mean any individual,
corporation, company, voluntary association, partnership, limited liability
company, joint venture, trust, unincorporated organization or government (or
any agency, instrumentality or political subdivision thereof).

 

“Plan” shall mean any employee pension benefit
plan (other than a Multiemployer Plan) as defined in Section 3(2) of ERISA, and
in respect of which any Borrower Party or its ERISA Affiliates is (or, if such
plan were terminated, would, if the Plan were subject to Title IV of ERISA,
under Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.

 

“Policy” and “Policies” shall have the
respective meanings assigned to such terms in Section 8.05(b).

 

“Post-Default Rate” shall mean a rate per annum
equal to 5% plus the Base Rate as in effect from time to time plus
the Applicable Margin for Base Rate Loans, provided that, with respect
to principal of a Eurodollar Loan, the “Post-Default Rate” shall be the greater
of (a) 5% plus the interest rate for such Loan as provided in Section 3.02(a)(ii)
and (b) the rate provided for above in this definition; provided, however,
that in no event shall the Post-Default Rate exceed the Maximum Rate.

 

“Primary
Credit Facility” means, with respect to any Permitted REIT, the primary
credit facility under which such Permitted REIT obtains financing for its
general purposes.

 

“Principal Office” shall mean the office of
Eurohypo, located on the date hereof at 1114 Avenue of the Americas, 29th
Floor, New York, New York, or such other office as the Administrative Agent shall
designate upon ten (10) days’ prior notice to the Borrower and the Lenders.

 

“Principals” shall mean the Named Principals
and any other Person holding ten percent (10%) or more of the shares,
partnership interests, membership interests, or other voting or beneficial
interests in Borrower’s Manager. As of the date hereof, the Named Principals
own all of the shares in Borrower’s Manager.

 

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

 

26

 

“Project-Level Account” shall have the meaning
assigned to such term in the Project-Level Account Security Agreement.

 

“Project-Level
Account Security Agreement” shall mean the Project-Level Account Security
Agreement, among the Borrower, the Administrative Agent (on behalf of the
Lenders) and the Depository Bank, substantially in the form of Exhibit I
attached hereto, delivered on the Closing Date, as the same may be Modified and
in effect from time to time.

 

“Property” shall mean any right or interest in
or to property of any kind whatsoever, whether real, personal or mixed and
whether tangible or intangible.

 

“Property Condition Report” shall mean,
collectively, those certain property condition reports for each Project
prepared for the Administrative Agent and listed on Schedule 1.01(7)
attached hereto. The Administrative Agent acknowledges receipt of copies of the
foregoing Property Condition Reports.

 

“Property Management Agreement” shall mean,
collectively, (a) each Property Management Agreement between the Borrower and
the Property Manager listed on Schedule 1.01(8) attached hereto and (b)
any other property management and/or leasing agreement entered into with a
Property Manager appointed in accordance with the definition of Property
Manager contained in this Section 1.01, as the same shall be Modified in
accordance with the provisions of this Agreement.

 

“Property Manager” shall mean Douglas, Emmett
and Company or such successor manager and/or leasing agent as shall be
reasonably approved by the Administrative Agent or otherwise permitted without
such approval pursuant to Section 9.15 or Section 14.31.

 

“Property Manager’s Consent” shall mean a
Property Manager’s Consent and Subordination of Property Management Agreement
substantially in the form of Exhibit J attached hereto, to be
executed, dated and delivered by (a) the Property Manager and the Borrower to
the Administrative Agent (on behalf of the Lenders) on the Closing Date and (b)
any other Property Manager to the Administrative Agent (on behalf of the
Lenders) prior to its appointment as Property Manager, as such agreements may
be Modified and in effect from time to time.

 

“Proportionate Share” shall mean, with respect
to each Lender, the percentage set forth opposite such Lender’s name on Schedule
1.01(4) attached hereto under the caption “Proportionate Share” or in the
Assignment and Assumption (in accordance with the terms of this Agreement)
pursuant to which such Lender became a party hereto, in any case, as such
percentage may be Modified in the most recent Assignment and Assumption (in
accordance with the terms of this Agreement) to which such Lender is a party. The
aggregate Proportionate Shares of all Lenders shall equal one hundred percent
(100%).

 

“Proposed Lender” shall have the meaning
assigned to such term in Section 5.07.

 

“Qualified Real Estate Interest” shall mean any
real estate asset of a type and quality, located in markets, consistent with
the Projects or any Residential Property as of the date this Agreement is
entered into or which is otherwise consistent with the investment practices

 

27

 

prior to the date hereof of the Douglas Emmett Realty
Funds taken as a whole and which is acquired after the Closing Date directly by
the Borrower or by a Qualified Sub-Tier Entity.

 

“Qualified Successor Entity” shall have the
meaning set forth in Section 9.03(a)(iii).

 

“Qualified Sub-Tier Entity” means an entity
wholly- or majority-owned and controlled by the Borrower.

 

“Real Estate Taxes” shall mean all real estate
taxes and all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents and charges, all charges for utilities
and all other public charges whether of a like kind or different nature,
imposed upon or assessed against the Borrower, the Projects or any part thereof
or upon the revenues, rents, issues, income and profits of the Projects or
arising in respect of the occupancy, use or possession thereof.

 

“Register” shall have the meaning assigned to
such term in Section 14.07(b)(iv).

 

“Regulations A, D, T, U and X” shall mean,
respectively, Regulations A, D, T, U and X of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be Modified and in
effect from time to time.

 

“Regulatory Change” shall mean, with respect to
any Lender, any change after the Closing Date in federal, state or foreign law
or regulations (including Regulation D) or the adoption or making after such
date of any interpretation, directive or request applying to a class of banks
including such Lender of or under any federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any Governmental Authority or
monetary authority charged with the interpretation or administration thereof.

 

“REIT” shall mean a real estate investment
trust as defined in Sections 856-860 of the Code.

 

“REIT
Merger Sub 1” shall have the meaning set forth in Section 14.31.

 

“REIT
Merger Sub 2” shall have the meaning set forth in Section 14.31.

 

“Rejecting Lender” shall have the meaning set
forth in Section 9.03(c).

 

“Related Entity” shall mean, as to any Person,
(a) any other Person which directly or indirectly owns 51% or more of the
partnership, membership or other ownership interests of such Person and
directly or indirectly controls such Person; (b) any other Person into
which, or with which, such Person is merged, consolidated or reorganized, or
which is otherwise a successor to such Person by operation of law, or which
acquires all or substantially all of the assets of such Person; (c) any
other Person which is a successor to the business operations of such Person and
engages in substantially the same activities; or (d) any other Person in which a
Person described in clauses (b) and (c) of this definition directly
or indirectly owns 51% or more of the partnership, membership or other
ownership interests of such Person and directly or indirectly controls such
Person. As used in this definition, “control” (including, with its
correlative meanings, “controlled by” and “under common control with”)
shall mean possession, directly or

 

28

 

indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).

 

“Related Party” shall mean:

 

(i)            any
family member of any Named Principal; or

 

(ii)           any
trust, corporation, partnership, limited liability company or other entity, in
which any Named Principal and/or such other persons referred to in the
immediately preceding clause (i) have a controlling interest.

 

“Release” shall mean any release, spill,
emission, leaking, pumping, injection, pouring, dumping, deposit, disposal,
discharge, dispersal, leaching, seeping or migration into the indoor or outdoor
environment, including the movement of Hazardous Substances through ambient
air, soil, surface water, ground water, wetlands, land or subsurface strata.

 

“Remediation” shall mean, without limitation,
any investigation, site monitoring, response, remedial, removal, or corrective
action, any activity to cleanup, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Substance, any actions to prevent, cure or mitigate any
Release of any Hazardous Substance, any action to comply with any Environmental
Laws or with any permits issued pursuant thereto, any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or evaluation relating to any Hazardous
Substances. “Remediate” shall have a correlative meaning.

 

“Rents” means all rents (whether denoted as
base rent, advance rent, minimum rent, percentage rent, additional rent or
otherwise), issues, income, royalties, profits, revenues, proceeds, bonuses,
deposits (whether denoted as security deposits or otherwise), termination fees,
rejection damages, buy-out fees and any other fees made or to be made in lieu
of rent to the Borrower, any award made hereafter to the Borrower in any court
proceeding involving any tenant, lessee, licensee or concessionaire under any
of the Leases in any bankruptcy, insolvency or reorganization proceedings in
any state or federal court, and all other payments, rights and benefits of
whatever nature from time to time due to the Borrower under the Leases
(including any Leases with respect to signage), including (i) rights to
payment earned under the Leases, (ii) any payments or rights to payment
with respect to parking facilities or other facilities in any way contained
within or associated with the Projects, and (iii) all other income,
consideration, issues, accounts, profits or benefits of any nature arising from
the possession, use and operation of the Projects.

 

“Requesting Lender” shall have the meaning
assigned to such term in Section 5.07.

 

“Required Lenders” shall mean Lenders holding
at least 66.67% of the Outstanding Principal Amount.

 

29

 

“Required Payment” shall have the meaning
assigned to such term in Section 4.06.

 

“Reserve Requirement” shall mean, for any
Interest Period for any Eurodollar Loan, the average maximum rate at which
reserves (including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against “Eurocurrency liabilities” (as such term
is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall include any other reserves required to be maintained
by such member banks by reason of any Regulatory Change with respect to
(i) any category of liabilities that includes deposits by reference to
which the LIBO Rate is to be determined as provided in the definition of “LIBO
Rate” in this Section 1.01 or (ii) any category of extensions
of credit or other assets that includes Eurodollar Loans.

 

“Residential Properties” shall mean each of
Barrington Plaza and Pacific Plaza.

 

“Restoration” shall have the meaning assigned
to such term in Section 10.01(a).

 

“Restoration Consultant” shall have the meaning
assigned to such term in Section 10.03(e).

 

“Restoration Retainage” shall have the meaning
assigned to such term in Section 10.03(f).

 

“Restricted Payment” shall mean all
distributions of the Borrower or the Borrower’s Member (in cash, Property or
other obligations) on, or other payments or distributions on account of (or the
setting apart of money for a sinking or other analogous fund for) the purchase,
redemption, retirement or other acquisition of, any portion of any Equity
Interest in the Borrower or the Borrower’s Member or of any warrants, options
or other rights to acquire any such Equity Interest.

 

“Rollover
Breakage Costs” shall have the meaning assigned to such term in Section
2.08.

 

“Security Accounts” shall mean, collectively,
the Cash Trap Account, the Project-Level Account and any Controlled Account.

 

“Security Documents” shall mean, collectively,
the Deed of Trust, the Hedge Agreement Pledge, the Cash Trap Account Security
Agreement, the Project-Level Account Security Agreement, the Controlled Account
Agreement, the General Assignment and such other security documents as the
Administrative Agent may reasonably request and all Uniform Commercial Code
financing statements required by this Agreement, the Deed of Trust, the Hedge
Agreement Pledge, the Cash Trap Account Security Agreement, the Project-Level
Account Security Agreement, the Controlled Account Agreement, the General
Assignment or any other security document the Administrative Agent may
reasonably request to be filed with respect to the applicable security
interests.

 

30

 

“Significant Casualty Event” shall have the
meaning assigned to such term in Section 10.01(b).

 

“SNDA Agreement” shall mean (i) the form of
Subordination, Non-Disturbance, and Attornment Agreement attached hereto as Exhibit
K, (ii) any form attached to a Major Lease currently in effect or which has
been approved by the Administrative Agent pursuant to the terms of this
Agreement or (iii) such other form as is reasonably satisfactory to the
Administrative Agent.

 

“Solvent” shall mean, when used with respect to
any Person, that at the time of determination: (i) the fair saleable value of
its assets is in excess of the total amount of its liabilities (including
contingent liabilities); (ii) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts become
absolute and matured; (iii) it is then able and expects to be able to pay its
debts (including contingent debts and other commitments) as they mature; and
(iv) it has capital sufficient to carry on its business as conducted and as
proposed to be conducted.

 

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

 

“Stated Maturity Date” shall mean the date that
is seven (7) years from the expiration of the Stub Interest Period, subject to Section 2.10.

 

“Stub Interest Period”
shall mean the period commencing on the Closing Date and ending on (but
not including) the first calendar day
of the first month following the Closing Date (or if such day is not a Business
Day, the next Business Day thereafter).

 

“Subsidiary” shall mean, with respect to any
Person, any corporation, limited liability company, partnership or other entity
of which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such
corporation, limited liability company, partnership or other entity (irrespective
of whether or not at the time securities or other ownership interests of any
other class or classes of such corporation, limited liability company,
partnership or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned
or controlled by such Person or one or more Subsidiaries of such Person or by
such Person and one or more Subsidiaries of such Person.

 

“Swap Agreement” means any agreement (whether
one or more) with respect to any swap, forward, future or derivative
transaction or option or similar agreement (including, without limitation, any
cap or collar) involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk
or value or any similar transaction or any combination of these transactions. For
purposes hereof, the credit exposure at any time of any Person under a Swap
Agreement to which such Person is a party shall be determined at such time in
accordance with the standard methods of calculating credit exposure under
similar arrangements as reasonably prescribed from time to time by the
Administrative

 

31

 

Agent, taking into account (a) potential interest rate
movements, (b) the respective termination provisions, (c) the notional
principal amount and term of such Swap Agreement and (d) any provisions
providing for the netting of amounts payable by and to a Person thereunder (or
simultaneous payments of amounts by and to such Person).

 

“Syndication” shall have the meaning assigned
to such term in Section 14.26.

 

“Taking” means a taking or voluntary conveyance
during the term hereof of all or part of any Project or any interest therein or
right accruing thereto or use thereof, as the result of, or in settlement of,
any condemnation or other eminent domain proceeding by any Governmental
Authority affecting such project or any portion thereof whether or not the same
shall have actually been commenced.

 

“Taxes” shall mean any and all present or
future taxes, levies, imposts, duties, deductions, charges or withholdings
imposed by any Governmental Authority.

 

“Third Party Counterparty” shall have the
meaning assigned to such term in Section 8.19(a).

 

“Third Party Hedge Agreement” shall have the
meaning assigned to such term in Section 8.19(c).

 

“Title Company” shall mean Chicago Title
Insurance Company and any one or more reinsurers identified on Schedule
1.01(9) attached hereto; provided, however, that (i) in no
event shall the amount insured by any such title insurer exceed the limits
shown on Schedule 1.01(9) and (ii) any reinsurance shall be subject to
direct access agreements from such reinsurers.

 

“Title Policy” shall have the meaning assigned
to such term in Section 6.01(k).

 

“Trading with the Enemy Act” shall mean 50
U.S.C. App. 1 et seq.

 

“Transactions” shall mean, collectively,
(a) the execution, delivery and performance by the Borrower of this
Agreement and the other Loan Documents to which it is a party, the borrowing of
the Loans and the use of the proceeds thereof and (b) the execution,
delivery and performance by the other Borrower Parties of the other Loan Documents
to which they are a party and the performance of their obligations thereunder.

 

“Transfer” shall mean any transfer, sale,
assignment, mortgage, encumbrance, pledge or conveyance, whether voluntary or
involuntary.

 

“Type” shall have the meaning assigned to such
term in Section 1.03.

 

“Uniform Commercial Code” shall mean the
Uniform Commercial Code of the State of California, except with respect to
those circumstances in which the Uniform Commercial Code of the State of
California shall require the application of the Uniform Commercial Code of
another state, in which case, for purposes of such circumstances, the “Uniform
Commercial Code” shall mean the Uniform Commercial Code of such other state.

 

32

 

“Use” shall mean, with respect to any Hazardous
Substance, the generation, manufacture, processing, distribution, handling,
use, treatment, recycling or storage of such Hazardous Substance or
transportation to or from the property of such Person of such Hazardous
Substance.

 

“Withdrawal Liability” means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan.

 

1.02         Accounting
Terms and Determinations.

 

(a)           Except
as otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time.

 

(b)           Without
first obtaining the Administrative Agent’s consent, the Borrower will not change
the last day of its fiscal year from December 31, or the last days of the first
three fiscal quarters in each of its fiscal years.

 

1.03         Types
of Loans. Loans hereunder are distinguished by “Type”. The “Type” of a Loan
refers to whether such Loan is a Base Rate Loan or a Eurodollar Loan, each of
which constitutes a Type.

 

1.04         Terms
Generally. The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed
to be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time Modified
(subject to any restrictions on such Modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder,”
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights and (f) whenever this Agreement provides that any consent
or approval will not be “unreasonably withheld” or words of like import, the
same shall be deemed to include within its meaning that such consent or
approval will not be unreasonably delayed or conditioned.

 

ARTICLE
II

COMMITMENTS, LOANS, NOTES AND PREPAYMENTS

 

2.01         Loans.
Each Lender severally agrees, on the terms and conditions of this Agreement, to
make a loan (each such loan being a “Loan” and collectively, the “Loans”)
on a

 

33

 

non-revolving basis to the Borrower in Dollars on the
Closing Date in a principal amount up to but not exceeding the amount of the
Commitment of such Lender. Thereafter the Borrower may Convert all or a portion
of the Outstanding Principal Amount of one Type of Loan into another Type of
Loan (as provided in Section 2.05) or Continue one Type of Loan as
the same Type of Loan (as provided in Section 2.05), subject in all
cases to the limit on the number of Interest Periods that may be outstanding at
any one time as set forth in the definition of “Interest Period”.

 

2.02         Funding
of Loans. On the Closing Date, each Lender shall make available from its
Applicable Lending Office the amount of the Loan to be made by it on such date
to the Administrative Agent as specified by the Administrative Agent, in
immediately available funds, for account of the Borrower. The amount so
received by the Administrative Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Borrower in immediately available
funds, for the uses and purposes identified on a sources and uses statement
approved by the Administrative Agent and the Borrower.

 

2.03         Several
Obligations. The failure of any Lender to make any Loan to be made by it on
the date specified therefor shall not relieve any other Lender of its
obligation to make its Loan on such date, but neither any Lender nor the
Administrative Agent shall be responsible for the failure of any other Lender
to make a Loan to be made by such other Lender. The amounts payable by the
Borrower at any time hereunder and under the Note to each Lender shall be a
separate and independent debt. It is understood and agreed that the Closing
hereunder shall not occur unless each of the Lenders shall have funded the
amount of the Loan to be made by it.

 

2.04         Notes.

 

(a)           Notes.
The Loan made by each Lender shall be evidenced by its Note.

 

(b)           Substitution,
Exchange and Subdivision of Notes. No Lender shall be entitled to have its
Note substituted or exchanged for any reason, or subdivided for promissory
notes of lesser denominations, except (i) in connection with a permitted
assignment of all or any portion of such Lender’s Commitment, Loan and Note
pursuant, and subject to the terms and conditions of, Section 14.07(b)
(and, if requested by any Lender in connection with such permitted assignment,
the Borrower agrees to so exchange any such Note provided the original Note
subject to such exchange has been delivered to the Borrower) or (ii) as
provided in Section 14.30 with respect to severance of Notes if elected
by Eurohypo, provided the original Note severed, split, divided or otherwise
replaced pursuant to Section 14.30 has been delivered to the Borrower.

 

(c)           Loss,
Theft, Destruction or Mutilation of Notes. In the event of the loss, theft
or destruction of any Note, upon the Borrower’s receipt of a reasonably
satisfactory indemnification agreement executed in favor of the Borrower by the
holder of such Note, or in the event of the mutilation of any Note, upon the
surrender of such mutilated Note by the holder thereof to the Borrower, the
Borrower shall execute and deliver to such holder a replacement Note in lieu of
the lost, stolen, destroyed or mutilated Note.

 

34

 

2.05         Conversions
or Continuations of Loans.

 

(a)           Subject
to Section 4.04, the Borrower shall have the right to Convert Loans
of one Type into Loans of another Type or Continue Loans of one Type as Loans
of the same Type, at any time or from time to time; provided that:  (i) the Borrower shall give the
Administrative Agent notice of each such Conversion or Continuation as provided
in Section 4.05; (ii) Eurodollar Loans may be Converted only on the
last day of an Interest Period for such Loans unless the Borrower complies with
the terms of Section 5.05 and (iii) subject to Sections 5.01(a)
and 5.03, any Conversion or Continuation of Loans shall be pro rata
among the Lenders. Notwithstanding the foregoing, and without limiting the
rights and remedies of the Administrative Agent and the Lenders under Article
XII, in the event that any Event of Default exists, the Administrative
Agent may (and at the request of the Required Lenders shall) suspend the right
of the Borrower to Convert any Loan into a Eurodollar Loan, or to Continue any
Loan as a Eurodollar Loan for so long as such Event of Default exists, in which
event all Loans shall be Converted (on the last day(s) of the respective
Interest Periods therefor) into, or Continued as, as the case may be, Base Rate
Loans. In connection with any such Conversion, a Lender may (at its sole
discretion) transfer a Loan from one Applicable Lending Office to another.

 

(b)           Notwithstanding
anything to the contrary contained in this Agreement, at any time that a Hedge
Agreement is in effect, the Borrower shall have the right to choose only an
Interest Period which is the same as the Interest Rate Hedge Period, provided
that the foregoing shall only apply to a Hedge Agreement that is required by Section
8.19(a) of this Agreement.

 

2.06         Prepayment.

 

(a)           Prepayment
of the Loans. Upon not less than ten (10) days’ prior written notice to the
Administrative Agent, the Borrower may prepay the Loans, in whole or in part,
in minimum increments of One Million Dollars ($1,000,000) except as otherwise
provided by Section 2.06(c), subject to the following:

 

(i)            any such prepayment shall be
accompanied by the amount of interest theretofore accrued but unpaid in respect
of the principal amount so prepaid, in accordance with Section 2.08;

 

(ii)           except as provided below, any such
prepayment (except as a result of a Casualty Event or Taking or any prepayment
made pursuant to Section 10.03(j) or Section 14.25)) shall
be accompanied by a prepayment premium equal to the following percentage of the
principal amount so prepaid:

 

	
  If the prepayment occurs during the

  following period:

  	
   

  	
  The percentage is as follows:

  
	
  During the
  period from the Closing Date to and including the date which occurs six (6)
  months after the Closing Date

  	
   

  	
  1.00%

  
	
  During the
  period from the day immediately following the date which occurs six (6)
  months after the Closing Date to and including the date which occurs twelve
  (12) months after the Closing Date

  	
   

  	
  0.50%

  
	
  Thereafter

  	
   

  	
  0.00%

  

 

35

 

and

 

(iii)          such prepayment shall be accompanied
by any amounts payable to a Lender pursuant to Section 5.05 as a
result of such prepayment while a Eurodollar Loan is in effect, in accordance
with Section 2.08.

 

If the Loans are paid or
prepaid in whole or in part for any reason (including acceleration of the Loans
or because the Loans automatically become due and payable in accordance with Section
12.02(a)), other than by a Casualty Event or Taking or any prepayment made
pursuant to Section 10.03(j) or Section 14.25) at any time,
the Borrower shall pay to the Administrative Agent (on behalf of the Lenders)
the amount(s) described in clauses (i), (ii), as applicable, and (iii),
of the immediately preceding sentence. Notwithstanding the foregoing, no
prepayment premium pursuant to clause (ii) of Section 2.06(a)
shall be payable in connection with any prepayment of principal made other than
pursuant to Section 2.09(a), if such prepayment, when aggregated with
all past prepayments made other than pursuant to Section 2.09(a), would
not exceed $53,750,000.

 

(b)           Treatment
of Prepayments. Except for any mandatory prepayment made pursuant to Section
2.07 and any prepayment made under Sections 2.06(c) and 2.09,
and notwithstanding when such prepayment is made, each partial prepayment of
the Loans shall be deemed to reduce the Allocated Loan Amounts pro-rata in
accordance with the Allocated Loan Amount for each Project.

 

(c)           Prepayment
Upon Release of Projects. Notwithstanding anything to the contrary
contained in this Section 2.06, any prepayment made in connection
with the release in accordance with the terms contained in Section 2.09
of any one or more of the Projects may be made at any time upon not less than
ten (10) days’ prior written notice to the Administrative Agent, and without
reference to the minimum One Million Dollars ($1,000,000) increment
requirements of Section 2.06(a), but subject to payment of any
applicable prepayment premium under clause (ii) of Section 2.06(a)
and compliance with the provisions set forth in clause (iii) of Section 2.06(a)
above, and the applicable provisions set forth in Section 2.09.

 

(d)           Acknowledgments
Regarding Prepayment Premium. The prepayment premiums required by this Section 2.06
are acknowledged by the Borrower to be partial compensation to the Lenders for
the costs of reinvesting the proceeds of the Loans and for the loss of the
contracted rate of return on the Loans and shall be due in accordance with the
terms of this Section 2.06 upon any prepayment of the Loans, including
any prepayment occurring after an acceleration resulting from a violation of
the provisions restricting Transfers set forth in this Agreement. Furthermore,
the Borrower acknowledges that the loss that may be sustained by the

 

36

 

Lenders as a
result of such a prepayment by the Borrower is not susceptible of precise
calculation, and the prepayment premium represents the good faith effort of the
Borrower and the Lenders to compensate the Lenders for such loss and the
parties’ reasonable estimate of such loss, and is not a penalty. By initialing
this provision where indicated below, the Borrower waives any rights it may
have under California Civil Code Section 2954.10, or any successor
statute, and the Borrower confirms that the Lenders’ agreement to make the
Loans at the interest rate and on the other terms set forth herein constitutes
adequate and valuable consideration, given individual weight by the Borrower,
for the prepayment provisions set forth in this Section 2.06.

 

	
   

  	
   

  	
   

  
	
   

  	
  Borrower’s Initials

  	
   

  

 

2.07         Mandatory
Prepayments. If a Casualty Event or Taking shall occur with respect to any
Project, the Borrower, upon the Borrower’s or the Administrative Agent’s
receipt of the applicable Insurance Proceeds or Condemnation Awards, shall
prepay the Loan, if required by the provisions of Article X, on the
dates and in the amounts specified therein without premium (but subject to the
provisions of Sections 2.08 and 5.05) or, at the instruction of
the Borrower (provided no Event of Default is then continuing), shall be held
in a Controlled Account by the Administrative Agent and applied to prepayment
of the Loan on the next Payment Date (in which case the amount so held shall
continue to bear interest at the rate(s) provided in this Agreement until so
applied to prepay the Loan). Nothing in this Section 2.07 shall be
deemed to limit any obligation of the Borrower under the Deeds of Trust or any
other Security Document, including any obligation to remit to the Cash Trap
Account, Project-Level Account, or a Controlled Account pursuant to the Deeds
of Trust or any of the other Security Documents the Insurance Proceeds,
Condemnation Awards or other compensation received in respect of any Casualty
Event or Taking.

 

2.08         Interest
and Other Charges on Prepayment. If the Loans are prepaid, in whole or in
part, pursuant to Section 2.06 or 2.07, each such prepayment shall
be made together with (a) the accrued and unpaid interest on the principal
amount prepaid, and (b) any amounts payable to a Lender pursuant to Section
5.05 as a result of such prepayment while an Adjusted LIBO Rate is in
effect (provided the Borrower is notified of such amount or an estimate
thereof), including, without limitation, any such amounts that may result from a
prepayment other than on the last day of an Interest Period for a Eurodollar
Loan the Interest Period of which has been automatically Continued pursuant to Section
4.05 during any period on which a prepayment date has been postponed in
accordance with the provisions set forth below in this Section 2.08; provided,
however, that any such prepayment shall be applied first, to the
prepayment of any portions of the Outstanding Principal Amount that are Base
Rate Loans and, second, to the prepayment of any portions of the
Outstanding Principal Amount that are Eurodollar Loans applying such sums first
to Eurodollar Loans of the shortest maturity so as to minimize Rollover Breakage
Costs (as defined below); provided  further, however, that
if an Event of Default exists, the Administrative Agent may distribute such
payment to the Lenders for application in such manner as it or the Required
Lenders, subject to Section 4.02, may determine to be appropriate. Each
prepayment pursuant to Section 2.06 shall be made on the prepayment date
specified in the notice of prepayment delivered pursuant to Section 4.05,
unless such notice is revoked (or the

 

37

 

date of prepayment is postponed) by a further written
notice (which may be delivered by the Borrower by facsimile to the
Administrative Agent). Any notice revoking a
notice of prepayment (or postponing a previously-specified prepayment date)
shall be delivered not less than one (1) Business Day prior to the date of
prepayment specified in the notice of prepayment; provided, however,
in the event that the Borrower revokes or postpones such notice during the last
three (3) Business Days of any Interest Period for a Eurodollar Loan, and
provided that the Borrower has not elected to Convert such Eurodollar Loan into
a Base Rate Loan pursuant to Section 2.05, the Borrower acknowledges
that losses, costs and expenses for which the Borrower is responsible pursuant
to Section 5.05(b) shall include, without limitation, losses, costs and
expenses that may subsequently result from the early repayment, termination,
cancellation or failure of the Borrower to borrow any Eurodollar Loan that was
to have been automatically continued pursuant to Section 4.05 (“Rollover
Breakage Costs”).

 

2.09         Release
of Projects. Except as set forth in this Section 2.09, or
unless the Obligations have been paid in full, the Borrower shall have no right
to obtain the release of any Project from the Lien of the Loan Documents, and
no repayment or prepayment of any portion of the Loans shall cause, give rise
to a right to require, or otherwise result in, the release of the Lien of the
Deed of Trust on any Project or any other collateral securing the Loans. Any
release upon payment of the Obligations in full shall be in accordance with the
provisions of the Deeds of Trust governing releases.

 

(a)           Release
of Projects. At any time following the Closing Date, the Borrower on one or
more occasions may obtain, and the Administrative Agent shall take such actions
as are necessary to effectuate pursuant to this Section 2.09(a),
the release of the entirety of any Project from the Lien of the Deeds of Trust
(and related Loan Documents) thereon and the release of the Borrower’s
obligations under the Loan Documents with respect to such Project (other than
those which expressly survive repayment, including, but not limited to, those
set forth in the Environmental Indemnity), upon satisfaction of each of the
following conditions:

 

(i)            The Borrower shall submit to the
Administrative Agent (on behalf of the Lenders), by 3:00 P.M., New York
City time, at least ten (10) days prior to the date of the proposed release,
written notice of its election to obtain such release (which notice shall
include a certification by an Authorized Officer of the Borrower that the
proposed release complies with all of the conditions set forth in this Section 2.09(a)),
together with the form or forms for a release of Lien and related Loan
Documents (or, in the case of a Deed of Trust, a request for reconveyance) for
such Project for execution by the Administrative Agent, which the
Administrative Agent shall execute and deliver to the Borrower for recordation
upon satisfaction of all conditions set forth in this Section 2.09(a).
Such release shall be in a form appropriate in each jurisdiction in which the
applicable Project is located and reasonably satisfactory to the Administrative
Agent and its counsel. Any notice of a proposed release of a Project pursuant
to this Section 2.09(a) may be revoked (or the date proposed for such
release may be postponed) by a further written notice (which may be delivered
by the Borrower by facsimile to the Administrative Agent). Any notice revoking a
proposed release (or postponing the date for a proposed release) shall be delivered
not less than one (1) Business Day prior to the date of such release specified
in the notice of release; provided, however, in the event that
the Borrower revokes or postpones such notice during the last three (3)
Business Days of

 

38

 

the Interest Period for any Eurodollar Loan, and
provided that the Borrower has not elected to Convert such Eurodollar Loan into
a Base Rate Loan pursuant to Section 2.05, the Borrower acknowledges
that the losses, costs and expenses for which the Borrower shall be responsible
under Section 5.05(b) shall include Rollover Breakage Costs;

 

(ii)           The Borrower shall remit to the
Administrative Agent an amount equal to one hundred ten percent (110%) of the
Allocated Loan Amount for the applicable Project (for application to the principal
balance of the Loans), plus any prepayment premium payable in connection with
such prepayment pursuant to clause (ii) of Section 2.06(a).
The minimum One Million Dollar ($1,000,000) increment requirements of Section
2.06(a) shall not apply to a prepayment of the Loans made in accordance
with this Section 2.09(a);

 

(iii)          The Borrower shall pay to the
Administrative Agent all sums, including, but not limited to, interest payments
and principal payments, if any, that are then due and payable under the Notes,
this Agreement, the Deeds of Trust and the other Loan Documents, and all costs
due pursuant to Section 5.05 and clause (viii) of this Section
2.09(a) (it being agreed that accrued interest on the principal amount to
be paid pursuant to clause (ii) of this Section 2.09(a) shall not be due
and payable in connection with such release (unless such accrued interest is
otherwise due and payable), but shall be due and payable on the next Payment
Date);

 

(iv)          [Reserved];

 

(v)           Immediately prior to such release,
the Debt Service Coverage Ratio as calculated for all of the Projects then
securing the Loans other than the Project proposed to be released (and assuming
for purposes of the calculation of the DSCR Debt Service that the principal of
the Loans shall have been reduced by the principal amount payable with respect
to the Project to be released in accordance with clause (ii) of this Section
2.09(a)) shall be equal to or greater than 1.50-to-1.00;

 

(vi)          After giving effect to such release
and the payment of principal required to be made in connection therewith, the
Outstanding Principal Amount of the Loans (unless the Loans shall be repaid in
full) shall not be less than $107,500,000.

 

(vii)         No Default or Event of Default exists
at the time of the Borrower’s request or on the date of the proposed release or
after giving effect thereto (other than a Default or Event of Default that
would be cured by effectuating such release); and

 

(viii)        The Borrower shall pay all costs and
expenses (including, but not limited to, reasonable legal fees and
disbursements, escrow and trustee fees, costs for title insurance endorsements
required by the Administrative Agent to confirm the continued priority of the
Liens in favor of the Lenders on the Projects not being released and other out-of-pocket
costs and expenses) incurred by the Administrative Agent in connection with
such release.

 

It is
understood and agreed that no such release shall impair or otherwise adversely
affect the Liens, security interests and other rights of the Administrative
Agent or the Lenders

 

39

 

under
the Loan Documents not being released (or as to the parties to the Loan
Documents and Projects subject to the Loan Documents not being released).

 

(b)           Any
Project released from the Lien of the Deed of Trust and other Loan Documents
pursuant to this Section 2.09 shall, effective upon such release, no
longer be considered a “Project” for purposes of this Agreement or the other
Loan Documents, except for purposes of those indemnification obligations and
other covenants which, by their terms, expressly survive any such release.

 

2.10         Call
Date. Notwithstanding anything to the contrary contained in this Agreement,
(i) the Outstanding Principal Amount under all Notes shall become automatically
due and payable on the fifth (5th) anniversary of the expiration of the Stub
Interest Period if on or prior to such date the Borrower has not paid to the
Administrative Agent in accordance with the Fee Letter for the benefit of the
Lenders an extension fee equal to five (5) basis points (0.05%) times the
Outstanding Principal Amount under all Notes as of the fifth (5th) anniversary
of the expiration of the Stub Interest Period or if on such date an Event of
Default exists and (ii) the Outstanding Principal Amount under all Notes shall
become automatically become due and payable on the sixth (6th) anniversary of
the expiration of the Stub Interest Period if on such date the Borrower has not
paid to the Administrative Agent in accordance with the Fee Letter for the
benefit of the Lenders an extension fee equal to five (5) basis points (0.05%)
times the Outstanding Principal Amount under all Notes as of the sixth (6th)
anniversary of the expiration of the Stub Interest Period or if on such date an
Event of Default exists.

 

ARTICLE
III

PAYMENTS OF PRINCIPAL AND INTEREST

 

3.01         Repayment
of Loans. The Borrower hereby promises to pay to the Administrative Agent
for the account of each Lender the principal amount of such Lender’s
outstanding Loans to the Borrower, together with accrued and unpaid interest,
any applicable fees and all other amounts due under the Loan Documents with
respect to such Loans, which amounts, to the extent not previously paid, shall,
without notice, demand or other action, be due and payable on the Maturity
Date.

 

3.02         Interest.

 

(a)           The
Borrower hereby promises to pay to the Administrative Agent for the account of
each Lender interest on the unpaid principal amount of each Loan (which may be
Base Rate Loans and/or Eurodollar Loans) made by such Lender for the period
from and including the date of such Loan to but excluding the date such Loan
shall be paid in full if paid in the time and manner provided for in Section
4.01, at the following rates per annum:

 

(i)            during such periods as such Loan is
a Base Rate Loan, the Base Rate plus the Applicable Margin; and

 

40

 

(ii)           during such periods as such Loan is a
Eurodollar Loan, for each Interest Period relating thereto, the Adjusted LIBO
Rate for such Loan for such Interest Period plus the Applicable Margin.

 

(b)           Accrued
interest on each Loan shall be payable (i) monthly in arrears on each Payment
Date for all interest accrued through but not including the relevant Payment
Date and (ii) in the case of any Loan, upon the payment or prepayment thereof
(except as expressly provided in Section 2.09(a)(iii)) or the
Conversion of such Loan to a Loan of another Type (but only on the principal
amount so paid, prepaid or Converted), except that interest payable hereunder
at the Post-Default Rate shall be payable from time to time on demand.

 

(c)           Notwithstanding
anything to the contrary contained herein, after the Maturity Date and during
any period when an Event of Default exists, the Borrower shall pay to the
Administrative Agent for the account of each Lender interest at the applicable
Post-Default Rate on the outstanding principal amount of any Loan made by such
Lender, any interest payments thereon not paid when due and on any other amount
due and payable by the Borrower hereunder, under the Notes and any other Loan
Documents.

 

(d)           Promptly
after the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall give notice thereof to the Lenders to
which such interest is payable and to the Borrower, but the failure of the
Administrative Agent to provide such notice shall not affect the Borrower’s
obligation for the payment of interest on the Loans.

 

(e)           In
addition to any sums due under this Section 3.02, the Borrower shall pay
to the Administrative Agent for the account of the Lenders a late payment
premium in the amount of four percent (4%) of (i) any payments of
principal under the Loans not made when due, and (ii) any payments of
interest or other sums under the Loans not made when due, provided, in each
case, that such payments are not made within the earlier of (i) two (2)
Business Days after the Borrower receives written notice from the
Administrative Agent of Borrower’s failure to make such payment when due and
(ii) five (5) days after the date the same became due, which late payment
premium shall be due with any such late payment or upon demand by the
Administrative Agent. Such late payment charge represents the reasonable
estimate of the Borrower, the Administrative Agent and the Lenders of a fair
average compensation for the loss that may be sustained by the Lenders due to
the failure of the Borrower to make timely payments. Such late charge shall be
paid without prejudice to the right of the Administrative Agent and the Lenders
to collect any other amounts provided herein or in the other Loan Documents to
be paid or to exercise any other rights or remedies under the Loan Documents.

 

(f)            Reserved.

 

3.03         Project-Level
Account. The Borrower shall, and shall cause the Property Manager to (a)
deposit all Rents from the Projects, and all amounts received by the Borrower
or the Property Manager constituting Rent or other revenue or sums of any kind
from the Projects, into the applicable Project-Level Account for such Project
in accordance with the Project-Level Account Security Agreement and (b) upon an
Event of Default, and upon written request of the Administrative Agent, deliver
irrevocable written instructions to all tenants under Leases to

 

41

 

deliver all Rents payable thereunder directly to the
applicable Project-Level Account for such Project. The Borrower shall not maintain
any checking, money market or other deposit accounts for the deposit and
holding of any revenues or sums derived from the ownership or operation of the
Projects other than the Project-Level Account (except for such replacement or
additional deposit accounts in which the Administrative Agent shall have been
granted, pursuant to a written instrument in form and substance satisfactory to
the Administrative Agent, a first priority security interest on the terms
provided herein, in which case the “Project-Level Account” referred to herein
shall include such replacement or additional account), other than
(i) accounts into which funds initially deposited in a Project-Level
Account have been, or may be, transferred in compliance with the Project-Level
Account Security Agreement and (ii) any Cash Trap Account or Controlled
Account required hereunder.

 

ARTICLE
IV

PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.

 

4.01         Payments.

 

(a)           Payments
by the Borrower. Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrower
under this Agreement, the Notes and any other Loan Document, shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent at the Administrative Agent’s
Account, not later than 3:00 p.m., New York City time, on the date on
which such payment shall become due (each such payment made after such time on
such due date to be deemed to have been made on the next succeeding Business
Day).

 

(b)           Application
of Payments. The Borrower may, at the time of making each payment under
this Agreement, any Note or any other Loan Document for the account of any
Lender (if such payment is not comprised solely of interest), specify to the
Administrative Agent (which shall so notify the intended recipient(s) thereof)
the Loans or other amounts to which such payment is to be applied (and in the
event that the Borrower fails to so specify, or if an Event of Default exists,
the Administrative Agent may apply such payment to amounts then due to the
Lenders, subject to Section 4.02, pro rata in accordance with their
Proportionate Share and, thereafter, may apply any remaining portion of such
payment in such manner as it or the Required Lenders, subject to Section
4.02, may determine to be appropriate). To the extent that the Borrower has
the right pursuant to this Section 4.01(b) to designate the obligations
to which a payment made by the Borrower under the Loan Documents is to be
applied, the Borrower shall exercise such rights in such a manner as shall
result in the application of such payment to the designated obligation in a
manner that will result in each Lender receiving its pro rata share
of the amount so paid by the Borrower on account of the designated obligation in proportion to the
respective amounts then due and payable on account of the designated obligation
to all Lenders entitled to payment of the designated obligation. Notwithstanding
the foregoing and to avoid any potential ambiguity between this provision and Section 2.06,
nothing in the foregoing sentence is intended to modify or supersede Section
2.06.

 

42

 

(c)           Payments
Received by the Administrative Agent. Each payment received by the
Administrative Agent under this Agreement, any Note or any other Loan Document
for account of any Lender shall be paid by the Administrative Agent promptly to
such Lender (and in any event, the Administrative Agent shall use commercially
reasonable efforts to pay such sums to such Lender on the same Business Day
such sums are received by the Administrative Agent provided the Administrative
Agent has actually received such sums prior to 3:00 p.m. on such Business Day),
in immediately available funds, for account of such Lender’s Applicable Lending
Office for the Loan or other obligation in respect of which such payment is
made. In the event that the Administrative Agent fails to make such payment to
such Lender within two (2) Business Days of receipt, subject to any delays
resulting from force majeure, then such Lender shall be entitled to interest from
the Administrative Agent at the Federal Funds Rate from the date that such
payment should have been paid by the Administrative Agent to such Lender until
the Administrative Agent makes such payment.

 

(d)           Extension
to Next Business Day. If the due date of any payment under this Agreement
or any Note would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest shall be
payable for any principal so extended for the period of such extension.

 

4.02         Pro
Rata Treatment. Except to the extent otherwise provided herein:  (a) each borrowing from the Lenders
under Section 2.01 shall be made from the Lenders on a pro rata
basis according to the amounts of their respective Commitments; (b) except
as otherwise provided in Section 5.04, Eurodollar Loans having the
same Interest Period shall be allocated pro rata among the Lenders according to
the amounts of their respective Commitments (in the case of the making of
Loans) or their respective Loans (in the case of Conversions and Continuations
of Loans); (c) each payment or prepayment of principal of Loans by the
Borrower shall be made for account of the Lenders on a pro rata basis in
accordance with the respective unpaid principal amounts of the Loans held by
them; and (d) each payment of interest on Loans by the Borrower shall be
made for the account of the Lenders on a pro rata basis in accordance with the
amounts of interest on such Loans then due and payable to the respective
Lenders. Notwithstanding anything to the contrary contained in this Agreement
or in any of the other Loan Documents, (a) all payments received by the Administrative
Agent on account of interest, principal (including, without limitation,
prepayments), fees or other amounts which are required under this Agreement to
be paid to the Lenders pro rata, or in accordance with their respective
Proportionate Shares, shall be paid to the Lenders pro rata in proportion to
the respective amounts of interest, principal, fees or other amounts, as
applicable, then due and payable to all Lenders pursuant to the Loan Documents,
and (b) during the existence of an Event of Default, all payments
received by the Administrative Agent with respect to the Loan shall be applied
as provided in that certain Co-Lender Agreement to be entered into by and among
the Lenders and the Administrative Agent, as the same may be Modified from time
to time.

 

4.03         Computations.
Interest on all Loans shall be computed on the basis of a year of 360 days and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable.

 

4.04         Minimum
Amounts. Except for (a) mandatory prepayments made pursuant to Section 2.07,
8.19(g), 10.03(j) or 14.25 of this Agreement or Section
7.08 of the

 

43

 

Deed of Trust, (b) Conversions or prepayments made
pursuant to Section 5.04, and (c) prepayments made pursuant to
Section 2.06 or Section 2.09 (which shall be governed by such
Sections) each borrowing, Conversion, Continuation and partial prepayment of
principal other than made pursuant to Section 2.09 (collectively, “Loan
Transactions”) of Loans shall be in an aggregate amount at least equal to
$1,000,000 (Loan Transactions of or into Loans of different Types or Interest
Periods at the same time hereunder shall be deemed separate Loan Transactions
for purposes of the foregoing, one for each Type or Interest Period); provided
that if any Loans or borrowings would otherwise be in a lesser principal amount
for any period, such Loans shall be Base Rate Loans during such period. Notwithstanding
the foregoing, the minimum amount of $1,000,000 shall not apply to Conversions
of lesser amounts into a tranche of Loans that has (or will have upon such
Conversion) an aggregate principal amount exceeding such minimum amount and one
Interest Period.

 

4.05         Certain
Notices. Notices by the Borrower to the Administrative Agent regarding Loan
Transactions and the selection of Types of Loans and/or of the duration of
Interest Periods shall be effective only if received by the Administrative
Agent not later than 3:00 PM, New York City time, on the date which is the
number of calendar days or Business Days, as applicable, prior to the date of
the proposed Loan Transaction specified immediately below:

 

	
  Notice

  	
   

  	
  Number of Days Prior

  
	
   

  	
   

  	
   

  
	
  Optional Prepayment

  	
   

  	
  10 calendar days

  
	
   

  	
   

  	
   

  
	
  Conversions into, Continuations as, or borrowings in
  Base Rate Loans

  	
   

  	
  3 Business Days

  
	
   

  	
   

  	
   

  
	
  Conversions into, Continuations as, borrowings in,
  or changes in duration of Interest Periods for, Eurodollar Loans

  	
   

  	
  3 Business Days
  (prior to first day of next applicable Interest Period for such Conversion Continuation
  or change)

  

 

Notices
of the selection of Types of Loans and/or of the duration of Interest Periods
shall be irrevocable. Each notice of a Loan Transaction shall specify the
amount (subject to Section 4.04), Type, and Interest Period of such
proposed Loan Transaction, and the date (which shall be a Business Day) of such
proposed Loan Transaction. Notices for Conversions and Continuations shall be
in the form of Exhibit L attached hereto. Each such notice
specifying the duration of an Interest Period shall specify the portion of the
Loans to which such Interest Period is to relate. The Administrative Agent
shall promptly notify the Lenders of the contents of each such notice. If the
Borrower fails to select (i) the Type of Loan or (ii) the duration of any
Interest Period for any Eurodollar Loan within the time period (i.e., three (3)
Business Days prior to the first day of the next applicable Interest Period)
and otherwise as provided in this Section 4.05, such Loan (if
outstanding as a Eurodollar Loan) will automatically be continued as a
Eurodollar Loan as of the last day of the then current Interest Period for such
Loan, with such Eurodollar Loan having an Interest Period of one month, and the
Borrower shall be deemed to have provided to the

 

44

 

Administrative
Agent three (3) Business Days prior to the first day of such Interest Period a
duly completed and unqualified notice requesting such Continuation in the form
of Exhibit L.

 

4.06         Non-Receipt
of Funds by the Administrative Agent. Unless the Administrative Agent shall
have been notified by a Lender or the Borrower (each, for purposes of this Section
4.06, a “Payor”) prior to the date on which such Payor is to make
payment to the Administrative Agent of (in the case of a Lender) the proceeds
of a Loan to be made by such Payor hereunder or (in the case of the Borrower) a
payment to the Administrative Agent for the account of one or more of the
Lenders hereunder (such payment being herein called a “Required Payment”),
which notice shall be effective upon receipt, that such Payor does not intend
to make such Required Payment to the Administrative Agent, the Administrative
Agent may assume that such Required Payment has been made and may, in reliance
upon such assumption (but shall not be required to), make the amount thereof
available to the intended recipient(s) on such date; and, if such Payor has not
in fact made the Required Payment to the Administrative Agent, the recipient(s)
of such payment from the Administrative Agent shall, on demand, repay to the
Administrative Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date (the “Advance
Date”) such amount was so made available by the Administrative Agent until
the date the Administrative Agent recovers such amount at a rate per annum
equal to (a) the Federal Funds Rate for such day in the case of payments
returned to the Administrative Agent by any of the Lenders or (b) the
applicable interest rate due hereunder with respect to payments returned by the
Borrower to the Administrative Agent and, if such recipient(s) shall fail to
promptly make such payment, the Administrative Agent shall be entitled to
recover such amount, on demand, from such Payor, together with interest at the
same rates as aforesaid; provided that if neither the recipient(s) nor
such Payor shall return the Required Payment to the Administrative Agent within
three (3) Business Days (five (5) days in the case the Borrower is the Payor) of
the Advance Date, then, retroactively to the Advance Date, such Payor and the
recipient(s) shall each be obligated to pay interest on the Required Payment as
follows:

 

(i)            if the Required Payment shall
represent a payment to be made by the Borrower to the Administrative Agent for
the benefit of the Lenders, the Borrower and the recipient(s) shall each be
obligated to pay interest retroactively to the Advance Date in respect of the
Required Payment at the Post-Default Rate (without duplication of the
obligation of the Borrower under Section 3.02 to pay interest on the
Required Payment at the Post-Default Rate), it being understood that the return
by the recipient(s) of the Required Payment to the Administrative Agent shall not
limit such obligation of the Borrower under Section 3.02 to pay
interest at the Post-Default Rate in respect of the Required Payment, and it
being further understood that to the extent the Administrative Agent actually
receives from the Borrower any such interest at the Post-Default Rate on such
Required Payment, such amount so received shall be credited against the amount
of interest (if any) payable by the applicable recipient(s), and

 

(ii)           if the Required Payment shall
represent proceeds of a Loan to be made by the Lenders to the Borrower, such
Payor and the Borrower shall each be obligated retroactively to the Advance
Date to pay interest in respect of the Required Payment pursuant to whichever
of the rates specified in Section 3.02 is applicable to the Type of
such Loan, it being understood that the return by the Borrower of the Required

 

45

 

Payment to the Administrative Agent shall not limit
any claim that the Borrower may have against such Payor in respect of such
Required Payment and shall not relieve such Payor of any obligation it may have
hereunder or under any other Loan Documents to the Borrower and no advance by
the Administrative Agent to the Borrower under this Section 4.06
shall release any Lender of its obligation to fund such Loan except as set
forth in the following sentence. If any such Lender shall thereafter advance
any such Required Payment to the Administrative Agent, together with interest
on such Required Payment as provided herein, such Required Payment shall be
deemed such Lender’s applicable Loan to the Borrower and shall be advanced by
the Administrative Agent to the Borrower to the extent the Borrower has
remitted the Required Payment and such interest to the Administrative Agent.

 

4.07         Sharing
of Payments, Etc.

 

(a)           Sharing.
If any Lender shall obtain payment of any principal of or interest on any Loan
owing to it or payment of any other amount under this Agreement or any other
Loan Document through the exercise (subject to the provisions of Section
14.10) of any right of set-off, banker’s lien or counterclaim or similar
right or otherwise (other than from the Administrative Agent as provided
herein), and, as a result of such payment, such Lender shall have received a
greater percentage of the principal of or interest on the Loans or such other
amounts then due hereunder or thereunder by the Borrower to such Lender than
the percentage received by any other Lender, it shall promptly purchase from
such other Lenders participations in (or, if and to the extent specified by
such Lender, direct interests in) the Loans or such other amounts,
respectively, owing to such other Lenders (or in interest due thereon, as the
case may be) in such amounts, and make such other adjustments from time to time
as shall be equitable, to the end that all the Lenders shall share the benefit
of such excess payment (net of any expenses that may be incurred by such Lender
in obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal of and/or interest on the Loans or such other amounts,
respectively, owing to each of the Lenders. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise be restored. Each
Lender agrees that it shall turn over to the Administrative Agent (for
distribution by the Administrative Agent to the other Lenders in accordance
with the terms of this Agreement) any payment (whether voluntary or
involuntary, through the exercise of any right of setoff or otherwise) on
account of the Loans held by it in excess of its ratable portion of payments on
account of the Loans obtained by all the Lenders.

 

(b)           Consent
by the Borrower. The Borrower agrees that any Lender so purchasing such a
participation (or direct interest) may exercise (subject, as among the Lenders,
to Section 14.10) all rights of set-off, banker’s lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans or other amounts (as the case may be) owing to
such Lender in the amount of such participation.

 

(c)           Rights
of Lenders; Bankruptcy. Nothing contained herein shall require any Lender
to exercise any right of set-off, banker’s lien or counterclaim or similar
right or otherwise or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured
claim

 

46

 

in lieu of a set-off
to which this Section 4.07 applies, then such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this Section 4.07
to share in the benefits of any recovery on such secured claim.

 

ARTICLE
V

YIELD PROTECTION, ETC.

 

5.01         Additional
Costs.

 

(a)           Costs
of Making or Maintaining Eurodollar Loans. The Borrower shall pay directly
to each Lender from time to time such amounts as such Lender may determine to
be necessary to compensate such Lender for any costs that such Lender determines
are attributable to its making or maintaining of any Eurodollar Loans, or its
obligation to make any Eurodollar Loans, hereunder, or, subject to the
following provisions of this Article V, any reduction in any amount
receivable by such Lender hereunder in respect of any of such Eurodollar Loans
or such obligation (such increases in costs and reductions in amounts
receivable being herein called “Additional Costs”), provided such
Additional Costs result from any Regulatory Change that:

 

(i)            shall subject any Lender (or its
Applicable Lending Office for any of such Eurodollar Loans) to any tax, duty or
other charge in respect of such Eurodollar Loans or its Note or changes the
basis of taxation of any amounts payable to such Lender under this Agreement or
its Note in respect of any of such Eurodollar Loans (other than Excluded
Taxes); or

 

(ii)           imposes or Modifies any reserve,
special deposit or similar requirements (other than the Reserve Requirement
utilized in the determination of the Adjusted LIBO Rate for such Eurodollar
Loan) relating to any extensions of credit or other assets of, or any deposits
with or other liabilities of, any Lender (including any of such Eurodollar
Loans or any deposits referred to in the definition of “LIBO Rate” in Section 1.01),
or any commitment of such Lender (including the Commitment of such Lender
hereunder); or

 

(iii)          imposes any other condition affecting
this Agreement or the Note of any Lender (or any of such extensions of credit
or liabilities) or its Commitment.

 

If any
Lender requests compensation from the Borrower under this Section 5.01(a)
or Section 5.01(b), the Borrower may, by notice to such Lender (with a
copy to the Administrative Agent), suspend the obligation of such Lender
thereafter to make or Continue Eurodollar Loans, or to Convert Base Rate Loans
into Eurodollar Loans, until the Regulatory Change giving rise to such request
ceases to be in effect or until the Borrower notifies such Lender that the
Borrower is lifting such suspension (in which case the provisions of Section 5.04
shall be applicable), provided that such suspension shall not affect the
right of such Lender to receive the compensation so requested for so long as
any Eurodollar Loan remains in effect.

 

47

 

(b)           Costs
Attributable to Regulatory Change or Risk-Based Capital Guidelines. Without
limiting the effect of the provisions of this Section 5.01 (but without
duplication), the Borrower shall pay to each Lender from time to time on
request such amounts as such Lender may determine to be necessary to compensate
such Lender (or, without duplication, the bank holding company or other legal
entity of which such Lender is a subsidiary) for any costs that it determines
are attributable to the maintenance of its Eurodollar Loans hereunder by such
Lender (or any Applicable Lending Office or such bank holding company or other
legal entity), pursuant to any law or regulation or any interpretation,
directive or request (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) of any Governmental Authority
(i) following any Regulatory Change with respect to such law, regulation,
interpretation, directive or request resulting in such costs or (ii) implementing
any risk-based capital guideline or other requirement of capital (whether or
not having the force of law and whether or not the failure to comply therewith
would be unlawful) hereafter issued by any Governmental Authority implementing
at the national level the Basel Accord, in respect of its Commitment or its
Eurodollar Loans (such compensation to include an amount equal to any reduction
of the rate of return on assets or equity of such Lender (or any Applicable
Lending Office or such bank holding company or other legal entity) to a level
below that which such Lender (or any Applicable Lending Office or such bank
holding company or other legal entity) could have achieved but for such law,
regulation, interpretation, directive or request).

 

(c)           Notification
and Certification. Each Lender shall notify the Borrower of any event
occurring after the date hereof entitling such Lender to compensation under subsections
(a) or (b) of this Section 5.01 (setting forth in
reasonable detail the basis of such determination) as promptly as practicable,
but in any event within sixty (60) days, after such Lender obtains actual
knowledge thereof; provided that (i) if any Lender fails to give
such notice within sixty (60) days after it obtains actual knowledge of such an
event, such Lender shall, with respect to compensation payable pursuant to this
Section 5.01 in respect of any costs resulting from such event, be
entitled to payment under this Section 5.01 only for costs incurred
from and after the date sixty (60) days prior to the date that such Lender does
give such notice and (ii) each Lender shall designate a different
Applicable Lending Office (if applicable) for the Eurodollar Loans of such
Lender affected by such event if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the sole opinion of such
Lender, be disadvantageous to such Lender. Each Lender shall furnish to the
Borrower a certificate setting forth the basis and amount of each request by
such Lender for compensation under subsection (a) or (b) of
this Section 5.01. Determinations and allocations by any Lender for
purposes of this Section 5.01 of the effect of any Regulatory
Change pursuant to subsection (a) or (b) of this Section 5.01,
or of the effect of capital maintained pursuant to subsection (b) of
this Section 5.01, on its costs or rate of return of maintaining
Eurodollar Loans or its obligation to make Eurodollar Loans, or on amounts
receivable by it in respect of Eurodollar Loans, and of the amounts required to
compensate such Lender under this Section 5.01, as set forth in the
certificate of the Lender, shall be prima facie evidence of the accuracy of the
determinations and calculations contained or asserted therein. Notwithstanding
anything to the contrary contained herein, it shall be a condition to the
Borrower’s obligation to pay compensation under subsections (a) or (b)
of this Section 5.01 that such compensation requirements are also
being imposed on substantially all other similar classes or categories of
commercial loans or

 

48

 

commitments of
such Lender similarly affected by the Regulatory Change and the other
guidelines and requirements referred to in this Section 5.01.

 

5.02         Limitation
on Eurodollar Loans. Anything herein to the contrary notwithstanding, if,
on or prior to the determination of any LIBO Rate for any Interest Period for
any Eurodollar Loan:

 

(a)           after
making reasonable efforts, the Administrative Agent determines, which
determination shall be conclusive absent manifest error, that quotations of
interest rates for the relevant deposits referred to in the definition of “LIBO
Rate” in Section 1.01 are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining rates of
interest for Eurodollar Loans as provided herein; or

 

(b)           the
Administrative Agent determines, which determination shall be conclusive absent
manifest error, that, as a result of circumstances arising after the Closing
Date, the relevant rates of interest referred to in the definition of “LIBO
Rate” in Section 1.01 upon the basis of which the rate of interest
for Eurodollar Loans for such Interest Period is to be determined are not
likely adequately to cover the cost to such Lenders of making or maintaining
Eurodollar Loans for such Interest Period;

 

then
the Administrative Agent shall give the Borrower and each Lender prompt notice
thereof and, so long as such condition remains in effect, the Lenders shall be
under no obligation to make additional Eurodollar Loans, to Continue Eurodollar
Loans or to Convert Base Rate Loans into Eurodollar Loans, and the Borrower
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Eurodollar Loans in accordance
with Sections 2.06 and 2.07 or, in accordance with Section 2.05,
Convert such Eurodollar Loans into Base Rate Loans or other Eurodollar Loans in
amounts and maturities which are still being provided. Notwithstanding the
foregoing, (i) if the applicable conditions under clauses (a) or (b)
of this Section 5.02 affect only a portion of the Eurodollar Loans, the
balance of the Eurodollar Loans may continue as Eurodollar Loans and
(ii) if the applicable conditions under clauses (a) and (b)
of this Section 5.02 only affect certain Interest Periods, the Borrower,
subject to the terms and conditions of this Agreement, may elect to have
Eurodollar Loans with such other Interest Periods.

 

5.03         Illegality.
Notwithstanding any other provision of this Agreement, if it becomes unlawful
for any Lender or its Applicable Lending Office to honor its obligation to make
or maintain Eurodollar Loans hereunder (and, in the sole opinion of such
Lender, the designation of a different Applicable Lending Office would either
not avoid such unlawfulness or would be disadvantageous to such Lender), then
such Lender shall promptly notify the Borrower thereof (with a copy to the
Administrative Agent) and such Lender’s obligation to make or Continue, or to
Convert portions of its Loan of any other Type into, Eurodollar Loans shall be
suspended until such time as such Lender may again make and maintain Eurodollar
Loans (in which case the provisions of Section 5.04 shall be
applicable).

 

5.04         Treatment
of Affected Loans. If the obligation of any Lender to make Eurodollar Loans
or to Continue, or to Convert Base Rate Loans into, Eurodollar Loans shall be
suspended pursuant to Sections 5.01 or 5.03, then such
Lender’s Eurodollar Loans shall be

 

49

 

automatically Converted into Base Rate Loans on the
last day(s) of the then current Interest Period(s) for Eurodollar Loans (or, in
the case of a Conversion resulting from a circumstance described in Section 5.03,
on such earlier date as such Lender may specify to the Borrower with a copy to
the Administrative Agent) and, unless and until either (a) such Lender gives
notice as provided below that the circumstances specified in Sections 5.01
or 5.03 that gave rise to such Conversion no longer exist or (b)
the Borrower, in the case of Section 5.01, ends any suspension by the
Borrower:

 

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

 

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

 

If
such Lender gives notice to the Borrower with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 or 5.03
that gave rise to the Conversion of such Lender’s Eurodollar Loans pursuant to
this Section 5.04 no longer exist (which notice such Lender agrees
to give promptly upon such circumstances ceasing to exist) or the Borrower
terminates its applicable suspension at a time when Eurodollar Loans made by
other Lenders are outstanding, such Lender’s Base Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Base Rate and Eurodollar Loans are
allocated among the Lenders ratably (as to principal amounts, Types and
Interest Periods) in accordance with their respective Commitments.

 

5.05         Compensation.
The Borrower shall pay to the Administrative Agent for account of each Lender,
upon the request of such Lender through the Administrative Agent, such amount
as shall be sufficient to compensate it for any loss, cost or expense that such
Lender reasonably determines is attributable to:

 

(a)           any
payment, mandatory or optional prepayment or Conversion of a Eurodollar Loan
made by such Lender for any reason (including the acceleration of the Loans
pursuant to Article XII) on a date other than the last day of the
Interest Period for such Loan;

 

(b)           any
failure by the Borrower for any reason to prepay a Eurodollar Loan pursuant to
a notice of prepayment given in accordance with Section 2.06 (or any
notice timely given postponing the date for prepayment given in accordance with
Section 2.08), unless such notice is timely revoked pursuant to a notice
of revocation given in accordance with Section 2.08; or

 

(c)           the
assignment of any Eurodollar Loan other than on the last day of the applicable
Interest Period as a result of a request by the Borrower pursuant to Section
5.07.

 

Without
limiting the effect of the preceding provisions, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of
interest that otherwise would have

 

50

 

accrued
on the principal amount so paid, prepaid, Converted or not borrowed for the
period from the date of such payment, prepayment, Conversion or failure to
borrow to the last day of the then current Interest Period for such Loan (or,
in the case of a failure to borrow, the Interest Period for such Loan that
would have commenced on the date specified for such borrowing) at the
applicable Adjusted LIBO Rate for such Loan provided for herein over
(ii) the amount of interest that such Lender would earn on such principal
amount for such period if such Lender would have bid in the London interbank
market for Dollar deposits of leading banks in amounts comparable to such
principal amount and with maturities comparable to such period (as reasonably
determined by such Lender), or if such Lender shall not, or shall cease to,
make such bids, the equivalent rate, as reasonably determined by such Lender,
derived from Page 3750 of the Dow Jones Markets Service (Telerate) or other
publicly available source as described in the definition of “LIBO Rate” in Section 1.01,
plus, in the case of Section 5.05(c), the amount of interest for such
period paid to such Lender pursuant to Section 5.07. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section 5.05 shall be delivered to the Borrower
and shall be prima facie evidence of the accuracy of the determinations and
calculations contained or asserted therein. The Borrower shall pay such Lender
the amount shown as due on any such certificate within ten (10) days after
receipt thereof. Any payment due to any of the Lenders pursuant to this Section
5.05 shall be deemed additional interest under such Lender’s Note.

 

5.06         Taxes.

 

(a)           Payments
Free of Taxes. Any and all payments by or on account of any obligation of
the Borrower hereunder or under any other Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 5.06) the
Administrative Agent and each Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

(b)           Payment
of Other Taxes by the Borrower. In addition, the Borrower shall pay any
Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

 

(c)           Indemnification
by the Borrower. The Borrower shall indemnify the Administrative Agent and
each Lender, within ten (10) days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent
or such Lender, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section 5.06) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or by the
Administrative Agent on its own behalf or on behalf of a

 

51

 

Lender, shall be
prima facie evidence of the accuracy of the determinations and calculations
contained or asserted therein.

 

(d)           Evidence
of Payments. As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.

 

(e)           Foreign
Lenders. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed
by applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate. Until such
documentation is provided, the Borrower shall be entitled to take all actions
that are required to comply with Applicable Laws with respect to payments
payable hereunder on account of Loans made to the Borrower by any Foreign
Lender who has not complied with the requirements of this Section 5.06(e),
and such actions shall not constitute a Default or an Event of Default.

 

(f)            Refunds.
If the Administrative Agent or a Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 5.06, provided no Major
Default or Event of Default exists, it shall pay over such refund to the
Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 5.06 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This Section 5.06(f) shall not be
construed to require the Administrative Agent or any Lender to make available
its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

 

5.07         Replacement
of Lenders. If any Lender requests compensation pursuant to Section 5.01
or 5.06, or any Lender’s obligation to Continue Loans of any Type, or to
Convert Loans of any Type into the other Type of Loan, shall be suspended
pursuant to Section 5.01 or 5.03 (any such Lender requesting
such compensation, or whose obligations are so suspended, being herein called a
“Requesting Lender”), the Borrower, upon five (5) Business Days notice
to such Requesting Lender and the Administrative Agent, may require that such
Requesting Lender transfer all of its right, title and interest under this
Agreement and such Requesting Lender’s Note and its interest in the other Loan
Documents to an Eligible Assignee (a “Proposed Lender”) identified by
the Borrower that is satisfactory to the Administrative Agent in its sole
discretion

 

52

 

(i) if such Proposed Lender agrees to assume all
of the obligations of such Requesting Lender hereunder, and to purchase all of
such Requesting Lender’s Loan hereunder for consideration equal to the
aggregate outstanding principal amount of such Requesting Lender’s Loan,
together with interest thereon to the date of such purchase (to the extent not
paid by the Borrower), and satisfactory arrangements are made for payment to
such Requesting Lender of all other amounts accrued and payable hereunder to
such Requesting Lender as of the date of such transfer (including any fees
accrued hereunder and any amounts that would be payable under Section 5.05
as if all of such Requesting Lender’s Loan were being prepaid in full on such
date) and (ii) if such Requesting Lender has requested compensation
pursuant to Section 5.01 or 5.06, such Proposed Lender’s
aggregate requested compensation, if any, pursuant to Section 5.01
or 5.06 with respect to such Requesting Lender’s Loan is lower than that
of the Requesting Lender. Subject to the provisions of Section 14.07(b),
such Proposed Lender shall be a “Lender” for all purposes hereunder. Without
prejudice to the survival of any other agreement of the Borrower hereunder the
agreements of the Borrower contained in Sections 5.01, 5.06,
14.03 and 14.04 (without duplication of any payments made to such
Requesting Lender by the Borrower or the Proposed Lender) shall survive for the
benefit of such Requesting Lender under this Section 5.07 with
respect to the time prior to such replacement.

 

ARTICLE
VI

 

CONDITIONS
PRECEDENT

 

6.01         Conditions
Precedent to Effectiveness of Loan Commitments. The effectiveness of the
Commitments and the obligation of the Lenders to make the Loans are subject to
the conditions precedent that, on or prior to the Closing Date, (i) the
Administrative Agent shall have received each of the documents (duly executed
and completed by the part(y)(ies) thereto and acknowledged when applicable)
referred to below in this Section 6.01, (ii) each of the other
conditions listed below in this Section 6.01 is satisfied, the
satisfaction of each of such conditions to be satisfactory to the
Administrative Agent (and to the extent specified below, to each Lender) in
form and substance (or any such condition shall have been waived in accordance
with Section 14.05), (iii) all of the representations and
warranties of the Borrower (without giving effect to any qualification therein
which limits any such representations and warranties to the “knowledge” or “best
knowledge” of the Borrower or any other Borrower Party) shall be true and
correct on the Closing Date, (iv) the Liens granted by the Security Documents
shall have attached and been perfected, with the priority as required pursuant
to the terms hereof or thereof (or, in the case of the Liens encumbering the
Projects the Title Policies insuring the effectiveness and priority of such
Liens shall have been unconditionally delivered to the Administrative Agent in
accordance with the closing instructions delivered on its behalf), and (v) no
Default or Event of Default shall exist or shall result therefrom.

 

(a)           Agreement.
From each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement.

 

53

(b)           Notes.  The Notes for each Lender.

 

(c)           Deed
of Trust.  Each Deed of Trust, in
form for recording.  

 

(d)           Environmental
Indemnity.  The Environmental
Indemnity.

 

(e)           Project-Level
Account Security Agreement.  The
Project-Level Account Security Agreement.

 

(f)            General
Assignment.  The General
Assignment.  

 

(g)           Property
Manager’s Consent.  The Property
Manager’s Consent.

 

(h)           Other
Loan Documents.  The Guarantor
Documents and all other Loan Documents.

 

(i)            Opinion
of Counsel to the Borrower Parties. 
A favorable written opinion, dated the Closing Date, of Cox,
Castle & Nicholson LLP, counsel to the Borrower and furnishing such
opinions at the Borrower’s request on behalf of the other Borrower Parties, and
covering such matters relating to the Borrower Parties, this Agreement, the
other Loan Documents, and the Transactions as the Administrative Agent shall
reasonably request.  The Borrower hereby
requests such counsel to deliver such opinion to the Lenders and the
Administrative Agent.

 

(j)            Organizational
Documents.  Copies of (i) the
Certificate of Incorporation, Certificate of Formation, Certificate of Limited
Partnership or similar formation document of each of the Borrower Parties,
certified by the Secretary of State of the state of formation of such Person as
of a recent date, (ii) the other Organizational Documents of each of the
Borrower Parties certified by any Authorized Officer on behalf of such Borrower
Party, (iii) the applicable resolutions of each of the Borrower Parties
authorizing the execution and delivery of the Loan Documents to which they are
a party, in each case certified by an Authorized Officer on behalf of such
Borrower Party as of the date of this Agreement as being accurate and complete,
all in form and substance satisfactory to the Administrative Agent and its
counsel, (iv) certificates signed by an Authorized Officer on behalf of
the applicable Person certifying the name, incumbency and signature of each
individual authorized to execute the Loan Documents to which such Person is a
party and the other documents or certificates to be delivered pursuant hereto
or thereto, on which the Administrative Agent and the Lenders may conclusively
rely unless a revised certificate is similarly so delivered in the future, and
(v) good standing certificates with respect to each Borrower Party that is
organized under the laws of any state of the United States of America from such
state and good standing certificates and authority to conduct business with
respect to the Borrower, the Borrower’s Member and the Borrower’s Manager from
the State of California.  

 

(k)           Title
Insurance; Priority.  An ALTA policy or policies (or pro
forma policy or policies) of title insurance for each Project satisfactory to
the Administrative Agent (collectively, the “Title Policy”), together
with evidence of the payment of all premiums due thereon, issued by the Title
Company (i) each insuring the Administrative Agent for the benefit of the
Lenders in an amount equal to the aggregate amount of the Commitments (to the
extent advanced) in effect on the Closing Date (with a tie-in endorsement
satisfactory to the

 

54

 

Administrative
Agent) that the Borrower is lawfully seized and possessed of a valid and subsisting
fee simple (or other applicable) interest in the Projects subject to no Liens
other than Permitted Title Exceptions and (ii) providing such other
affirmative insurance and endorsements as the Administrative Agent may require
in each case as approved by the Administrative Agent.  In addition, the Borrower shall have paid to
the Title Company all expenses and premiums of the Title Company in connection
with the issuance of such policies and all recording and filing fees payable in
connection with recording the Deeds of Trust and the filing of the Uniform
Commercial Code financing statements related thereto in the appropriate
offices.

 

(l)            Survey.  An “as-built” survey of each Project, each
satisfactory to the Administrative Agent in form and content and made by a
registered land surveyor satisfactory to the Administrative Agent, each survey
showing, among other things through the use of course bearings and distances,
(i) all easements and roads or rights of way (including all access to
public roads) and setback lines, if any, affecting the Improvements and that
the same are unobstructed or any such obstructions are acceptable to the
Administrative Agent; (ii) the dimensions of all existing buildings and
distance of all material Improvements from the lot lines; (iii) no
encroachments by improvements located on adjoining property that are not
acceptable to the Administrative Agent; and (iv) such additional
information which may be reasonably required by the Administrative Agent.  Each said survey shall be dated a date
reasonably satisfactory to the Administrative Agent, bear a proper certificate
substantially in the form of Exhibit M attached hereto by the
surveyor in favor of the Administrative Agent (on behalf of the Lenders) and
the Title Company and include the legal description of the Project.  

 

(m)          Certificates
of Occupancy.  Copies of permanent
and unconditional certificates of occupancy permitting the fully functioning
operation and occupancy of the Projects and of such other permits necessary for
the use and operation of the Projects issued by the respective Governmental
Authorities having jurisdiction over the Projects, together with such other
evidence as may be requested by the Administrative Agent with respect to the
compliance of the Projects with zoning requirements.

 

(n)           Insurance.  A copy of the insurance policies required by Section
8.05 or certificates of insurance with respect thereto, such policies or
certificates, as the case may be, to be in form and substance, and issued by
companies, acceptable to the Administrative Agent and otherwise in compliance
with the terms of Section 8.05, together with evidence of the
payment of all premiums therefor.

 

(o)           Environmental
Report.  The Environmental
Reports.  

 

(p)           Leases.  (i) An affidavit (the “Leasing
Affidavit”) of an Authorized Officer of the Borrower certifying that except
as disclosed in the estoppel certificates delivered to the Administrative Agent
prior to the Closing Date, that certain Douglas, Emmett & Company
Delinquency/Aging Report (Summarized) dated 7/20/2005 provided to the
Administrative Agent, or the rent rolls delivered to the Administrative Agent pursuant
to Section 7.22, (A) each tenant lease listed in the Leasing
Affidavit is in full force and effect; (B) the tenant lease summaries
provided by the Borrower to the Administrative Agent are true and correct and,
as to all matters contained therein relating to rent, term, termination rights,
options to renew, extend or expand, rights of first refusal or offer, tenant improvement
allowances, security deposits and

 

55

 

other credit
enhancements, insurance, tax and operating expense recovery, and obligations
with respect to subordination, non-disturbance and attornment, complete in all
material respects, and such summaries do not fail to disclose any material term
of any Lease which would adversely affect the obligation of the tenant
thereunder to pay rent or perform any of its other material obligations for the
entire term thereof consistent with the terms disclosed in such summary and the
rent rolls delivered to the Administrative Agent pursuant to Section 7.22;
(C) no defaults exist under any of the Leases (other than the Major
Leases) by any party (including any guarantor) thereto that, individually or in
the aggregate with respect to all such defaults, would result in a Material
Adverse Effect and, to the knowledge of the Borrower, no material default
exists under any of the Major Leases; and (D) to the Borrower’s knowledge,
no event which would result in a material adverse change in the financial
condition, operations or business of one or more tenants under Major Leases has
occurred which the Borrower has determined would adversely affect the ability
of such tenant to pay its rent and perform its other material obligations under
such Major Lease and (ii) the standard office lease form and the standard
retail lease form (both as approved by the Administrative Agent) to be used for
the Projects.

 

(q)           Estoppels.   Estoppel certificates in form and
substance satisfactory to the Administrative Agent from tenants covering at
least seventy-five percent (75%) of all the leased space in the Projects,
except to the extent that the Administrative Agent agrees in writing to defer
the receipt of any estoppel certificate to a date subsequent to the Closing
Date, in which case the Borrower shall use commercially reasonable efforts to
obtain such deferred estoppel certificates as promptly as possible following
the Closing Date.  For purposes of this
requirement, it is agreed that the form tenant estoppels required by any
applicable Approved Lease shall be acceptable to the Administrative Agent.

 

(r)            SNDA
Agreements.  The Borrower will
distribute and use commercially reasonable efforts to obtain the SNDA
Agreements duly executed by each tenant under a Major Lease.  

 

(s)           Non-Foreign
Status.  A certificate by an
Authorized Officer certifying the Borrower’s tax identification number and the
fact that the Borrower is not a foreign person under the Code.

 

(t)            UCC
Searches.  Uniform Commercial Code
searches with respect to the Borrower, the Borrower’s Member and the Borrower’s
Manager as required by the Administrative Agent.

 

(u)           Appraisal.  The Appraisals indicating an “as-is” value for
each of the Projects, such that the Allocated Loan Amount for each Project
shall not exceed sixty percent (60%) of the Appraised Value of such Project.

 

(v)           Property
Management and Leasing Agreements. 
The Property Management Agreement and all brokerage and/or leasing
agreements affecting the Projects and certified by an Authorized Officer to be
true, correct and complete in all respects.

 

(w)          Financial
Statements.  Copies of the most
recent audited and unaudited annual and quarterly financial statements of the Borrower’s
Member, and a certificate dated the

 

56

 

Closing Date and
signed by an Authorized Officer on behalf of the Borrower’s Member stating that
(i) such financial statements are true, complete and correct in all
material respects and (ii) no event that could reasonably be expected to
have a Material Adverse Effect has occurred since the date of such financial
statements, all of the foregoing to be satisfactory to the Administrative Agent
and each Lender in their reasonable discretion.

 

(x)            Approved
Annual Budget.  A copy of the Annual
Budget for each Project for the current calendar year. 

 

(y)           Property
Condition Report.  A survey of the
physical condition of the Projects prepared by a licensed engineer selected by
the Administrative Agent and in accordance with the Administrative Agent’s
scope.  

 

(z)            Project-Level
Accounts.  The Project-Level Accounts
shall have been established pursuant to the terms of this Agreement and any
other Loan Document.  

 

(aa)         Seismic
Report.  A seismic report for each
Project prepared by a firm of licensed engineers selected by the Administrative
Agent and prepared in accordance with the Administrative Agent’s scope for such
reports and otherwise acceptable to the Administrative Agent in all respects.

 

(bb)         Fees
and Expenses.  The Borrower shall
have paid (i) all fees then due and payable to the Administrative Agent
pursuant to the Fee Letter, (ii) any other fees then due to the
Administrative Agent, Eurohypo or the Arranger and (iii) any fees and
expenses due to the Administrative Agent or the Arranger pursuant to Section
14.03, including the reasonable fees and expenses of Morrison &
Foerster LLP, counsel to the Administrative Agent and Eurohypo.

 

(cc)         Other
Documents.  Such other documents as
the Administrative Agent may reasonably request.

 

ARTICLE
VII

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the
Administrative Agent and the Lenders as of the date hereof that:

 

7.01         Organization;
Powers.  Each of the Borrower Parties
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to
carry on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.  The Borrower Parties are each qualified to do
business and in good standing in the State of California.  

 

7.02         Authorization;
Enforceability.  The Transactions
applicable to each Borrower Party are within such Borrower Party’s
organizational powers and have been duly

 

57

 

authorized by all necessary organizational action
under their respective Organizational Documents.  This Agreement and the other Loan Documents
have been duly executed and delivered by the Borrower Parties party thereto and
each of the Loan Documents to which a Borrower Party is a party when delivered
will constitute, a legal, valid and binding obligation of the applicable
Borrower Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

 

7.03         Government
Approvals; No Conflicts.  The
Transactions (a) do not require any Government Approvals of, registration or
filing with, or any other action by, any Governmental Authority, except for (i)
such as have been obtained or made and are in full force and effect and (ii)
filings and recordings in respect of the Liens created pursuant to the Security
Documents, (b) will not violate any Applicable Law applicable to the Borrower
Parties or the Organizational Documents of any of the Borrower Parties, (c)
will not violate or result in a default under any material indenture, agreement
or other instrument binding upon any of the Borrower Parties, or give rise to a
right thereunder to require any payment to be made by any of the Borrower
Parties, and (d) except for the Liens created pursuant to the Security
Documents, will not result in the creation or imposition of any Lien on any
asset of any of the Borrower Parties.

 

7.04         Financial
Condition.  The Borrower has
heretofore furnished to the Administrative Agent certain financial statements
of the Borrower’s Member.  All such
financial statements are complete and correct in all material respects and
fairly present the financial condition of Borrower’s Member, as of the dates of
such financial statements, all in accordance with GAAP.  Each of the Borrower and Borrower’s Member,
on the date hereof, does not have any Indebtedness (other than security
deposits and tenant improvement allowances under the Leases that are described
in the tenant lease summaries provided by the Borrower to the Administrative
Agent and that are in amounts and on terms consistent with market terms and in
the ordinary course of business), material contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in said financial statements as of said dates and
except for Real Estate Taxes and Other Charges that are not yet delinquent.  Since the applicable dates of such financial
statements, except as disclosed in Schedule 7.04 attached hereto, there
has been no event that could reasonably be expected to have a Material Adverse
Effect.

 

7.05         Litigation.  Except as disclosed in Schedule 7.05
hereto, there are no legal or arbitral proceedings, or any proceedings by or
before any Governmental Authority or agency of which the Borrower, Borrower’s
Member or Borrower’s Manager has received written notice, now pending or (to
the knowledge of the Borrower) threatened in writing against the Borrower, the
Projects, the Borrower’s Member or Borrower’s Manager except for those which (a)
(subject to applicable deductibles or self-insurance) are fully covered by
insurance maintained by or for the Borrower, the Borrower’s Member or the Borrower’s
Manager or (b) involve uninsured claims that do not exceed $75,000
individually, or in the aggregate for all such claims.  

 

58

 

7.06         ERISA.  Neither the Borrower nor Borrower’s Member has
established any Plan which would cause the Borrower or the Borrower’s Member to
be subject to ERISA and none of the Borrower’s or the Borrower’s Member’s
assets constitutes or will constitute “plan assets” of one or more Plans.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect.  Each Plan established by a Borrower Party
and, to the knowledge of the Borrower Parties, each of its ERISA Affiliates and
each Multiemployer Plan, is in compliance with, the applicable provisions of
ERISA, the Code and any other Applicable Law. 

 

7.07         Taxes.  Each of the Borrower Parties has timely filed
or timely caused to be filed (or obtained effective extensions for filing) all
tax returns and reports required to have been filed and has paid or caused to
be paid all Taxes required to have been paid by it, except Taxes that are being
contested in good faith by appropriate proceedings and (a) for which such
Borrower Party has set aside on its books adequate reserves in accordance with
GAAP or (b) to the extent that the failure to do so could not reasonably
be expected to result in a Material Adverse Effect.  

 

7.08         Investment
and Holding Company Status.  None of
the Borrower Parties is (a) an “investment company” as defined in, or subject
to regulation under, the Investment Company Act of 1940 or (b) a “holding
company”, or an “affiliate” of a “holding company” or a “subsidiary company” of
a “holding company”, as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

 

7.09         Environmental
Matters.  Except for matters
expressly and specifically set forth in the Environmental Reports or the
Property Condition Reports or matters disclosed in Schedule 7.09 or Schedule
8.11 attached hereto, to the Borrower’s knowledge:

 

(a)           The
Borrower and each Project is in compliance with all applicable Environmental
Laws, except where the failure to comply with such laws is not reasonably
likely to result in a Material Adverse Effect.

 

(b)           There
is no Environmental Claim of which the Borrower has received written notice
pending, or to the Borrower’s knowledge, threatened in writing, and no
penalties arising under Environmental Laws have been assessed, against the
Borrower, any Project or, to the Borrower’s knowledge, against any Person whose
liability for any Environmental Claim the Borrower or the Borrower’s Member has
or may have retained or assumed either contractually or by operation of law,
and the Borrower has received no written notice of any investigation or review
which is pending or, to the knowledge of the Borrower, threatened in writing by
any Governmental Authority, citizens group, employee or other Person with
respect to any alleged failure by the Borrower, the Borrower’s Member or any
Project to have any environmental, health or safety permit, license or other
authorization required under, or to otherwise comply with, any Environmental
Law or with respect to any alleged liability of the Borrower or the Borrower’s
Member for any Use or Release of any Hazardous Substances.  

 

(c)           There
have been no past, and there are no present, Releases of any Hazardous
Substance that could reasonably be anticipated to form the basis of any

 

59

 

Environmental
Claim against the Borrower, the Borrower’s Member, any Project or, to the
knowledge of the Borrower, against any Person whose liability for any
Environmental Claim the Borrower or the Borrower’s Member has or may have
retained or assumed either contractually or by operation of law.

 

(d)           To
the Borrower’s knowledge, there is no Release of Hazardous Substances migrating
to any Project which could require Remediation or require the Borrower to
provide notice to any Governmental Authority.

 

(e)           There
is not present at, on, in or under any Project, PCB-containing equipment,
asbestos or asbestos containing materials, underground storage tanks or surface
impoundments for Hazardous Substances, lead in drinking water (except in
concentrations that comply with all Environmental Laws), or lead-based paint
(except in compliance with all applicable Environmental Laws).

 

(f)            No
Liens are presently recorded with the appropriate land records under or
pursuant to any Environmental Law with respect to any Project and, to the
Borrower’s knowledge no Governmental Authority has been taking or is in the
process of taking any action that could subject any Project to Liens under any
Environmental Law.

 

(g)           The
Borrower has provided to the Administrative Agent’s environmental consultant
prior to the Closing Date true and correct copies of all materials,
environmental reports and other documents pertaining to the Projects requested
by the consultant and in the Borrower’s possession or control.  

 

7.10         Organizational
Structure.  The Borrower has heretofore
delivered to the Administrative Agent a true and complete copy of the
Organizational Documents of each Borrower Party.  The sole member of the Borrower on the date
hereof is the Borrower’s Member.  The
sole manager of Borrower and general partner of Borrower’s Member on the date
hereof is Borrower’s Manager.

 

7.11         Subsidiaries.  The Borrower’s Member has no Subsidiaries
except for Borrower and those specifically disclosed on Schedule 7.11.  No other Borrower Party has any Subsidiaries
except for those specifically disclosed on Schedule 7.11.

 

7.12         Title.  On the Closing Date, the Borrower will own
and on such date will have good, indefeasible and insurable fee simple title to
the portion of the Projects consisting of real property free and clear of all
Liens, other than Permitted Title Exceptions. 
On the Closing Date, the Borrower will own or (in compliance with Section 9.04(d))
lease and will have good title to all other portions of the Project free and
clear of all Liens, other than Permitted Title Exceptions and rights of
equipment lessors under equipment leases currently in effect which comply with
the requirements set forth in Sections 9.02(h) and 9.04(d).  There are no outstanding options to purchase
or rights of first refusal to purchase affecting the Projects.

 

7.13         No Bankruptcy Filing.  Neither the Borrower nor the Borrower’s Member
is contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of its assets or property, and neither

 

60

 

the Borrower nor Borrower’s Member has knowledge of
any Person contemplating the filing of any such petition against the Borrower,
the Borrower’s Member or the Borrower’s Manager.  

 

7.14         Executive
Offices; Places of Organization.  The
location of the Borrower’s, the Borrower’s Member’s and the Borrower’s Manager’s
principal place of business and chief executive office is the address
identified in the “Address for Notices” area beneath the Borrower’s name on the
Borrower’s signature page to this Agreement, except to the extent changed in
accordance with Section 9.07. 
The Borrower was organized in the State of Delaware, and the Borrower’s
Member and the Borrower’s Manager were organized in the State of California.

 

7.15         Compliance;
Government Approvals.  Except as
expressly set forth in the Property Condition Report for each Project, the
Environmental Reports, or the seismic reports delivered for the Projects
pursuant to Section 6.01(aa), the Borrower, each Project and the
Borrower’s use thereof and operations thereat comply in all material respects
with all Applicable Laws.  All material
Government Approvals necessary under Applicable Law in connection with the
operation of the Projects as contemplated by the Loan Documents have been duly
obtained, are in full force and effect, are not subject to appeal, are held in
the name of the Borrower (or Borrower’s Member for the benefit of the Borrower)
and are free from conditions or requirements compliance with which could
reasonably be expected to have a Material Adverse Effect or which the Borrower
does not reasonably expect to be able to satisfy.  To the best knowledge of the Borrower, there
is no proceeding pending or threatened in writing that seeks, or may reasonably
be expected, to rescind, terminate, Modify or suspend any such Government
Approval.  Except for business licenses
and other licenses or permits that are not specifically applicable to the
Projects, the Borrower has no reason to believe that the Administrative Agent,
acting for the benefit of the Lenders, will not be entitled, without undue
expense or delay, to the benefit of each such Government Approval upon the
exercise of remedies under the Security Documents.

 

7.16         Condemnation;
Casualty.  To the Borrower’s
knowledge, no Taking has been commenced or is presently contemplated with
respect to all or any portion of any Project or for the relocation of roadways
providing access to any Project.  No
Casualty Event of any material nature that has not been substantially repaired
has occurred with respect to any Project.

 

7.17         Utilities
and Public Access; No Shared Facilities. 
Each Project has adequate rights of access to public ways and is served
by adequate electric, gas, water, sewer, sanitary sewer and storm drain
facilities.  All public utilities
necessary to the use and enjoyment of each Project as intended to be used and
enjoyed are located in the public right-of-way abutting each Project except as
otherwise shown on the survey of such Project provided to the Administrative
Agent.  

 

7.18         Solvency.  On the Closing Date and after and giving
effect to the Loans occurring on the Closing Date, and the disbursement of the
proceeds of such Loans pursuant to the Borrower’s instructions, each Borrower
Party is and will be Solvent.

 

7.19         Foreign
Person.  Neither the Borrower nor
Borrower’s Member is a “foreign person” within the meaning of Section
1445(f)(3) of the Code.

 

61

 

7.20         No
Joint Assessment; Separate Lots.  The
Borrower has not suffered, permitted or initiated the joint assessment of any
Project with any other real property constituting a separate tax lot.

 

7.21         Security
Interests and Liens.  The Security
Documents create (and upon recordation of the Deeds of Trust, filing of the
applicable financing statements in the appropriate filing offices and the
execution and delivery by the Depository Bank of control agreements with
respect to any pledged deposit accounts there will be perfected as to any
portion of such collateral consisting of the deposit account itself and the
securities entitlements thereto), as security for the Obligations, valid,
enforceable, perfected and first priority security interests in and Liens on
all of the respective collateral intended to be covered thereunder, in favor of
the Administrative Agent as administrative agent for the ratable benefit of the
Lenders, subject to no Liens other than the Permitted Title Exceptions and
rights of equipment lessors under equipment leases currently in effect which
comply with the requirements set forth in Sections 9.02(h) and 9.04(d),
except as enforceability may be limited by applicable insolvency, bankruptcy,
reorganization, moratorium or other laws affecting creditors’ rights generally,
or general principles of equity, whether such enforceability is considered in a
proceeding in equity or at law.  Other
than in connection with any future change in the Borrower’s name or the
location in which the Borrower is organized or registered, no further
recordings or filings are or will be required in connection with the creation,
perfection or enforcement of such security interests and Liens, other than the
filing of continuation statements and Notices of Intent to Preserve Security
Interests in accordance with the Uniform Commercial Code and the California
Civil Code.  A financing statement
covering all property covered by any Security Document that is subject to a
Uniform Commercial Code financing statement has been filed and/or recorded, as
appropriate, (or irrevocably delivered to the Administrative Agent or a title
agent for such recordation or filing) in all places necessary to perfect a
valid first priority security interest with respect to the rights and property
that are the subject of such Security Document to the extent governed by the
Uniform Commercial Code and to the extent such security can be perfected by
such filing.  

 

7.22         Leases.  Except as disclosed in the estoppel
certificates delivered to the Administrative Agent prior to the Closing Date,
in that certain Douglas, Emmett & Company Delinquency/Aging Report
(Summarized) dated 7/20/2005 provided to the Administrative Agent prior to the
Closing Date, or (as to items (2) through (10) below) the rent rolls for each
Project attached hereto as Schedule 7.22, with respect to the Leases
(which term, for the purposes of this Section 7.22 is limited to
tenant leases): (1) the rent rolls attached hereto as Schedule 7.22
are true, correct and complete and the Leases referred to thereon are all valid
and in full force and effect; (2) the Leases (including Modifications
thereto) are in writing, and there are no oral agreements with respect thereto;
(3) the copies of each of the Leases (if any) delivered to the
Administrative Agent are true, correct and complete in all material respects
and have not been Modified (or further Modified); (4) the lease summaries
delivered to the Administrative Agent are true and correct in all material
respects and, as to all matters contained therein relating to rent, term,
termination rights, options to renew, extend or expand, rights of first refusal
or offer, tenant improvement allowances, security deposits and other credit
enhancements, insurance, tax and operating expense recovery, and obligations
with respect to subordination, non-disturbance and attornment, complete in all
material respects, and such summaries do not fail to disclose any material term
of any Lease which would materially impact the obligation of the tenant
thereunder to pay rent or perform any of its other material obligations for the
entire term thereof as disclosed

 

62

 

in such summary and the rent rolls attached hereto as Schedule
7.22; (5) to the Borrower’s knowledge, no defaults exist under any of
the Leases (other than the Major Leases) by any party (including any guarantor)
thereto that, individually or in the aggregate with respect to all such
defaults would result in a Material Adverse Effect and, to the knowledge of the
Borrower, no material default exists under any of the Major Leases;
(6) the Borrower has no knowledge of any presently effective notice of
termination or notice of default given by any tenant with respect to any Major Lease
or under any other Leases that individually or in the aggregate could be
reasonably expected to result in a Material Adverse Effect; (7) the
Borrower has not made any presently effective assignment or pledge of any of
the Leases, the rents or any interests therein except to the Administrative
Agent; (8) no tenant or other party has an option or right of first
refusal to purchase all or any portion of any Project; (9) except as
disclosed in the lease summaries delivered by the Borrower to the
Administrative Agent, no tenant has the right to terminate its lease prior to
expiration of the stated term of such Lease (except as a result of a casualty
or condemnation); and (10) no tenant has prepaid more than one month’s
rent in advance (except for bona fide security deposits and estimated payments
of operating expenses, taxes and other pass-throughs paid by tenants pursuant
to their Leases not prepaid more than one month prior to the date such
estimated payments are due). 

 

7.23         Insurance.  The Borrower has in force, and has paid (in
each case to the extent now due and payable) the Insurance Premiums in respect
of all of the insurance required by Section 8.05.

 

7.24         Physical
Condition.  Except as expressly and
specifically described and disclosed in the Property Condition Reports for the
Projects, the seismic reports delivered for the Projects pursuant to Section
6.01(aa), the Environmental Reports for the Projects and the capital
improvement schedules contained in the 2005 budgets for the Projects previously
delivered to the Administrative Agent, and except for the work described in Schedule
8.21, to the Borrower’s knowledge, each Project, including all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems, electrical systems,
equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, is in good condition, order and repair
in all material respects; to the Borrower’s knowledge, there exists no
structural or other material defects or damages in any Project, whether latent
or otherwise, and the Borrower has not received written notice from any
insurance company or bonding company of any defects or inadequacies in any
Project, or any part thereof, which would adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon
or of any termination or threatened termination of any policy of insurance or
bond.  Notwithstanding the provisions of Section
12.01(c), if any representation or warranty contained in this Section
7.24 is untrue at any time with respect to any Project, such Default or
Event of Default may be cured if the Borrower, within the cure period set forth
in Section 12.01(r), performs such acts as are sufficient to cause this
representation and warranty to be true by the end of such cure period.  

 

7.25         Flood
Zone.  Except as may be disclosed on
the survey of the Project, or any flood zone certification delivered by the
Borrower to the Administrative Agent prior to the Closing Date, no portion of
any Project is located in a flood hazard area as designated by the Federal
Emergency Management Agency or, if in a flood zone, flood insurance is
maintained therefor in full compliance with the provisions of Section
8.05(a)(i).

 

63

 

7.26         Management
Agreement.  The Property Management
Agreement is the only management and/or leasing agreement related to each
Project, and is in full force and effect with no default or event of default
existing thereunder, and the copy of the Property Management Agreement
delivered to the Administrative Agent is a true, correct and complete copy.

 

7.27         Boundaries.  Except as may be disclosed on the surveys
delivered pursuant to Section 6.01(l) and in the Title Policy, to the
Borrower’s knowledge: (i) none of the Improvements is outside the
boundaries of any Project (or building restriction or setback lines applicable
thereto); (ii) no improvements on adjoining properties encroach upon any
Project; and (iii) no Improvements encroach upon or violate any easements
or (in any respect which would have a Material Adverse Effect) any other
encumbrance upon any Project.

 

7.28         Illegal
Activity.  No portion of any Project
has been purchased with proceeds of any illegal activity and no part of the
proceeds of the Loans will be used in connection with any illegal activity.

 

7.29         Permitted Liens.  None of the Permitted Title Exceptions or
Permitted Liens individually or in the aggregate will have a Material Adverse
Effect.  

 

7.30         Foreign Assets Control Regulations,
Etc.  Neither the execution and
delivery of the Notes and the other Loan Documents by the Borrower Parties nor
the use of the proceeds of the Loan, will violate the Trading with the Enemy
Act, as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or the Anti-Terrorism Order or any enabling legislation or executive
order relating to any of the same.  Without
limiting the generality of the foregoing, no Borrower Party or any of their
respective Subsidiaries (a) is or will become a blocked person described in
Section 1 of the Anti-Terrorism Order or (b) knowingly engages or will
engage in any dealings or transactions or be otherwise associated with any
person who is known or who (after such inquiry as may be required by Applicable
Law) should be known to such Borrower Party or Subsidiary to be such a blocked
person.

 

7.31         Defaults.  No Default exists under any of the Loan
Documents.

 

7.32         Other
Representations.  All of the
representations in this Agreement and the other Loan Documents by the Borrower
and its Affiliates are true, correct and complete in all material respects as
of the date hereof.  

 

7.33         True
and Complete Disclosure.  The
information, reports, financial statements, exhibits and schedules furnished in
writing by or on behalf of the Borrower Parties to the Administrative Agent or
any Lender in connection with the negotiation, preparation or delivery of this
Agreement and the other Loan Documents or included herein or therein or
delivered pursuant hereto or thereto, do not contain any untrue statement of
material fact or omit to state any material fact known to the Borrower
necessary to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. 
All written information furnished after the date hereof by any Borrower
Party to the Administrative Agent and the Lenders in connection with this
Agreement and the other Loan Documents and the Transactions will, to the
Borrower’s knowledge, be true, complete and accurate in every material

 

64

 

respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or
certified.  There is no fact presently
known to the Borrower or the Borrower’s Manager that could reasonably be
anticipated to have a Material Adverse Effect that has not been disclosed
herein, in the other Loan Documents or in a report, financial statement,
exhibit, schedule, disclosure letter or other writing furnished to the
Administrative Agent or the Lenders for use in connection with the
Transactions.

 

7.34         Reserved.

 

7.35         Limited
Partners.  The Borrower represents
and warrants to the Lenders as follows: 
(a) no limited partner of the Borrower’s Member is presently
asserting, or has threatened to assert, by action or otherwise, any claims or
other liability of the Borrower’s Manager in its capacity as the general
partner of Borrower’s Member or otherwise or any person related to such general
partner with respect to the business, operations or financing of the Borrower
or the Borrower’s Member or the past, present or future offering of any limited
partnership interests in the Borrower’s Member or the making of the Loans or
the grant of the security therefor (an “LP Claim,” which term shall also
refer to any other claim that any such limited partner may make against the Borrower’s
Manager from time to time of a nature that would indicate that any assurance
contained in this Section may be incorrect); and (b) to the extent
required, the consent of such limited partners to the Loans has been obtained
and is fully effective.  

 

7.36         Non-Foreign
Status.  The Borrower represents and
warrants to the Lenders that its tax identification number is 76-0770980 under the Code and that the Borrower’s
Member’s tax identification number is 95-4601862 under the Code. 

 

7.37         Borrower’s
Member.  The Borrower’s Member is
permitted under the limited partnership agreement of the Borrower’s Member, as
amended, or pursuant to consents obtained from the limited partners of the
Borrower’s Member,
to enter into or authorize Borrower to enter into the Transactions including
the borrowing of the Loans by the Borrower. 
There is not, and after the Closing Date the original Borrower’s Member will
not incur, any ‘Portfolio Debt’ (as such term is defined in the limited
partnership agreement of the Borrower’s Member, as amended) that is not
permitted under the limited partnership agreement of the Borrower’s Member, as
amended, or pursuant to consents obtained from the limited partners of the
Borrower’s Member.

 

ARTICLE
VIII

 

AFFIRMATIVE
COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees with the Lenders and
the Administrative Agent that, so long as any Commitment or Loan is outstanding
and until payment in full of all amounts payable by the Borrower hereunder:

 

65

 

8.01         Information.  The Borrower shall deliver to the
Administrative Agent:

 

(a)           Within one hundred (100) days
after the end of each fiscal year of the Borrower’s operation of the Project,
the Borrower shall furnish to the Administrative Agent (i) an annual report
containing a summary of operating results for such year, a history of operating
results broken down by quarter and twelve (12) month periods for the Borrower and
the Borrower’s Member since inception (which may be consolidated provided that
such report contains notes clearly identifying each item on such report which
is attributable to the Borrower and the Borrower’s Member), an investment
summary broken down for each of the Borrower’s properties, a comparison of
actual results to budget for all of the Borrower’s properties for such year,
audited financial statements for such year for the Borrower and the Borrower’s
Member (which may be consolidated provided that such financial statements
contain notes clearly identifying each item on such financial statements which
is attributable to the Borrower, the Borrower’s Member and the Projects) (including
a balance sheet, statement of income, statement of aggregate partners’ capital
or member’s equity, statement of cash flows, and notes), and the operating
budget for each of the Projects for the fiscal year then under way, all in the same
form as the Borrower’s Member’s 2004 audited financial statements and related
materials, which form is acceptable to Administrative Agent, and (ii) an
updated rent roll for each of the Projects in the form delivered to the
Administrative Agent prior to the Closing Date; provided however, following a Permitted Public
REIT Transfer, in lieu of the items in clauses (i) and (ii) above, the Borrower
shall furnish to the Administrative Agent, within the later of the time period
for delivery of the annual report provided above or five (5) Business Days
after the annual Form 10-K of the Permitted Public REIT becomes publicly
available, the following:  (i) the annual
Form 10-K of the Permitted Public REIT, (ii) an annual summary of operating
results for each of the Projects for such year, (iii) a comparison of actual
results to budget for each of the Projects for such year, (iv) the operating
budget for each of the Projects for the fiscal year then under way, (v) an
unaudited balance sheet and income statement for such year for the Borrower
(which may be consolidated provided that such financial statements contain
notes identifying each item on such financial statements that is attributable
to the Borrower or the Projects) and (vi) an updated rent roll for each of the
Projects;

 

(b)           Within fifty (50) days after the end of each
calendar quarter (or, in the case of the fourth calendar quarter for each
fiscal year, within one hundred (100) days after the end of such quarter), the
Borrower shall furnish to the Administrative Agent (i) a quarterly report
containing a summary of operating results for such quarter and for the twelve
(12) months ending with such quarter, a history of operating results broken
down by quarter and twelve (12) month periods for the Borrower and Borrower’s
Member since inception (which may be consolidated provided that such report
contains notes clearly identifying each item on such report which is
attributable to the Borrower and the Borrower’s Member), an investment summary broken down for each of the Borrower’s
properties, a comparison of actual results to budget for all of the Borrower’s
properties for such quarter and for the twelve (12) months ending with such
quarter, unaudited financial statements for that quarter and for the twelve
(12) months ending with such quarter for the Borrower and the Borrower’s Member
(which may be consolidated provided that such financial statements
contain notes clearly identifying each item on such financial statements which
is attributable to the Borrower, the Borrower’s Member and the Projects) (including a balance sheet, statement of
income, statement of partners’ capital or member’s equity, statement of cash flows, and notes), and
in the same form as the most recent

 

66

 

(as of the date hereof) quarterly report of the Borrower’s Member provided
to the Administrative Agent pursuant to Section 6.01(w), which form is
acceptable to Administrative Agent and (ii) an updated rent roll for each
of the Projects in the form delivered to the Administrative Agent in connection
with the Closing; provided however, following a Permitted Public REIT
Transfer, in lieu of the items in clauses (i) and (ii) above, the Borrower
shall furnish to the Administrative Agent, within the later of the time period
provided above for delivery of the quarterly report (which shall instead be
based on the Permitted Public REIT’s fiscal quarter) or five (5) Business Days
after the Form 10-Q of the Permitted Public REIT for such fiscal quarter
becomes publicly available, the following: 
(i) the most recent Form 10-Q of the Permitted Public REIT, (ii) a
summary of operating results for each of the Projects as of the end of the current
quarter for the year-to-date, (iii) a comparison of actual results to budget
for each of the Projects as of the end of the current quarter for the
year-to-date, (iv) an unaudited balance sheet and income statement for the
Borrower as of the end of the current quarter for the year-to-date (which may
be consolidated provided that such financial statements contain notes
identifying each item on such financial statements that is attributable to the
Borrower or the Projects) and (v) an updated rent roll for each of the
Projects;

 

(c)           at
the time of the delivery of each of the financial statements provided for in subsection
(a) and subsection (b) of this Section 8.01, a certificate of
an Authorized Officer on behalf of the Borrower, certifying (i) that such
respective financial statements and reports as being true, correct, and
complete in all material respects; (ii) that such officer has no knowledge,
except as specifically stated, of any Default or if a Default has
occurred, specifying the nature thereof in reasonable detail and the action
which the Borrower is taking or proposes to take with respect thereto; (iii) that
the Borrower is in compliance with the restrictions on Indebtedness set forth
in Section 9.04; and (iv) containing a calculation in such
reasonable detail as is acceptable to the Administrative Agent setting forth
the Operating Income, Operating Expenses, Net Operating Income, Adjusted Net
Operating Income, DSCR Debt Service, and Debt Service Coverage Ratio of the
Borrower for the most recent calendar quarter;

 

(d)           from
time to time, within fifteen (15) days after request therefor, such other
information regarding the financial condition, operations, business or
prospects of the Borrower, the Projects, the other Borrower Parties, the
Bankruptcy Parties or status or terms of the Permitted Reorganization as the
Administrative Agent may reasonably request, including, without limitation, if
there is a material variation in the application of accounting principles as
further described herein (i) a description in reasonable detail of any
material variation between the application of accounting principles employed in
the preparation of any annual or quarterly financial statement under Section 8.01
and the application of accounting principles employed in the preparation of the
immediately preceding annual or quarterly financial statements and
(ii) reasonable estimates of the difference between such statements
arising as a consequence thereof; and

 

(e)           within
ten (10) Business Days after the end of each calendar month during a Low DSCR
Trigger Period, (i) an operating statement (showing monthly activity), with
such detail and in a form reasonably satisfactory to the Administrative Agent, showing
Operating Income, Operating Expenses, Net Operating Income, Adjusted Net
Operating Income, DSCR Debt Service, and the Borrower’s calculation of Excess
Cash for such month; (ii) the computations of Debt Service Coverage Ratio as
calculated as of the end of the most recent

 

67

 

calendar month;
and (iii) a reconciliation of the results for such month and year-to-date as
compared to the Approved Annual Budget for such period.

 

(f)            In the event of a
Transfer to a Permitted REIT or its Permitted REIT Subsidiary in accordance
with Section 9.03(a)(iii), the Borrower shall furnish to the
Administrative Agent (a) if the Borrower shall have delivered a Guarantee of
the Guaranteed Line of Credit, all compliance certificates, financial
statements and all other financial and material reports required pursuant to the
terms of the Primary Credit Facility of the Permitted REIT on or prior to the
date(s) required for the delivery thereof by such Permitted REIT pursuant to
the terms of the Primary Credit Facility of such Permitted REIT and (b) at all
other times such compliance certificates, financial statements and all other
financial and material reports delivered by the Permitted REIT pursuant to the
terms of the Primary Credit Facility of the Permitted REIT as may be requested
by the Administrative Agent from time to time, promptly following such request.

 

Any reports,
statements or other information required to be delivered under this Agreement (other
than the Form 10-K and Form 10-Q of the Permitted Public REIT, which may be
delivered in paper or electronic form) shall be delivered (1) in paper form,
(2) on a diskette, and (3) if requested by the Administrative Agent and within
the capabilities of the Borrower’s data systems without change or modification
thereto, in electronic form and prepared using a Microsoft Word for Windows or
WordPerfect for Windows files (which files may be prepared using a spreadsheet
program and saved as word processing files).

 

8.02         Notices
of Material Events.  The Borrower
shall give to the Administrative Agent prompt written notice after becoming
aware of any of the following:

 

(a)           the
occurrence of any Default or Event of Default, including a description of the
same in reasonable detail;

 

(b)           the
commencement (or threatened commencement in writing) of all material legal or
arbitral proceedings whether or not covered by insurance policies maintained by
or for the Borrower, the Borrower’s Member or the Borrower’s Manager in
accordance herewith (it being understood that any monetary claims asserted in
any proceeding which, individually or in the aggregate, exceeds $3,000,000
shall be deemed material), and of all proceedings by or before any Governmental
Authority of a material nature, and any material development in respect of such
legal or other proceedings, affecting any of the Borrower Parties or any
Project;

 

(c)           the
occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower Parties in an aggregate amount exceeding $250,000;

 

(d)           promptly
after the Borrower knows or has reason to believe any default has occurred by
the Borrower or tenant under any Major Lease or the Borrower has received a
written notice of default from the tenant under any Major Lease, a notice of
such default;

 

(e)           copies
of any material notices or documents pertaining to or related to the Projects,
the Borrower or the Borrower’s Member received from any Governmental Authority;
and, with respect to Major Leases only, any notices received asserting a material
default by the

 

68

 

landlord under
such lease, or relating to an assignment of the lease by the tenant, or a
subletting of all or substantially all of the premises thereunder, or the
vacation of all or a material portion of the premises by the tenant, or a
change in control of the tenant, or an election by the tenant to terminate the
lease or any other event or condition which, as reasonably determined by the
Borrower, would impact the obligation of the tenant thereunder to pay rent or
perform any of its other material obligations for the entire term thereof as
previously disclosed to the Administrative Agent;

 

(f)            notice
of any Taking threatened in writing; or the occurrence of any Casualty Event
resulting in damage or loss in excess of $500,000; and

 

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

 

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

 

8.03         Existence,
Etc.  The Borrower will, and will cause
each other Borrower Party to, preserve and maintain its legal existence and all
material rights, privileges, licenses and franchises necessary for the
maintenance of its existence and the conduct of its affairs.

 

8.04         Compliance
with Laws; Adverse Regulatory Changes.

 

(a)           The
Borrower shall comply in all material respects (subject to such more stringent
requirements as may be set forth elsewhere herein) with all Applicable
Laws.  The Borrower shall maintain in
full force and effect all required Government Approvals and shall from time to
time obtain all Government Approvals as shall now or hereafter be necessary
under Applicable Law in connection with the operation or maintenance of the
Projects and shall comply, in all material respects, with all such Government
Approvals and keep them in full force and effect.  Upon request from time to time, the Borrower
shall promptly furnish a true, correct and complete copy of each such
Government Approval to the Administrative Agent.  The Borrower shall, unless otherwise approved
by the Administrative Agent in writing, use its reasonable efforts to contest
any proceedings before any Governmental Authority and to resist any proposed
adverse changes in Applicable Law to the extent that such proceedings or
changes are directed specifically toward any Project or could reasonably be
expected to have a Material Adverse Effect, but only to the extent that
Borrower deems such action to be in the best interests of the affected Project
in the exercise of its business judgment.

 

(b)           The
Borrower, at its own expense, may contest by appropriate legal proceedings
promptly initiated and conducted in good faith and with due diligence, the
validity or application of any Applicable Law, and shall provide the
Administrative Agent with notice of any such contest of a material nature, provided
that:

 

(i)            Reserved;

 

69

 

(ii)           the Borrower shall pay any
outstanding fines, penalties or other payments under protest unless such
proceeding shall suspend the collection of such items;

 

(iii)          such proceeding shall be permitted
under and be conducted in accordance with the applicable provisions of any
other instrument governing the contest of such Applicable Laws to which the
Borrower or any such Project is subject and shall not constitute a default
thereunder;

 

(iv)          no part of or interest in any Project
(or the Borrower’s interest therein) will be in danger of being sold,
forfeited, terminated, canceled or lost during the pendency of the proceeding;

 

(v)           such proceeding shall not subject the
Borrower, the Administrative Agent or any Lender to criminal or civil liability
(other than civil liability of the Borrower as to which adequate security has
been provided pursuant to clause (vi) below);

 

(vi)          unless paid under protest, the
Borrower shall have furnished such security as may be required in the
proceeding, or as may be reasonably requested by the Administrative Agent, to
insure the payment of any such items, together with all interest and penalties thereon,
which shall not be less than 110% of the maximum liability of the Borrower as
reasonably determined by the Administrative Agent; and

 

(vii)         the Borrower shall promptly upon final
determination thereof pay the amount of such items, together with all costs,
interest and penalties.

 

8.05         Insurance.

 

(a)           The
Borrower shall obtain and maintain, or cause to be maintained, for the benefit
of the Borrower, the Administrative Agent and the Lenders, insurance for each
Project providing at least the following coverages:

 

(i)            comprehensive all risk insurance (A)
in an amount equal to one hundred percent (100%) of the full replacement cost
(less deductible amounts provided for herein), which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver of
depreciation; (B) containing an agreed amount endorsement with respect to the
Improvements and personal property at each Project waiving all co-insurance provisions
(if applicable); (C) providing for no deductible in excess of Seventy-Five
Thousand Dollars ($75,000) for all such insurance coverage; and (D) containing
an “Ordinance or Law Coverage” or “Enforcement” endorsement if any of the
Improvements or the use of each Project shall at any time constitute legal
non-conforming structures or uses.  In
addition, the Borrower shall obtain: (y) if any portion of the Improvements is
currently or at any time in the future located in a federally designated “special
flood hazard area”, flood hazard insurance in an amount equal to the lesser of
(1) the Outstanding Principal Amount of the Notes or (2) the maximum amount of
such insurance available under the National Flood Insurance Act of 1968, the
Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform
Act of 1994, as each may be amended or such greater amount as the
Administrative Agent shall require; and (z) subject to Sections 8.05(a)(xi)

 

70

 

and (xii), coverage for terrorism, terrorist
acts and earthquake; provided that the insurance pursuant to clauses (y)
and (z) hereof shall be on terms (other than with respect to deductibles and
self-insurance) consistent with the comprehensive all risk insurance policy
required under this subsection (i);

 

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

 

(iii)          business income insurance (A) with
loss payable to the Administrative Agent (on behalf of the Lenders); (B)
covering all risks required to be covered by the insurance provided for in subsection (i)
above for a period commencing at the time of loss for such length of time as it
takes to repair or replace with the exercise of due diligence and dispatch; (C)
containing an extended period of indemnity endorsement which provides that
after the physical loss to the Improvements and personal property has been
repaired, the continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the expiration of twelve
(12) months from the date that the Project is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period; and (D) if there is a
separate sublimit for business income insurance, such sublimit shall be not
less than one hundred percent (100%) of the projected gross income from the
Project for a period of eighteen (18) months. 
The amount of such business income insurance shall be determined prior
to the date hereof and at least once each year thereafter based on the Borrower’s
reasonable estimate of the gross income from the Project for the succeeding eighteen
(18) month period.  All proceeds payable
to the Administrative Agent pursuant to this subsection (iii) shall
be held by the Administrative Agent and shall be applied to debt service that
is due and payable under the Notes with the amount in excess of such debt
service during the period of business interruption held in a Controlled Account
and available for release to the Borrower upon the completion of the
restoration of the Project provided no Major Default or Event of Default then
exists; provided, however, that nothing herein contained shall be
deemed to relieve the Borrower of its obligations to pay the obligations
secured by the Loan Documents on the respective dates of payment provided for
in the Notes and the other Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;

 

(iv)          at all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements, and only if or to the extent the coverage specified herein is not
provided through the other insurance maintained by

 

71

 

or for the benefit of the Borrower, (A) owner’s
contingent or protective liability insurance covering claims not covered by or
under the terms or provisions of the above mentioned commercial general
liability insurance policy; and (B) the insurance provided for in subsection (i)
above written in a so-called builder’s risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to subsection (i)
above, (3) including permission to occupy the Project, and (4) with an agreed
amount endorsement waiving co-insurance provisions;

 

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

 

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

 

(vii)         umbrella liability insurance in
addition to primary coverage in an amount not less than Fifty Million and
No/100 Dollars ($50,000,000) per occurrence on terms consistent with the
commercial general liability insurance policy required under subsection (ii)
above and subsections (viii) and (ix) below;

 

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

 

(ix)           if applicable to a particular
Project, so-called “dramshop” insurance or other liability insurance required
in connection with the sale by the Borrower of alcoholic beverages;

 

(x)            insurance against employee
dishonesty in an amount not less than one (1) month of Operating Income from
the Project and with a deductible not greater than Ten Thousand and No/100
Dollars ($10,000.00);

 

(xi)           such coverages with respect to
terrorism and terrorist acts as are then being maintained by prudent owners of
institutionally owned “Class A” office buildings in the market where the Projects
are located as reasonably determined by the Borrower and the Administrative
Agent; it being acknowledged and agreed that the Administrative Agent and the
Lenders have accepted the Borrower’s existing coverages, deductibles and
self-insurance limits in effect on the Closing Date with respect to terrorism
and terrorist acts;

 

(xii)          such coverages with respect to
earthquake as are then being maintained by prudent owners of institutionally
owned “Class A” office buildings in the market where the Projects are located
as reasonably determined by the Borrower and the Administrative Agent; it being
acknowledged and agreed that the Administrative Agent

 

72

 

and the Lenders have accepted the Borrower’s existing
coverages, deductibles and self-insurance limits in effect on the Closing Date
with respect to earthquake; and

 

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

 

(b)           All
insurance provided for in Section 8.05(a) shall be obtained under
valid and enforceable policies (collectively, the “Policies” or in the
singular, the “Policy”) and, to the extent not specified above, shall be
subject to the approval of the Administrative Agent as to deductibles, loss
payees and insureds.  Not less than fifteen
(15) days prior to the expiration dates of the Policies theretofore furnished
to the Administrative Agent, certificates of insurance evidencing the Policies
accompanied by evidence satisfactory to the Administrative Agent of payment of
the premiums then due thereunder (the “Insurance Premiums”), shall be
delivered by the Borrower to the Administrative Agent; provided, however,
that no Event of Default shall result from the Borrower’s failure to deliver or
cause to be delivered such certificates or other evidence unless (i) on or
prior to the expiration date of the applicable Policy, the Administrative Agent
shall not have obtained certificates or other evidence satisfactory to it confirming
that the Policies required hereunder shall have been extended for an additional
period or shall have been replaced for an additional period with replacement
Policies that comply with the requirements set forth in this Section 8.05
and (ii) on or prior to the fifth (5th) Business Day after the
expiration of such expiring Policy, the Administrative Agent shall not have
received certificates of insurance evidencing the extension of the existing
Policies or replacement Policies for an additional period accompanied by
evidence satisfactory to the Administrative Agent of payment of the Insurance
Premiums then due thereunder.

 

(c)           Each
Policy shall (i) provide that adjustment and settlement of any claim equal to
or in excess of the Insurance Threshold Amount shall be subject to the approval
of the Administrative Agent in accordance with Section 10.01(b); provided
that so long as no Event of Default exists, the Borrower may, upon notice to
the Administrative Agent, settle and adjust any claim with respect to a
Casualty Event in excess of the Insurance Threshold Amount without the prior
consent of the Administrative Agent and the Borrower is hereby authorized to
collect the Insurance Proceeds with respect to any such claim; provided
that such adjustment is carried out in a competent and timely manner; (ii)
include permission by the insurer for the parties to the transaction to waive
all rights of subrogation against each other; (iii) to the extent such
provisions are reasonably obtainable, provide that such insurance shall not be
impaired or invalidated by virtue of (1) any act, failure to act or negligence
of, or violation of declarations, warranties or conditions contained in such
policy by, the Borrower, the Administrative Agent, the Lenders or any other
named insured, additional insured, or loss payee, except for the willful
misconduct of the Administrative Agent or the Lenders knowingly in violation of
the conditions of such Policy or (2) any foreclosure or other proceeding or
notice of sale relating to the Projects; (iv) be subject to a deductible, if
any, not greater than $10,000 (except as otherwise specifically provided in or
permitted by Section 8.05(a)); (v) contain an endorsement providing that
none of the Administrative Agent, the Lenders or the Borrower shall be, or
shall be deemed to be, a co-insurer with respect to any risk insured by such
Policy; (vi) include effective waivers by the

 

73

 

insurer of all
claims for insurance premiums against any loss payees, additional insureds and
named insureds (other than the Borrower Parties); (vii) provide that if all or
any part of such Policy shall be canceled or terminated, or shall expire, the
insurer will forthwith give notice thereof to each named insured, additional
insured and loss payee and that no cancellation, termination, expiration,
reduction in amount of, or material change (other than an increase) in,
coverage thereof shall be effective until at least thirty (30) days after
receipt by each named insured, additional insured and loss payee of written
notice thereof; and (viii) provide that the Administrative Agent shall not be
liable for any Insurance Premiums thereon or subject to any assessments
thereunder.

 

(d)           If
any such Insurance Proceeds required to be paid to the Administrative Agent are
instead made payable to the Borrower, the Borrower hereby appoints the
Administrative Agent as its attorney-in-fact, irrevocably and coupled with an
interest, to endorse and/or transfer any such payment to the Administrative
Agent (on behalf of the Lenders).

 

(e)           Except
as otherwise provided by the terms of the blanket insurance policies maintained
by the Borrower and/or its Affiliates with respect to the Borrower and the
Projects as of the Closing Date, or comparable blanket policies that may be
obtained by the Borrower and/or its Affiliates after the Closing Date, any
blanket insurance Policy shall specifically allocate to the Projects the amount
of coverage from time to time required hereunder and shall otherwise provide
the same protection as would a separate Policy insuring only the Projects in
compliance with the provisions of Section 8.05(a).

 

(f)            All
Policies of insurance provided for or contemplated by Section 8.05(a)
shall be primary coverage and, except for the Policy referenced in Section 8.05(a)(v),
shall name the Borrower as the insured and the Administrative Agent (on behalf
of the Lenders) and its successors and/or assigns as the additional insured (or
in the case of property insurance, as the “mortgagee”), as its interests may
appear, and in the case of property damage, boiler and machinery, flood,
earthquake and terrorism insurance, shall contain a standard non-contributing
mortgagee endorsement in favor of the Administrative Agent providing that the
loss thereunder shall be payable to the Administrative Agent.  The Borrower shall not procure or permit any
of its constituent entities to procure any other insurance coverage which would
be on the same level of payment as the Policies or would adversely impact in
any way the ability of the Administrative Agent or the Borrower to collect any
proceeds under any of the Policies.  All
polices must EXACTLY state the following: Eurohypo AG, New York Branch Its
successors and assigns 1114 Avenue of the Americas 29th Floor New
York, NY 10036 Attn: Director of Portfolio Operations.

 

(g)           Without
limiting the obligations of the Borrower under the foregoing provisions of this
Section 8.05, if at any time the Administrative Agent is not in receipt
of written evidence that all insurance required hereunder is in full force and
effect, the Administrative Agent shall have the right, without notice to the
Borrower, to take such action as the Administrative Agent deems necessary to
protect its interest in the Projects, including, without limitation, the
obtaining of such insurance coverage as the Administrative Agent in its sole
discretion deems appropriate and all premiums incurred by the Administrative
Agent in connection with such action or in obtaining such insurance and keeping
it in effect shall be paid

 

74

 

by the Borrower to
the Administrative Agent upon demand and until paid shall be secured by the
Deed of Trust and shall bear interest at the Post-Default Rate.

 

(h)           In
the event of foreclosure of the Deed of Trust or other transfer of title to any
Project in extinguishment in whole or in part of the obligations thereunder,
all right, title and interest of the Borrower in and to the Policies that are
not blanket Policies then in force concerning such Project and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
the Administrative Agent or other transferee in the event of such other
transfer of title.

 

(i)            The
Polices shall be issued by financially sound and responsible insurance
companies authorized to do business in the state in which the Projects are
located and be approved by the Administrative Agent.  The insurance companies shall have (i) a
general policy and claims paying ability rating of A or better and a financial
class of IX or better (and, as to the coverages for terrorism, terrorist acts
and earthquake, a general policy and claims paying ability rating of A minus or
better and a financial class of VII or better) by A.M. Best Company, Inc.; provided,
however, that the Borrower shall be permitted to maintain (at levels
other than the primary layer of insurance) up to twenty percent (20%) of the
total required all-risk insurance coverage required under subsection
8.05(a)(i) with insurance companies having a general policy and claims
paying ability rating of less than A and a financial class of less than IX provided
such companies have at least a general policy and claims paying ability rating
of A minus or better and a financial class of VII or better, provided such
insurance companies are also issuing earthquake coverage to the Borrower or
(ii) an investment grade rating for claims paying ability of “AA” by S&P or
the equivalent rating by one or more credit rating agencies approved by the
Administrative Agent.

 

8.06         Real
Estate Taxes and Other Charges.

 

(a)           Subject
to the provisions of subsection (b) of this Section 8.06, the
Borrower shall pay all Real Estate Taxes and Other Charges now or hereafter
levied or assessed or imposed against each Project or any part thereof before
fine, penalty, interest or cost attaches thereto.  Subject to the provisions of subsection
(b) of this Section 8.06, upon the request of the Administrative
Agent, the Borrower shall furnish to the Administrative Agent receipts for, or
other evidence reasonably satisfactory to the Administrative Agent of, the
payment of Real Estate Taxes and Other Charges in compliance with this Section 8.06.

 

(b)           After
prior written notice to the Administrative Agent, the Borrower, at its own
expense, may contest by appropriate legal proceedings or other appropriate
actions, promptly initiated and conducted in good faith and with due diligence,
the amount or validity or application in whole or in part of any Real Estate
Taxes and Other Charges, provided that:

 

(i)            Reserved;

 

(ii)           the Borrower shall pay the Real
Estate Taxes and Other Charges under protest unless such proceeding shall
suspend the collection of the Real Estate Taxes and Other Charges;

 

75

(iii)          such proceeding shall be permitted
under and be conducted in accordance with the applicable provisions of any
other instrument governing the contest of Real Estate Taxes or Other Charges to
which the Borrower or the Projects is subject and shall not constitute a
default thereunder;

 

(iv)          such proceeding shall be conducted in
accordance with all Applicable Laws; 

 

(v)           neither the Projects nor any part
thereof or interest therein will, in the reasonable opinion of the
Administrative Agent, be in danger of being sold, forfeited, terminated,
cancelled or lost during the pendency of the proceeding;

 

(vi)          unless paid under protest, the
Borrower shall have furnished such security as may be required in the
proceeding, or as may be reasonably requested by the Administrative Agent (but
in no event less than 110% of the Real Estate Taxes or Other Charges being
contested), to insure the payment of any such Real Estate Taxes and Other
Charges, together with all interest and penalties thereon; and

 

(vii)         the Borrower shall promptly upon final
determination thereof or upon the failure of the existence of (ii), (iii),
(iv) or (v) above pay the amount of such Real Estate Taxes or Other
Charges, together with all costs, interest and penalties.

 

8.07         Maintenance
of the Projects; Alterations.  The
Borrower shall: 

 

(i)            maintain or cause to be maintained (A)
each Project (other than the Project known as the Sherman Oaks Galleria) in
good condition and repair in a manner consistent with a Class-A office building
located in the relevant submarket in which such Project is located in Los
Angeles County, California, and make all reasonably necessary repairs or
replacements thereto and (B) the Project known as the Sherman Oaks Galleria in
good condition and repair in a manner consistent with a Class-A mixed-use
office and retail project located in west Los Angeles/Beverly Hills/west San
Fernando Valley/Burbank region, and make all necessary repairs or replacements
thereto; 

 

(ii)           except for work that constitutes
required work under Section 8.21, not remove, demolish or structurally
alter, or permit or suffer the removal, demolition or structural alteration of,
any of the Improvements or make any alteration that may have a Material Adverse
Effect or involve a cost in the aggregate for such alteration and all other
alterations involving a single work of improvement (or related group of
improvements) which is anticipated to exceed the lesser of (A) $5,000,000 or
(B) ten percent (10%) of the Appraised Value of such Project, without the prior
consent of the Administrative Agent; provided, however, that the
Administrative Agent’s consent shall not be required for tenant improvement
work performed pursuant to the terms and provisions of an Approved Lease which
(upon completion of such work) does not adversely affect any structural
component of any Improvements, any utility or HVAC system contained in any Improvements
or the exterior of any building (excluding signage or other alterations that
would not otherwise require the consent of the Administrative Agent under this Section
8.07(ii) in the absence of this proviso) constituting a part of any
Improvements at any

 

76

 

Project; and provided, further, that the
Administrative Agent’s consent shall not be unreasonably withheld for any
alterations that are required by Applicable Law and otherwise require the
consent of the Administrative Agent under this Section 8.07(ii); 

 

(iii)          complete promptly and in a good and
workmanlike manner any Improvements which may be hereafter constructed and,
subject to the terms of the Loan Documents (including, without limitation, Section
10.03), promptly restore (in compliance with Section 10.03) in
like manner any portion of the Improvements which may be damaged or destroyed
thereon from any cause whatsoever, and pay when due all claims for labor
performed and material furnished therefor, subject to the Borrower’s right to
contest any such claims (as long as, with respect to any claim for which a
mechanic’s lien has been filed, such contested claims have been bonded over to
the satisfaction of the Administrative Agent within thirty (30) days of the
date of filing); 

 

(iv)          not commit, or permit, any waste of
the Projects; and 

 

(v)           not remove any item from the Projects
without replacing it with a comparable item of equal quality, value and
usefulness, except that the Borrower may sell or dispose of in the ordinary
course of the Borrower’s business any property which is obsolete.

 

8.08         Further
Assurances.  The Borrower will, and
will cause each of the other Borrower Parties to, promptly upon request by the
Administrative Agent, execute any and all further documents, agreements and
instruments, and take all such further actions which may be required under any
applicable law, or which the Administrative Agent may reasonably request, to
effectuate the Transactions, all at the sole cost and expense of the
Borrower.  The Borrower, at its sole cost
and expense, shall take or cause to be taken all action required or requested
by the Administrative Agent to maintain and preserve the Liens of the Security
Documents and the priority thereof.  The
Borrower shall from time to time execute or cause to be executed any and all
further instruments, and register and record such instruments in all public and
other offices, and shall take all such further actions, as may be necessary or
requested by the Administrative Agent for such purposes, including timely
filing or refiling all continuations and any assignments of any such financing statements,
as appropriate, in the appropriate recording offices.

 

8.09         Performance
of the Loan Documents.  The Borrower
shall observe, perform and satisfy all the terms, provisions, covenants and
conditions required to be observed, performed or satisfied by it under the Loan
Documents, and shall pay when due all costs, fees and expenses required to be
paid by it under the Loan Documents.

 

8.10         Books
and Records; Inspection Rights.  The
Borrower will, and will cause each of the other Borrower Parties to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities.  The Borrower will, and will
cause each of the other Borrower Parties to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties (subject to the proviso set forth
in Section 8.11(a)), to examine and make extracts from its books and
records, and to discuss its affairs, finances and

 

77

 

condition with its officers and independent
accountants, all at such reasonable times (during normal business hours) and as
often as reasonably requested.

 

8.11         Environmental
Compliance.

 

(a)           Environmental
Covenants.  The Borrower covenants
and agrees that:  

 

(i)            all uses and operations on or of
each Project, whether by the Borrower or any other Person, shall be in
compliance with all Environmental Laws and permits issued pursuant thereto; 

 

(ii)           except for Releases incidental to the
Use of Hazardous Substances permitted by clause (iii) below and in
compliance with all Applicable Laws, the Borrower shall not permit a Release of
Hazardous Substances in, on, under or from any Project; 

 

(iii)          the Borrower shall not knowingly
permit Hazardous Substances in, on, or under any Project, except those that are
in compliance with all Environmental Laws and of types and in quantities
customarily used in the ownership, operation and maintenance of buildings
similar to the Projects (i.e., materials used in cleaning and other building
operations) and shall undertake to supervise and inspect activities occurring
on the Projects as may be reasonably prudent to comply with the foregoing obligation;

 

(iv)          except as disclosed in Schedule
8.11 or as specifically described in the Environmental Reports, the
Borrower shall not permit any underground storage tanks to be in, on, or under
any Project, and shall operate, maintain, repair and replace any such
underground storage tank so disclosed in compliance with all Applicable Laws; 

 

(v)           Reserved;  

 

(vi)          the Borrower shall keep each Project
free and clear of all Liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of the Borrower or any
other Person (collectively, “Environmental Liens”); 

 

(vii)         notwithstanding clause (iii)
above, the Borrower shall not, or knowingly permit any other Person to, install
any asbestos or asbestos containing materials on any Project, and shall upon
and following the Closing Date implement, comply with and maintain in effect an
operations and maintenance program with respect to any existing asbestos or
asbestos containing materials located at any Project;

 

(viii)        the Borrower shall cause the Remediation
of such Hazardous Substances present on, under or emanating from any Project,
or migrating onto or into any Project, in accordance with this Agreement and
applicable Environmental Laws subject to the right to contest such Remediation
in accordance with Section 7(a) of the Environmental Indemnity; and 

 

(ix)           the Borrower shall provide the
Administrative Agent, the Lenders and their representatives (A) with
access, upon prior reasonable notice, at reasonable times (during normal
business hours) to all or any portion of any Project for purposes of

 

78

 

inspection; provided that such inspections
shall not unreasonably interfere with the operation of such Project or the
tenants or occupants thereof, and shall be subject to the rights of tenants
under their Leases, and the Borrower shall cooperate with the Administrative
Agent, the Lenders and their representatives in connection with such
inspections, including, but not limited to, providing all relevant information
and making knowledgeable persons available for interviews and (B) promptly
upon request, copies of all environmental investigations, studies, audits,
reviews or other analyses conducted by or that are in the possession or control
of the Borrower in relation to any Project, whether heretofore or hereafter
obtained.

 

(b)           Environmental
Notices.  The Borrower shall promptly
provide notice to the Administrative Agent of:

 

(i)            all Environmental Claims asserted or
threatened against the Borrower or any other Person occupying any Project or
any portion thereof or against any Project which become known to the Borrower;

 

(ii)           the discovery by the Borrower of any
occurrence or condition on any Project or on any real property adjoining or in
the vicinity of any Project which could reasonably be expected to lead to an
Environmental Claim against the Borrower, any Project, the Administrative Agent
or any of the Lenders;

 

(iii)          the commencement or completion of any
Remediation at any Project; and

 

(iv)          any Environmental Lien filed against
any Project.

 

In
connection therewith, the Borrower shall transmit to the Administrative Agent
copies of any citations, orders, notices or other written communications
received from any Person and any notices, reports or other written
communications and copies of any future Environmental Reports whether or not submitted
to any Governmental Authority with respect to the matters described above.

 

8.12         Management
of the Projects.

 

(a)           The
Borrower shall (i) cause each Project to be managed by the Property Manager in
accordance with the Property Management Agreement, (ii) promptly perform and
observe all of the material covenants required to be performed and observed by
the Borrower under the Property Management Agreement and do all things
necessary to preserve and to keep unimpaired its material rights thereunder,
(iii) promptly notify the Administrative Agent of any material default under
the Property Management Agreement of which it is aware and (iv) promptly
enforce the performance and observance of all of the material covenants
required to be performed and observed by the Property Manager under the
Property Management Agreement.

 

(b)           If
(i) an Event of Default exists, (ii) the Property Manager is insolvent,
or (iii) the Property Manager is in default of any material covenant or
obligation under the Property Management Agreement beyond the expiration of any
applicable grace period set forth therein, the Borrower shall, at the request
of the Administrative Agent, promptly terminate the Property

 

79

 

Management
Agreement and replace the Property Manager with a property manager approved by
the Administrative Agent pursuant to a Property Management Agreement on terms
and conditions reasonably satisfactory to the Administrative Agent.

 

8.13         Leases.  The Borrower shall (a) upon the Closing Date,
assign to the Administrative Agent (on behalf of the Lenders) any and all
Leases, and/or all Rents payable thereunder, including, but not limited to, any
Lease which is now in existence or which may be executed after the Closing
Date, (b) promptly perform and fulfill, or cause to be performed and fulfilled,
each and every material term and provision of the Borrower’s obligations under
the Leases, including the performance of any tenant improvement work required
with respect thereto, (c) give to the Administrative Agent a copy of each
notice of default given to any tenant under a Major Lease or sent by any tenant
thereunder to the Borrower, (d) consistent with good business practices
and in the best interests of the affected Project, enforce its rights with
regard to all Leases unless otherwise approved by the Administrative Agent, (e)
use its commercially reasonable efforts to lease the Projects, (f) diligently
enforce the terms of each Lease with respect to any construction work to be
performed by the tenant thereunder so that such work is performed in a manner
which will cause a minimum amount of disruption to the tenants then in
occupancy at any such Project and in a manner so as not to cause a default by
the Borrower under any other tenants’ Leases or provide the basis for any
abatement or set off by any other tenant of the rent payable under any such
Lease, or a claim by any other tenant for breach of warranty of habitability or
similar claim and (g) prior to entering into any new Lease with a retail tenant
provide a copy of the Borrower’s standard form of retail lease to the
Administrative Agent for review and approval, which approval shall not be
unreasonably withheld or delayed.

 

8.14         Tenant
Estoppels.  At the Administrative
Agent’s request, at any time while an Event of Default exists and otherwise
from time to time upon the joint agreement of the Borrower and the Administrative
Agent, with each acting reasonably, the Borrower shall request and use
commercially reasonable efforts to obtain and furnish to the Administrative
Agent written estoppels in form and substance satisfactory to the
Administrative Agent, executed by tenants under Leases in any Project and
confirming the term, rent, and other provisions and matters relating to the
Leases.  Borrower further hereby agrees
that, while an Event of Default exists, the Administrative Agent may exercise
all rights of the Borrower under the Leases to request the delivery of
estoppels from the tenants thereunder.  

 

8.15         Subordination,
Non-Disturbance and Attornment Agreements. 
The Borrower shall use commercially reasonable efforts to provide to the
Administrative Agent SNDA Agreements executed by each tenant under a Major
Lease prior to the Closing Date; provided, however, that in
addition to the obligations set forth in Section 9.09(c), if the
Borrower does not obtain all such SNDA Agreements by the Closing Date, the
Borrower shall continue to use commercially reasonable efforts to obtain such
SNDA Agreements after the Closing Date. 

 

8.16         Operating
Plan and Budget.

 

(a)           Commencing
with the budget for the calendar year 2006 and then annually thereafter, the
Borrower shall submit to the Administrative Agent an annual budget for each
Project (each an “Annual Budget”), in form and substance reasonably
satisfactory to the Administrative Agent setting forth in detail budgeted
monthly Operating Income and monthly

 

80

 

Operating Expenses
for each such Project (which may be in the form of the calendar year 2005
budget for each Project provided to the Administrative Agent prior to the
Closing Date).  The Annual Budget for
each year shall be delivered together with the annual financial statement for
the preceding year pursuant to Section 8.01(a).  During any Low DSCR Trigger Period but not
otherwise, the Administrative Agent shall have the right to approve such Annual
Budget (including, without limitation, the Annual Budget for the portions of
the calendar year in which such Low DSCR Trigger Period occurs following after
the commencement of such Low DSCR Trigger Period).  Within fifty (50) days following the end of
any calendar quarter which comprises a Low DSCR Trigger Period, the Borrower
shall deliver to the Administrative Agent for its approval the Annual Budget
(in the format as described above) for the calendar year in which such Low DSCR
Trigger Period occurs (together with a reconciliation to that Annual Budget of
actual revenues and expenses year-to-date), and shall thereafter deliver to
Administrative Agent for its approval the Annual Budget (in the format as
described above) proposed by the Borrower for the succeeding calendar year, by
no later than the November 15 preceding such calendar year.  The Administrative Agent shall not
unreasonably withhold its approval of any Annual Budget as required hereunder; provided,
however, that if during any Low DSCR Trigger Period the actual monthly
Operating Expenses exceed budgeted Operating Expenses in any month during any
period by more than ten percent (10%), the Administrative Agent shall have the
right to require the Borrower to submit for its approval a revised Annual
Budget for review and approval by the Administrative Agent in its sole
discretion.  If the Administrative Agent
objects to any proposed Annual Budget for which approval is required hereunder,
the Administrative Agent shall advise the Borrower of such objections within
fifteen (15) Business Days after receipt thereof (and deliver to the Borrower a
reasonably detailed description of such objections), and the Borrower shall
within five (5) days after receipt of notice of any such objections revise such
Annual Budget and resubmit the same to the Administrative Agent (such procedure
to be repeated until such time as the Administrative Agent shall approve such
Annual Budget).  Each such Annual Budget
submitted to and (to the extent that such approval is required hereunder) approved
by the Administrative Agent in accordance with terms hereof, as well as the
budget for the current calendar year approved by the Administrative Agent on
the Closing Date, shall hereinafter be referred to as an “Approved Annual
Budget”.  Until such time that the
Administrative Agent has approved a proposed Annual Budget for which its approval
is required hereunder, the most recently Approved Annual Budget shall apply for
purposes of this Section 8.16; provided that such Approved Annual
Budget shall be adjusted to reflect actual increases in real estate taxes,
insurance premiums, utilities expenses and other fixed costs and shall
otherwise be adjusted to reflect any change during the preceding year in the
Consumer Price Index.  Notwithstanding
the foregoing, the Administrative Agent and the Lenders acknowledge that the
Borrower is not required to operate under the terms of an Approved Annual
Budget during any period other than a Low DSCR Trigger Period.

 

(b)           During
any Low DSCR Trigger Period, the Borrower may at any time propose an amendment
to an Approved Annual Budget for any Project for the remainder of the calendar
year in which such Low DSCR Trigger Period has occurred, and, when approved as
provided below, such amended Approved Annual Budget for such Project shall be
deemed to be and shall be effective as the Approved Annual Budget for such
Project for such calendar year.  Prior to
making any expenditures not reflected in any current Approved Annual Budget in
excess of ten percent (10%) of the budgeted amount therefor, the Borrower shall
propose an amendment to such Approved Annual Budget to the Administrative Agent
for its approval in accordance

 

81

 

with the standards
for the granting or withholding of consent to Annual Budgets set forth in Section
8.16(a).  The Administrative Agent shall
have fifteen (15) Business Days after receipt of any proposed amendment to such
Approved Annual Budget to approve or disapprove such proposed amendment.  

 

8.17         Operating
Expenses.  The Borrower shall pay all
known costs and expenses of operating, maintaining, leasing and otherwise
owning the Projects on a current basis and before same become delinquent
(subject however to the other provisions of this Agreement and the other Loan
Documents), including all interest, principal (when due) and other sums
required to be paid under this Agreement, the other Loan Documents and the
Hedge Agreement, before utilizing any revenues derived or to be derived from or
in respect of the Projects for any other purpose, including distributions or
other payments to the Borrower’s Member.

 

8.18         Margin
Regulations.  No part of the proceeds
of the Loans will be used for the purpose of purchasing or acquiring any “margin
stock” within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation T, U, X or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements.

 

8.19         Hedge
Agreements. 

 

(a)           The
Borrower shall obtain , or cause to be obtained by an Other Swap Pledgor, no
later than thirty (30) days after the Closing Date and will at all times
thereafter maintain, or cause to be maintained by an Other Swap Pledgor,  in full force and effect one or more Hedge
Agreements in the aggregate notional amount equal to one hundred percent (100%)
of the Outstanding Principal Amount of the Loans from time to time (the “Aggregate
Notional Amount”) approved by the Administrative Agent in its reasonable
discretion with (i) Eurohypo or its Affiliates or (ii) one or more
other banks or insurance companies as counterparties (each a “Third-Party
Counterparty”), which is effective to cause the All-in-Rate as to the Aggregate
Notional Amount commencing no later than the date that is thirty (30) days
after the Closing Date (or, if such day is not a Business Day, the first
Business Day thereafter) to be not in excess of eight percent (8.0%) per annum through
the Hedging Termination Date.  Upon the
Closing Date, the Borrower shall deliver, or cause to be delivered by an Other
Swap Pledgor, a Hedge Agreement Pledge, substantially in the form of Exhibit
G-1 attached hereto, together with, within thirty (30) days after the
Closing Date, the applicable bid package, confirmation and other documentation for
such Hedge Agreement (including, without limitation, a certificate from an
Authorized Officer of the Borrower certifying that a Hedge Agreement has been
entered into on the terms set forth in the confirmation) as may be reasonably acceptable
to the Administrative Agent evidencing compliance with the Borrower’s
obligations under the provisions of this Section 8.19, and within ten
(10) days after the delivery of each such Hedge Agreement (or within the thirty
(30) day period referred to above)  shall
deliver the applicable counterparty acknowledgment.  Any Hedge Agreement shall require monthly
fixed rate and floating rate payments and be based on a LIBO Rate of interest
having, at the Borrower’s option, successive Interest Periods (an “Interest
Rate Hedge Period”) of one, two, three, six or twelve months or such other
Interest Periods satisfactory to the Administrative Agent in its reasonable
discretion.  Notwithstanding anything to
the contrary contained in this Section 8.19, the Borrower or any Other
Swap Pledgor shall be entitled to enter into one or more Hedge Agreements in
excess of

 

82

 

the Aggregate
Notional Amount, up to the total amount of the Commitments or providing
interest rate protection for periods that extend beyond the Hedging Termination
Date (each such agreement, but only to the extent that it, after giving effect
to all other Hedge Agreements maintained pursuant to this Section 8.19(a),
relates to a notional amount in excess of the Aggregate Notional Amount or
provides interest rate protection for periods that extend beyond the Hedging
Termination Date, is referred to herein as an “Excess Hedge Agreement”)
on terms acceptable to the Borrower or such Other Swap Pledgor; provided,
however, that Borrower shall deliver, or cause to be delivered by an
Other Swap Pledgor, upon the Administrative Agent’s request in accordance with
the time requirements set forth in this Section 8.19(a), a Hedge
Agreement Pledge with respect to each Excess Hedge Agreement, substantially in
the form of Exhibit G-2 attached hereto, together with the counterparty’s
acknowledgment and other instruments provided to be delivered thereunder.

 

(b)           The
Borrower’s obligations under any Hedge Agreement shall not be secured by the
Deeds of Trust and shall not be secured by any Lien on or in all or any portion
of the collateral under the Security Documents, any direct or indirect interest
in the Borrower or any other Property (other than as permitted pursuant to Section
9.02(i)).  

 

(c)           Any
Hedge Agreement with a Third-Party Counterparty is herein called a “Third-Party
Hedge Agreement.”  With respect to each
Third-Party Hedge Agreement maintained with respect to the Aggregate Notional
Amount and each Excess Hedge Agreement pledged to the Administrative Agent
pursuant to Section 8.19(a):  (i)
the Third-Party Counterparty providing such Third-Party Hedge Agreement must
have a long term credit rating no lower than “A” from S&P or “A2” from
Moody’s at the time of entry into such Third-Party Hedge Agreement; provided,
however, if there is a difference in the then current S&P rating and
the Moody’s rating, the lesser rating shall be applicable; (ii) the form
and substance thereof must be satisfactory to the Administrative Agent in its
reasonable discretion and in all respects and (iii) each counterparty
thereunder shall have delivered to the Administrative Agent a counterparty’s
acknowledgment in the form attached to the Hedge Agreement Pledge applicable
thereto (or in such other form as may be acceptable to the Administrative Agent
in its reasonable discretion).

 

(d)           Reserved.  

 

(e)           If
the Borrower fails for any reason or cause whatsoever to secure and maintain, or
cause to be secured and maintained by an Other Swap Pledgor, a Hedge Agreement
with respect to the Aggregate Notional Amount as and when required to do so
hereunder, such failure shall constitute an Event of Default and the
Administrative Agent shall be entitled to exercise all rights and remedies
available to it under this Agreement (for the benefit of the Lenders) and the
other Loan Documents or otherwise, including the right (but not the obligation)
of the Administrative Agent to secure or otherwise enter into one or more Hedge
Agreements with respect to the Aggregate Notional Amount with a Lender for and
on behalf of the Borrower without such action constituting a cure of such Event
of Default and without waiving the Administrative Agent’s or the Lenders’
rights arising out of or in connection with such Event of Default.  If the Administrative Agent shall enter into
a Hedge Agreement with a Lender in accordance with its right to do so pursuant
to this subsection (e), then (i) the terms and provisions of any such
Hedge Agreement, including the term thereof, shall be determined by the

 

83

 

Administrative
Agent in its sole discretion (except that the maximum notional amount of all
such Hedge Agreements shall not exceed the Aggregate Notional Amount) and (ii)
the Borrower shall pay all of the Administrative Agent’s costs and expenses in
connection therewith, including any fees charged by the applicable
counterparty, attorneys’ fees and disbursements, and the cost of additional
title insurance in an amount determined by the Administrative Agent to be
necessary to protect the Administrative Agent and the Lenders from potential
funding losses under any Hedge Agreement provided by a Lender.

 

(f)            Reserved.  

 

(g)           If
the Borrower or Other Swap Pledgor is entitled to receive a payment upon the
termination of any Hedge Agreement required by this Section 8.19, or,
while any Event of Default exists, under any Excess Hedge Agreement pledged to
the Administrative Agent pursuant to Section 8.19(a) (it being
understood that any termination payment paid with respect to any Excess Hedge
Agreement shall be delivered to the Borrower or Other Swap Pledgor at any time
while an Event of Default does not exist) such payment shall be delivered to
the Administrative Agent and applied by the Administrative Agent to any amounts
due to the Administrative Agent or the Lenders under the Loan Documents
evidencing the Loans (it being understood that any such payment applied to the
principal of the Loans shall be deemed a prepayment of such principal, and
shall be accompanied by any applicable prepayment premium resulting from such
prepayment, or such termination payment shall be applied in part to pay such
principal and in part to pay such prepayment premium) in such order and
priority as the Administrative Agent shall determine in its sole
discretion.  Notwithstanding the
foregoing, if (i) at any time upon or following any principal prepayment made
pursuant to Section 2.06 the Outstanding Principal Amount is reduced and
the Borrower or Other Swap Pledgor elects at its option to terminate or partially
to terminate, or to reduce the notional amount of, any Hedge Agreement (or is
required under the terms of such Hedge Agreement to do so) in a notional amount
(in either such case) not exceeding, respectively, the amount by which the aggregate
notional amount in effect under the Hedge Agreements then maintained pursuant
hereto (other than Excess Hedge Agreements unless pledged pursuant to the Hedge
Agreement Pledge substantially in the form of Exhibit G-1 attached
hereto) exceeds the Aggregate Notional Amount then required to be hedged
pursuant hereto or (ii) the Borrower or Other Swap Pledgor elects, in full
compliance with the terms of each Hedge Agreement Pledge, to deliver to the
Administrative Agent, in substitution for a Hedge Agreement, a substitute Hedge
Agreement, then the Borrower or Other Swap Pledgor shall have the right to do
so, and if the Borrower or Other Swap Pledgor is entitled (in the case of
either (i) or (ii) above) to receive a termination payment from the
counterparty in connection therewith, then, provided that no Event of Default
then exists, the Borrower or Other Swap Pledgor shall have the right to receive
and retain such termination payment free and clear of the Lien of the Hedge
Agreement Pledge, provided, that, after giving effect to any such termination
or substitution, the Borrower remains in compliance with its obligations under Section
8.19(a) with respect to the maintenance of Hedge Agreements with respect to
the Aggregate Notional Amount then required to be hedged pursuant hereto and
has complied (or caused the Other Swap Pledgor to comply) with the applicable
conditions precedent set forth in Section 6(e) of the Hedge Agreement Pledge
and the certification obligations with respect thereto set forth in the
applicable Hedge Agreement Pledge and the Acknowledgment of Security Interest
delivered pursuant thereto.  The Borrower
or Other Swap Pledgor shall have the right to terminate, reduce the notional
amount of or modify any Excess

 

84

 

Hedge Agreement
and to receive any payments from the counterparty thereunder resulting
therefrom, provided that if an Event of Default exists and such Excess Hedge
Agreement has been pledged to the Administrative Agent, then the rights and
obligations of the Borrower (or Other Swap Pledgor) and the Administrative
Agent with respect thereto shall be the same as their respective rights and
obligations with respect to Hedge Agreements maintained with respect to the
Aggregate Notional Amount. 

 

(h)           Upon
securing any Hedge Agreement required under this Section 8.19, or any
Excess Hedge Agreement pledged to the Administrative Agent pursuant to Section
8.19(a) the Borrower agrees that the economic and other benefits of such
Hedge Agreement and all of the other rights of the Borrower or Other Swap
Pledgor thereunder shall be collaterally assigned to the Administrative Agent
as additional security for the Loans for the ratable benefit of the Lenders,
pursuant to a Hedge Agreement Pledge. 
All Hedge Agreement Pledges shall be accompanied by (i) Uniform
Commercial Code financing statements, in duplicate, with respect to such
pledges and (ii) within ten (10) days after delivery of the applicable
Hedge Agreement Pledge (or within such longer period as provided in Section 8.19(a)
above), a counterparty’s acknowledgment in the form attached to the Hedge
Agreement Pledge applicable thereto (or in such other form as may be acceptable
to the Administrative Agent in its reasonable discretion) from each
counterparty under each Hedge Agreement. 

 

(i)            Notwithstanding
the provisions of Section 8.19(a), following the delivery of any notice
of full or partial prepayment delivered by the Borrower pursuant to Section
2.06(a) or any notice of a proposed release of a Project pursuant to Section
2.06(c), Borrower’s obligation to maintain, or cause to be
maintained, any Hedge Agreement required under Section 8.19(a) shall be
suspended with
respect to the full Aggregate Notional Amount (in the case of a notice of full
prepayment) or the portion of the Aggregate Notional Amount equal to the amount
to be prepaid in the case of a partial prepayment or pursuant to Section
2.09(a)(ii) in connection with the release of a Project (in the case of a
notice of partial prepayment or notice of the release of a Project), and
Borrower or the Other Swap Pledgor may terminate or reduce the notional amount
of any Hedge Agreement theretofore entered into with respect to such suspended portion of the
Aggregate Notional Amount; provided, however, that if such notice of
prepayment or release is subsequently revoked, or if such prepayment or release
does not occur on or prior to the date identified in such notice of prepayment
or release (as such date may be postponed in accordance with the provisions of
this Agreement), then the suspension of such obligation shall terminate, and
Borrower shall be obligated to enter into and thereafter maintain, or to cause
an Other Swap Pledgor to enter into and thereafter maintain, one or more Hedge
Agreements in full compliance with Section 8.19(a) by not later than the
end of a cumulative period during which the Hedge Agreements otherwise required
under Section 8.19(a) are not being maintained (with respect to all such
notices of prepayment or release in the aggregate) which shall not exceed (60)
days in the aggregate.  

 

(j)            If
any Hedge Agreement delivered by the Borrower or Other Swap Pledgor to the
Administrative Agent shall, by its terms, expire during any period in which
Borrower remains obligated to maintain a Hedge Agreement in effect pursuant to Section
8.19(a), and as a result thereof the Borrower would not be in compliance
with its obligations under Section 8.19(a) with respect to the
maintenance of Hedge Agreements covering the Aggregate Notional Amount, then,
subject to the provisions of Section 8.19(i),  the Borrower

 

85

 

shall deliver, or
cause an Other Swap Pledgor to deliver, to the Administrative Agent a
replacement Hedge Agreement at least ten (10) Business Days prior to the
expiration date of the then current Hedge Agreement (so as to remain in
compliance with its obligations under Section 8.19(a) with respect to
the maintenance of Hedge Agreements) which replacement Hedge Agreement shall be
acceptable to the Administrative Agent in its reasonable discretion and
otherwise satisfy the requirements of this Section 8.19.

 

8.20         Reserved.  

 

8.21         Required
Work.  The Borrower shall cause the
work described on Schedule 8.21 attached hereto to be completed on or
before the applicable dates set forth on said schedule.  Such work shall be completed in a good and
workmanlike manner, lien-free and in accordance with all Applicable Laws.  The Administrative Agent shall have the right
to inspect such work and the reasonable costs of such inspection shall be paid
by the Borrower.  In addition, the
Borrower acknowledges receipt of the Environmental Reports and the Property
Condition Reports and agrees to address in its prudent business judgment the
recommendations contained in such reports. 

 

ARTICLE
IX

 

NEGATIVE
COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees that, until the
payment in full of the Obligations, it will not do or permit, directly or
indirectly, any of the following:

 

9.01         Fundamental
Change.

 

(a)           Mergers;
Consolidations; Disposal of Assets.  Except
as expressly provided for in Section 14.31, none of the Borrower Parties
will merge into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or sell, transfer, lease (other
than tenant leases pursuant to and in accordance with Sections 8.13 and 9.09
of this Agreement) or otherwise dispose of (in one transaction or in a series
of transactions) any substantial part of its Properties and assets whether now
owned or hereafter acquired (but excluding any Transfer permitted by Section
9.03 (including, without limitation, any sale or disposition of any
Excluded Projects) or any sale or disposition of Projects subject to and in
accordance with Section 2.09 of this Agreement or of obsolete or excess
furniture, fixture and equipment in the ordinary course of business if same is
unnecessary or is replaced with furniture, fixtures and equipment of equal or
greater value and utility), or wind up, liquidate or dissolve, or enter into
any agreement to do any of the foregoing.

 

(b)           Organizational
Documents.  Without the prior written
consent of the Administrative Agent, the Borrower will not, and will not permit
any of the other Borrower Parties to, make any Modification of the terms or
provisions of its Organizational Documents, except: (i) Modifications necessary
to clarify existing provisions of such Organizational
Documents, (ii) Modifications which would have no adverse, substantive effect
on the rights or interests of the Lenders in conjunction with the Loans or
under the Loan Documents, (iii) Modifications necessary to effectuate
Transfers to the extent expressly permitted in this

 

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Agreement; or (iv)
Modifications of the Organizational Documents for Borrower Parties other than
the Borrower which are necessary to effectuate the Permitted Reorganization.

 

9.02         Limitation
on Liens.  None of the Borrower, the
Borrower’s Member nor any of their respective Subsidiaries shall create, incur,
assume or suffer to exist any Lien upon or with respect to any of its Property,
now owned or hereafter acquired; provided, however, that the
following shall be permitted Liens except (in the case of any Lien described in
clauses (d), (f) or (g) below) to the extent that they
would encumber any interest in any Project, any other asset which is collateral
for the Loans or any interest in Borrower:

 

(a)           the
Liens created by the Loan Documents; any Permitted Title Exceptions affecting
the Projects; any Permitted Liens; and any Lien for the performance of work or
the supply of materials affecting any Property (unless, in the case of any such
Lien affecting any Project, the Borrower or the Borrower’s Member fails to
discharge such Lien by payment or bonding (in accordance with statutory bonding
requirements the effect of which is to release such Lien from the affected
Project and to limit the Lien claimant’s rights to a recovery on the bond) on
or prior to the date that is the earlier of (i) thirty (30) days after the date
of filing of such lien against such Project and (ii) the date on which the
Project (or the Borrower’s interest therein) is in danger of being sold,
forfeited, terminated, canceled or lost);

 

(b)           Liens
for taxes or assessments or other government charges or levies if not yet
delinquent or if they are being contested in good faith by appropriate
proceedings in accordance with Sections 8.04(b) and/or 8.06(b),
if applicable;

 

(c)           Liens
imposed by law, such as mechanic’s, materialmen’s, landlord’s, warehousemen’s
and carrier’s Liens, and other similar Liens securing obligations incurred in
the Borrower’s or the Borrower’s Member’s or their respective Subsidiary’s ordinary
course of business which, in the case of the Projects, are not past due for
more than thirty (30) days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established;

 

(d)           Liens
or pledges to secure the performance of bids, tenders, contracts (other than
contracts for the payment of money), leases, public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of the Borrower’s or the
Borrower’s Member’s or their respective Subsidiary’s business;

 

(e)           Judgment
and other similar Liens (which shall be subordinate to the Liens of the Deeds
of Trust, in the case of any such Lien encumbering any Project or the Borrower’s
interest therein) in an aggregate amount not in excess of $1,000,000 arising in
connection with court proceedings, but only if the execution or other
enforcement of such Liens is effectively stayed (or bonded over through the
posting of a bond in accordance with a statutory bonding procedure the effect
of which is to release such Lien from any Property of the Borrower or the
Borrower’s Member and to limit the Lien claimant’s rights to recovery under the
bond) and the claims secured thereby are being actively contested in good faith
by appropriate proceedings and for which appropriate reserves have been
established;

 

87

 

(f)            Easements,
rights-of-way, restrictions and other similar non-monetary encumbrances
encumbering assets other than the Projects or any other collateral for the
Loans;

 

(g)           Liens
on any of the Qualified Real Estate Interests (it being understood that the
Liens permitted under this Section 9.02(g) shall also include Liens
encumbering interests in accounts, rents, leases, management and other
contracts, personal property and other items related to the applicable
Qualified Real Estate Interest and Liens on Swap Agreements entered into in
connection therewith), but only to the extent created to secure Indebtedness
incurred in connection with the acquisition, financing or refinancing thereof,
in compliance with Section 9.04(e) or (g);

 

(h)           Liens
consisting of the rights of the lessor to the property covered by any equipment
lease entered into in compliance with Section 9.04(d), provided that
such lien consists solely of such rights with respect to the leased property;

 

(i)            Liens
encumbering cash and other liquid assets (not constituting collateral for the
Loans to the Borrower) in the aggregate
amount not to exceed the sum required to be pledged by the Borrower or
any of its Subsidiaries in order to secure its respective obligations with
respect to the negative value of any Hedge Agreement or Excess Hedge Agreement entered
into by the Borrower or Other Swap Pledgor in compliance with Section 8.19
hereof or the negative value of any Hedge Agreement entered into by the
Borrower or the Borrower’s Member or their respective Subsidiaries in
connection with the Indebtedness permitted by Section 9.04(e), (f)
or (g);

 

(j)            Liens
securing the Indebtedness permitted by Section 9.04(e) or (f),
and encumbering the specific Residential Properties or Excluded Projects
financed pursuant to such section or sections (it being understood that the
Liens permitted under this Section 9.02(j) shall also include Liens
encumbering interests in accounts, rents, leases, management and other
contracts, personal property and other items related to the applicable
Residential Properties and/or Excluded Projects and Liens on Swap Agreements
entered into in connection therewith); and

 

(k)           Liens
securing the obligations of Borrower or its Subsidiaries on account of
Guarantees described in Section 9.04(h) provided that such Liens encumber
Excluded Projects (which may include Liens on any interests in accounts, rents,
leases, management and other contracts, personal property and, other items
related thereto) exclusively.

 

9.03         Due
on Sale; Transfer; Pledge.  Without
the prior written consent of the Administrative Agent and (subject to the last
paragraph of this Section 9.03) the Required Lenders:

 

(a)           None
of the Borrower, nor any Borrower Party, nor any Principal shall (w) directly
or indirectly Transfer any interest in any Project or any part thereof
(including any direct or indirect interest in any partnership, membership or
other ownership interest or other Equity Interest in the Borrower, the Borrower’s
Member or the Borrower’s Manager); (x) directly or indirectly grant any
Lien on any direct or, prior to the

 

88

 

Permitted Public
REIT Transfer, indirect interest in any Project or any part thereof (including
any direct or, prior to the Permitted Public REIT Transfer, indirect interest
in any partnership, membership or other ownership interest or other Equity
Interest in the Borrower, the Borrower’s Member or the Borrower’s Manager),
whether voluntarily or involuntarily; (y) except for arrangements which
result from the Permitted Reorganization pursuant to which the Permitted Public
REIT or its Operating Partnership or another Permitted Public REIT Subsidiary
thereof shall acquire such rights or powers, enter into any arrangement
granting any direct or indirect right or power to direct the operations,
decisions and affairs of the Borrower, the Borrower’s Member or the Borrower’s
Manager, whether through the ability to exercise voting power, by contract or
otherwise; or (z) except as described in clause (e) of the definition of “Permitted
Liens,” enter into any easement or other agreement granting rights in or
restricting the use or development of any Project except for easements and
other agreements which, in the reasonable opinion of the Administrative Agent,
have no Material Adverse Effect; provided, however, that, the
foregoing restrictions shall not apply with respect to:

 

(i)            any Transfer of direct or indirect
ownership interests in the Borrower’s Member, or a successor to the Borrower’s
Member (other than the ownership interests that are covered by Section
9.03(a)(ii)), unless (A) in the case of any such Transfer prior to the
Permitted Public REIT Transfer, the acquisition by any one investor of ownership
interests in the Borrower’s Member would result in the direct or indirect
ownership by that investor of more than forty-nine percent (49%) of the ownership
interests in the Borrower’s Member, or successor to the Borrower’s Member, in
which case the consent of the Administrative Agent, which shall not be
unreasonably withheld or delayed, shall be required or (B) in the case of
any such Transfer following the Permitted Public REIT Transfer, the Permitted Public REIT, following such
Transfer, shall not directly or indirectly own fifty-one percent (51%) or more
of the ownership interests in the Borrower or shall not directly or indirectly
control the Borrower, or a Change in Control shall result from such Transfer;

 

(ii)           the Transfer of direct or indirect
ownership interests in, or the admission or withdrawal of any partner, member
or shareholder to or from, the Borrower’s Manager (or any replacement manager referred
to in Section 9.03(b) or any general partner, manager or managing member
of any successor to the Borrower or the Borrower’s Member referred to in Section
9.03(a)(iii)), so long as, after such Transfer, admission or withdrawal,
the provisions of Section 9.03(c) are not violated;

 

(iii)          the conveyance of all of the Projects to
a Qualified Successor Entity which assumes all of the obligations of the
Borrower under the Loan Documents in form and substance satisfactory to the
Administrative Agent and in recordable form; provided, however,
that such Qualified Successor Entity and the general partner, manager or
managing member of such Qualified Successor Entity, after giving effect to such
Transfer, is in compliance with all of the covenants of the Borrower or
applicable to the Borrower’s Member, the Borrower’s Manager or any Borrower
Party (as applicable) contained in the Loan Documents except as otherwise
provided in the definition of “Borrower’s Member” or “Borrower’s Manager” (with
all references herein to “Borrower” to mean such Qualified Successor Entity, all
references herein to the “Borrower’s Member” to mean (except as otherwise
provided in the definition of “Borrower’s Member”) the controlling entity for
such Qualified Successor Entity, and all

 

89

 

references herein to “Borrower’s Manager” to mean (except
as otherwise provided in the definition of “Borrower’s Manager”) any general
partner, manager or managing member of the Qualified Successor Entity; no
Default or Event of Default is then existing or would result therefrom; and
upon the transfer of the Projects to such Qualified Successor Entity, such Qualified
Successor Entity, its controlling entity and the general partner, manager or
managing member of such Qualified Successor Entity are in compliance in all
material respects with all of the representations and warranties of the
Borrower or applicable to the Borrower’s Member or the Borrower’s Manager
(whether directly or as a Borrower Party) (as applicable) contained herein and
in the other Loan Documents (after giving effect to the modifications
reflecting the identity of the transferee resulting from such transfer) except
as otherwise provided in the definition of “Borrower’s Member” or “Borrower’s
Manager” (with all references herein to “Borrower” to mean such Qualified
Successor Entity, all references herein to the “Borrower’s Member” to mean (except
as otherwise provided in the definition of “Borrower’s Member”) the controlling
entity for such Qualified Successor Entity, and all references herein to “Borrower’s
Manager” to mean (except as otherwise provided in the definition of “Borrower’s
Manager”) any general partner, manager or managing member of the Qualified
Successor Entity); and provided, further, that from and after
such Transfer, in the case of a Transfer to a Qualified Successor Entity
consisting of a Permitted Public REIT Subsidiary, the Properties may be managed
by the Permitted Public REIT or any property management company owned or
controlled directly or indirectly by the Permitted Public REIT.  Prior to such Transfer, the Administrative
Agent shall have received and approved (which approval shall not be
unreasonably withheld) the Organizational Documents of such Qualified Successor
Entity and the general partner, manager or managing member of such Qualified
Successor Entity (except that, in the
case of a Qualified Successor Entity which is a Permitted Public REIT
Subsidiary of the Permitted Public REIT, there shall be no approval rights over
the Organizational Documents of such general partner, manager or managing
member if it is the Permitted Public REIT or the Operating Partnership of the
Permitted Public REIT), together with such financial information
relating to such Qualified Successor Entity as the Administrative Agent may
reasonably request, and concurrently with such Transfer, the Administrative
Agent shall have received such endorsements to the Title Policies insuring
ownership of the Projects by such Qualified Successor Entity and the continued
priority of the Liens of the Deeds of Trust after giving effect to the delivery
by such entity of the assumption agreement referred to above (subject only to
Permitted Title Exceptions), in form and substance satisfactory to the
Administrative Agent, and such confirmation as the Administrative Agent may
require that the Hedge Agreements required under Section 8.19(a) remain
in full force and effect, in compliance with Section 8.19 hereof, as to
the Loans as assumed by such Qualified Successor Entity.  In connection with any such Transfer, the
assumption agreement to be entered into by the Borrower and the Qualified
Successor Entity (and such other parties deemed appropriate by the
Administrative Agent) shall include such modifications to this Agreement and
the other Loan Documents as the Administrative Agent may reasonably require,
including, without limitation, such modifications to the covenants and other
provisions that are contained herein and that relate to the Borrower, Borrower’s
Member or Borrower’s Manager, as shall be deemed necessary by the
Administrative Agent to allocate to the

 

90

 

Qualified Successor Entity, its controlling entity,
and its general partner or manager responsibility for the performance of the
covenants of, and satisfaction of the other provisions set forth herein that
relate to, the Borrower, Borrower’s Member or Borrower’s Manager, and of such
limited indemnity agreements and guaranties as shall be deemed necessary by the
Administrative Agent to obtain recourse liability from the general partner or
manager of the Qualified Successor Entity as shall be consistent with the
obligations of the Guarantor under the Guarantor Documents immediately upon the
Closing Date.  Upon compliance with the foregoing requirements in connection with such
Transfer, the original Borrower and the original Guarantor, in their capacities
as such, shall be released from their respective obligations under the Loan
Documents arising from and after such Transfer, but such release shall not
limit the obligations of such parties to comply with any requirements
applicable to them (if any) in other capacities (including, without limitation,
in capacities such as the general partner, managing member, manager or
controlling entity for such Qualified Successor Entity).  As used herein, “Qualified Successor
Entity” shall mean either (I) so long as the provisions of Section
9.03(c) are not violated, an entity (other than a REIT, its Operating
Partnership or any Subsidiary of such REIT), majority-owned, directly or
indirectly, by (A) the Borrower and/or (B) the Borrower’s Member and/or (C) at
least two (2) of the Named Principals, so long as at least one of the Named
Principals is either Dan A. Emmett or Jordan L. Kaplan, and provided that in
the case of this clause (I)(C) the general partner, managing member or
manager of such Qualified Successor Entity must be controlled, directly or
indirectly, by such Named Principals, (II) a Permitted Public REIT Subsidiary
of the Permitted Public REIT (other than such Permitted Public REIT’s Operating
Partnership), or (III) a Permitted Private REIT Subsidiary of a private REIT,
provided that at least two (2) of the Named Principals are senior officers of
such private REIT and own, directly or indirectly, not less than one percent
(1%) of the beneficial interest in such private REIT, and at least one of the
Named Principals is either Dan A. Emmett or Jordan L. Kaplan; such private REIT
has an institutional character substantially the same as the institutional
character of the Borrower as of the date hereof; and all of the investors in
such private REIT are “accredited investors” within the meaning of Regulation D
promulgated under the Securities Act of 1933 (such private REIT is referred to
as a “Permitted Private REIT”); and,
provided further, however, that in the case of clauses (I), (II) and (III)
above, such Qualified Successor Entity shall, from the date of its formation,
have been in compliance with the provisions of Sections 9.02, 9.04
and 9.05 hereof as if each reference therein to “Borrower” were to mean
and refer to such Qualified Successor Entity;

 

(iv)          entering into Approved Leases or the
granting of Liens expressly permitted by the Loan Documents;

 

(v)           any Transfers of direct or indirect
Equity Interests in the Borrower or any of the Borrower Parties to the
Permitted Public REIT, its Operating Partnership or any Permitted Public REIT
Subsidiary in connection with a Permitted Public REIT Transfer;

 

(vi)          any Transfers constituting part of the
Permitted Reorganization which are permitted under Section 14.31;

 

91

 

(vii)         any Transfers expressly permitted by
the Loan Documents; and

 

(viii)        following the Permitted Public REIT
Transfer, any of the following so long as no Change of Control shall result
therefrom:  (A) any Transfer or issuance (whether through public offerings, private
placements or other means) of shares or Equity Interests in the Permitted
Public REIT or its Operating Partnership; (B) any conversion, into
securities of the Permitted Public REIT, of partnership units or other Equity
Interests of the Operating Partnership of the Permitted Public REIT; (C) any
issuance or Transfer of any Equity Interests in any Permitted Public REIT
Subsidiary owning any direct or indirect Equity Interests in any Borrower
Party, so long as following such issuance or Transfer the Permitted Public REIT
shall directly or indirectly own fifty-one percent (51%) or more of the
ownership interests in the Borrower and shall directly or indirectly control
the Borrower; and/or (C) any merger, consolidation, dissolution, liquidation,
reorganization, sale, lease or other transaction involving any Person other
than the Borrower so long as the Permitted Public REIT (or, as applicable, a
Permitted Public REIT Subsidiary) is the surviving entity and the Permitted
Public REIT thereafter directly or indirectly owns fifty-one percent (51%) or
more of the ownership interests in the Borrower and directly or indirectly
controls the Borrower.  As used herein, “control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise) of such Person.

 

(b)           Prior
to a Permitted Public REIT Transfer, except for Transfers constituting part of the
Permitted Reorganization which are permitted under Section 14.31, no
new general partner, manager or managing member that is not owned and
controlled, directly or indirectly, by at least two (2) of the Named Principals
shall be admitted to or created in the Borrower or the Borrower’s Member (nor
shall the Borrower’s Manager withdraw or be replaced as the Borrower’s sole manager
or the Borrower’s Manager withdraw or be replaced as the Borrower’s Member’s
general partner) unless the new or replacement general partner, manager or
managing member is owned and controlled, directly or indirectly, by at least
two (2) Named Principals and the general partners or managers owned and
controlled, directly or indirectly, by at least two (2) of the Named Principals
own, directly or indirectly, not less than one percent (1%) of the beneficial
interest in the Borrower’s Member following such admission or replacement and,
without the prior written consent of the Administrative Agent, no other change
in the Borrower’s or the Borrower’s Member’s Organizational Documents (except
as permitted in Section 9.01(b)) shall be effected in connection with
such replacement;

 

(c)           Except
for Transfers constituting part of the Permitted Reorganization which are
permitted under Section 14.31, prior to a Permitted Public REIT
Transfer, no Transfer shall be permitted which would cause the Borrower’s
Manager or any replacement general partner, manager or managing member referred
to in Section 9.03(b) (or any general partner, manager or managing
member of any Qualified Successor Entity unless the Borrower is, itself, such
manager or managing member) (i) to own, directly or indirectly, less than one
percent (1%) of the beneficial interest in the Borrower, the Borrower’s Member
or such successor to the Borrower or the Borrower’s Member or (ii) to cease to
be “controlled” directly or indirectly by at least two (2) of the Named
Principals (at least one of which shall be Dan A. Emmett or Jordan L.

 

92

 

Kaplan in the case of a Qualified Successor Entity referred to in clause
(I)(A) of the definition of the term “Qualified Successor Entity”); and

 

(d)           As
used in Sections 9.03(a)(iii), (b) and (c) above, “control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise) of such Person.

 

Notwithstanding the
foregoing provisions of this Section 9.03, any Transfer of a direct
or indirect ownership interest in the Borrower, the Borrower’s Member, the Borrower’s
Manager or any Qualified Successor Entity or any general partner, manager or
managing member of any Qualified Successor Entity shall be further subject to
the requirement that, after giving effect to such Transfer, the Borrower, the
Borrower’s Member, the Borrower’s Manager, any Qualified Successor Entity and
its controlling entity and general partner or manager shall be in compliance
with all applicable laws applicable to such Persons and relating to such
Transfer, including the USA Patriot Act and regulations issued pursuant thereto
and “know your customer” laws, rules, regulations and orders.  In addition, any such Transfer (except for the
Permitted Public REIT Transfer, any Transfer of publicly-traded stocks in the
Permitted Public REIT or any Transfers following a Permitted Public REIT
Transfer that are permitted by Section 9.03(a)(viii)) shall be further
subject to (w) the Borrower providing prior written notice to Administrative
Agent of any such Transfer, (x) no Default or Event of Default then existing,
(y) the proposed transferee being a corporation, partnership, limited liability
company, joint venture, joint-stock company, trust or individual approved in
writing by each Lender subject to a Limiting Regulation in its discretion, and
(z) payment to the Administrative Agent on behalf of the Lenders of all reasonable
costs and expenses incurred by the Administrative Agent or any Lenders in
connection with such Transfer.  Each
Lender at the time subject to a Limiting Regulation shall, within ten (10)
Business Days after receiving the Borrower’s notice of a proposed Transfer
subject to this Section 9.03, furnish to the Borrower a certificate
(which shall be conclusive absent manifest error) stating that it is subject to
a Limiting Regulation, whereupon such Lender shall have the approval right
contained in clause (y) above.  Each
Lender which fails to furnish such a certificate to the Borrower during such
ten (10) Business Day period shall be automatically and conclusively deemed not
to be subject to a Limiting Regulation with respect to such Transfer.  If any Lender subject to a Limiting
Regulation fails to approve a proposed transferee under clause (y) above (any
such Lender being herein called a “Rejecting Lender”),
the Borrower, upon three (3) Business Days’ notice, may (A) notwithstanding the
terms of Sections 2.06, prepay such Rejecting Lender’s outstanding
Loans or (B) require that such Rejecting Lender transfer all of its right,
title and interest under this Agreement and such Rejecting Lender’s Note to any
Eligible Assignee or Proposed Lender selected by the Borrower that is
reasonably satisfactory to the Administrative Agent if such Eligible Lender or
Proposed Lender (x) agrees to assume all of the obligations of such Rejecting
Lender hereunder, and to purchase all of such Rejecting Lender’s Loans
hereunder for consideration equal to the aggregate outstanding principal amount
of such Rejecting Lender’s Loans, together with interest thereon to the date of
such purchase (to the extent not paid by the Borrower), and satisfactory
arrangements are made for payment to such Rejecting Lender of all other amounts
accrued and payable hereunder to such Rejecting Lender as of the date of such
transfer (including any fees accrued hereunder and any amounts that would be
payable under Section 2.06 as if all such Rejecting Lender’s Loans
were prepaid in full on

 

93

 

such date) and (y)
approves the proposed transferee. 
Subject to the provisions of Section 14.07 such Eligible
Assignee or Proposed Lender shall be a “Lender” for all purposes
hereunder.  Without prejudice to the
survival of any other agreement of the Borrower hereunder, the agreements of
the Borrower contained in Section 5.05 shall survive for the
benefit of such Rejecting Lender with respect to the time period prior to such
replacement.

 

9.04         Indebtedness.  None of the Borrower, the Borrower’s Member
nor any of their respective Subsidiaries shall create, incur, assume, suffer to
exist, or otherwise become or remain directly or indirectly liable with respect
to, any Indebtedness or enter into any equipment leases (whether or not
constituting Indebtedness), except for the following:

 

(a)           Indebtedness
Under the Loan Documents. 
Indebtedness of such Borrower Party and its Subsidiaries in favor of the
Administrative Agent and the Lenders pursuant to this Agreement and the other
Loan Documents;

 

(b)           Accounts
Payable.  Accounts payable to trade
creditors for goods and services and current operating liabilities (not the
result of the borrowing of money) incurred in the ordinary course of such Borrower
Party’s or Subsidiary’s business in accordance with customary terms and paid
within the specified time, unless contested in good faith by appropriate
actions or proceedings and reserved for in accordance with GAAP, and provided
such trade payables and accrued expenses are not outstanding for more than
sixty (60) days;

 

(c)           Contingent
Obligations.  Indebtedness consisting
of (i) endorsements by such Borrower Party or such Subsidiary for collection or
deposit in the ordinary course of business or (ii) unsecured Swap Agreements
entered into by the Borrower, the Borrower’s Member or their respective
Subsidiaries with respect to Indebtedness permitted under Section 9.04
(a), (e), (f) or (g);

 

(d)           Indebtedness
for Capital Improvements.  Unsecured
Indebtedness of the such Borrower Party and its Subsidiaries (including
obligations under equipment leases or other personal property used in the
ownership or operation of their respective Properties), in the aggregate amount
during the term of the Loans not to exceed $30,000,000 (inclusive of the
portion of the value of the equipment covered by equipment leases entered into
pursuant to this Section 9.04(d) amortized through the rental payments
under such leases) incurred in connection with capital or tenant improvements
to (or other tenant concessions made in connection with) such Borrower Party’s and
such Subsidiaries’ Properties (including, without limitation, the Projects and
the Residential Properties) or the acquisition of equipment or other assets for
the benefit of such Borrower Party’s and such Subsidiaries’ Properties
(including, without limitation, the Projects and the Residential Properties),
and that is not used for the purposes of making Restricted Payments.  Not more than Two Million Dollars
($2,000,000) of the foregoing $30,000,000 maximum may be incurred in the form
of equipment leases (as measured by the value of the equipment covered by such
equipment leases amortized through the rental payments under such leases); provided
that such equipment leases relate to equipment constituting neither fixtures
nor personal property material to the operation, maintenance or management of
any of the Projects; and

 

94

 

(e)           Additional
Indebtedness of Borrower Parties and Wholly-Owned Subsidiaries.  Indebtedness of the Borrower, the Borrower’s
Member or their wholly-owned Subsidiaries for borrowed money incurred in
connection with the acquisition, financing or refinancing of one or more of the
Excluded Projects, but only if such Indebtedness satisfies the following
requirements:

 

(i)            the obligation to repay such
Indebtedness is non-recourse to the Borrower, the Borrower’s Member, the Bankruptcy
Parties and the Named Principals (except for “carve-outs” (or Guarantees
guarantying the debtor’s liability with respect to “carve-outs”) for fraud,
misrepresentation, misappropriation and other exceptions-from-non-recourse
customary in the real estate finance industry and not materially more favorable
to such lender than the exceptions-from-non-recourse set forth in the second
sentence of Sections 14.23(a));

 

(ii)           such Indebtedness is secured solely
by Liens on the Excluded Projects owned by the Borrower or one or more of its
wholly-owned Subsidiaries (if the Borrower or any such Subsidiary is the
borrower of the Indebtedness secured thereby), or by Liens on the Excluded
Projects owned by the Borrower’s Member or one or more of its wholly-owned
Subsidiaries (other than the Borrower or its wholly-owned Subsidiaries) (if the
Borrower’s Member or any such wholly-owned Subsidiary of the Borrower’s Member
is the borrower of the Indebtedness secured thereby), together with Liens on
any interests in accounts, rents, leases, management and other contracts,
personal property and other items (including, without limitation, Swap
Agreements) related thereto;

 

(iii)          the amount of such Indebtedness, when
incurred, does not exceed sixty percent (60%) of the fair market value of the Excluded
Projects, as determined by the lender’s appraisal (or, in the case of financing
for the acquisition of Excluded Projects, sixty percent (60%) of the
acquisition cost of the Excluded Projects so acquired) encumbered as collateral for such Indebtedness, and, so long as the original
Borrower’s Member remains a member of the Borrower, such Indebtedness
complies with the limitations on indebtedness contained in the limited partnership
agreement of the original Borrower’s Member, as amended, or has otherwise
received the requisite approval of the limited partners of the original Borrower’s
Member, if required; provided that, in the case of any Excluded Project
consisting of a Residential Property, the “sixty percent (60%)” limitation set
forth above in this clause (iii) shall mean “seventy-five percent (75%)”; and

 

(iv)          no Major Default or Event of Default
shall have occurred or be continuing immediately prior to the incurrence of
such Indebtedness or would occur after giving effect thereto.

 

(f)            Additional Indebtedness of
Residential Properties.  Indebtedness
for borrowed money incurred in connection with the financing or refinancing of
any of the Residential Properties by the Borrower or one or more of its
wholly-owned Subsidiaries (if the Borrower or any such Subsidiary is the borrower
of the Indebtedness secured thereby), or by the Borrower’s Member or one or
more of its wholly-owned Subsidiaries (other than the Borrower or its
wholly-owned Subsidiaries) (if the Borrower’s Member or any such wholly-owned

 

95

 

Subsidiary of the Borrower’s Member is the borrower of the Indebtedness
secured thereby), but only if such Indebtedness satisfies the following
requirements:

 

(i)            the obligation to repay such
Indebtedness is non-recourse to the Bankruptcy Parties and the Named Principals
(except for “carve-outs” (or Guarantees guarantying the debtor’s liability with
respect to “carve-outs”) for fraud, misrepresentation, misappropriation and
other exceptions-from-non-recourse customary in the real estate finance
industry);

 

(ii)           such Indebtedness is secured solely
by Liens on the Residential Properties so financed and, if applicable, Liens on
other Excluded Projects owned by the Borrower or one or more of its
wholly-owned Subsidiaries (if the Borrower or any such Subsidiary is the
borrower of the Indebtedness secured thereby), or by Liens on Excluded Projects
owned by the Borrower’s Member or one or more of its wholly-owned Subsidiaries
(other than the Borrower or its wholly-owned Subsidiaries) (if the Borrower’s
Member or any such wholly-owned Subsidiary of the Borrower’s Member is the
borrower of the Indebtedness secured thereby), together with Liens on any
interests in accounts, rents, leases, management and other contracts, personal
property and other items (including, without limitation, Swap Agreements) related
thereto;

 

(iii)          the amount of such Indebtedness, when
incurred, does not exceed seventy-five percent (75%) of the fair market value
of such Residential Properties, as determined by the lender’s appraisal, plus
sixty percent (60%) of the fair market value, as determined by the lender’s
appraisal, of any Excluded Projects encumbered as security therefore that are
non-residential and seventy-five percent (75%) of the fair market value, as
determined by the lender’s appraisal, of any Excluded Projects encumbered as
security therefore that are residential and, so long as the original Borrower’s Member remains a member of the
Borrower, such Indebtedness complies with the limitations on
indebtedness contained in the limited partnership agreement of the original Borrower’s
Member, as amended, or has otherwise received the requisite approval of the
limited partners of the original Borrower’s Member, if required; and

 

(iv)          no Major Default or Event of Default
shall have occurred or be continuing immediately prior to the incurrence of
such Indebtedness or would occur after giving effect thereto.

 

(g)           Additional
Indebtedness of Qualified Sub-Tier Entities.  Indebtedness of any Qualified Sub-Tier Entity
for borrowed money incurred in connection with the acquisition, financing or
refinancing by such Qualified Sub-Tier Entity of Qualified Real Estate Interests,
but only if the obligation to repay such Indebtedness is non-recourse to such
Qualified Sub-Tier Entity, Bankruptcy Parties, and the Named Principals (except
for “carve-outs” (or Guarantees guarantying the debtor’s liability with respect
to “carve-outs”) for fraud, misrepresentation, misappropriation and other
exceptions-from-nonrecourse customary in the real estate finance industry and
not materially more favorable to the holder of such Indebtedness than the
exceptions from non-recourse set forth in the second sentence of Sections 14.23(a))
and such Indebtedness otherwise is in compliance with the requirements set
forth in Sections 9.04(e)

 

96

 

above (unless such Qualified Real Estate Interests consist of
residential projects, in which case the applicable requirements shall be as set
forth in Section 9.04(f)).

 

(h)           Guarantees of Permitted Public REIT or
Operating Partnership Line of Credit.  Following the Permitted Public
REIT Transfer, Guarantees by the Borrower or its Subsidiaries of one or more
credit facilities provided to the Permitted Public REIT, its Operating
Partnership or another Permitted Public REIT Subsidiary (each, a “Guaranteed
Line of Credit”), which Guarantees, if secured, shall be secured only in
compliance with Section 9.02(k) and shall in no event be secured by any
of the Projects or other Collateral encumbered by the Security Documents;
provided that no Major Default or Event of Default shall exist or be
continuing immediately prior to the incurrence of such Guarantees or would
occur after giving effect thereto.

 

9.05         Investments.  Neither the Borrower nor the Borrower’s
Member nor any of their respective Subsidiaries will make or permit to remain
outstanding any Investments except (a) operating deposit accounts or money
market accounts with banks, (b) Permitted Investments, (c) Borrower’s
Member’s 100% membership in Borrower, (d) the Projects, (e) the
Excluded Projects (including, without limitation, any of the Residential Properties
(or Borrower’s Member’s Equity Interest in the owner of any of the Residential
Properties) which may hereafter be acquired by the Borrower or any Subsidiary
thereof), (f) Borrower’s or Borrower’s Member’s Equity Interests in any
Subsidiary of Borrower or Borrower’s Member existing on the Closing Date, (g) Borrower’s
Equity Interests in any Qualified Sub-Tier Entity or any Subsidiary permitted
or contemplated by this Agreement, (h) other investments which are
permitted by the respective Organizational Documents of the Borrower or the
Borrower’s Member as in effect on the Closing Date, (i) other investments
required or permitted by the Loan Documents, and (j) other investments
(including, without limitation, investments owned by Subsidiaries) which are consistent
with the investment practices prior to the date hereof of the Douglas Emmett
Realty Funds taken as a whole.

 

9.06         Restricted
Payments.  Neither the Borrower nor
the Borrower’s Member will make any Restricted Payment at any time during the
existence of a Major Default or Event of Default.

 

9.07         Change
of Organization Structure; Location of Principal Office.  The Borrower or any Qualified Successor
Entity that may hereafter acquire title to any of the Projects shall not change
its name or change the location of its chief executive office, state of
formation or organizational structure unless, in each instance, Borrower shall
have (a) given the Administrative Agent at least thirty (30) days’ prior
written notice thereof, and (b) made all filings or recordings, and taken
all other action, reasonably requested by the Administrative Agent that is
reasonably necessary under Applicable Law to protect and continue the priority
of the Liens created by the Security Documents.

 

9.08         Transactions
with Affiliates.  Except as expressly
permitted by this Agreement, prior to the Permitted Public REIT Transfer, neither
the Borrower nor the Borrower’s Member shall enter into, or be a party to, any
transaction with an Affiliate of the Borrower or Borrower’s Member, except in
full compliance with the Organizational Documents

 

97

 

of the Borrower’s Member as in effect on the Closing
Date.  This Section shall not prohibit
any transfer of the Excluded Projects to Affiliates of the Borrower or Borrower’s
Member.

 

9.09         Leases.

 

(a)           Negative
Covenants.  The Borrower shall not
(i) accept from any tenant, nor permit any tenant to pay, Rent for more than
one month in advance except for payment in the nature of security for performance
of a tenant’s obligations, escalations, percentage rents and estimated payments
(not prepaid more than one month prior to the date such estimated payments are
due) of operating expenses, taxes and other pass-throughs paid by tenants
pursuant to their Leases, (ii) Modify (other than ministerial changes),
terminate, or accept surrender of, any Major Lease now existing or hereafter
made, without the prior written consent of the Administrative Agent;
notwithstanding the foregoing, the Borrower shall retain the right to Modify,
terminate, or accept surrender of any Approved Lease that is not a Major Lease;
provided that (A) any such Modification, is (1) consistent
with fair market terms and (2) is entered into pursuant to arm’s-length
negotiations with a tenant not affiliated with the Borrower, and (B) any
such termination is (1) in the ordinary course of business,
(2) consistent with good business practice and (3) in the best interests
of the affected Project, (iii) except for the Deed of Trust, assign, transfer
(except for a Transfer thereof together with the transfer of the Projects to
the entity described in Section 9.03(a)(iii) in full compliance with the
provisions of such Section), pledge, subordinate or mortgage any Lease or any
Rent without the prior written consent of the Administrative Agent and the
Required Lenders, (iv) waive or release any nonperformance of any material
covenant of any Major Lease by any tenant without the Administrative Agent’s
prior written consent, (v) release any guarantor from its obligations under any
guaranty of any Major Lease or any letter of credit or other credit support for
a tenant’s performance under any Major Lease, except as expressly permitted
pursuant to the terms of such Lease or (vi) enter into any master lease for any
space at the Projects.  Notwithstanding
the foregoing or anything to the contrary contained herein, the Borrower shall
have the right, at its option, to terminate or accept the surrender of any
Lease (including any Major Lease), and to pursue any other rights and remedies
the Borrower may have against any tenant, following an uncured material default
by a tenant under its Lease.

 

(b)           Approvals.  The Borrower shall not enter into any Lease
for any space at any Project (unless such proposed Lease is held in escrow
pending the receipt of any approval required below) except as follows:

 

(i)            Non-Major Leases.  The Borrower may enter into Leases that do
not constitute Major Leases, and extensions, Modifications and renewals thereof
without the approval of the Administrative Agent or any Lender; provided
that such Lease, extension, renewal or Modification (A) in the case of a
Lease, is substantially in the form of the Borrower’s standard form office lease
or standard form retail lease, as applicable, previously approved by the
Administrative Agent, (B) is consistent with fair market terms and (C) is
entered into pursuant to arm-length negotiations with a tenant not affiliated
with the Borrower.  Any proposed Lease
that is not a Major Lease, or any extension, renewal or modification of any
such Lease, that does not comply with the preceding sentence shall require the
prior approval of the Administrative Agent.

 

98

 

(ii)           Major Leases.  The Borrower shall not enter into any Major
Lease or any extension, renewal or Modification of any Major Lease without the
prior written approval of the Administrative Agent.

 

(iii)          Information.  With respect to any Lease or Modification of
Lease that requires approval of the Administrative Agent, the Borrower shall
provide the Administrative Agent with the following information (collectively,
the “Lease Approval Package”): 
(A) all material information available to the Borrower concerning
the lessee and its business and financial condition; (B) a draft of the
lease (or lease modification); and (C) a summary (the “Lease
Information Summary”) substantially in the form attached hereto as Exhibit
N, of the material terms of such lease or lease modification.  Within ten (10) Business Days after the
Administrative Agent shall have received a Lease Approval Package, the
Administrative Agent shall either consent or refuse to consent to such Lease
Approval Package.  If the Administrative
Agent shall fail to respond within such ten (10) Business Day period, the
Administrative Agent shall be deemed to have approved such lease or lease
modification; provided that such lease or lease modification is
documented pursuant to a lease or lease modification which is consistent with
the draft and lease summary and Lease Approval Package previously delivered to
the Administrative Agent in all material respects.

 

(c)           Additional
Requirements as to all Leases. 
Notwithstanding anything to the contrary set forth in this Section
9.09, the following requirements shall apply with respect to all Leases and
all Modifications of Leases entered into after the date hereof:

 

(i)            The Borrower shall within ten (10)
days after the Administrative Agent’s request, provide the Administrative Agent
with a true, correct and complete copy thereof as signed by all such parties,
including any Modifications and Guarantees thereof.

 

(ii)           All Leases must be subordinate to the
Deed of Trust, and all existing and future advances thereunder, and to any
Modification thereof.

 

(iii)          Notwithstanding anything to the
contrary set forth above, the Administrative Agent may require that the
Borrower and the tenant under any Major Lease execute and deliver an SNDA
Agreement (with such commercially reasonable changes thereto as may be requested
by such tenant).  The Administrative
Agent (on behalf of the Lenders) shall, if requested by the Borrower, and as a
condition to a tenant’s obligation to subordinate its lease (if necessary or if
requested by the Borrower) or attorn, enter into an SNDA Agreement with such
tenant (with such commercially reasonable changes thereto as may be requested
by such tenant).  The Administrative
Agent’s execution thereof shall be conditioned upon the prior execution thereof
by both the tenant and the Borrower.

 

(iv)          All Leases shall be substantially in
the form of the Borrower’s standard form office lease or standard form retail
lease, as applicable, approved by the Administrative Agent and the Borrower on
the Closing Date, with such Modifications as the Administrative Agent shall
thereafter approve prior to the execution of such Leases.

 

99

9.10         Reserved.

 

9.11         No
Joint Assessment; Separate Lots. The Borrower shall not suffer, permit or
initiate the joint assessment of any Project with any other real property
constituting a separate tax lot.

 

9.12         Zoning.
The Borrower shall not, without the Administrative Agent’s prior written
consent, seek, make, suffer, consent to or acquiesce in any change or variance
in any zoning or land use laws or other conditions of any Project or any
portion thereof. Except as disclosed on the Appraisals delivered to the
Administrative Agent prior to the Closing Date or any other existing
non-conforming use disclosed on Schedule 9.12, the Borrower shall not
use or permit the use of any portion of any Project in any manner that could
result in such use becoming a non-conforming use under any zoning or land use
law or any other applicable law, or Modify any agreements relating to zoning or
land use matters or permit the joinder or merger of lots for zoning, land use
or other purposes, without the prior written consent of the Administrative
Agent. Without limiting the foregoing, in no event shall the Borrower take any
action that would reduce or impair either (a) the number of parking spaces
at any Project or (b) access to any Project from adjacent public roads.

 

Further, without the
Administrative Agent’s prior written consent, the Borrower shall not file or
subject any part of any Project to any declaration of condominium or
co-operative or convert any part of any Project to a condominium, co-operative
or other direct or indirect form of multiple ownership and governance.

 

9.13         ERISA.
The Borrower shall not shall not take any action, or omit to take any action,
which would (a) cause the Borrower’s assets to constitute “plan assets” for
purposes of ERISA or the Code or (b) cause the Transactions to be a nonexempt
prohibited transaction (as such term is defined in Section 4975 of the Code or
Section 406 of ERISA) that could subject the Administrative Agent and/or the
Lenders, on account of any Loan or execution of the Loan Documents hereunder,
to any tax or penalty on prohibited transactions imposed under Section 4975 of
the Code or Section 502(i) of ERISA.

 

9.14         Reserved.

 

9.15         Property
Management. The Borrower will not, without the prior written approval of
the Administrative Agent, (i) enter into any new Property Management Agreement;
(ii) terminate or make any material changes to the Property Management
Agreement, either orally or in writing, in any respect; or (iii) consent to,
approve or agree to any assignment or transfer by or with respect to the
Property Manager (including transfers of beneficial interests in the Property
Manager or assignments or transfers by the Property Manager of any or all of
its rights under any Property Management Agreement) except as otherwise
permitted by Section 9.03 or Section 14.31. Notwithstanding the
foregoing, the Borrower may, on prior written notice to the Administrative
Agent, subject to the limitations set forth herein with respect to the
Administrative Agent’s approval of any new manager for any Project, terminate a
Property Management Agreement in accordance with its terms as a result of a
material default by a Property Manager thereunder, and the limited partners in the
Borrower’s Member may remove any Property Manager or terminate any Property
Management Agreement provided a

 

100

 

replacement Property Manager satisfactory to the
Administrative Agent is immediately appointed pursuant to a Property Management
Agreement acceptable to the Administrative Agent which permits termination by
the Borrower on thirty (30) days’ notice so long as the new property manager
delivers a Property Manager’s Consent. Any change in ownership or control of
the Property Manager other than as specifically set forth herein shall be cause
for the Administrative Agent to re-approve such Property Manager and Property
Management Agreement. If at any time the Administrative Agent consents to the
appointment of a new Property Manager, such new Property Manager and the
Borrower shall, as a condition of the Administrative Agent’s consent, execute a Property Manager’s Consent in the form
then used by the Administrative Agent. Each Property Manager shall be required
to hold and maintain all necessary licenses, certifications and permits
required by Applicable Law. The Borrower may, on prior written notice to the
Administrative Agent, transfer a Property Management Agreement to, or terminate
and enter into a new Property Management Agreement on substantially the same
terms with, another entity owned and controlled by, or under common control
with, Douglas, Emmett and Company or the Borrower’s Manager; provided
that such new management entity is majority-owned and controlled, directly or
indirectly, by at least two (2) of the four (4) Named Principals, and such
entity delivers a Property Manager’s Consent with respect to such Property
Management Agreement.

 

9.16         Foreign
Assets Control Regulations. Neither the Borrower nor any Borrower Party
shall use the proceeds of the Loan in any manner that will violate the Trading
with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or the Anti-Terrorism Order or any enabling legislation
or executive order relating to any of the same. Without limiting the foregoing,
neither the Borrower nor any Borrower Party will permit itself nor any of its
Subsidiaries to (a) become a blocked person described in Section 1 of the
Anti-Terrorism Order or (b) knowingly engage in any dealings or transactions or
be otherwise associated with any person who is known by such Borrower Party or
who (after such inquiry as may be required by Applicable Law) should be known
by such Borrower Party to be a blocked person.

 

ARTICLE
X

INSURANCE AND CONDEMNATION PROCEEDS

 

10.01       Casualty
Events.

 

(a)           If
a Casualty Event shall occur as to any Project which results in damage in
excess of $500,000, the Borrower shall give prompt notice of such damage to the
Administrative Agent and shall, subject to the provisions of Section 10.03,
promptly commence and diligently prosecute in accordance with Section 8.07
and this Article X the completion of the repair and restoration of such
Project in accordance with Applicable Law to, as nearly as reasonably possible,
the condition such Project was in immediately prior to such Casualty Event,
with such alterations as may be reasonably approved by the Administrative Agent
(a “Restoration”) for any Restoration for which such approval is
otherwise required pursuant to Section 10.03(e) or alteration for which
such approval is otherwise required pursuant to Section 8.07. The
Borrower shall pay all costs of such Restoration whether or not such costs are
covered

 

101

 

by Insurance
Proceeds. The Administrative Agent may, but shall not be obligated to make
proof of loss if not made promptly by the Borrower. All Net Proceeds with
respect to a Significant Casualty Event, shall, at the Administrative Agent’s
option, be applied to the payment of the Obligations unless required to be made
available to the Borrower for Restoration hereunder, in which case such Net
Proceeds shall, subject to the provisions of this Agreement, be made available
to the Borrower to pay the costs incurred in connection with the Restoration. All
Net Proceeds with respect to a Casualty Event that is not a Significant
Casualty Event shall, subject to the provisions of this Agreement, be made
available to the Borrower to pay the costs incurred in connection with the
Restoration of the affected Project.

 

(b)           If
Restoration of any Project following a Casualty Event is reasonably expected to
cost not more than the lesser of (i) $5,000,000 and (ii) ten percent (10%) of
the Appraised Value of such Project (the “Insurance Threshold Amount”),
provided no Event of Default exists, the Borrower may, upon notice to the
Administrative Agent, settle and adjust any claim with respect to such Casualty
Event without the prior consent of the Administrative Agent and the Borrower is
hereby authorized to collect the Insurance Proceeds with respect to any such
claim; provided such adjustment is carried out in a manner consistent with good
business practice. In the event that Restoration of any Project is reasonably
expected to cost an amount equal to or in excess of the Insurance Threshold
Amount (a “Significant Casualty Event”), provided no Event of Default
exists, the Borrower may, with the prior written consent of the Administrative
Agent (which consent shall not be unreasonably withheld), settle and adjust any
claim of the Borrower and agree with the insurer(s) on the amount to be paid on
the loss, and the Insurance Proceeds shall be due and payable solely to the
Administrative Agent (on behalf of the Lenders); notwithstanding the foregoing,
the Administrative Agent shall retain the right to participate (not to the
exclusion of the Borrower) in any such insurance settlement at any time. If an
Event of Default exists, with respect to any Casualty Event, the Administrative
Agent, in its sole discretion, may settle and adjust any claim without the
consent of the Borrower and agree with the insurer(s) on the amount to be paid
on the loss, and the Insurance Proceeds shall be due and payable solely to the
Administrative Agent (on behalf of the Lenders) and deposited in a Controlled
Account and disbursed in accordance herewith. If the Borrower or any party
other than the Administrative Agent is a payee on any check representing
Insurance Proceeds with respect to a Significant Casualty Event, the Borrower
shall immediately endorse, and cause all such third parties to endorse, such
check payable to the order of the Administrative Agent. The Borrower hereby
irrevocably appoints the Administrative Agent as its attorney-in-fact, coupled
with an interest, to endorse such check payable to the order of the
Administrative Agent. The reasonable out-of-pocket expenses incurred by the
Administrative Agent in the settlement, adjustment and collection of the
Insurance Proceeds shall become part of the Obligations and shall be reimbursed
by the Borrower to the Administrative Agent upon demand to the extent not
already deducted by the Administrative Agent from such Insurance Proceeds in
determining Net Proceeds.

 

10.02       Condemnation
Awards.

 

(a)           The
Borrower shall promptly give the Administrative Agent notice of any actual
Taking or any Taking that has been threatened in writing and shall deliver to
the Administrative Agent copies of any and all papers served in connection with
such actual or threatened Taking. The Administrative Agent may participate in
any Taking proceedings (not to

 

102

 

the exclusion of
the Borrower), and the Borrower shall from time to time deliver to the
Administrative Agent all instruments requested by it to permit such
participation. The Borrower shall, at its expense, diligently prosecute any
such proceedings, and shall consult with the Administrative Agent, its
attorneys and experts, and cooperate with them in the carrying on or defense of
any such proceedings. The Administrative Agent may participate in any such
proceedings (not to the exclusion of the Borrower) and may be represented
therein by counsel of the Administrative Agent’s selection at the Borrower’s
cost and expense. Without the Administrative Agent’s prior consent, the
Borrower (i) shall not agree to any Condemnation Award and (ii) shall not take
any action or fail to take any action which would cause the Condemnation Award
to be determined; provided, however, that if no Event of Default
exists, and upon prior written notice to the Administrative Agent, the Borrower
shall have the right to compromise and collect or receive any Condemnation
Award that does not exceed the lesser of (i) $5,000,000 and (ii) ten percent
(10%) of the Appraised Value of such Project, provided that such condemnation
does not result in any material adverse effect upon the Project affected
thereby. In the event of such Taking, the Condemnation Award payable is hereby
assigned to and (except as provided in the preceding sentence) shall be paid to
the Administrative Agent (on behalf of the Lenders) and, except as expressly
set forth in Section 10.03 hereof, shall be applied to the repayment of
the Obligations. If any Project or any portion thereof is subject to a Taking,
the Borrower shall promptly commence and diligently prosecute the Restoration
of such Project in accordance with this Article X and otherwise comply
with the provisions of Section 10.03. If such Project is sold,
through foreclosure or otherwise, prior to the receipt by the Administrative
Agent of the Condemnation Award, the Administrative Agent and the Lenders shall
have the right, whether or not a deficiency judgment on the Notes shall have
been sought, recovered or denied, to receive the Condemnation Award, or a
portion thereof sufficient to pay the Obligations.

 

10.03       Restoration.

 

(a)           If
each of the Net Proceeds and the cost of completing the Restoration shall be
not more than the Insurance Threshold Amount, the Net Proceeds will be
disbursed by the Administrative Agent to the Borrower upon receipt; provided
that no Major Default or Event of Default then exists and, except where the
Restoration has already been completed by the Borrower and the Borrower seeks
reimbursement for costs of the Restoration, the Borrower delivers to the
Administrative Agent a written undertaking to expeditiously commence and to
satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Agreement; and the Borrower thereafter commences and
diligently proceeds with the Restoration thereof in compliance with Section
8.07 and this Article X.

 

(b)           If
either the Net Proceeds or the costs of completing the Restoration is equal to
or greater than the Insurance Threshold Amount, the Administrative Agent shall
make the Net Proceeds available for the Restoration in accordance with the
provisions of this Section 10.03. The term “Net Proceeds” for
purposes of this Article X shall mean: 
(i) the net amount of all Insurance Proceeds received by the
Administrative Agent pursuant to the Policies as a result of such damage or
destruction, after deduction of the

 

103

 

Administrative
Agent’s reasonable out-of-pocket costs and expenses (including, but not limited
to, reasonable counsel fees), if any, in collecting same, or (ii) the net
amount of the Condemnation Award, after deduction of the Administrative Agent’s
reasonable out-of-pocket costs and expenses (including, but not limited to,
reasonable counsel fees), if any, in collecting same, whichever the case may
be.

 

(c)           The
Net Proceeds shall be made available to the Borrower for Restoration; provided
that each of the following conditions is met:

 

(i)            no Major Default or Event of Default
exists;

 

(ii)           (A) in the event the Net Proceeds are
Insurance Proceeds, less than twenty-five percent (25%) of the total (gross)
floor area of the Improvements on such Project has been damaged, destroyed or
rendered unusable as a result of such Casualty Event or (B) in the event the
Net Proceeds are Condemnation Awards, less than ten percent (10%) of the land
constituting such Project is taken, and such land is located along the
perimeter or periphery of such Project, and no portion of the Improvements
(other than sidewalks, paved areas and decorative non-structural elements of
the Improvements) is located on such land;

 

(iii)          Reserved;

 

(iv)          the Debt Service Coverage Ratio
projected (with Operating Income and Operating Expenses also being projected
rather than being based on the previous calendar quarter) by the Administrative
Agent for a period of one year after the Administrative Agent’s estimated date
for the stabilization of the affected Project following completion of the
Restoration will be equal to or greater than 1:50:1.00 based on Leases with
respect to which the tenants do not have the right to or have waived any right
to terminate their respective Leases;

 

(v)           subject to the applicable provisions
of Section 10.03(l), the Borrower shall commence the Restoration as soon
as reasonably practicable (but in no event later than ninety (90) days after
such Casualty Event or Taking, as the case may be, occurs) and shall diligently
pursue the same to completion to the reasonable satisfaction of the
Administrative Agent;

 

(vi)          the Administrative Agent shall be
satisfied that any operating deficits, including all scheduled payments of
principal and interest under the Notes, which will be incurred with respect to
the subject Project as a result of the occurrence of any such Casualty Event or
Taking, as the case may be, will be covered out of (A) the Net Proceeds, (B)
the proceeds of Business Interruption Insurance, if applicable, or (C) other
funds of the Borrower;

 

(vii)         the Administrative Agent shall be
satisfied that the Restoration will be completed on or before the earliest to
occur of (A) six (6) months prior to the Stated Maturity Date, (B) such time as
may be required under Applicable Law in order to repair and restore the subject
Project to the condition it was in immediately prior to such Casualty Event or
to as nearly as possible the condition it was in immediately prior to such
Taking, as the case may be, and (C) six (6) months prior to the expiration of
the Business Interruption Insurance unless the Borrower delivers to the
Administrative Agent such additional security to the Administrative Agent in an
amount reasonably determined

 

104

 

by the Administrative Agent which additional security
shall consist of cash or a letter of credit reasonably satisfactory to the
Administrative Agent;

 

(viii)        the subject Project and the use thereof
after the Restoration will be in substantial compliance with and permitted
under all Applicable Laws;

 

(ix)           the Borrower shall deliver, or cause
to be delivered, to the Administrative Agent satisfactory evidence that after
Restoration, the subject Project would be at least as valuable as immediately
before the Casualty Event or Taking occurred;

 

(x)            such Casualty Event or Taking, as
the case may be, does not result in the permanent loss of any current access to
the subject Project;

 

(xi)           the Borrower shall deliver, or cause
to be delivered, to the Administrative Agent a signed detailed budget approved
in writing by the Borrower’s architect or engineer stating the entire cost of
completing the Restoration, which budget shall be reasonably acceptable to the
Administrative Agent and any architect or engineer the Administrative Agent may
engage (at the Borrower’s expense); and

 

(xii)          the Net Proceeds together with any
cash or cash equivalent deposited by the Borrower with the Administrative Agent
are sufficient in the Administrative Agent’s judgment to cover the cost of the
Restoration.

 

(d)           Except
for proceeds of a Casualty Event or Taking received and retained by the
Borrower in compliance with the provisions of this Article X, the Net
Proceeds shall be held by the Administrative Agent in a Controlled Account,
until disbursed in accordance with the provisions of this Section 10.03,
and shall constitute additional security for the Obligations. Upon receipt of
evidence reasonably satisfactory to the Administrative Agent that all the
conditions precedent to such advance, including those set forth in subsection
(c) above, have been satisfied, the Net Proceeds shall be disbursed by the
Administrative Agent to, or as directed by, the Borrower from time to time
during the course of the Restoration in substantially the same manner and
subject to similar conditions as if such advances were being made in connection
with a construction loan, such manner of disbursement and conditions to be
determined by the Administrative Agent, including the Administrative Agent’s
receipt of (i) advice from the Restoration Consultant (who shall be employed by
the Administrative Agent at the Borrower’s sole expense) that the work
completed or materials installed conform to said budget and plans, as approved
by the Administrative Agent, (ii) evidence that all materials installed and
work and labor performed to the date of the applicable advance (except to the
extent that they are to be paid for out of the requested disbursement) in
connection with the Restoration have been paid for in full, including the
receipt of waivers of lien, contractor’s certificates, surveys, receipted
bills, releases, title policy endorsements and such other evidences of cost,
payment and performance satisfactory to the Administrative Agent, and (iii)
evidence that there exist no notices of pendency, stop orders, mechanic’s or
materialman’s liens or notices of intention to file same, or any other Liens of
any nature whatsoever on the subject Project which have not either been fully
bonded to the reasonable satisfaction of the Administrative Agent and discharged
of record or in

 

105

 

the alternative fully insured to the reasonable satisfaction of the
Administrative Agent under the Title Policy.

 

(e)           All
plans and specifications required in connection with any Restoration resulting
in Net Proceeds in excess of the Insurance Threshold Amount shall be subject to
prior review and approval (such approval not to be unreasonably withheld) in
all respects by the Administrative Agent and by an independent consulting
engineer selected by the Administrative Agent (the “Restoration Consultant”).
All plans and specifications required in connection with any Restoration
resulting in Net Proceeds not in excess of the Insurance Threshold Amount shall
be provided to the Administrative Agent in the ordinary course of business. The
Administrative Agent shall have the use of the plans and specifications and all
permits, licenses and approvals required or obtained in connection with any
Restoration. With respect to any Restoration resulting in Net Proceeds in
excess of the Insurance Threshold Amount (whether resulting from a Casualty
Event or a Taking), the identity of the contractors, subcontractors and
materialmen engaged in the Restoration, as well as all contracts having a cost
in excess of $100,000, shall be subject to the prior review and approval (such
approval not to be unreasonably withheld) of the Administrative Agent and the
Restoration Consultant. All costs and expenses incurred by the Administrative
Agent in connection with making the Net Proceeds available for the Restoration
including reasonable counsel fees and disbursements and the Restoration
Consultant’s fees, shall be paid by the Borrower. The Borrower shall also
obtain, at its sole cost and expense, all necessary Government Approvals as and
when required in connection with such Restoration and provide copies thereof to
the Administrative Agent and the Restoration Consultant.

 

(f)            In
no event shall the Administrative Agent be obligated to make disbursements of the
Net Proceeds in excess of an amount equal to the costs actually incurred from
time to time for work in place as part of the Restoration, as certified by the
Restoration Consultant, minus the Restoration Retainage. The term “Restoration
Retainage” shall mean the greater of (i) an amount equal to ten percent
(10%) of the hard costs actually incurred for work in place as part of the
Restoration, as certified by the Restoration Consultant and (ii) the amount
actually held back by the Borrower from contractors, subcontractors and
materialmen engaged in the Restoration. The Restoration Retainage shall not be
released until the Restoration Consultant certifies to the Administrative Agent
that the Restoration has been substantially completed in accordance with the
provisions of this Section 10.03, subject to punch-list items and other
non-material items of work and that all approvals necessary for the
re-occupancy and use of the subject Project have been obtained from all
appropriate Governmental Authorities, and the Administrative Agent receives
evidence reasonably satisfactory to the Administrative Agent that the costs of
the Restoration have been paid in full or will be paid in full out of the
Restoration Retainage; provided, however, that the Administrative
Agent will release the portion of the Restoration Retainage being held with
respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Restoration Consultant certifies to
the Administrative Agent that such contractor, subcontractor or materialman has
satisfactorily completed all work and has supplied all materials in accordance
with its contract, and the Administrative Agent receives lien waivers and
evidence of payment in full of all sums due to such contractor, subcontractor
or materialman as may be reasonably requested by the Administrative Agent or by
the Title Company issuing the Title Policy, and the Administrative Agent
receives an endorsement to the Title Policy insuring the continued priority of the
lien of the Deed of Trust and evidence of payment of any premium payable for
such endorsement. If

 

106

 

required by the
Administrative Agent, the release of any such portion of the Restoration
Retainage shall be approved by the surety company, if any, which has issued a
payment or performance bond with respect to such contractor, subcontractor or
materialman.

 

(g)           The
Administrative Agent shall not be obligated to make disbursements of the Net
Proceeds more frequently than once per month.

 

(h)           If
at any time the Net Proceeds or the undisbursed balance thereof shall not, in
the reasonable opinion of the Administrative Agent in consultation with the
Restoration Consultant, be sufficient to pay in full the balance of the costs
which are estimated by the Restoration Consultant to be incurred in connection
with the completion of the Restoration, the Borrower shall deposit the
deficiency (the “Net Proceeds Deficiency”) with the Administrative Agent
within ten (10) Business Days of the Administrative Agent’s request and before
any further disbursement of the Net Proceeds shall be made. The Net Proceeds
Deficiency shall be held in a Controlled Account and shall be disbursed for
costs actually incurred in connection with the Restoration on the same
conditions applicable to the disbursement of the Net Proceeds, and, until so
disbursed, shall constitute additional security for the Obligations.

 

(i)            After
the Restoration Consultant certifies to the Administrative Agent that a
Restoration has been substantially completed in accordance with the provisions
of this Section 10.03, and the receipt by the Administrative Agent of
evidence satisfactory to the Administrative Agent that all costs incurred in
connection with the Restoration have been paid in full, the excess, if any, of
the Net Proceeds and the remaining balance, if any, of the Net Proceeds
Deficiency deposited in a Controlled Account shall be remitted to the Borrower,
provided that no Event of Default shall exist.

 

(j)            All
Net Proceeds not required (i) to be made available for the Restoration or (ii)
to be returned to the Borrower as excess Net Proceeds pursuant to subsection
(i) above may (A) be retained and applied by the Administrative Agent
toward the payment of the Obligations, whether or not then due and payable, in
such order, priority and proportions as the Administrative Agent in its sole
discretion shall deem proper (but without premium or penalty) or (B) at
the sole discretion of the Administrative Agent, be paid, either in whole or in
part, to the Borrower for such purposes and upon such conditions as the
Administrative Agent shall designate. In the event the Net Proceeds are applied
to the Obligations and all of the Obligations have been performed or are
discharged by the application of less than all of the Net Proceeds, then any
remaining Net Proceeds will be paid over to the Borrower or any other party
legally entitled thereto.

 

(k)           Notwithstanding
any Casualty or Taking, the Borrower shall continue to pay the Obligations in
the manner provided in the Notes, this Agreement and the other Loan Documents
and the Outstanding Principal Amount shall not be reduced unless and until (i)
any Insurance Proceeds or Condemnation Award shall have been actually received
by the Administrative Agent, (ii) the Administrative Agent shall have deducted
its reasonable expenses of collecting such proceeds and (iii) the
Administrative Agent shall have applied any portion of the balance thereof to
the repayment of the Outstanding Principal Amount in accordance with Section
10.03(j). The Lenders shall not be limited to the interest paid on any
Condemnation

 

107

 

Award but shall
continue to be entitled to receive interest at the rate or rates provided in
the Notes and this Agreement if such interest is then due hereunder.

 

(l)            Notwithstanding
anything to the contrary contained in this Article X or Section 8.07,
if pursuant to the provisions of this Article X the Net Proceeds are
required to be made available to the Borrower for Restoration of the damage
caused by a Casualty Event or any Taking, the Borrower’s obligation to commence
or thereafter to proceed with such Restoration shall be conditioned upon the
Borrower’s receipt of the Net Proceeds attributable to such Casualty Event or
Taking, respectively; provided, however, that nothing contained
in this sentence (or any other provision of this Article X) shall (i)
defer, limit or excuse in any respect the Borrower’s obligation to commence or
proceed with the Restoration of any Project: (A) if the Borrower does not
diligently pursue the collection of such Net Proceeds; (B) where the relevant
Casualty Event is not a Significant Casualty Event or the Taking involves a
claim of not more than the lesser of $5,000,000 or ten percent (10%) of the
Appraised Value of the affected Project; (C) in the case of a Casualty Event,
to the extent that the costs of such Restoration are included within any
applicable deductible or self-insurance retention, or exceed the applicable
limits of insurance, under any insurance policy maintained hereunder; (D) in
the case of a Casualty Event, if the Borrower is, at the time of such Casualty
Event, in default in its obligation to maintain the insurance policies required
under Section 8.05 in any respect which would reduce the amount of Net
Proceeds available to the Borrower on account of such Casualty Event below the
amount which would have been available had the Borrower not been in default of
such obligation, then to the extent of such reduction; or (E) to the extent
that the Net Proceeds available to the Borrower on account of such Casualty
Event or Taking are reasonably anticipated to be reduced as a result of any
defense to coverage or other defense available to the insurer or condemning
authority, whether as a result of any act or omission of the Borrower or
otherwise (provided that the undisputed portion of such Net Proceeds shall have
been paid by the insurer or condemning authority and made available to the
Borrower); (ii) defer, limit or excuse in any respect the Borrower’s obligation
to undertake such prudent measures (subject in all cases to any applicable
provisions in Section 8.07) as may be necessary to keep any Project,
following any Casualty Event or Taking, safe, secure and protected and as may
be appropriate to avoid further deterioration or damage; or (iii) defer, limit
or excuse any obligation of the Borrower under this Agreement or the other Loan
Documents (other than the obligation to commence and diligently prosecute the
Restoration of such damage).

 

ARTICLE
XI

CASH TRAP ACCOUNT

 

11.01       Low
DSCR Trigger Event. Upon the occurrence of a Low DSCR Trigger Event and on
each day that the required monthly report is due under Section 8.01(e)
and continuing for each month thereafter during any Low DSCR Trigger Period,
the Borrower shall cause all Excess Cash from the Projects to be paid each
month directly to the Administrative Agent for deposit into a Cash Trap Account
established for the Borrower as additional collateral for its Obligations.

 

108

 

(a)           Establishment and Maintenance of
the Cash Trap Account.

 

(i)            The Cash Trap Account (A) shall be a
separate and identifiable account from all other funds held by the Depository
Bank and (B) shall contain only funds required to be deposited pursuant to this
Section 11.01. Any interest which may accrue on the amounts on deposit
in a Cash Trap Account shall be added to and shall become part of the balance
of the Cash Trap Account. The Borrower shall enter into with the Administrative
Agent and the applicable Depository Bank a Cash Trap Account Security Agreement
(with such changes thereto as may be required by the Depository Bank and
satisfactory to the Administrative Agent) which shall govern the Cash Trap
Account established for it and the rights, duties and obligations of each party
to such Cash Trap Account Security Agreement.

 

(ii)           The Cash Trap Account Security
Agreement shall provide that (A) the Cash Trap Account shall be established in
the name of the Administrative Agent, (B) the Cash Trap Account shall be
subject to the sole dominion, control and discretion of the Administrative
Agent, and (C) neither the Borrower nor any other Person, including, without
limitation, any Person claiming on behalf of or through the Borrower, shall
have any right or authority, whether express or implied, to make use of or
withdraw, or cause the use or withdrawal of, any proceeds from the Cash Trap
Account or any of the other proceeds deposited in the Cash Trap Account, except
as expressly provided in this Agreement or in the Cash Trap Account Security
Agreement.

 

(b)           Deposits
to, Disbursements and Release from the Cash Trap Account. All deposits to
and disbursements of all or any portion of the deposits to the Cash Trap
Account shall be in accordance with this Agreement and the Cash Trap Account Security
Agreement. The Borrower hereby agrees to pay any and all fees charged by
Depository Bank in connection with the maintenance of the Cash Trap Account and
the performance of its duties. During any Low DSCR Trigger Period, provided
that no Event of Default exists at the time of any request by the Borrower for
a disbursement from the Cash Trap Account, the Administrative Agent will direct
the Depository Bank to transfer amounts credited to the Cash Trap Account to
the Borrower’s Account to pay or reimburse the Borrower for (i) Real Estate
Taxes or Insurance Premiums, (ii) capital expenditures incurred pursuant to an
Approved Annual Budget (such capital expenditures, “Approved Capital
Expenditures”), (iii) actual costs of tenant improvements and/or leasing
commissions pursuant to an Approved Lease and set forth in an Approved Annual
Budget (such expenditures, “Approved Leasing Expenditures”), or (iv)
capital expenditures which have been approved by the Administrative Agent in
accordance with subsection (c)(iv) below or leasing expenditures
incurred pursuant to an Approved Lease, in either case which are not set forth
in an Approved Annual Budget (such expenditures, “Extraordinary Capital or
Leasing Expenditures”), in accordance with the terms and conditions set
forth below in subsection (c). Provided no Default or Event of Default
then exists, any funds held in the Cash Trap Account shall be released to the
Borrower for the account of the Borrower upon the occurrence of a Low DSCR
Release Event and, in such event the Borrower shall no longer be required to
cause the deposit of the subsequent Excess Cash into the Cash Trap Account unless
a Low DSCR Trigger Event occurs with respect to any future calendar quarter.

 

109

 

(c)           Conditions
to Disbursements from Cash Trap Account. Each disbursement from a Cash Trap
Account is subject to the satisfaction of each of the following conditions:

 

(i)            Disbursements shall be utilized
solely for Real Estate Taxes, Insurance Premiums, Approved Capital
Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing
Expenditures and shall be in an amount no greater than the actual cost of such
Real Estate Taxes or Insurance Premiums, Approved Capital Expenditures,
Approved Leasing Expenditures or Extraordinary Capital or Leasing Expenditures
to the extent not theretofore paid from Operating Income;

 

(ii)           Disbursements for Approved Capital
Expenditures, Approved Leasing Expenditures and Extraordinary Capital or
Leasing Expenditures shall not be made more frequently than monthly, and each
disbursement (if any) shall be in an amount not less than $25,000.00 (unless
the disbursement represents the final disbursement for a particular Approved Capital
Expenditure or Approved Leasing Expenditure);

 

(iii)          Not less than ten (10) days prior to
the requested funding date for a disbursement, the Administrative Agent shall
have received a written request for such disbursement executed by an Authorized
Officer, which request shall specify the date on which the Borrower requests
the disbursement to be made and the Person(s) or account(s) to whom such disbursement
should be made (such duly completed request is referred to herein as a “Disbursement
Request”);

 

(iv)          Not less than ten (10) days prior to
each disbursement for Approved Capital Expenditures, Approved Leasing
Expenditures or Extraordinary Capital or Leasing Expenditures, the
Administrative Agent shall have received, reviewed and approved (A) a
certificate executed by the Borrower, or, if such Person was engaged for such
work, the Borrower’s architect or engineer, as applicable, certifying that, to
the knowledge of such Person, the work for which such disbursement is being
requested has been completed to the percentage of completion specified in the
Disbursement Request substantially in accordance with the applicable plans and
specifications therefor and in a good and workmanlike manner; (B) sworn
statements and conditional lien waivers from all contractors, subcontractors
and materialmen with respect to such work; (C) sworn statements and final lien
waivers from all contractors and subcontractors and materialmen with respect to
work theretofore completed and for which a disbursement was made to the
Borrower in a prior month; (D) copies of paid invoices for prior disbursements
and open invoices for requested disbursements, and an all bills paid affidavit from
the Borrower; (E) with respect to the final payment for a work of improvement,
certificates of occupancy (or similar documentation), as required by Applicable
Law, relating to the work for which such disbursement is being made; and (F)
such other supporting documentation as may be reasonably required by the
Administrative Agent, all in form and substance reasonably satisfactory to the
Administrative Agent. Notwithstanding

 

110

 

the foregoing, in lieu of
complying with the requirements in clauses (A) through (F) above with respect
to any requested disbursement for Approved Capital Expenditures, Approved
Leasing Expenditures or Extraordinary Capital or Leasing Expenditures which
consists of leasing commissions or sums due pursuant to any contract or
subcontract providing for an aggregate contract sum of not more than $50,000,
the Borrower may, not less than ten (10) days prior to the requested funding
date for any disbursement on account thereof, deliver to the Administrative
Agent, together with (or as part of) its Disbursement Request, a certificate
executed by an Authorized Officer on behalf of the Borrower certifying that
such sums so requested are due and payable and are Approved Capital
Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing
Expenditures which have been incurred in compliance with this Agreement and
containing copies of the relevant invoices, contracts or other back-up
documentation to confirm that such sums are then owing; and

 

(v)           Based on the most recent
reconciliation report delivered by the Borrower pursuant to Section
8.01(e)(iii) prior to the delivery of such Disbursement Request (or, if the
most recent such report has not been delivered pursuant to such section or
article, based on such other information as the Administrative Agent shall
determine in its reasonable discretion), the results from the operations of the
Projects for the month and year-to-date covered by such reconciliation report
shall be equal to or better than the results contemplated by the Approved
Annual Budget for such month and year-to-date, except for Extraordinary Capital
or Leasing Expenditures or other expenses or items approved by the
Administrative Agent.

 

ARTICLE
XII

EVENTS OF DEFAULT

 

12.01       Events
of Default. Any one or more of the following events shall constitute an “Event
of Default”:

 

(a)           The
Borrower shall: (i) fail to pay any principal of any Loan when due (whether at
stated maturity, mandatory prepayment or otherwise); or (ii) fail to pay
any interest on any Loan, any fee or any other amount (other than an amount
referred to in clause (i) above) payable by it under this Agreement or under
any other Loan Document, when and as the same shall become due and payable,
and, in the case of this clause (ii), such default shall continue for a
period of five (5) days; or

 

(b)           The
Borrower (or, if applicable, any Borrower Party) shall default in the
performance of any of its obligations under any of Sections 8.05, 8.06,
8.12, 8.17, 8.19 or Article IX (other than Section 9.06);
or any Change in Control shall occur; or the Borrower shall default in the
performance of any of its obligations under Section 8.16 which are
required to be performed during any Low DSCR Trigger Period; or the Borrower
shall make any Restricted Payment while any Event of Default exists; or the
Borrower shall make a Restricted Payment while any other Major Default exists
unless such Major Default is cured within the applicable cure or grace period
therefor; or

 

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(c)           Any
representation, warranty or certification made or deemed made herein or in any
other Loan Document (or in any Modification hereto or thereto) by the Borrower
or any request, notice or certificate furnished by or on behalf of any Borrower
Party pursuant to the provisions hereof or thereof, shall prove to have been
false or misleading as of the time made or furnished in any material respect;
or

 

(d)           Any
of the Bankruptcy Parties shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or

 

(e)           An
involuntary proceeding shall be commenced or an involuntary petition shall be
filed, seeking (i) liquidation, reorganization or other relief in respect of
any of the Bankruptcy Parties or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar
official for any of the Bankruptcy Parties or for a substantial part of its
assets, and, in any such case, such proceeding or petition shall continue
undismissed for a period of sixty (60) days or an order or decree approving or
ordering any of the foregoing shall be entered; or

 

(f)            Any
Bankruptcy Party shall (i) voluntarily commence as to itself any proceeding or
file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (e) of this Section 12.01, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for it or for a substantial part of any of its
assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any
of the foregoing; or

 

(g)           The
Borrower shall default in the payment when due of any principal of or interest
on any of its Indebtedness (other than the Obligations) in excess of Five
Million Dollars ($5,000,000) and such default shall not be cured within any
applicable notice or cure period provided with respect to such Indebtedness; or
any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Indebtedness shall occur if the effect of
such event is to cause, or (with the giving of any notice or the lapse of time
or both) to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due, or to be prepaid in full (whether by redemption,
purchase, offer to purchase or otherwise), prior to its stated maturity; or

 

(h)           Any
of the Bankruptcy Parties shall be terminated, dissolved or liquidated (as a
matter of law or otherwise) or proceedings shall be commenced by any Person
(including any Bankruptcy Party) seeking the termination, dissolution or
liquidation of any Bankruptcy Party, except, in each case, in connection with a
merger, termination, dissolution or liquidation permitted by Section 9.03(a)
or Section 14.31; or

 

(i)            One
or more (i) judgments for the payment of money (exclusive of judgment amounts
fully covered by insurance (other than permitted deductibles) where the

 

112

 

insurer has
admitted liability in respect of the full amount of such judgment) aggregating
in excess of One Million Dollars ($1,000,000) shall be rendered against one or
more of the Borrower Parties or (ii) non-monetary judgments, orders or decrees
shall be entered against any of the Borrower Parties which have or would
reasonably be expected to have a Material Adverse Effect, and, in either case,
the same shall remain undischarged for a period of thirty (30) consecutive days
during which execution shall not be effectively stayed (or bonded over through
the posting of a bond in accordance with a statutory bonding procedure the
effect of which is to limit the judgment creditor’s claim to recovery under the
bond), or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of such Borrower Party to enforce any such judgment; or

 

(j)            An
ERISA Event shall have occurred that, in the opinion of the Administrative
Agent, when taken together with all other such ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect; or

 

(k)           The
Liens created by the Security Documents shall at any time not constitute a
valid and perfected first priority Lien (subject to the Permitted Title
Exceptions) on the collateral intended to be covered thereby in favor of the
Administrative Agent, free and clear of all other Liens (other than the
Permitted Title Exceptions and Liens which are described in clauses (b),
(c), (e) and (g) of the definition of “Permitted Liens” or which
are described in clauses (a), (b), (c), (e) and (h)
of Section 9.02 of this Agreement, and which are in the case of Liens
described in clause (e) of the definition of “Permitted Liens” and Section 9.02
(e) of this Agreement subordinate to the Lien of the Deed of Trust
encumbering the affected Project), or, except for expiration in accordance with
its terms or releases or terminations contemplated by this Agreement, any of
the Security Documents shall for whatever reason be terminated or cease to be
in full force and effect, or the enforceability thereof shall be contested by
any Borrower Party or any of their Affiliates (controlled by the Permitted
Public REIT, in the case of contest occurring after a Permitted Public REIT
Transfer); or

 

(l)            The
Guarantor shall (i) default under any of the Guarantor Documents beyond
any applicable notice and grace period; or (ii) revoke or attempt to
revoke, contest or commence any action against its obligations under any of the
Guarantor Documents; or

 

(m)          At
any time while a Guarantee furnished by the Borrower or any Subsidiary of the
Borrower is in effect with respect to any Guaranteed Line of Credit, any event
of default shall occur under any of the applicable documents evidencing or
securing such Guaranteed Line of Credit; or any event specified in any of the
applicable documents evidencing or securing such Guaranteed Line of Credit
shall occur and the effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit the lenders providing such
Guaranteed Line of Credit to cause, all amounts outstanding under Guaranteed
Line of Credit to become immediately due and payable prior to the stated
maturity date; or

 

(n)           Reserved

 

(o)           The
Borrower uses, or permits the use of, funds from the Security Accounts for any purpose other than the purpose for which
such funds were disbursed from the Security Accounts; or

 

113

 

(p)           Except
as permitted by Section 8.19(i), the failure of Borrower to
maintain, or cause to be maintained, Hedge Agreements with respect to the
Aggregate Notional Amount in accordance with Section 8.19; or the
occurrence of any default by or termination event as to the Borrower or Other
Swap Pledgor under any Hedge Agreement maintained with respect to the Aggregate
Notional Amount which is not cured within the applicable notice and grace or cure
periods provided therein; or

 

(q)           Reserved;

 

(r)            Any
of the Borrower Parties shall default under any of the other terms, covenants
or conditions of this Agreement or any other Loan Document not set forth above
in this Section 12.01 and such default shall continue for thirty (30)
days after notice from the Administrative Agent to the Borrower; provided,
however, that if (i) such default is susceptible of cure but the
Administrative Agent reasonably determines that such non-monetary default
cannot be reasonably cured within such thirty (30) day period, (ii) the
Administrative Agent determines, in its sole discretion, that such default does
not create a material risk of sale or forfeiture of, or substantial impairment
in value to, any material portion of the Projects, and (iii) the Borrower
has provided the Administrative Agent with security reasonably satisfactory to
the Administrative Agent against any interruption of payment or impairment of
collateral that is reasonably likely to result from such continuing failure,
then, so long as the relevant Borrower Party shall have commenced to cure such
default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for such time as is reasonably necessary for the relevant Borrower
Party in the exercise of due diligence to cure such default, but in no event
shall such period exceed ninety (90) days after the original notice from the
Administrative Agent or extend beyond the Maturity Date; or

 

(s)           At
any time following a Transfer to a Qualified Successor Entity consisting of a
Permitted Private REIT or its Permitted Private REIT Subsidiary pursuant to Section
9.03(a)(iii), the senior officers of and members of the Board of Directors
of the Permitted Private REIT shall include less than two (2) of the Named
Principals; or at the time of a Permitted Public REIT Transfer, the senior
officers of and members of the Board of Directors of the Permitted Public REIT
shall include less than two (2) of the Named Principals.

 

12.02       Remedies.
Upon the occurrence of an Event of Default and at any time thereafter during
the existence of such event, the Administrative Agent may (subject to, and in
accordance with, the provisions of Section 13.03) and, upon request of
the Required Lenders shall, by written notice to the Borrower, pursue any one
or more of the following remedies, concurrently or successively, it being the
intent hereof that none of such remedies shall be to the exclusion of any
other:

 

(a)           In
the case of an Event of Default other than one referred to in clause (e)
or (f) of Section 12.01 with respect to any Borrower Party,
terminate the Commitments and/or declare the Outstanding Principal Amount of
the Loans, and the accrued interest on the Loans and all other amounts payable
by the Borrower hereunder (including any amounts payable under Section 5.05)
and under the Notes and the Obligations of the Borrower under the other Loan
Documents to be forthwith due and payable and, if the Administrative Agent or
an Affiliate is a

 

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counterparty to a
Hedge Agreement, then the Administrative Agent may designate a default or
similar event under such Hedge Agreement whereupon such amounts shall be
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower. In the case of the occurrence of an Event of Default referred to in clause (e)
or (f) of Section 12.01 with respect to a Borrower Party,
the Commitments shall automatically be terminated and the Outstanding Principal
Amount of the Loans, and the accrued interest on, the Loans and all other
amounts payable by the Borrower hereunder (including any amounts payable under Section 5.05)
and under the Notes and the Obligations of the Borrower under the other Loan
Documents shall automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower;

 

(b)           If
the Borrower shall fail, refuse or neglect to make any payment or perform any
Obligations under the Loan Documents, then, while any Event of Default exists
and without notice to or demand upon the Borrower and without waiving or
releasing any other right, remedy or recourse the Administrative Agent may have
because of such Event of Default, the Administrative Agent may (but shall not
be obligated to) make such payment or perform such Obligation for the account
of and at the expense of the Borrower, and shall have the right to enter upon
the Projects for such purpose and to take all such action thereon and with
respect to the Projects as it may deem necessary or appropriate. If the
Administrative Agent shall elect to pay any sum due with respect to the
Projects, the Administrative Agent may do so in reliance on any bill, statement
or assessment procured from the appropriate Governmental Authority or other
issuer thereof without inquiring into the accuracy or validity thereof. Similarly,
in making any payments to protect the security intended to be created by the
Loan Documents, the Administrative Agent shall not be bound to inquire into the
validity of any apparent or threatened adverse title, Lien, encumbrance, claim
or charge before making an advance for the purpose of preventing or removing
the same. Additionally, if any Hazardous Substance affects or threatens to
affect any of the Projects, the Administrative Agent may (but shall not be
obligated to) give such notices and take such actions as it deems necessary or
advisable in order to abate the discharge of or remove any Hazardous Substance;
and/or

 

(c)           Exercise
or pursue any other remedy or cause of action permitted under this Agreement,
any or all of the Security Documents or any other Loan Document, or conferred
upon the Administrative Agent and the Lenders by operation of law.

 

ARTICLE
XIII

THE ADMINISTRATIVE AGENT

 

13.01       Appointment,
Powers and Immunities. Each Lender hereby irrevocably appoints and
authorizes the Administrative Agent to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically delegated to the
Administrative Agent by the terms of this Agreement and of the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
The Administrative Agent (which term as used in this sentence and in Section 13.05
and the first sentence of Section 13.06 shall include reference to
its Affiliates and its own and its Affiliates’ officers, directors, employees
and agents):

 

115

 

(a)           shall
have no duties or responsibilities except those expressly set forth in this
Agreement and in the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a fiduciary or trustee for any Lender
except to the extent that the Administrative Agent acts as an agent with
respect to the receipt or payment of funds, nor shall the Administrative Agent
have any fiduciary duty to the Borrower nor shall any Lender have any fiduciary
duty to the Borrower or any other Lender;

 

(b)           shall
not be responsible to the Lenders for any recitals, statements, representations
or warranties contained in this Agreement or in any other Loan Document, or in
any certificate or other document referred to or provided for in, or received
by any of them under, this Agreement or any other Loan Document, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, any Note or any other Loan Document or any other document
referred to or provided for herein or therein or for any failure by the
Borrower or any other Person to perform any of its obligations hereunder or
thereunder;

 

(c)           shall
not be responsible for any action taken or omitted to be taken by it hereunder
or under any other Loan Document or under any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence, bad faith or willful
misconduct;

 

(d)           shall
not, except to the extent expressly instructed by the Required Lenders with
respect to collateral security under the Security Documents, be required to
initiate or conduct any litigation or collection proceedings hereunder or under
any other Loan Document; and

 

(e)           shall
not be required to take any action which is contrary to this Agreement or any
other Loan Document or Applicable Law.

 

The
relationship between the Administrative Agent and each Lender is a contractual
relationship only, and nothing herein shall be deemed to impose on the
Administrative Agent any obligations other than those for which express
provision is made herein or in the other Loan Documents. The Administrative
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by it in good faith. The Administrative Agent may deem and treat the payee of a
Note as the holder thereof for all purposes hereof unless and until a notice of
the assignment or transfer thereof shall have been filed with the
Administrative Agent, any such assignment or transfer to be subject to the
provisions of Section 14.07. Except to the extent expressly provided in Sections
13.08 and 13.10, the provisions of this Article XIII are
solely for the benefit of the Administrative Agent and the Lenders, and the
Borrower shall not have any rights as a third-party beneficiary of any of the
provisions hereof and the Lenders may Modify or waive such provisions of this Article
XIII in their sole and absolute discretion.

 

13.02       Reliance
by Administrative Agent. The Administrative Agent shall be entitled to rely
upon any certification, notice, document or other communication (including any
thereof by telephone, telecopy, telegram or cable) reasonably believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by

 

116

 

the Administrative Agent in good faith. As to any
matters not expressly provided for by this Agreement or any other Loan
Document, the Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or thereunder in accordance
with instructions given by the Required Lenders, and such instructions of the
Required Lenders and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders.

 

13.03       Defaults.

 

(a)           The
Administrative Agent shall give the Lenders notice of any material Default of
which the Administrative Agent has knowledge or notice. Except with respect to
(i) the nonpayment of principal, interest or any fees that are due and payable
under any of the Loan Documents, (ii) Defaults with respect to which the
Administrative Agent has actually sent written notice of to the Borrower and
(iii) material Defaults with respect to which the Administrative Agent is given
written notice (or copied on such written notice) from a third party specifying
such Default, the Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default unless the Administrative Agent has
received notice from a Lender or the Borrower specifying such Default and
stating that such notice is a “Notice of Default”. If the Administrative Agent
has such knowledge or receives such a notice from the Borrower or a Lender in
accordance with the immediately preceding sentence with respect to the occurrence
of a material Default, the Administrative Agent shall give prompt notice
thereof to the Lenders. Within ten (10) days of delivery of such notice of
Default from the Administrative Agent to the Lenders (or such shorter period of
time as the Administrative Agent determines is necessary), the Administrative
Agent and the Lenders shall consult with each other to determine a proposed
course of action. The Lenders agree that the Administrative Agent shall
(subject to Section 13.07) take such action with respect to such
Default as shall be directed by the Required Lenders, provided that, (A)
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may while a Default exists (but shall not be obligated
to) take such action, or refrain from taking such action, including decisions
(1) to make protective advances that the Administrative Agent determines are
necessary to protect or maintain the Projects and (2) to foreclose on any of
the Projects or exercise any other remedy, with respect to such Default as it
shall deem advisable in the interest of the Lenders and (B) no actions approved
by the Required Lenders shall violate the Loan Documents or Applicable Law. Each
of the Lenders acknowledges and agrees that no individual Lender may separately
enforce or exercise any of the provisions of any of the Loan Documents
(including the Notes) other than through the Administrative Agent. The
Administrative Agent shall advise the Lenders of all material actions which the
Administrative Agent takes in accordance with the provisions of this Section
13.03(a) and shall continue to consult with the Lenders with respect to all
of such actions. Notwithstanding the foregoing, if the Required Lenders shall
at any time direct that a different or additional remedial action be taken from
that already undertaken by the Administrative Agent, including the commencement
of foreclosure proceedings, such different or additional remedial action shall
be taken in lieu of or in addition to, the prosecution of such action taken by
the Administrative Agent; provided that all actions already taken by the
Administrative Agent pursuant to this Section 13.03(a) shall be valid
and binding on each Lender. All money (other than money subject to the
provisions of Section 13.03(f)) received from any enforcement actions,
including the proceeds of a foreclosure sale of the Projects, shall be applied,
first, to the payment or reimbursement of the Administrative Agent for expenses
and advances incurred in accordance with the provisions of Sections 13.03(a)
and (d) and 13.05 and to the payment of any fees owing

 

117

 

to the
Administrative Agent pursuant to the Loan Documents, second, to the
payment or reimbursement of the Lenders for expenses incurred in accordance
with the provisions of Sections 13.03(b), (c) and (d) and 13.05;
third, to the payment or reimbursement of the Lenders for any advances
made pursuant to Section 13.03(b); fourth, pari passu to the Lenders in accordance
with their respective Proportionate Shares until the Obligations have been
fully paid and discharged in full; and fifth to the person(s) legally
entitled thereto.

 

(b)           All
losses with respect to interest (including interest at the Post-Default Rate)
and other sums payable pursuant to the Notes or incurred in connection with the
Loans, the enforcement thereof or the realization of the security therefor,
shall be borne by the Lenders in accordance with their respective Proportionate
Shares of the Loan, and the Lenders shall promptly, upon request, remit to the
Administrative Agent their respective Proportionate Shares of (i) any expenses
incurred by the Administrative Agent in connection with any Default to the
extent any expenses have not been paid by the Borrower, (ii) any advances made
to pay taxes or insurance or otherwise to preserve the Lien of the Security
Documents or to preserve and protect the Projects, whether or not the amount
necessary to be advanced for such purposes exceeds the amount of the
Obligations,  (iii) any other expenses
incurred in connection with the enforcement of the Deeds of Trust or other Loan
Documents, and (iv) any expenses incurred in connection with the consummation
of the Loans not paid or provided for by the Borrower. To the extent any such
advances are recovered in connection with the enforcement of the Deeds of Trust
or the other Loan Documents, each Lender shall be paid its Proportionate Share
of such recovery after deduction of the expenses of the Administrative Agent
and the Lenders.

 

(c)           If,
at the direction of the Required Lenders or otherwise as provided in Section
13.03(a), any action(s) is brought to collect on the Notes or enforce the
Security Documents or any other Loan Document, such action shall (to the extent
permitted under applicable law and the decisions of the court in which such
action is brought) be an action brought by the Administrative Agent and the
Lenders, collectively, to collect on all or a portion of the Notes or enforce
the Security Documents or any other Loan Document and counsel selected by the
Administrative Agent shall prosecute any such action at the direction of the
Administrative Agent on behalf of the Administrative Agent and the Lenders, and
the Administrative Agent and the Lenders shall consult and cooperate with each
other in the prosecution thereof. All decisions concerning the appointment of a
receiver while such action is pending, the conduct of such receivership, the
conduct of such action, the collection of any judgment entered in such action
and the settlement of such action shall be made by the Administrative Agent. The
costs and expenses of any such action shall be borne by the Lenders in
accordance with each of their respective Proportionate Shares (without
diminishing or releasing any obligation of the Borrower to pay for such costs).

 

(d)           If,
at the direction of the Required Lenders or otherwise as provided in Section
13.03(a), any action(s) is brought to foreclose any Deed of Trust, such
action shall (to the extent permitted under applicable law and the decisions of
the court in which such action is brought) be an action brought by the
Administrative Agent and the Lenders, collectively, to foreclose all or a
portion of the Deed of Trust and collect on the Notes. Counsel selected by the
Administrative Agent shall prosecute any such foreclosure at the direction of
the Administrative Agent on behalf of the Administrative Agent and the Lenders
and the Administrative Agent and the Lenders shall consult and cooperate with
each other in the prosecution thereof. All decisions

 

118

 

concerning the
appointment of a receiver, the conduct of such foreclosure, the manner of
taking and holding title to any such Project (other than as set forth in subsection
(e) below), and the commencement and conduct of any deficiency judgment
proceeding shall be made by the Administrative Agent (subject to the rights of
the Required Lenders under Section 13.03(a)), and all decisions
concerning the acceptance of a deed in lieu of foreclosure and the bid on
behalf of the Administrative Agent and the Lenders at the foreclosure sale of
any Project shall be made by the Administrative Agent with the approval of the
Required Lenders. The costs and expenses of foreclosure will be borne by the
Lenders in accordance with their respective Proportionate Shares.

 

(e)           If
title is acquired to any Project after a foreclosure sale, nonjudicial
foreclosure or by a deed in lieu of foreclosure, title shall be held by the
Administrative Agent in its own name in trust for the Lenders or, at the
Administrative Agent’s election, in the name of a wholly owned subsidiary of
the Administrative Agent on behalf of the Lenders.

 

(f)            If
the Administrative Agent (or its subsidiary) acquires title to any Project or is
entitled to possession of any Project during or after the foreclosure, all
material decisions with respect to the possession, ownership, development,
construction, control, operation, leasing, management and sale of such Project
shall be made by the Administrative Agent. All income or other money received
after so acquiring title to or taking possession of such Project with respect
to the Project, including income from the operation and management of such
Project and the proceeds of a sale of such Project, shall be applied, first,
to the payment or reimbursement of the Administrative Agent and the expenses
incurred in accordance with the provisions of this Article XIII and to
the payment of any fees owed to the Administrative Agent, second, to the
payment of operating expenses with respect to such Project; third, to
the establishment of reasonable reserves for the operation of such Project; fourth,
to the payment or reimbursement of the Lenders for any advances made pursuant
to Section 13.03(b); fifth to fund any capital improvement,
leasing and other reserves; and sixth, to the Lenders in accordance with
their respective Proportionate Shares.

 

13.04       Rights
as a Lender. With respect to its Commitment and the Loans made by it, Eurohypo
(and any successor acting as Administrative Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Administrative
Agent, and the term “Lender” or “Lenders” shall, unless the context otherwise
indicates, include the Administrative Agent in its individual capacity. Subject
to the provisions of Sections 4.07 and 14.10, Eurohypo (and any
successor acting as Administrative Agent) and any of its Affiliates may
(without having to account therefor to any other Lender) accept deposits from,
lend money to, make investments in and generally engage in any kind of banking,
investment banking, trust or other business with the Borrower (and any of its
Affiliates) as if it were not acting as the Administrative Agent and Eurohypo
(and any such successor) and any of its Affiliates may accept fees and other
consideration from the Borrower for services in connection with this Agreement
or otherwise without having to account for the same to the Lenders.

 

13.05       Indemnification.
Each Lender agrees to indemnify the Administrative Agent (to the extent not
reimbursed by the Borrower, but without limiting the obligations of the
Borrower under Section 14.03) in accordance with their
Proportionate Shares, for any and all

 

119

 

liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as Administrative Agent (including by any
Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Loan Document or any
other documents contemplated by or referred to herein or therein or the
Transactions (including the costs and expenses that the Borrower is obligated
to pay under Section 14.03, but excluding, unless a Default has occurred
and is continuing, normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof, provided that no Lender shall be liable for any
of the foregoing to the extent they arise from the gross negligence, bad faith
or willful misconduct of the Administrative Agent.

 

13.06       Non-Reliance
on Administrative Agent and Other Lenders. Each Lender agrees that it has,
independently and without reliance on the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its decision to
enter into this Agreement and that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or under any other Loan Document. The Administrative Agent shall not be
required to keep itself informed as to the performance or observance by the
Borrower of this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
Properties or books of the Borrower. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder or under the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Borrower (or any of its Affiliates) that may come
into the possession of the Administrative Agent or any of its Affiliates.

 

13.07       Failure
to Act. Except for action expressly required of the Administrative Agent
hereunder and under the other Loan Documents, the Administrative Agent shall in
all cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction from
the Lenders of their indemnification obligations under Section 13.05
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action, subject to the limitations on
such obligations contained in such Section 13.05.

 

13.08       Resignation
of Administrative Agent. It is agreed by the Lenders that subject to the
terms of this Loan Agreement, the Administrative Agent will remain the
Administrative Agent under this Agreement and the other Loan Documents
throughout the term of the Loans; provided, however, that
(a) the Administrative Agent may assign all its rights as the
Administrative Agent to any Related Entity of Eurohypo, and such Related Entity
shall assume the obligations of Administrative Agent hereunder arising after
the date of such assignment, (b) subject to the appointment and acceptance
of a successor Administrative Agent as provided below, the Administrative Agent
may resign at any time by giving at least thirty (30) days’ prior written notice
thereof to the Lenders and the Borrower and (c) the Administrative Agent may be
removed upon the unanimous consent of the Lenders (excepting therefrom the

 

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Administrative Agent in its capacity as a Lender) on
account of the gross negligence, bad faith or willful misconduct of the
Administrative Agent. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Administrative Agent that
shall be a Person that, provided that no Event of Default then exists, meets
the qualifications of an Eligible Assignee with an office in the United States
through which it will act as the servicer of the Loans; who is knowledgeable
and experienced in servicing real estate secured syndicated commercial loans in
the United States; who (together with its Affiliates and Related Entities and any
Approved Funds managed by it or by any of its Affiliates or Related Entities) then
holds (and agrees in writing for the benefit of the Borrower to maintain, for
so long as it shall remain the Administrative Agent and provided that no Event
of Default has occurred), minimum Loans and Commitments either (i) in an
aggregate principal amount not less than ten percent (10%) of the aggregate
Outstanding Principal Amount of the Loans, (ii) comprising Loans
and Commitments evidenced by a Note C, which comprise at least two and one-half
percent (21⁄2%) of the aggregate Loans and Commitments of all Lenders and which,
determined collectively with the Loans and Commitments evidenced by a Note C of
Eurohypo and Barclays Capital Real Estate Inc. and their respective Affiliates,
Related Entities and Approved Funds managed by either of them or their
respective Affiliates or Related Entities, comprise at least five percent (5%)
of the aggregate Loans and Commitments of all Lenders, but only (in the case of
this clause (ii)) if such replacement Administrative Agent also qualifies and is
named as the replacement Administrative Agent pursuant to the loan agreements
entered into by Eurohypo as administrative agent with Douglas Emmett 1993, LLC,
Douglas Emmett 1995, LLC, Douglas Emmett 1997, LLC, Douglas Emmett 1998, LLC,
Douglas Emmett 2000, LLC, and Douglas Emmett 2002, LLC and certain co-borrowers
named therein to the extent then outstanding or (iii) only if the
replacement Administrative Agent is Barclays Capital Real Estate Inc. or one of
its Affiliates, Related Entities or Approved Funds managed by Barclays Capital
Real Estate Inc or one of its Affiliates or Related Entities, comprising Loans
and Commitments evidenced by a Note C, which comprise at least two and one-half
percent (21⁄2%) of the aggregate Loans and Commitments of all Lenders, and who
agrees in writing for the benefit of the Borrower not to resign except in
accordance with the provisions of this Loan Agreement. If such successor
Administrative Agent is not a Lender (or is a Lender, but such Lender does not
comply with the requirements of the second sentence of this Section 13.08),
as long as no Major Default exists, the Borrower shall have the right to
approve such successor Administrative Agent, such approval not to be
unreasonably withheld or delayed and which consent shall be deemed to have been
given unless written notice of disapproval is delivered by the Borrower to the
resigning Administrative Agent within five (5) Business Days after notice of
such proposed successor Administrative Agent has been delivered to the
Borrower. If, in the case of a resignation by the Administrative Agent, no
successor Administrative Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Administrative Agent’s giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent, that shall be a Person that meets the
requirements of the second sentence of this Section 13.08. If any
successor Administrative Agent is not a Lender (or is a Lender, but such Lender
does not comply with the requirements of the second sentence of this Section
13.08), the Borrower, as long as no Major Default exists, shall have the right
to approve such successor Administrative Agent, such approval not to be
unreasonably withheld or delayed and which consent shall be deemed to have been
given unless, in the case of a resignation, written notice of disapproval is
delivered by the

 

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Borrower to the resigning Administrative Agent within
five (5) Business Days after notice of such proposed successor Administrative
Agent has been delivered to the Borrower. Upon the acceptance of any appointment
as the Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and such successor Administrative Agent shall assume all
obligations of the Administrative Agent hereunder arising after the date of
such acceptance, and the retiring or removed Administrative Agent shall be
discharged from its duties and obligations hereunder; provided, however,
that the retiring or removed Administrative Agent shall not be discharged from
any liabilities which existed prior to the effective date of such resignation. The
fees payable by the Borrower to a successor Administrative Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After any retiring Administrative Agent’s
resignation hereunder as the Administrative Agent, the provisions of this Article
XIII shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent.

 

13.09       Consents
under Loan Documents. Subject to the provisions of Section 14.05,
the Administrative Agent may (a) grant any consent or approval required of it
or (b) consent to any Modification or waiver under any of the Loan Documents. If
the Administrative Agent solicits any consents or approvals from the Lenders
under any of the Loan Documents, each Lender shall within ten (10) Business
Days of receiving such request, give the Administrative Agent written notice of
its consent or approval or denial thereof; provided that, if any Lender
does not respond within such ten (10) Business Days or within any such shorter
period as required in this Agreement or any other Loan Document, such Lender
shall be deemed to have authorized the Administrative Agent to vote such Lender’s
interest with respect to the matter which was the subject of the Administrative
Agent’s solicitation as the Administrative Agent elects. Any such solicitation
by the Administrative Agent for a consent or approval shall be in writing and
shall include a description of the matter or thing as to which such consent or
approval is requested and shall include the Administrative Agent’s recommended
course of action or determination in respect thereof.

 

13.10       Authorization.
The Administrative Agent is hereby authorized by the Lenders to execute,
deliver and perform in accordance with the terms of each of the Loan Documents
to which the Administrative Agent is or is intended to be a party and each
Lender agrees to be bound by all of the agreements of the Administrative Agent
contained in such Loan Documents. The Borrower shall be entitled to rely on all
written agreements, approvals and consents received from the Administrative
Agent as being that also of the Lenders, without obtaining separate
acknowledgment or proof of authorization of same.

 

13.11       Amendments
Concerning Agency Function. Notwithstanding anything to the contrary
contained in this Agreement, the Administrative Agent shall not be bound by any
waiver, amendment, supplement or Modification of this Agreement or any other
Loan Document which affects its duties, rights and/or functions hereunder or
thereunder unless it shall have given its prior written consent thereto.

 

13.12       Liability
of the Administrative Agent. The Administrative Agent shall not have any
liabilities or responsibilities to the Borrower on account of the failure of
any Lender

 

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(other than the Administrative Agent in its capacity
as a Lender) to perform its obligations hereunder or to any Lender on account
of the failure of the Borrower to perform its obligations hereunder or under
any other Loan Document.

 

13.13       Transfer
of Agency Function. Without the consent of the Borrower or any Lender, the
Administrative Agent may at any time or from time to time transfer its
functions as the Administrative Agent hereunder to any of its offices wherever
located in the United States; provided that the Administrative Agent
shall promptly notify the Borrower and the Lenders thereof.

 

13.14       Co-Lead
Arranger and Joint Bookrunner. No Lender identified on the cover page of or
elsewhere in this Agreement as a “Co-Lead Arranger” or “Joint Bookrunner” shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders under this Agreement and
the other Loan Documents as a Lender.

 

ARTICLE
XIV

 

MISCELLANEOUS

 

14.01       Non-Waiver;
Remedies Cumulative. No failure on the part of the Administrative Agent or
any Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement or any
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under this Agreement or any
other Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
and in the other Loan Documents are cumulative and not exclusive of any
remedies provided by law.

 

14.02       Notices.

 

(a)           All
notices, requests, demands, statements, authorizations, approvals, directions,
consents and other communications provided for herein and under the Loan
Documents shall be given or made in writing and shall be deemed sufficiently
given or served for all purposes as of the date (a) when hand delivered,
(b) three (3) days after being sent by postage pre-paid registered or
certified mail, return receipt requested, (c) one (1) Business Day after being
sent by reputable overnight courier service, or (d) with a simultaneous
delivery by one of the means in clause (a), (b) or (c)
above, by facsimile, when sent, with confirmation and a copy sent by first
class mail, in each case addressed to the intended recipient at the “Address
for Notices” specified below its name on the signature pages hereof; or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party hereto. Unless otherwise expressly provided in the
Loan Documents, the Borrower shall only be required to send notices, requests,
demands, statements, authorizations, approvals, directions, consents and other
communications to the Administrative Agent on behalf of all of the Lenders.

 

(b)           Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the

 

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Administrative
Agent; provided that the foregoing shall not apply to notices pursuant
to Article II or notices pursuant to Section 13.03 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The
Administrative Agent or the Borrower may, in its discretion, agree (in writing)
to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval
of such procedures by such party may be limited to particular notices or
communications.

 

(c)           Any
person shall have the right to specify, from time to time, as its address or
addresses for purposes of this Agreement, any other address or addresses upon
giving notice thereof to each other person then entitled to receive notices or
other instruments hereunder at least five (5) days before such change of
address shall become effective for purposes of this Agreement.

 

14.03       Expenses,
Etc. Subject to the limitation set forth in Section 14.26:

 

(a)           The
Borrower agrees to pay on demand or reimburse on demand to the applicable party
all reasonable out-of-pocket costs and expenses of the Administrative Agent and
the Arranger incurred prior to the Closing Date or otherwise in connection with
the closing of the Loans (including customary post-closing follow-through) and
in connection with the satisfaction of the requirements of Section 8.19
following the Closing Date, including, but not limited to, (i) the
reasonable fees and expenses for Morrison & Foerster LLP, counsel to the
Administrative Agent and Eurohypo; such legal fees to be paid on the Closing
Date; provided, however, that payment of
ten percent (10%) of such legal fees shall be deferred and payable promptly
upon the Borrower’s receipt of a closing binder and legal invoices prepared by
Morrison & Foerster LLP and payment of any such legal fees relating to
the satisfaction of the requirements of Section 8.19 following the
Closing Date shall be payable promptly following the Borrower’s receipt of any
legal invoice therefor (if delivered subsequent to the invoices covering the
10% retention referred to above), (ii) due diligence expenses, including title
insurance reports and policies, surveys, title and lien searches and appraisals
(including the Appraisal and the Environmental Reports) and (iii) fees and
expenses for the services of an insurance consultant, in connection with:  the negotiation, preparation, execution and
delivery of this Agreement and the other Loan Documents and initial funding of
the Loans hereunder and the creation and perfection of the Liens to be created
by the Security Documents.

 

(b)           The
Borrower also agrees to pay on demand or reimburse on demand to the applicable
party all reasonable out-of-pocket costs and expenses of the Administrative
Agent incurred after the Closing Date (including, but not limited to, the
reasonable fees and expenses of legal counsel, but excluding any travel
expenses incurred for travel by the personnel of the Administrative Agent (but
not any of its consultants when engaged in services for which the Borrower is
required to reimburse the Administrative Agent hereunder, with the
understanding that the Administrative Agent shall use good faith efforts to attempt
to engage qualified local consultants to provide such services) and also
excluding the Administrative Agent’s internal overhead) in connection with (i) any
release of a Project under Section 2.09, (ii) the negotiation or
preparation of any Modification or waiver of any of the terms of this Agreement
or any of the other Loan Documents (whether or not consummated), (iii) the
protection and maintenance of the perfection and priority of the Liens created
pursuant to the Security Documents, (iv) the negotiation with any tenant,
execution, delivery or recordation of any SNDA Agreement, (v) any

 

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review or
inspection of the work undertaken pursuant to Section 8.21 (including,
without limitation, any seismic review undertaken to measure the probable
maximum loss with respect to the affected Projects following the completion of
such work); any monitoring or evaluation of environmental conditions occurring
at any Project following the occurrence of (A) any event for which notice
is required under Section 8.11(b), (B) any violation by the
Borrower of any of its covenants contained in Section 8.11(a) or
(C) any act or occurrence for which the Borrower is obligated to indemnify
the Administrative Agent or any Lender pursuant to the terms set forth in the
Environmental Indemnity Agreement; any review, inspection or evaluation
undertaken by the Restoration Consultant; and the preparation of any reports or
studies in connection with any of the foregoing, (vi) any review of
documents or requests, consideration for approval or disapproval or exercise of
rights outside of the ordinary day-to-day administration of the Loans and the
Loan Documents, and (vii) any other act, condition, request, delivery or
other item, if any other applicable provision of this Agreement or the other
Loan Documents provides for the costs and expenses of the Administrative Agent
in connection therewith to be paid by the Borrower and are not in violation of the
limitations contained herein.

 

(c)           The
Borrower also agrees to pay on demand or reimburse on demand to the applicable
party all reasonable out-of-pocket costs and expenses of the Lenders and the
Administrative Agent (including, but not limited to, the reasonable fees and
expenses of legal counsel) in connection with (i) any Default and any
enforcement or collection proceedings resulting therefrom, including all manner
of participation in or other involvement with (A) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, (B) judicial
or regulatory proceedings and (C) workout, restructuring or other negotiations
or proceedings (whether or not the workout, restructuring or transaction
contemplated thereby is consummated) and (ii) the enforcement of this Section
14.03.

 

(d)           The
Borrower also agrees to pay on demand or reimburse on demand to the applicable
party all transfer, stamp, documentary or other similar taxes, assessments or
charges levied by any Governmental Authority in respect of this Agreement or any
of the other Loan Documents or any other document referred to herein or therein
and all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated by any Security Document or any other document
referred to therein.

 

14.04       Indemnification.
(a) The Borrower hereby agrees to (i) protect and indemnify the
Indemnified Parties from, and hold each of them harmless, from and against all
damages, losses, claims, actions, liabilities (or actions, investigations or
other proceedings commenced or threatened in respect thereof) penalties, fines,
costs and expenses including reasonable attorneys’ fees and expenses
(collectively and severally, “Losses”) which may be imposed upon,
asserted against or incurred or paid by any of them resulting from the claims
of any third party relating to or arising out of (A) the Projects, (B) any of
the Loan Documents or the Transactions, (C) any ERISA Events, (D) any Environmental
Losses and (E) any act performed or permitted to be performed by any
Indemnified Party under any of the Loan Documents, except for Losses to the
extent determined by a court of competent jurisdiction to be caused by the
gross negligence, bad faith or willful misconduct of an Indemnified Party (but
the effect of this exception only eliminates the liability of the Borrower with
respect to the Indemnified Party (and if such Indemnified Party is not a
Lender, the Lender on whose behalf

 

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such Indemnified Party was acting) to the extent such
Indemnified Party has been adjudged to have so acted and not with respect to
any other Indemnified Party), and (ii) reimburse each Indemnified Party on
demand for any expenses (including the reasonable attorneys’ fees and
disbursements) reasonably incurred in connection with the investigation of,
preparation for or defense of any actual or threatened claim, action or
proceeding arising therefrom (excluding any action or proceeding where the
Indemnified Party is not a party to such action or proceeding out of which any
such expenses arise unless such Indemnified Party is required to participate or
respond in connection with such action or proceeding (e.g., by way of deposition,
discovery requests, testimony, subpoena or similar reason)). The Obligations
shall not be considered to have been paid in full unless all obligations of the
Borrower under this Section 14.04(a) shall have been fully performed
(except for contingent indemnification obligations for which no claim has
actually been made pursuant to this Agreement). This Section 14.04(a)
shall survive repayment in full of the Obligations and, as to any Project, the
release of that Project as collateral for the Loans in accordance with Section
2.09 of this Agreement, and in addition, shall survive the assignment, sale
or other transfer of the Administrative Agent’s or any Lender’s interest
hereunder.

 

(b)           Reserved.

 

14.05       Amendments,
Etc. Except as otherwise expressly provided in this Agreement or the other
Loan Documents, this Agreement and the other Loan Documents may be Modified
only by an instrument in writing signed by the Borrower and the Administrative
Agent acting with the consent of the Required Lenders; provided that:  (a) no Modification or waiver shall,
unless by an instrument signed by all of the Lenders or by the Administrative
Agent acting with the written consent of all of the Lenders:  (i) extend the date fixed for the
payment of principal of or interest on any Loan or any fee hereunder or under
the Loan Documents, including, without limitation, any extension of the
Maturity Date, (ii) reduce the amount of any such payment of principal,
(iii) reduce the rate at which interest is payable thereon or any fee is
payable hereunder, (iv) alter the rights or obligations of the Borrower to
prepay Loans, (v) alter the manner in which payments or prepayments of
principal, interest or other amounts hereunder shall be applied as between the
Lenders or Types of Loans, (vi) alter the terms of this Section 14.05,
(vii) Modify the definition of the term “Required Lenders” or Modify in
any other manner the number or percentage of the Lenders required to make any
determinations or waive any rights hereunder or to Modify any provision hereof,
(viii) alter the several nature of the Lenders’ obligations hereunder,
(ix) release the Borrower, any collateral or the Guarantor or otherwise
terminate any Lien under any Security Document providing for collateral
security (except that no such consent shall be required, and the Administrative
Agent is hereby authorized, to release any Lien covering the collateral under
the Security Documents, and to release (or terminate the liability of) the
Borrower under the Loan Documents, and to release the Guarantor under the
Guarantor Documents:  (A) as
expressly provided in the Loan Documents and (B) upon payment of the
Obligations in full in accordance with the terms of the Loan Documents), (x)
agree to additional obligations being secured by such collateral security, or
(xi) alter the relative priorities of the obligations entitled to the
benefits of the Liens created under the Security Documents; (b) any
Modification of Article XIII, or of any of the rights or duties of the
Administrative Agent hereunder, shall require the consent of the Administrative
Agent and the Required Lenders; and (c) no Modification shall increase the
Commitment of any Lender without the consent of such Lender. Notwithstanding
anything to the contrary contained in this Agreement or the other Loan

 

126

 

Documents, the Administrative Agent is hereby
authorized by the Lenders to enter into Modifications to the Loan Documents
which are ministerial in nature, including the preparation and execution of
Uniform Commercial Code forms, Assignments and Assumptions and SNDA Agreements
and any amendment to the definition of “Change of Control” that would eliminate
the exclusions set forth in clause (i) or (ii) of such definition.

 

14.06       Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.

 

14.07       Assignments
and Participations.

 

(a)           Consent
Required for Assignments by the Borrower. Except as otherwise expressly
permitted by this Agreement, the Borrower may not assign any of its rights or
obligations hereunder or under the Loan Documents without the prior consent of
all of the Lenders and the Administrative Agent.

 

(b)           Assignments
by Lenders.

 

(i)            Subject to the conditions set forth
in subsection (b)(ii) below, any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it) with the prior written consent of:

 

(A)          the Borrower, whose consent shall not
be unreasonably withheld, conditioned or delayed; provided that (1) such
consent shall be deemed granted should the Borrower fail to respond within five
(5) Business Days upon receipt of a notice of such assignment and (2) should
the Borrower not give such consent, the Borrower shall provide to the
Administrative Agent and the Lender requesting such assignment its specific
reasons for such disapproval; provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a Lender that
is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business (and which
is not engaged in the business of acquiring direct or indirect ownership
interests in commercial real estate projects), an Eligible Assignee or, if a
Major Default exists, any other assignee; and

 

(B)           the Administrative Agent, whose
consent shall not be unreasonably withheld, conditioned or delayed; provided
that no consent of the Administrative Agent shall be required for an assignment
of all or a portion of any Commitment or Loans to an assignee that is a Lender
with a Commitment immediately prior to giving effect to such assignment or an
Affiliate of the assigning Lender if also an Eligible Assignee.

 

(ii)           Assignments shall be subject to the
following additional conditions:

 

(A)          except in the case of an assignment to
a Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender’s Commitment or Loan, the amount of the
Commitment or Loan of the assigning

 

127

 

Lender subject to each
such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent; provided that no such consent of the Borrower
shall be required if an Event of Default exists;

 

(B)           each partial assignment shall be made
as an assignment of a proportionate part of all the assigning Lender’s rights
and obligations under this Agreement;

 

(C)           the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $4,500; and

 

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

 

(iii)          Subject to acceptance and recording
thereof pursuant to subsection (b)(iv) of this Section 14.07,
from and after the effective date specified in each Assignment and Assumption
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 5.01,
5.05, 5.06 and 14.04); provided, however,
that in no event shall such assigning Lender be released with respect to any
defaults by or liabilities of such Lender under the Loan Documents which
accrued prior to such assignment. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section
14.07 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with subsection
(c) of this Section 14.07.

 

(iv)          The Administrative Agent shall
maintain at its Principal Office a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and principal amount of the Loan owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).
The entries in the Register shall be conclusive absent manifest error, and the
Borrower, the Administrative Agent, and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Administrative Agent shall record all entries in the Register promptly
upon their being effected. The Register shall be available for inspection by
the Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

 

128

 

(v)           Upon its receipt of a duly completed
Assignment and Assumption executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire, the processing and
recordation fee referred to in subsection (b) of this Section 14.07
and any written consent to such assignment required by subsection (b) of
this Section 14.07, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this subsection.

 

(c)           Participations.

 

(i)            Any Lender may, without the consent
of the Borrower or the Administrative Agent, sell participations to one or more
banks or other financial institutions (including, without limitation, life
insurance companies), or an Affiliate of the Lender that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit
in the ordinary course of its business (and which is not engaged in the
business of acquiring direct or indirect ownership interests in commercial real
estate projects) (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement and the other Loan Documents
(including all or a portion of its Commitment and the Loans owing to it); provided
that (A) such Lender’s obligations under this Agreement and the other Loan
Documents shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement and the other Loan Documents. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and the other Loan Documents and to approve any Modification or
waiver of any provision of this Agreement or any other Loan Document; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of such Participant, agree to (1) increase or extend the
term of such Lender’s Commitment to the extent that it affects such
Participant, (2) extend the date fixed for the payment of principal of or
interest on the related Loan or Loans, (3) reduce the amount of any such
payment of principal or (4) reduce the rate at which interest is payable
thereon to a level below the rate at which the Participant is entitled to
receive such interest. Subject to subsection (c)(ii) of this Section
14.07, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 5.01, 5.05 and 5.06 to the same
extent, but subject to the same limitations, conditions and duties set forth in
such sections, as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section 14.07.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 14.10 as though it were a Lender; provided
that such Participant agrees to be subject to Section 14.10 as though it
were a Lender.

 

(ii)           A Participant shall not be entitled
to receive any greater payment under Section 5.01 or 5.06
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the participation
to such Participant is made with the Borrower’s prior written consent. A

 

129

 

Participant that would be a Foreign Lender if it were
a Lender shall not be entitled to the benefits of Section 5.06 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees in writing, for the benefit of the Borrower, to comply with Section 5.06
as though it were a Lender.

 

(d)           Pledges.
In addition to the assignments and participations permitted under the foregoing
provisions of this Section 14.07: 
(a) any Lender may (without notice to the Borrower, the Administrative
Agent or any other Lender and without payment of any fee) assign and pledge all
or any portion of its Loans and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank, and such Loans and Note shall be transferable as
provided therein; and (b) any Lender may (upon notice to the Administrative
Agent and without payment of any fee) assign and pledge all or any portion of
its Loans and its Note as collateral for financing, and such Loans and Note
shall be fully transferable as provided therein. No such assignment shall release
the assigning Lender from its obligations hereunder.

 

(e)           Provision
of Information to Assignees and Participants. A Lender may furnish any
information concerning the Borrower, the Projects, the Loans, the Borrower’s
Member or any Borrower Party in the possession of such Lender from time to time
to assignees, pledgees and participants (including prospective assignees,
pledgees and participants), subject, however, to the party receiving such
information confirming in writing that such party and such information is
subject to the provisions of Section 14.24.

 

(f)            No
Assignments to the Borrower or Affiliates. Anything in this Section
14.07 or Section 14.27 to the contrary notwithstanding, each Lender
agrees for itself that it shall not assign or participate any interest in any
Loan held by it hereunder to the Borrower or any of its Affiliates without the
prior consent of each Lender.

 

14.08       Survival.
The obligations of the Borrower under Sections 3.02(e), 5.01, 5.05,
5.06, 14.03, 14.04 and 14.12, and the obligations
of the Lenders under Sections 13.05, shall survive the repayment of
the Obligations, the termination of the Commitments and, as to any Project, the
release of that Project as collateral for the Loans in accordance with Section
2.09 of this Agreement, and in addition, in the case of any Lender that may
assign any interest under the Loan Documents in accordance with the terms
thereof including any Lender’s interest in its Commitment or Loan hereunder,
shall survive the making of such assignment, notwithstanding that such
assigning Lender may cease to be a “Lender” hereunder. In addition, each
representation and warranty made herein or pursuant hereto by the Borrower
shall survive the making of such representation and warranty, and no Lender shall
be deemed to have waived, by reason of making any Loan, any Default that may
arise by reason of such representation or warranty proving to have been false
or misleading, notwithstanding that such Lender or the Administrative Agent may
have had notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such Loan was made.

 

14.09       Reserved.

 

130

 

14.10       Right
of Set-off.

 

(a)           Upon
the occurrence and during the continuance of any Event of Default, each of the
Lenders is, subject (as between the Lenders) to the provisions of subsection
(c) of this Section 14.10, hereby authorized at any time and from
time to time, without notice to the Borrower (any such notice being expressly
waived by the Borrower) and to the fullest extent permitted by law, to set-off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held, and other indebtedness at any time owing, by such
Lender in any of its offices, in Dollars or in any other currency, to or for
the credit or the account of the Borrower against any and all of the respective
obligations of the Borrower now or hereafter existing under the Loan Documents,
irrespective of whether or not such Lender or any other Lender shall have made
any demand hereunder and although such obligations may be contingent or
unmatured and such deposits or indebtedness may be unmatured. Each Lender and
the Administrative Agent acknowledges that it is aware of the implications of
the anti-deficiency laws and “one form of action” laws of various jurisdictions
in which the Collateral may be located. These laws, in general, restrict or
prohibit the exercise of remedies under loans secured by real property, and the
violation of those laws can result in severe consequences to a lender,
including a loss of the real property security. These laws include, for
example, Section 726 of the California Code of Civil Procedure. Therefore,
anything obtained in this Section 14.10 to the contrary notwithstanding,
no Lender shall exercise any right of set-off against any Borrower Party with
respect to the Obligations under the Loan Documents without the prior written
consent of all of the Lenders. In the event that any Lender exercises any right
of set-off without all of the Lenders’ prior consent, such Lender shall
protect, indemnify, defend and hold harmless the Administrative Agent and each
of the other Lenders from and against any liability, loss, cost, damage, or
injury that may result from such Person’s exercise of its right of set-off. This
Section 14.10 shall inure only for the benefit of the Lenders and the
Administrative Agent, and may not be relied upon by any third party, including
but not limited to the Borrower and its Subsidiaries.

 

(b)           Each
Lender shall promptly notify the Borrower and the Administrative Agent after
any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of the Lenders under this Section 14.10 are in addition to other
rights and remedies (including other rights of set-off) which the Lenders may
have.

 

(c)           If
an Event of Default has resulted in the Loans becoming due and payable prior to
the stated maturity thereof, each Lender agrees that it shall turn over to the
Administrative Agent any payment (whether voluntary or involuntary, through the
exercise of any right of setoff or otherwise) on account of the Loans held by
it in excess of its ratable portion of payments on account of the Loans
obtained by all the Lenders.

 

14.11       Remedies
of Borrower. It is expressly understood and agreed that, notwithstanding
any Applicable Law or any provision of this Agreement or the other Loan
Documents to the contrary, the liability of the Administrative Agent and each
Lender (including their respective successors and assigns) and any recourse of
the Borrower against the Administrative Agent and each Lender shall be limited
solely and exclusively to their respective interests in the Loans and/or Commitments
or the Projects. Without limiting the foregoing, in the event that a claim or
adjudication is made that the Administrative Agent, any of the Lenders,

 

131

 

or their agents, acted unreasonably or unreasonably
delayed acting in any case where by Applicable Law or under this Agreement or
the other Loan Documents, the Administrative Agent, any Lender or any such
agent, as the case may be, has an obligation to act reasonably or promptly, or
otherwise violated this Agreement or the Loan Documents, the Borrower agrees
that none of the Administrative Agent, the Lenders or their agents shall be
liable for any incidental, indirect, special, punitive, consequential or
speculative damages or losses resulting from such failure to act reasonably or
promptly in accordance with this Agreement or the other Loan Documents.

 

14.12       Brokers.
The Borrower hereby represents to the Administrative Agent and each Lender that
it has not dealt with any broker, underwriter, placement agent, or finder in
connection with the Transactions, except for Secured Capital. The Borrower
hereby agrees that it shall pay any and all brokerage commissions or finders
fees owing to Secured Capital in connection with the Transactions and agrees
and acknowledges that payment of all such brokerage commissions or finders fees
shall be the Borrower’s sole responsibility. The Borrower hereby agrees to protect
and indemnify and hold the Administrative Agent and each Lender harmless from
and against any and all claims, liabilities, costs and expenses of any kind in
any way relating to or arising from a claim by Secured Capital and any Person
that such Person acted on behalf of the Borrower in connection with the
Transactions.

 

14.13       Estoppel
Certificates.

 

(a)           The
Borrower, within ten (10) days after the Administrative Agent’s request, shall
furnish to the Administrative Agent a written statement, duly acknowledged,
certifying to the Administrative Agent and each Lender and/or, subject to the
terms of Section 14.07, any proposed assignee of any portion of the
interests hereunder:  (i) the amount of
the Outstanding Principal Amount then owing under this Agreement and each of
the Notes, (ii) the terms of payment and Stated Maturity Date of the Loans (or
if earlier, the Maturity Date), (iii) the date to which interest has been paid
under each of the Notes, (iv) whether, to the Borrower’s knowledge, any offsets
or defenses exist against the repayment of the Loans and, if any are alleged to
exist, a reasonably detailed description thereof, (v) the extent to which the
Loan Documents have been Modified by the Borrower and (vi) such other
information as the Administrative Agent shall reasonably request.

 

(b)           The
Administrative Agent, within ten (10) days after the Borrower’s reasonable
request therefor, shall furnish to the Borrower a written statement, duly
acknowledged, certifying to any prospective permitted purchaser of an interest
in the Borrower or any prospective permitted lender to the Borrower or any
lender providing any Guaranteed Line of Credit, as to which the Borrower or any
Subsidiary thereof remains or will be obligated under a Guarantee: (i) the
amount of the Outstanding Principal Amount, (ii) the terms of payment and
Stated Maturity Date of the Loans (or if earlier, the Maturity Date), (iii) the
date to which interest has been paid under each of the Notes, (iv) whether, to
the actual knowledge of the Person signing on behalf of the Administrative
Agent, there are any Defaults on the part of the Borrower under this Agreement or
under any of the other Loan Documents, and, if any are alleged to exist, a
detailed description thereof and (v) the extent to which the Loan Documents
have been Modified.

 

132

 

14.14       Preferences.
To the extent that the Borrower makes a payment or payments to the
Administrative Agent and/or any Lender, which payment or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds received, the
obligations hereunder or part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by the Administrative Agent or a Lender, as the case may be.

 

14.15       Certain
Waivers. The Borrower hereby irrevocably and unconditionally waives
(a) promptness and diligence, (b) notice of any actions taken by the
Administrative Agent or any Lender hereunder or under any other Loan Document
or any other agreement or instrument relating thereto except to the extent (i)
otherwise expressly provided herein or therein or (ii) the Borrower is not,
pursuant to Applicable Law, permitted to waive the giving of such notice,
(c) all other notices, demands and protests, and all other formalities of
every kind in connection with the enforcement of the Borrower’s obligations
hereunder and under the other Loan Documents, the omission of or delay in
which, but for the provisions of this Section 14.15, might constitute
grounds for relieving the Borrower of any of its obligations hereunder or under
the other Loan Documents, except to the extent otherwise expressly provided
herein or to the extent that the Borrower is not, pursuant to Applicable Law,
permitted to waive the giving of such notice, (d) any requirement that the
Administrative Agent or any Lender protect, secure, perfect or insure any lien
on any collateral for the Loans or exhaust any right or take any action against
the Borrower or any other Person or against any collateral for the Loans,
(e) any right or claim of right to cause a marshalling of the Borrower’s
assets and (f) until the Obligations are paid in full and discharged, all
rights of subrogation or contribution, whether arising by contract or operation
of law or otherwise by reason of payment by the Borrower pursuant hereto or to
the other Loan Documents.

 

14.16       Entire
Agreement. This Agreement, the Notes and the other Loan Documents
constitute the entire agreement between the Borrower, the Administrative Agent
and the Lenders with respect to the subject matter hereof and all
understandings, oral representations and agreements heretofore or
simultaneously had among the parties are merged in, and are contained in, such
documents and instruments.

 

14.17       Severability.
If any provision of this Agreement shall be held by any court of competent
jurisdiction to be unlawful, void or unenforceable for any reason as to any
Person or circumstance, such provision or provisions shall be deemed severable
from and shall in no way affect the enforceability and validity of the
remaining provisions of this Agreement.

 

14.18       Captions.
The table of contents and captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

 

14.19       Counterparts.
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.

 

133

 

14.20       GOVERNING
LAW. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS ARE TO BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (AS PERMITTED BY SECTION 1646.5 OF THE CALIFORNIA CIVIL CODE OR ANY
SIMILAR SUCCESSOR PROVISION), WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW RULE
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA TO GOVERN THE RIGHTS AND DUTIES OF THE
PARTIES.

 

14.21       SUBMISSION
TO JURISDICTION. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH OF THE
LENDERS HEREBY IRREVOCABLY (I) AGREE THAT ANY SUIT, ACTION OR OTHER LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, ANY
SECURITY DOCUMENT, OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN A COURT OF
RECORD IN THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES OR IN THE COURTS OF
THE UNITED STATES OF AMERICA LOCATED IN SUCH STATE AND COUNTY, (II) CONSENT TO
THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING,
(III) WAIVE ANY OBJECTION WHICH IT MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING IN ANY OF SUCH COURTS AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (IV)
AGREE AND CONSENT THAT ALL SERVICE OF PROCESS UPON THE BORROWER IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN ANY SUCH STATE OR FEDERAL COURT MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE
BORROWER, AT THE ADDRESS FOR NOTICES PURSUANT TO SECTION 14.02
HEREOF, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE SAME
SHALL HAVE BEEN SO MAILED. NOTHING IN THIS SECTION 14.21 SHALL AFFECT
THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT OR ANY LENDER TO BRING ANY SUIT, ACTION OR PROCEEDING AGAINST THE
BORROWER OR THE PROPERTY OF THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTIONS.

 

14.22       WAIVER
OF JURY TRIAL; COUNTERCLAIM. EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS. THE BORROWER FURTHER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY LEGAL PROCEEDING BROUGHT BY OR
ON BEHALF OF THE ADMINISTRATIVE AGENT OR THE LENDERS WITH RESPECT TO THIS
AGREEMENT, THE NOTES , THE OTHER LOAN DOCUMENTS OR OTHERWISE IN RESPECT OF THE
LOANS, ANY AND EVERY RIGHT THE BORROWER MAY HAVE TO (A) INTERPOSE ANY
COUNTERCLAIM THEREIN, OTHER THAN A MANDATORY OR COMPULSORY COUNTERCLAIM, AND
(B) HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR
PROCEEDING. NOTHING CONTAINED IN THE

 

134

 

IMMEDIATELY PRECEDING SENTENCE SHALL PREVENT OR
PROHIBIT THE BORROWER FROM INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST
THE ADMINISTRATIVE AGENT OR THE LENDERS WITH RESPECT TO ANY ASSERTED CLAIM. THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY WAIVE ANY DEFENSE OR OBJECTION TO
THE BORROWER INSTITUTING OR MAINTAINING SUCH A SEPARATE ACTION AGAINST THE
ADMINISTRATIVE AGENT OR THE LENDERS FOR ANY CLAIM WHICH THE BORROWER IS
PRECLUDED FROM INTERPOSING AS A COUNTERCLAIM IN OR CONSOLIDATING WITH ANY
PROCEEDING COMMENCED BY THE ADMINISTRATIVE AGENT OR THE LENDERS DESCRIBED IN
THIS SECTION 14.22, BUT THE DEFENSES AND OBJECTIONS SO WAIVED ARE
LIMITED SOLELY TO DEFENSES AND OBJECTIONS BASED ON THE ASSERTION OF SUCH CLAIM
IN A SEPARATE ACTION AND DO NOT INCLUDE ANY OTHER DEFENSES OR OBJECTIONS,
WHETHER PROCEDURAL OR SUBSTANTIVE.

 

14.23       Limitation
of Liability.

 

(a)           Neither
the Borrower, nor any past, present or future member in or manager of Borrower,
nor any owner of any direct or indirect Equity Interests in the Borrower, shall
be personally liable for payments due hereunder or under any other Loan
Document or for the performance of any obligation of the Borrower hereunder or
thereunder, or breach of any representation or warranty made by the Borrower
hereunder or thereunder. Notwithstanding the foregoing provisions of this Section
14.23(a), the Borrower shall be personally (and on a full recourse basis)
liable for and shall protect, indemnify and defend the Administrative Agent and
the Lenders from and against, and shall hold the Administrative Agent and the
Lenders harmless of, from and against any deficiency, liability, loss, damage,
costs, and expenses (including legal fees and disbursements) suffered by the
Administrative Agent and/or the Lenders and caused by, or related to or as a
result of any of the following:  (i) the
commission of a criminal act by or on behalf of the Borrower, (ii) fraud,
intentional misrepresentation or intentionally inaccurate certification made at
any time in connection with the Loan Documents or the Loans by or on behalf of
the Borrower; (iii) misapplication or misappropriation of cash flow or other
revenue derived from or in respect of the Projects, including security
deposits, Insurance Proceeds, Condemnation Awards, or any rental, sales or
other income derived directly or indirectly from the Projects in violation of
the Loan Documents by or on behalf of the Borrower; and/or (iv) intentional
or bad faith commission of waste to or of the Projects or any portion thereof
by or on behalf of the Borrower. In addition, the Borrower (but not any past,
present or future member in or manager of Borrower, nor any owner of any direct
or indirect Equity Interests in the Borrower) shall be personally (and on a
full recourse basis) liable for and shall protect, indemnify and defend the
Administrative Agent and the Lenders from and against, and shall hold the
Administrative Agent and the Lenders harmless of, from and against any
deficiency, liability, loss, damage, costs, and expenses (including legal fees
and disbursements) suffered by the Administrative Agent and/or the Lenders and
caused by, or related to or as a result of any of the following:
(A) voluntary bankruptcy or collusion in an involuntary bankruptcy of the
Borrower by or on behalf of the Borrower, (B) any violation of Section
8.11(a) or resulting from a failure to perform under the Environmental
Indemnity, and/or (C) interference with foreclosure following an Event of
Default by or on behalf of the Borrower.

 

135

 

(b)           Nothing
contained in this Section shall impair the validity of the indebtedness,
obligations or Liens arising under the Loan Documents. Notwithstanding anything
to the contrary contained herein, the Administrative Agent may pursue any power
of sale, bring any foreclosure action, any action for specific performance, or
any other appropriate action or proceedings against Borrower or any other
Person for the purpose of enabling the Administrative Agent and the Lenders to
realize upon the collateral for the Loans (including, without limitation, any Rents
and Net Proceeds to the extent provided for in the Loan Documents) or to obtain
the appointment of a receiver.

 

(c)           Notwithstanding
anything to the contrary contained herein, the Guarantor shall have personal
liability on the terms contained in the Guarantor Documents (to the extent
provided therein).

 

14.24       Confidentiality.
Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information that may be
disclosed (a) to it and its Subsidiaries’ and Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent required by Applicable Laws or by
any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder
or under any other Loan Document or any suit, action or proceeding relating to
this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section 14.24, to (i) any
assignee or pledgee of or Participant in, or any prospective assignee or
pledgee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the
extent such Information (i) becomes publicly available other than as a
result of a breach of this Section 14.24 or of arrangements entered into
pursuant hereto or (ii) becomes available to the Administrative Agent or
any Lender on a non-confidential basis from a source other than the Borrower; provided,
however, the obligation to maintain the confidentiality of the
Information provided hereunder shall expire twelve (12) months after the date
upon which the Obligations hereunder are indefeasibly paid in full. For the
purposes of this Section 14.24, “Information” means all written
information received from or on behalf of the Borrower relating to the
Borrower, its Subsidiaries or Affiliates or their respective businesses, other
than any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis (and obtained from a Person not known by the
Administrative Agent or such Lender to have disclosed such information in violation
of a contractual confidentiality obligation of such Person owed to the
Borrower) prior to disclosure by the Borrower. The Administrative Agent and
each Lender, to the extent required to maintain the confidentiality of
Information as provided in this Section 14.24, shall be considered to
have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as a
commercial banker exercising reasonable and customary business practices would
accord to its own confidential information. Notwithstanding anything herein to
the contrary, the information subject to this Section 14.24 shall not
include, and the Administrative Agent and each Lender may disclose without
limitation of any kind, any information with respect to the

 

136

 

“tax treatment” and “tax structure” (in each case,
within the meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to the Administrative Agent or such Lender
relating to such tax treatment and tax structure; provided that with
respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transactions
as well as other information, this sentence shall only apply to such portions
of the document or similar item that relate to the tax treatment or tax
structure of the Loans and transactions contemplated hereby.

 

14.25       Usury
Savings Clause. It is the intention of the Borrower, the Administrative
Agent and the Lenders to conform strictly to the usury and similar laws
relating to interest from time to time in force, and all Loan Documents between
the Borrower, the Administrative Agent and the Lenders, whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited so
that in no contingency or event whatsoever, whether by acceleration of maturity
hereof or otherwise, shall the amount paid or agreed to be paid in the
aggregate to the Lenders as interest (whether or not designated as interest,
and including any amount otherwise designated by or deemed to constitute
interest by a court of competent jurisdiction) hereunder or under the other
Loan Documents or in any other agreement given to secure the Loans, or in any
other document evidencing, securing or pertaining to the Loans, exceed the
maximum amount (the “Maximum Rate”) permissible under Applicable Laws. If
under any circumstances whatsoever fulfillment of any provision hereof, of this
Agreement or of the other Loan Documents, at the time performance of such
provisions shall be due, shall involve exceeding the Maximum Rate, then, ipso
facto, the obligation to be fulfilled shall be reduced to the Maximum Rate. For
purposes of calculating the actual amount of interest paid and/or payable
hereunder in respect of laws pertaining to usury or such other laws, all sums
paid or agreed to be paid to the Lenders for the use, forbearance or detention
of the Loans evidenced hereby, outstanding from time to time shall, to the
extent permitted by Applicable Law, be amortized, pro-rated, allocated and
spread from the date of disbursement of the proceeds of the Notes until payment
in full of all of such indebtedness, so that the actual rate of interest on
account of such Loans is uniform through the term hereof. If under any
circumstances any Lender shall ever receive an amount which would exceed the
Maximum Rate, such amount shall be deemed a payment in reduction of the
principal amount of the applicable Loans and shall be treated as a voluntary
prepayment under this Agreement (without prepayment penalty or premium) and
shall be so applied in accordance with the provisions of this Agreement, or if
such excessive interest exceeds the outstanding amount of the applicable Loans
and any other Obligations, the excess shall be deemed to have been a payment
made by mistake and shall be refunded to the Borrower.

 

14.26       Cooperation
with Syndication. The Borrower acknowledges that Arranger intends to
syndicate a portion of the Commitments to one or more Lenders (the “Syndication”)
and in connection therewith, the Borrower will take all actions as Arranger may
reasonably request to assist Arranger in its Syndication effort. Without
limiting the generality of the foregoing, the Borrower shall, at the request of
Arranger (i) facilitate the review of the Loan and the Projects by any
prospective Lender; (ii) assist Arranger and otherwise cooperate with Arranger
in the preparation of information offering materials (which assistance may
include reviewing and commenting on drafts of such information materials and
drafting portions thereof); (iii) deliver updated information on the Borrower
and the Projects; (iv) make

 

137

 

representatives of the Borrower available to meet with
prospective Lenders at tours of the Projects and bank meetings; (v) facilitate
direct contact between the senior management and advisors of the Borrower and
any prospective Lender; and (vi) provide Arranger with all information
reasonably deemed necessary by it to complete the Syndication successfully. The
Borrower agrees to take such further action, in connection with documents and
amendments to the Loan Documents, as may reasonably be required to effect such
Syndication. The Borrower shall not be responsible for any costs or expenses
incurred by the Administrative Agent, the Arranger, any Lender or any other
Person in connection with such Syndication, other than Arranger’s attorneys’
fees incurred through the closing of the Loan.

 

14.27       Reserved.

 

14.28       Controlled Account. The Borrower
hereby agrees with the Administrative Agent, as to any Controlled Account into
which this Agreement requires the Borrower to deposit funds, as follows:

 

(a)           Establishment and Maintenance of
the Controlled Account.

 

(i)            Each Controlled Account (A) shall be
a separate and identifiable account from all other funds held by the Depository
Bank and (B) shall contain only funds required to be deposited pursuant to this
Agreement or any other Loan Document. Any interest which may accrue on the
amounts on deposit in a Controlled Account shall be added to and shall become
part of the balance of such Controlled Account. The Borrower, the
Administrative Agent and the applicable Depository Bank shall enter into an
agreement (the “Controlled Account Agreement”), substantially in the
form of Exhibit O attached hereto (with such changes thereto as may be
required by the Depository Bank and satisfactory to the Administrative Agent)
which shall govern the Controlled Account and the rights, duties and
obligations of each party to the Controlled Account Agreement.

 

(ii)           The Controlled Account Agreement
shall provide that (A) the Controlled Account shall be established in the name
of the Administrative Agent, as agent for the Lenders, (B) the Controlled
Account shall be subject to the sole dominion, control and discretion of the
Administrative Agent, and (C) neither the Borrower nor any other Person,
including, without limitation, any Person claiming on behalf of or through the Borrower,
shall have any right or authority, whether express or implied, to make use of
or withdraw, or cause the use or withdrawal of, any proceeds from the
Controlled Account or any of the other proceeds deposited in the Controlled
Account, except as expressly provided in this Agreement or in the Controlled
Account Agreement.

 

(b)           Deposits to and Disbursements from
the Controlled Account. All deposits to and disbursements of all or any
portion of the deposits to the Controlled Account shall be in accordance with
this Agreement and the Controlled Account Agreement. The Borrower shall pay any
and all fees charged by Depository Bank in connection with the maintenance of
the Controlled Account required to be established by or for it hereunder, and
the performance of the Depository Bank’s duties.

 

138

 

(c)           Security Interest.

 

(i)            The Borrower hereby grants a
perfected first priority security interest in favor of the Administrative Agent
for the ratable benefit of the Lenders in each Controlled Account established
by or for it hereunder and all financial assets and other property and sums at any
time held, deposited or invested therein, and all security entitlements and
investment property relating thereto, together with any interest or other
earnings thereon, and all proceeds thereof, whether accounts, general
intangibles, chattel paper, deposit accounts, instruments, documents or
securities (collectively, “Controlled Account Collateral”), together
with all rights of a secured party with respect thereto (even if no further
documentation is requested by the Administrative Agent or the Lenders or
executed by the Borrower).

 

(ii)           The Borrower covenants and agrees:

 

(A)          to do all acts that may be reasonably
necessary to maintain, preserve and protect the Controlled Account Collateral;

 

(B)           to pay promptly when due all material
taxes, assessments, charges, encumbrances and liens now or hereafter imposed
upon or affecting any Controlled Account Collateral;

 

(C)           to appear in and defend any action or
proceeding which may materially and adversely affect the Borrower’s title to or
the Administrative Agent’s interest in the Controlled Account Collateral;

 

(D)          following the creation of each
Controlled Account established by or for the Borrower and the initial funding
thereof, other than to the Administrative Agent pursuant to this Agreement or a
Controlled Account Agreement, not to transfer, assign, sell, surrender,
encumber, mortgage, hypothecate, or otherwise dispose of any of the Controlled
Account Collateral or rights or interests therein, and to keep the Controlled
Account Collateral free of all levies and security interests or other liens or
charges except the security interest in favor of the Administrative Agent
granted hereunder;

 

(E)           to account fully for and promptly
deliver to the Administrative Agent, in the form received, all documents,
chattel paper, instruments and agreements constituting the Controlled Account
Collateral hereunder, endorsed to the Administrative Agent or in blank, as
requested by the Administrative Agent, and accompanied by such powers as
appropriate and until so delivered all such documents, instruments, agreements
and proceeds shall be held by the Borrower in trust for the Administrative
Agent, separate from all other property of the Borrower; and

 

(F)           from time to time upon request by the
Administrative Agent, to furnish such further assurances of the Borrower’s
title with respect to the Controlled Account Collateral, execute such written
agreements, or do such other acts, all as may be reasonably necessary to
effectuate the purposes of this agreement or as may be

 

139

 

required by law, or in order to perfect or continue
the first-priority lien and security interest of the Administrative Agent in the
Controlled Account Collateral.

 

(iii)          All interest earned on the Controlled
Account shall be retained in such Controlled Account subject to the Borrower’s
withdrawal rights set forth herein. The Borrower shall treat all interest
earned on the Controlled Account as its income for federal income tax purposes.

 

(iv)          Upon the occurrence and during the
continuation of an Event of Default, the Administrative Agent may (and, upon
the instruction of the Required Lenders, shall):

 

(A)          without any advertisement or notice to
or authorization from the Borrower (all of which advertisements, notices and/or
authorizations are hereby expressly waived), withdraw, sell or otherwise
liquidate the funds deposited into any Controlled Account, and apply the
proceeds thereof to the unpaid Obligations in such order as the Administrative
Agent may elect in its sole discretion, without liability for any loss, and the
Borrower hereby consents to any such withdrawal and application as a
commercially reasonable disposition of such funds and agrees that such
withdrawal shall not result in satisfaction of the Obligations except to the
extent the proceeds are applied to such sums;

 

(B)           without any advertisement or notice
to or authorization from the Borrower (all of which advertisements, notices
and/or authorizations are hereby expressly waived), notify any account debtor
on any Controlled Account Collateral pledged by the Borrower pursuant hereto to
make payment directly to the Administrative Agent;

 

(C)           foreclose upon all or any portion of
the Controlled Account Collateral pledged by the Borrower or otherwise enforce
the Administrative Agent’s security interest in any manner permitted by law or
provided for in this Agreement;

 

(D)          sell or otherwise dispose of all or
any portion of the Controlled Account Collateral pledged by the Borrower at one
or more public or private sales, whether or not such Controlled Account
Collateral is present at the place of sale, for cash or credit or future
delivery, on such terms and in such manner as the Administrative Agent may
determine;

 

(E)           recover from the Borrower all costs
and expenses, including, without limitation, reasonable attorneys’ fees,
incurred or paid by the Administrative Agent in exercising any right, power or
remedy provided by this subsection (iv); and

 

(F)           exercise any other right or remedy
available to the Administrative Agent or the Lenders under Applicable Law or in
equity.

 

(v)           Reserved.

 

140

 

14.29       Financing Statements. The
Borrower authorizes the Administrative Agent to file such financing statements
(and any continuation statements with respect thereto) as the Administrative
Agent may deem necessary in order to perfect or maintain the perfection of any
security interest granted or to be granted to the Administrative Agent pursuant
to any of the Loan Documents, in such jurisdictions as the Administrative Agent
may elect.

 

14.30       Severance of Loan. Eurohypo shall have the right, at any time,
but at no additional cost to the Borrower, to direct the Administrative Agent,
with respect to all or any portion of the Loan, to (a) cause the Notes, the
Deeds of Trust and the other Security Documents to be severed and/or split into
two or more separate notes, deeds of trust and other security agreements, so as
to evidence and secure one or more senior and subordinate mortgage loans, (b)
create one more senior and subordinate notes (i.e., an A/B or A/B/C structure)
secured by the Deeds of Trust and the other Security Documents, (c) create
multiple components of the Notes (and allocate or reallocate the Outstanding
Principal Amount of the Loan among such components or among the components of
the Notes delivered upon the Closing Date) or (d) otherwise sever the Loan into
two or more loans secured by the Deeds of Trust and the other Security
Documents; in each such case, in whatever proportions and priorities as
Eurohypo may so direct in its discretion to the Administrative Agent; provided,
however, that in each such instance (i) the Outstanding Principal Amount
of all the Notes evidencing the Loan (or (in any case involving the splitting, modification, componentization or
other severance of any previously-split, componentized or severed Note)
components of such Notes) immediately after the effective date of such
splitting, modification, componentization or other severance, equals the Outstanding
Principal Amount of the Loan (or (in any case involving the splitting, modification, componentization or
other severance of any previously-split, componentized or severed Note) the
applicable component thereof) immediately prior to such splitting,
modification, componentization or other severance, (ii) the weighted average of
the interest rates for all such Notes (or, if applicable, components of such
Notes) immediately after the effective date of such splitting, modification,
componentization or other severance equals the interest rate of the original
Note (or the applicable component thereof) immediately prior to such splitting,
modification, componentization or other severance thereof, (iii) there
shall be no modification of the Maturity Date, the Types of Loans available to
be selected by the Borrower (provided that the Applicable Margins on the
relevant Types may be modified, and may differ for each of such split,
modified, componentized or otherwise severed Notes or components, so long as the
restrictions set forth in clause (ii) above are not violated), the due dates
for mandatory principal payments, prepayment terms, Events of Default (other
than cross defaulting of any severed Notes or Security Documents) or any other
modifications which would result, in the aggregate, in an increase in the
economic obligations of the Borrower with respect to all Loans outstanding
hereunder following such splitting,
modification, componentization or other severance as compared to the
obligations of the Borrower immediately prior thereto (other than
changes in the interest rate or Applicable Margins which do not violate the
restrictions in clause (ii) above), including, without limitation, any recourse
provisions, and (iv) except for modifications which do not violate the
restrictions set forth in clauses (ii) and (iii) above, such modification shall
not result, in the aggregate, in an increase in any liability or obligation, or
any change in any substantive rights, of the Borrower, any Borrower Party or
any Named Principal under the Loan Documents following such splitting, modification, componentization or
other severance as compared to the respective liabilities, obligations or
rights of such parties immediately prior thereto. If requested by the
Administrative Agent in writing, subject to the provisions of Section

 

141

 

2.04(b), the Borrower shall execute within ten (10)
Business Days after such request, a severance agreement, amendments to or
amendments and restatements of any one or more Loan Documents, and such
documentation as the Administrative Agent may reasonably request to evidence
and/or effectuate any such splitting, modification, componentization or other
severance, all in form and substance reasonably satisfactory to Eurohypo, the
Administrative Agent and the Borrower.

 

14.31       Additional Permitted Public REIT
Provisions. In connection with the Permitted Reorganization and following a
Permitted Public REIT Transfer, the following provisions shall apply:

 

(a)           The
Borrower shall have the right from time to time upon notice to, but without the
consent of, the Administrative Agent to change the Borrower’s Manager to the
Permitted Public REIT or any other Permitted Public REIT Subsidiary determined
by the Permitted Public REIT. Upon the occurrence of such change, the Borrower
shall notify the Administrative Agent of the name and principal place of
business or chief executive office of the new Borrower’s Manager within ten
(10) Business Days after any change in the same.

 

(b)           Notwithstanding
the provisions of Section 1.02(b), the Borrower shall have the right
from time to time upon notice to, but without the consent of, the
Administrative Agent, to change its fiscal year, including the last days of its
fiscal year and fiscal quarters, to correspond with those of the Permitted
Public REIT. The Borrower shall provide written notice thereof to the
Administrative Agent within ten (10) Business Days after the occurrence of such
change.

 

(c)           Nothing in Sections 8.03, 9.01
and 9.07 as to parties other than the Borrower shall prohibit or
restrict the actions taken pursuant to the Permitted Reorganization, or any
other actions expressly permitted by this Section 14.31 (or any
agreement to take any such actions). As used herein, the term “Permitted
Reorganization” shall mean a simultaneous transaction consisting of
one or more of the following elements, provided that, upon the consummation of
such transaction, the Borrower shall be in compliance with all covenants set
forth in this Agreement (after giving effect to the express terms thereof which
by their terms may be applicable or inapplicable upon the occurrence of the
Permitted Public REIT Transfer or Transfer of the Projects to a Qualified
Successor Entity), no Event of Default shall result therefrom, and the Permitted Public REIT shall directly or
indirectly own fifty-one percent (51%) or more of the ownership interests in
the Borrower and shall directly or indirectly control the Borrower:

 

(i)            The
formation of a limited liability company that is a wholly owned Subsidiary of
the Operating Partnership of the Permitted Public REIT (the “OP Merger Sub”)
and the merger of the Borrower’s Member into the OP Merger Sub with either the
Borrower’s Member or the OP Merger Sub as the surviving entity;

 

(ii)           The
contribution to the Operating Partnership of the Permitted Public REIT of all
of the Equity Interests in the Borrower’s Member that are not redeemed;

 

142

 

(iii)          At
the option of the Permitted Public REIT, the contribution to the
Operating Partnership of the Permitted Public REIT or another Permitted Public REIT
Subsidiary as part of a Permitted Public REIT Transfer of all of the Equity
Interests in the Borrower, the withdrawal of the Borrower’s Member as the sole
member of the Borrower and the dissolution of the Borrower’s Member or the OP
Merger Sub;

 

(iv)          The
formation of a limited liability company that is a wholly owned Subsidiary of
the Permitted Public REIT (“REIT Merger Sub 1”) and the merger of the Borrower’s
Manager into REIT Merger Sub 1 with either the Borrower’s Manager or REIT
Merger Sub 1 as the surviving entity;

 

(v)           The
formation of a limited liability company that is a wholly owned Subsidiary of
the Permitted Public REIT (“REIT Merger Sub 2”) and the merger of the
Property Manager into REIT Merger Sub 2 with either the Property Manager or
REIT Merger Sub 2 as the surviving entity;

 

(vi)          The
contribution to the Operating Partnership of the Permitted Public REIT of all
or substantially all of the assets of the Borrower’s Manager and all or
substantially all of the assets of the Property Manager and, at the option of
the Permitted Public REIT, the subsequent dissolution of the Borrower’s Manager
and/or the Property Manager;

 

(vii)         The
withdrawal of the Borrower’s Manager as the manager of the Borrower and any
applicable Subsidiaries of the Borrower or the Borrower’s Member and the
appointment of the Permitted Public REIT or any wholly-owned Permitted Public
REIT Subsidiary determined by the Permitted Public REIT as the new manager of
such Person;

 

(viii)        The
termination of the Property Management Agreement for each Project and the
appointment, pursuant to Section 14.31(d), of a new Property Manager for
the Projects consisting of the Permitted Public REIT or any wholly-owned Permitted
Public REIT Subsidiary determined by the Permitted Public REIT; and

 

(ix)           Modifications
to the Organizational Documents of the Borrower Parties that do not violate Section 9.01(b);
and

 

(x)            The
formation, dissolution or termination of such other entities, the contribution
or transfer of such other assets, the execution of such contracts and
agreements, and such other deliveries and actions as the Borrower Parties shall
determine to be necessary or appropriate to accomplish the foregoing so long
as, upon the consummation of such transaction, the Borrower shall be in
compliance with all covenants set forth in this Agreement (after giving effect
to the express terms thereof which by their terms may be applicable or
inapplicable upon the occurrence of the Permitted Public REIT Transfer or Transfer
of the Projects to a Qualified Successor Entity), no Event of Default shall
result therefrom, and the Permitted
Public REIT shall directly or indirectly own fifty-one percent (51%) or more of
the ownership interests in the Borrower and shall directly or indirectly
control the Borrower.

 

(d)           In connection with the Permitted
Reorganization or at any time thereafter, the Borrower shall have the right to
terminate (or assign to the new property manager) the existing Property
Management Agreement for each Project and to replace, pursuant to this

 

143

 

Section 14.31(d), the Property Manager by the Permitted
Public REIT or by a management company controlled directly or indirectly by the
Permitted Public REIT (including, without limitation, the Operating Partnership
of the Permitted Public REIT or any other wholly-owned Permitted Public REIT
Subsidiary). If any Project is managed by the Permitted Public REIT or a
Permitted Public REIT Subsidiary, then the Borrower may dispense with the
requirement of entering into a property management agreement or may enter into
a new property management agreement for one or more of the Projects on such
terms as it deems satisfactory (which may include, without limitation, a
separate cost sharing agreement delegating responsibilities for property
management to the Permitted Public REIT or a Permitted Public REIT Subsidiary);
provided that, if a property management agreement is entered into, such
agreement shall in all events be subordinate to the Deeds of Trust and the
other Loan Documents, and, within thirty (30) days after entering into a new
property management agreement, the Borrower and the new property manager will
execute and deliver to the Administrative Agent a Property Manager’s Consent,
with such changes thereto as may be reasonably necessary for the Permitted
Public REIT or its Affiliates to comply with tax or other Applicable Laws
pertaining to their status.

 

(e)           The Borrower’s Manager’s Limited
Indemnity and Guaranty shall be replaced by replacement guaranties delivered by
an entity reasonably
satisfactory to the Administrative Agent with a net worth at least equivalent to
that of Borrower’s Manager as of the date of this Agreement and which controls
the Borrower, which may, at Borrower’s option, be the Permitted Public REIT’s Operating Partnership or another guarantor reasonably satisfactory to the
Administrative Agent. Without limiting the discretion of the Administrative
Agent in connection with the review of any such replacement guarantor, it is
understood and agreed that (i) such replacement guarantor shall deliver to the
Administrative Agent such certified organizational documents and papers,
authorizations, consents, resolutions, incumbency certificates and legal
opinions as the Administrative Agent may reasonably require in its discretion
in order to confirm the due formation, valid existence and good standing of such
replacement guarantor, due execution, authorization, validity and
enforceability of such replacement guaranties, the enforceability with respect
to such replacement guarantor of the obligations incurred thereby and the
adequacy of the consideration received by such replacement guarantor for the incurrence
of such obligations and such other matters relating to such replacement
guarantor as the Administrative Agent may reasonably request; (ii) the
Administrative Agent shall have received such financial statements and obtained
such background checks, searches of governmental records and similar diligence
items with respect to such replacement guarantor as shall be in form and
substance reasonably satisfactory to the Administrative Agent; and (iii) the Borrower
or replacement guarantor shall pay upon demand all costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses)
incurred by the Administrative Agent in connection with the review,
preparation, negotiation or execution of any of the foregoing items. Upon the
Administrative Agent’s approval of such replacement guarantor and satisfaction
of the conditions set forth above, such replacement guarantor shall be deemed a
“Guarantor” hereunder in substitution for the named Guarantor and the
replacement guaranties delivered by such replacement guarantor shall be deemed
the “Guarantor Documents” hereunder.

 

(f)            The Borrower shall ̧ within ten (10) Business Days, following the
consummation of the Permitted Reorganization, deliver written notice thereof to
the Administrative Agent which shall identify in reasonable detail any changes
in the identity of the

 

144

 

Borrower
Parties or the Property Manager, any changes in the Property Management Agreement,
any changes in the Organizational Documents of the Borrower Parties, or any
change in the fiscal year of the Borrower which were consummated in connection
therewith.

 

[Signature Pages Follow]

 

145

 

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

 

	
   

  	
  BORROWER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS EMMETT
  1996, LLC,

  	
   

  
	
   

  	
  a Delaware
  limited liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  DOUGLAS EMMETT
  REALTY ADVISORS,

  	
   

  
	
   

  	
   

  	
  a California
  corporation, its Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ William
  Kamer

  	
   

  
	
   

  	
   

  	
   

  	
  William Kamer

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Douglas Emmett
  1996, LLC

  	
   

  
	
   

  	
  c/o Douglas
  Emmett Realty Advisors

  	
   

  
	
   

  	
  808 Wilshire
  Boulevard, Suite 200

  	
   

  
	
   

  	
  Santa Monica,
  California 90401

  	
   

  
	
   

  	
  Attention:
  Jordan L. Kaplan

  	
   

  
	
   

  	
  Telecopier No.:
  (310) 255-7702

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With copies to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Douglas Emmett
  1996, LLC

  	
   

  
	
   

  	
  c/o Douglas
  Emmett Realty Advisors

  	
   

  
	
   

  	
  808 Wilshire
  Boulevard, Suite 200

  	
   

  
	
   

  	
  Santa Monica,
  California 90401

  	
   

  
	
   

  	
  Attention:
  William Kamer

  	
   

  
	
   

  	
  Telecopier No.:
  (310) 255-7702

  	
   

  
						

 

 

	
   

  	
  LENDERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EUROHYPO AG, NEW
  YORK BRANCH

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alfred Koch

  	
   

  
	
   

  	
   

  	
  Name: Alfred
  Koch

  	
   

  
	
   

  	
   

  	
  Title:   Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Cox

  	
   

  
	
   

  	
   

  	
  Name: Stephen
  Cox

  	
   

  
	
   

  	
   

  	
  Title:   Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices to Eurohypo AG,

  	
   

  
	
   

  	
  New York Branch:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Eurohypo AG, New
  York Branch

  	
   

  
	
   

  	
  1114 Avenue of
  the Americas, 29th Floor

  	
   

  
	
   

  	
  New York, New
  York 10036

  	
   

  
	
   

  	
  Attention: Legal
  Director

  	
   

  
	
   

  	
  Telecopier No.:
  (866) 267-7680

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With copies to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Eurohypo AG, New
  York Branch

  	
   

  
	
   

  	
  1114 Avenue of
  the Americas, 29th Floor

  	
   

  
	
   

  	
  New York, New
  York 10036

  	
   

  
	
   

  	
  Attention: Head
  of Portfolio Operations

  	
   

  
	
   

  	
  Telecopier No.:
  (866) 267-7680

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  - and -

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Morrison &
  Foerster LLP

  	
   

  
	
   

  	
  555 West Fifth
  Street, Suite 3500

  	
   

  
	
   

  	
  Los Angeles,
  California 90013

  	
   

  
	
   

  	
  Attention:
  Thomas R. Fileti, Esq.

  	
   

  
	
   

  	
  Telecopier No.:
  (213) 892-5454

  	
   

  
						

 

 

	
   

  	
  BARCLAYS CAPITAL
  REAL ESTATE INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ LoriAnn Rung

  	
   

  
	
   

  	
   

  	
  Name:

  	
  LoriAnn Rung

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Barclays Capital Real Estate Inc.

  	
   

  
	
   

  	
  200 Park Avenue

  	
   

  
	
   

  	
  New York, NY 10166

  	
   

  
	
   

  	
  Attention: Larry Miller, Director

  	
   

  
	
   

  	
  Telecopier No.: (212) 412-1613

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With copies to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Barclays Capital Real Estate Inc.

  	
   

  
	
   

  	
  200 Park Avenue

  	
   

  
	
   

  	
  New York, NY 10166

  	
   

  
	
   

  	
  Attention: Lori Rung

  	
   

  
	
   

  	
  Telecopier No.: (212) 412-1664

  	
   

  

 

 

	
   

  	
   

  	
  ADMINISTRATIVE
  AGENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EUROHYPO AG, NEW
  YORK BRANCH,

  	
   

  
	
   

  	
  as
  Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Sarner

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Sarner

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Cox

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Stephen Cox

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices to

  	
   

  
	
   

  	
  Eurohypo as
  Administrative Agent:

  	
   

  
	
   

  	
   

  
	
   

  	
  Eurohypo AG, New
  York Branch

  	
   

  
	
   

  	
  1114 Avenue of the
  Americas, 29th Floor

  	
   

  
	
   

  	
  New York, New
  York 10036

  	
   

  
	
   

  	
  Attention: Legal
  Director

  	
   

  
	
   

  	
  Telecopier No.:
  (866) 267-7680

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With copies to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Eurohypo AG, New
  York Branch

  	
   

  
	
   

  	
  1114 Avenue of
  the Americas, 29th Floor

  	
   

  
	
   

  	
  New York, New
  York 10036

  	
   

  
	
   

  	
  Attention: Head
  of Portfolio Operations

  	
   

  
	
   

  	
  Telecopier No.:
  (866) 267-7680

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  - and -

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Morrison &
  Foerster LLP

  	
   

  
	
   

  	
  555 West Fifth
  Street, Suite 3500

  	
   

  
	
   

  	
  Los Angeles,
  California 90013

  	
   

  
	
   

  	
  Attention:
  Thomas R. Fileti, Esq.

  	
   

  
	
   

  	
  Telecopier No.:
  (213) 892-5454

  	
   

  
								

 

 

SCHEDULE 1A

 

LIST OF PROJECTS

 

1.             1333 Second Street, Santa Monica, California

 

2.             Sherman
Oaks Galleria, 15301-15303 Ventura Boulevard, Sherman Oaks, California

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