10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13

OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

Commission file number 001-33106

DOUGLAS EMMETT, INC.

(Exact name of registrant as specified in its charter)

MARYLAND	20-3073047
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

808 Wilshire Boulevard,

Suite 200

Santa Monica, California 90401

(Address and zip code of principal executive offices)

(310) 255-7700

Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x     Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x	Accelerated filer  o
Non-accelerated filero(Do not check if a smaller reporting company)	Smaller reporting company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o     Nox

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at April 30, 2008
Common Shares of beneficial interest,	121,281,401 shares
$0.01 par value per share

DOUGLAS EMMETT, INC.

FORM 10-Q

TABLE OF CONTENTS

			PAGE NO.
PART I.	FINANCIAL INFORMATION			3
	Item 1.	Financial Statements		3
		Consolidated Balance Sheets as of March 31, 2008 (unaudited) and December 31, 2007		3
		Consolidated Statements of Operations for the three months ended March 31, 2008 and 2007 (unaudited)		4
		Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007 (unaudited)		5
		Notes to Consolidated Financial Statements		6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		24
	Item 4.	Controls and Procedures		24
PART II.	OTHER INFORMATION			25
	Item 1.	Legal Proceedings		25
	Item 1A.	Risk Factors		25
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		25
	Item 3.	Defaults Upon Senior Securities		25
	Item 4.	Submission of Matters to a Vote of Security Holders		25
	Item 5.	Other Information		25
	Item 6.	Exhibits		26
	SIGNATURES			27

- 2 - -

Douglas Emmett, Inc.

Consolidated Balance Sheets

(in thousands, except for share data)

	March 31, 2008			December 31, 2007
	(unaudited)
Assets
Investment in real estate
Land	$	887,453		$	825,560
Buildings and improvements		5,475,767			4,978,124
Tenant improvements and lease intangibles		531,315			460,486
		6,894,535			6,264,170
Less: accumulated depreciation		(298,863	)		(242,114	)
Net investment in real estate		6,595,672			6,022,056
Cash and cash equivalents		4,493			5,843
Tenant receivables, net		252			955
Deferred rent receivables, net		25,076			20,805
Interest rate contracts		149,633			84,600
Acquired lease intangible assets, net		22,210			24,313
Other assets		27,037			31,396
Total assets	$	6,824,373		$	6,189,968
Liabilities
Secured notes payable, including loan premium	$	3,729,368		$	3,105,677
Accounts payable and accrued expenses		66,882			62,704
Security deposits		34,278			31,309
Acquired lease intangible liabilities, net		206,070			218,371
Interest rate contracts		286,762			129,083
Dividends payable		22,737			19,221
Total liabilities		4,346,097			3,566,365
Minority interests		556,125			793,764
Stockholders’ Equity
Common stock, $0.01 par value 750,000,000 authorized, 121,263,847
and 109,833,903 outstanding at March 31, 2008 and December 31, 2007,    respectively.		1,213			1,098
Additional paid-in capital		2,272,234			2,019,716
Accumulated other comprehensive income		(192,009	)		(101,163	)
Accumulated deficit		(159,287	)		(89,812	)
Total stockholders’ equity		1,922,151			1,829,839
Total liabilities and stockholders’ equity	$	6,824,373		$	6,189,968

See notes to consolidated financial statements.

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Douglas Emmett, Inc.

Consolidated Statements of Operations

(unaudited and in thousands, except for share data)

	Three Months Ended March 31,
	2008			2007
Revenues
Office rental
Rental revenues	$	99,016		$	91,612
Tenant recoveries		5,368			8,186
Parking and other income		12,660			11,100
Total office revenues		117,044			110,898
Multifamily rental
Rental revenues		17,224			16,514
Parking and other income		560			491
Total multifamily revenues		17,784			17,005
Total revenues		134,828			127,903
Operating expenses
Office expense		31,364			33,294
Multifamily expense		3,877			4,923
General and administrative		5,285			5,042
Depreciation and amortization		56,749			51,121
Total operating expenses		97,275			94,380
Operating income		37,553			33,523
Interest and other income		409			82
Interest expense		(41,203	)		(38,302	)
Loss before minority interests		(3,241	)		(4,697	)
Minority interests		741			1,424
Net loss	$	(2,500	)	$	(3,273	)
Net loss per common share – basic and diluted	$	(0.02	)	$	(0.03	)
Dividends declared per common share	$	0.1875		$	0.175
Weighted average shares of common stock outstanding -basic and diluted		118,283,579			115,005,860

See notes to consolidated financial statements.

- 4 - -

Douglas Emmett, Inc.

Consolidated Statements of Cash Flows

(unaudited and in thousands)

	Three Months Ended March 31,
	2008			2007
Operating Activities
Net loss	$	(2,500	)	$	(3,273	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Minority interests		(741	)		(1,424	)
Depreciation and amortization		56,749			51,121
Net accretion of acquired lease intangibles		(10,198	)		(9,863	)
Amortization of deferred loan costs		362			249
Amortization of loan premium		(1,160	)		(1,095	)
Non-cash market value adjustments on interest rate contracts		1,800			3,768
Non-cash amortization of stock-based compensation		3,291			670
Change in working capital components
Tenant receivables		703			245
Deferred rent receivables		(4,271	)		(4,505	)
Accounts payable, accrued expenses and security deposits		3,282			6,427
Other		6,726			269
Net cash provided by operating activities		54,043			42,589
Investing Activities
Capital expenditures and property acquisitions		(627,103	)		(13,471	)
Net cash used in investing activities		(627,103	)		(13,471	)
Financing Activities
Proceeds from borrowings		833,850			31,500
Deferred loan costs		(2,010	)		-
Repayment of borrowings		(205,000	)		(41,500	)
Net change in short-term borrowings		(4,000	)		-
Issuance of minority interest in consolidated joint venture		100			-
Distributions to minority interests		(8,251	)		(6,003	)
Redemption of minority interests		(23,758	)		-
Cash dividends		(19,221	)		(13,801	)
Net cash provided by (used in) financing activities		571,710			(29,804	)
Decrease in cash and cash equivalents		(1,350	)		(686	)
Cash and cash equivalents at beginning of period		5,843			4,536
Cash and cash equivalents at end of period	$	4,493		$	3,850

See notes to consolidated financial statements for additional non-cash items.

- 5 - -

Douglas Emmett, Inc.

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

1. Organization and Description of Business

Douglas Emmett, Inc, a Maryland corporation formed on June 28, 2005, is a fully integrated, self-administered, and self-managed Real Estate Investment Trust (REIT).  We did not have any meaningful operating activity until the consummation of our initial public offering (IPO) and the related acquisition of our predecessor and certain other entities on October 30, 2006.  Through our interest in Douglas Emmett Properties, LP (our operating partnership) and its subsidiaries, we own, manage, lease, acquire and develop real estate.  As of March 31, 2008, we owned a portfolio of 55 office properties (including ancillary retail space) and nine multifamily properties, as well as the fee interests in two parcels of land that we lease to third parties.  All of these properties are located in Los Angeles County, California and Honolulu, Hawaii.  We qualified as a REIT for federal income tax purposes beginning with our initial taxable year ending December 31, 2006 and expect to maintain such qualification.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements as of March 31, 2008 and December 31, 2007 and for the three months ended March 31, 2008 and 2007 are the consolidated financial statements of Douglas Emmett, Inc. and its subsidiaries including our operating partnership.  All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.  Certain prior period amounts have been reclassified to conform with current period presentation.

Unaudited Interim Financial Information

The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosure normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) may have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the presentation not misleading. The accompanying unaudited financial statements include, in our opinion, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial information set forth therein. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2008. The interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2007 and notes thereto.  Any reference to the number of properties and square footage are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions, for example with respect to the allocation of the purchase price of acquisitions among land, buildings, improvements, equipment and any related intangible assets and liabilities.  These estimates and assumptions are subjective and affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, we consider short-term investments with maturities of three months or less when purchased to be cash equivalents.

Interest Rate Contracts

We manage our interest rate risk associated with borrowings by obtaining interest rate swap and interest rate cap contracts. No other derivative instruments were used.

Statement of Financial Accounting Standards (FAS) No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133), as amended and interpreted, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.  As required by FAS 133, we record all derivatives on the balance sheet at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

Our objective in using derivatives is to add stability to interest expense and to manage our exposure to interest rate movements or other identified risks.  To accomplish this objective, we primarily use interest rate swaps as part of our cash flow hedging strategy.  Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount.  For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings.  The ineffective portion of changes in the fair value of the derivative is recognized directly in earnings.  We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.  See Note 8 for the accounting of our interest rate hedges.

Income Taxes

We elected to be taxed as a REIT under the Internal Revenue Code (the “Code”) commencing with our initial taxable year ending December 31, 2006. To qualify as a REIT, we are required to distribute at least 90% of our REIT taxable income to our stockholders and meet the various other requirements imposed by the Code related to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided we qualify for taxation as a REIT, we generally will not be subject to corporate-level income tax on the earnings distributed currently to our stockholders that we derive from our REIT qualifying activities. We will be subject to corporate-level tax on the earnings we derive through our taxable REIT subsidiary (TRS). If we fail to qualify as a REIT in any taxable year, and are unable to avail ourselves of certain savings provisions set forth in the Code, all of our taxable income would be subject to federal income tax at regular corporate rates, including any applicable alternative minimum tax.

- 7 - -

Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

In addition, we will be subject to taxation by various state and local (and potentially foreign) jurisdictions, including those in which we transact business or reside.  Our predecessor was an S-Corporation and the institutional funds it sponsored were limited partnerships. Our non-TRS subsidiaries, including the operating partnership, are either partnerships or disregarded entities for federal income tax purposes.  Under applicable federal and state income tax rules, the allocated share of net income or loss from the limited partnerships and S-Corporation is reportable in the income tax returns of the respective partners and stockholders.  Accordingly, no income tax provision is included in the accompanying consolidated financial statements other than the 1.5% tax due on taxable income of S-Corporations in the State of California attributable to periods prior to our formation transactions.

Earnings Per Share (EPS)

Basic EPS is calculated by dividing the net income applicable to common stockholders for the period by the weighted average of common shares outstanding during the period. Diluted EPS is calculated by dividing the net income applicable to common stockholders for the period by the weighted average number of common and dilutive instruments outstanding during the period using the treasury stock method.  Since we were in a net loss position during the three months ended March 31, 2007 and 2008, all potentially dilutive instruments are anti-dilutive and have been excluded from our computation of weighted average dilutive shares outstanding.

Recently Issued Accounting Literature

In February 2007, the Financial Accounting Standards Board (FASB) issued FAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115.  This standard permits entities to choose to measure many financial instruments and certain other items at fair value and is effective for the first fiscal year beginning after November 15, 2007, which for us means 2008.  We did not elect the fair value measurement option for any financial assets or liabilities during the first quarter of 2008, nor do we currently expect to elect this option for any financial assets or liabilities in the near future.

In December 2007, the FASB issued FAS No. 160, Non-controlling Interests in Consolidated Financial Statements-an Amendment of Accounting Research Bulletin No. 51 (FAS 160).  FAS 160 establishes new accounting and reporting standards for a non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary.  Specifically, this statement requires the recognition of a non-controlling interest (minority interest) as equity in the consolidated financial statements separate from the parent’s equity.  The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement.  FAS 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest.  In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated.  Such gain or loss will be measured using the fair value of the non-controlling equity investment on the deconsolidation date.  FAS 160 also includes expanded disclosure requirements regarding the interests of the parent and its non-controlling interest. FAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, which for us means 2009.  We are currently evaluating the impact that FAS 160 will have on our financial statements.

In December 2007, the FASB issued FAS No. 141 (Revised 2007), Business Combinations (FAS 141R).  FAS 141R will significantly change the accounting for business combinations.  Under FAS 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions.  FAS 141R also includes a substantial number of new disclosure requirements.  FAS 141R applies prospectively to business combinations occurring in any reporting period beginning on or after December 15, 2008, which for us means 2009.  We are currently evaluating the impact that FAS 141R will have on our financial statements.

- 8 - -

Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

On January 1, 2008, we adopted FAS No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  FAS 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.  FAS 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement.  Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability.  As a basis for considering market participant assumptions in fair value measurements, FAS 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).  Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.

Currently, we use interest rate swaps and capsto manage interest rate risk resulting from variable interest payments on our floating rate debt.  The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.

To comply with the provisions of FAS 157, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.  In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.  We have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.  We do not have any fair value measurements using significant unobservable inputs (Level 3) as of March 31, 2008.

The table below presents the assets and liabilities measured at fair value on a recurring basis as of March 31, 2008, aggregated by the level in the fair value hierarchy within which those measurements fall.

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Balance at March 31, 2008
Assets
Interest Rate Contracts	$  -	$149,633	$  -	$149,633
Liabilities
Interest Rate Contracts	$  -	$286,762	$  -	$286,762

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

3. Acquisitions

On March 26, 2008, we acquired a 1.4 million square foot office portfolio consisting of six Class “A” buildings all located in our core Los Angeles submarkets – Santa Monica, Beverly Hills, Sherman Oaks/Encino and Warner Center/Woodland Hills – for a contract price of approximately $610 million.  An affiliate of the seller provided $380 million of first trust deed bridge financing at a floating rate of LIBOR plus 200 basis points for nine months.

On February 13, 2008, we acquired a two-thirds interest in a 78,298 square-foot office building located in Honolulu, Hawaii.  As part of the same transaction, we also acquired all of the assets of The Honolulu Club, a private membership athletic and social club, which is located in the building.  The aggregate contract price was approximately $18 million and the purchase was made in a consolidated joint venture with our local partner.  The joint venture financed the acquisition with an $18 million loan at a floating interest rate of LIBOR plus 125 basis points.  The loan has a term of two years with a one-year extension.

The results of operations for the acquired properties are included in our consolidated statement of operations for the three months ended March 31, 2008 since the date of acquisition.  We acquired these properties near the end of the quarter, and as such, the following table represents our preliminary purchase price allocation.  These amounts are likely to change based on a more thorough calculation to be performed during the one-year purchase accounting window provided under the relevant accounting standards.  We did not acquire any properties during the first three months of 2007.

		2008 Acquisitions
Investment in real estate:
Land	$	61,870
Buildings and improvements		494,958
Tenant improvements and other in-place lease assets		61,870
Tenant receivables and other assets		2,386
Accounts payable, accrued expenses and tenant security deposits		(6,190)
Acquired intangible assets other than leases		658
Net acquisition cost	$	615,552

Our acquired lease intangibles related to above/below-market leases is summarized as of:

	March 31, 2008			December 31, 2007
Above-market tenant leases	$	32,770		$	32,770
Accumulated amortization		(13,648	)		(11,564	)
Below-market ground leases		3,198			3,198
Accumulated amortization		(110	)		(91	)
Acquired lease intangible assets, net	$	22,210		$	24,313
Below-market tenant leases	$	261,260		$	261,260
Accumulated accretion		(69,006	)		(57,112	)
Above-market ground leases		16,200			16,200
Accumulated accretion		(2,384	)		(1,977	)
Acquired lease intangible liabilities, net	$	206,070		$	218,371

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

4. Other Assets

Other assets consist of the following at:

	March 31,		December 31,
	2008		2007
Deferred loan costs, net of accumulated amortization of $1,666 and $1,304 at March 31, 2008 and December 31, 2007, respectively	$	6,635	$	4,987
Deposits in escrow		-		4,000
Restricted cash		2,833		2,848
Prepaid interest		3,997		7,944
Prepaid expenses		2,873		3,095
Interest receivable		3,818		3,229
Other indefinite-lived intangible		1,988		1,988
Other		4,893		3,305
	$	27,037	$	31,396

We incurred deferred loan cost amortization expense of $362 and $249 for the three months ended March 31, 2008 and 2007, respectively.  The deferred loan cost amortization is included as a component of interest expense in the consolidated statements of operations.

5. Minimum Future Lease Rentals

 We have leased space to tenants primarily under noncancelable operating leases, which generally contain provisions for a base rent plus reimbursement for certain operating expenses. Operating expense reimbursements are reflected in our consolidated statements of operations as tenant recoveries.

We have leased space to certain tenants under noncancelable leases, which provide for percentage rents based upon tenant revenues. Percentage rental income for the three months ended March 31, 2008 and 2007 totaled $244 and $264, respectively.

Future minimum base rentals on noncancelable office and ground operating leases at March 31, 2008 are as follows:

April 1, 2008 to December 31, 2008	$	383,171
2009		355,705
2010		305,977
2011		252,424
2012		202,993
Thereafter		529,343
Total future minimum base rentals	$	2,029,613

The above future minimum lease payments exclude residential leases, which typically have a term of one year or less, as well as tenant reimbursements, amortization of deferred rent receivables and above/below-market lease intangibles. Some leases are subject to termination options. In general, these leases provide for termination payments should the termination options be exercised. The preceding table is prepared assuming such options are not exercised.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

6. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following as of:

	March 31, 2008		December 31, 2007
Accounts payable	$	45,298	$	43,449
Accrued interest payable		15,290		13,963
Deferred revenue		6,294		5,292
	$	66,882	$	62,704

7. Secured Notes Payable

During the first quarter of 2008, we borrowed an additional $623 million of long-term variable rate debt, as follows:

·   We obtained a $380 million bridge loan from an affiliate of the seller in the March 2008 acquisitions described in Note 3.  This loan has an interest rate of LIBOR plus 200 basis points and a nine-month term.

·   We obtained a non-recourse $340 million term loan secured by four of our previously unencumbered office properties.  This loan bears interest at a floating rate equal to LIBOR plus 150 basis points, but we have entered into interest rate swap contracts that effectively fix the interest rate at 4.84%, effective in the second quarter of 2008 until January 2, 2013.  This loan facility matures on April 1, 2015.  Proceeds from this loan were utilized to repay our secured revolving credit facility and for general corporate purposes.  At March 31, 2008, $225 million was outstanding, leaving $115 million available to us under this loan.  See Note 13.

·   The joint venture, in which we have a two-thirds interest, obtained an $18 million loan that financed the February 2008 acquisition described in Note 3.  This loan has an interest rate of LIBOR plus 125 basis points and a two-year term with a one-year extension.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

A summary of our secured notes payable is as follows:

Type of Debt	March 31, 2008		December 31, 2007	Fixed/Floating Rate	Effective Annual Interest Rate(1)	Maturity Date	Swap Maturity Date
Variable Rate Swapped to Fixed Rate:
Modified Term Loan I(2)(3)	$2,300,000		$2,300,000	LIBOR + 0.85%	5.20%	08/31/12	08/01/10-08/01/12
Term Loan II(4)(5)	225,000		-	LIBOR + 1.50%	--(5)	04/01/15	--
Fannie Mae Loan I (6)	293,000		293,000	DMBS + 0.60%	4.76	06/01/12	08/01/11
Fannie Mae Loan II(6)	95,080		95,080	DMBS + 0.60%	5.86	06/01/12	08/01/11
Fannie Mae Loan III(6)	36,920		36,920	DMBS + 0.60%	5.86	02/01/15	08/01/11
Fannie Mae Loan IV(6)	75,000		75,000	DMBS + 0.76%	4.93	02/01/15	08/01/11
Fannie Mae Loan V(6)	82,000		82,000	LIBOR + 0.62%	5.70	02/01/16	03/01/12
Fannie Mae Loan VI(6)	18,000		18,000	LIBOR + 0.62%	5.90	06/01/17	06/01/12
Subtotal	3,125,000	(7)	2,900,000		5.20%
Variable Rate:
General Electric Bridge Loan	380,000		--	LIBOR + 2.00%		01/02/09	--
Wells Fargo Loan(8)	18,000		--	LIBOR + 1.25%		03/01/10	--
$370 Million Senior Secured Revolving Credit Facility(9)	182,300		180,450	LIBOR / Fed Funds+(10)		10/30/09	--
Subtotal	3,705,300		3,080,450
Unamortized Loan Premium(11)	24,068		25,227
Total	$3,729,368		$3,105,677

(1) Includes the effect of interest rate contracts.  Based on actual/365-day basis and excludes amortization of loan fees and unused fees on credit line.

(2) Secured by seven separate cross collateralized pools.  Requires monthly payments of interest only, with outstanding principal due upon maturity.

(3) Includes $1.11 billion swapped to 4.89% until August 1, 2010; $545.0 million swapped to 5.75% until December 1, 2010; $322.5 million swapped to 4.98% until August 1, 2011; and $322.5 million swapped to 5.02% until August 1, 2012.

(4) Represents a $340 million loan facility, of which $225 million was funded on March 18, 2008.  The remaining $115 million will be funded on May 1, 2008.  Secured by four properties in a separate cross-collateralized pool.  Requires monthly payments of interest only, with outstanding principal due upon maturity.

(5) During the first quarter, we entered into interest rate swap contracts that effectively fix the interest rate on this $340 million facility at 4.84% (or 4.77% on an actual/360-day basis) effective in the second quarter of 2008.

(6) Secured by four separate collateralized pools.  Fannie Mae Discount Mortgage-Backed Security (DMBS) generally tracks 90-day LIBOR.

(7) As of March 31, 2008, the weighted average remaining life of our total outstanding debt is 4.3 years, and the weighted average remaining life of the interest rate swaps is 3.0 years.  Adjusting for the $340 million of swaps that take effect in the second quarter of 2008, the weighted average remaining life of the interest rate swaps is 3.2 years.  These swaps lower the overall effective hedged rate of 5.20% at March 31, 2008 to 5.18% (based on actual/365-day basis).

(8) This loan is carried by a consolidated joint venture formed in 2008, of which our Operating Partnership owns a two-thirds interest.

(9) This credit facility is secured by nine properties and has two-one year extension options available.

(10) This revolver bears interest at either LIBOR +0.70% or Fed Funds +0.95% at our election.  If the amount outstanding exceeds $262.5 million, the credit facility bears interest at either LIBOR +0.80% or Fed Funds +1.05% at our election.

(11) Represents non-cash mark-to-market adjustment on variable rate debt associated with office properties.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

The minimum future principal payments due on our secured notes payable, excluding the non-cash loan premium amortization, at March 31, 2008 are as follows:

April 1, 2008 to December 31, 2008	$	-
2009		562,300
2010		18,000
2011		-
2012		2,688,080
Thereafter		436,920
Total future principal	$	3,705,300

Senior Secured Revolving Credit Facility

We have a $370 million revolving credit facility.  Our secured revolving credit facility is with a group of banks led by Bank of America, NA and Banc of America Securities, LLC, and bears interest at a rate per annum equal to either LIBOR plus 70 basis points or Federal Funds Rate plus 95 basis points if the amount outstanding is $262.5 million or less and at either LIBOR plus 80 basis points or Federal Funds Rate plus 105 basis points if the amount outstanding is greater than $262.5 million. Our secured revolving credit facility contains an accordion feature that allows us to increase the availability by an additional $130 million, to $500 million, under specified circumstances.  The facility bears interest at 15 basis points on the undrawn balance.  The facility expires in 2009 with two one-year extensions at our option.

8. Interest Rate Contracts

We have executed interest rate swaps with a notional amount of $3.2 billion to protect against interest rate fluctuations on our existing variable-rate term loan facilities, including $340 million executed in the first quarter of 2008.  These derivatives were designated and qualify as highly effective cash flow hedges under FAS 133 and remove the variability from the hedged cash flows.  An unrealized loss of $90.8 million and $11.9 million was recorded in accumulated other comprehensive income in our consolidated balance sheets, representing the change in fair value of the cash flow hedges for the three months ended March 31, 2008 and 2007, respectively.  An immaterial amount of hedge ineffectiveness has also been recorded in interest expense.

The components of comprehensive income consist of the following:

	Three Months Ended March 31,
	2008				2007
Net loss		$	(2,500	)		$	(3,273	)
Cash flow hedge adjustment			(90,846	)			(11,888	)
Comprehensive income		$	(93,346	)		$	(15,161	)

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

We also have additional interest rate swaps that we acquired from our predecessor at the time of our IPO.  Our predecessor had $2.21 billion notional of pay-fixed interest rate swaps at swap rates ranging between 4.09% and 5.00%.  Concurrent with the completion of our IPO, we executed receive-fixed swaps for the same notional amount at swap rates ranging between 4.96% and 5.00%, which were intended to largely offset the future cash flows and future change in fair value of our predecessor’s pay-fixed swaps.  The acquired pay-fixed swaps and the new receive-fixed swaps were not designated as hedges under FAS 133 and as such, the changes in fair value of these interest rate swaps have been recognized in earnings for all periods.  The fair value of these swaps decreased $1.9 million for the three months ended March 31, 2008.  Included in the net $1.9 million decrease is a $1.2 million increase related to the credit value adjustment resulting from our initial application of FAS 157 (see Note 2).  The fair value of these swaps decreased $3.6 million for the three months ended March 31, 2007.

9. Stockholders’ Equity and Minority Interests

Minority interests in our operating partnership relate to interests in our operating partnership that are not owned by us, which amounted to approximately 22% at March 31, 2008.  A unit in our operating partnership and a share of our common stock have essentially the same economic characteristics as they share equally in the total net income or loss distributions of our operating partnership.  Investors who own units in our operating partnership, have the right to cause our operating partnership to redeem any or all of their units in our operating partnership for cash equal to the then-current market value of one share of common stock, or, at our election, shares of our common stock on a one-for-one basis.

During the first quarter of 2008, we formed a joint venture to purchase an office building in Honolulu, Hawaii.  The joint venture is two-thirds owned by our operating partnership and is consolidated in our financial statements as of March 31, 2008.

Dividends

During 2008 and 2007, we declared quarterly dividends of $0.1875 and $0.175 per share, respectively, which equals an annual rate of $0.75 and $0.70 per share, respectively.

Equity Conversions and Repurchases

During the first three months of 2008, investors converted 11.4 million units to shares and we repurchased approximately 1.1 million share equivalents in private transactions for a total consideration of approximately $23.8 million.  We may make additional purchases of our share equivalents from time to time in private transactions or in the public markets, but do not have any commitments to do so.

Taxability of Dividends

Earnings and profits, which determine the taxability of distributions to stockholders, will differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of loss on extinguishment of debt, revenue recognition, compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

10. Stock-Based Compensation

On December 16, 2004, the FASB issued FAS No. 123 (revised 2004), Share-Based Payment (FAS 123R), which is a revision of FAS 123, Accounting for Stock-Based Compensation.  Generally, the approach in FAS 123R is similar to the approach described in FAS 123.  However, FAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.

The Douglas Emmett, Inc. 2006 Omnibus Stock Incentive Plan, our stock incentive plan, was adopted by our board of directors and approved by our stockholders prior to the consummation of our IPO. Our stock incentive plan is administered by the compensation committee of our board of directors.  All full-time and part-time officers, employees, directors and other key persons (including consultants and prospective employees) are eligible to participate in our stock incentive plan.  For more information on our stock incentive plan, please refer to the notes to the consolidated financial statements in our 2007 Annual Report on Form 10-K.

During the first quarter of 2008, we granted approximately 2.7 million long-term incentive units and stock options with a total fair market value of $9.9 million.  For the three months ended March 31, 2008, we recognized non-cash compensation expense of $1.2  million upon the vesting of such equity awards, compared to $0.7 million for the three months ended March 31, 2007.  An additional $2.2 million of equity awards vested during the three months ended March 31, 2008 to satisfy a portion of the bonus accrued during 2007.

11. Commitments and Contingencies

We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. We believe that the ultimate outcome of these actions will not have a material adverse effect on our financial position and results of operations or cash flows.

Concentration of Credit Risk

Our properties are located in Los Angeles County, California and Honolulu, Hawaii. The ability of the tenants to honor the terms of their respective leases is dependent upon the economic, regulatory and social factors affecting the markets in which the tenants operate.  We perform ongoing credit evaluations of our tenants for potential credit losses.  Financial instruments that subject us to credit risk consist primarily of cash, accounts receivable, deferred rents receivable and interest rate contracts. We maintain our cash and cash equivalents with high quality financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $100, and to date, we have not experienced any losses on our deposited cash.

Asset Retirement Obligations

In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations—an interpretation of FASB Statement No. 143 (FIN 47).  FIN 47 clarifies that the term “conditional asset retirement obligation” as used in FAS No. 143, Accounting for Asset Retirement Obligations, represents a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement is conditional on a future event that may or may not be within a company’s control.  Under this standard, a liability for a conditional asset retirement obligation must be recorded if the fair value of the obligation can be reasonably estimated. Environmental site assessments and investigations have identified 18 properties in our portfolio containing asbestos, which would have to be removed in compliance with applicable environmental regulations if these properties undergo major renovations or are demolished. As of March 31, 2008, the obligations to remove the asbestos from these properties have indeterminable settlement dates, and therefore, we are unable to reasonably estimate the fair value of the associated conditional asset retirement obligation.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

Future Minimum Lease Payments

We lease portions of the land underlying three of our office properties as more fully described in the notes to consolidated financial statements contained in our 2007 Annual Report on Form 10-K. We expensed ground lease payments in the amount of $786 and $861 for the three months ended March 31, 2008 and 2007, respectively.

The following is a schedule of minimum ground lease payments as of March 31, 2008:

April 1, 2008 to December 31, 2008	$	633
2009		707
2010		733
2011		733
2012		733
Thereafter		4,520
	$	8,059

Tenant Concentrations

For the three months ended March 31, 2008 and 2007, no tenant exceeded 10% of our total rental revenue and tenant reimbursements.

12. Segment Reporting

FAS No. 131, Disclosures about Segments of an Enterprise and Related Information, established standards for disclosure about operating segments and related disclosures about products and services, geographic areas and major customers. Segment information is prepared on the same basis that our management reviews information for operational decision-making purposes. We have operated in two business segments: (i) the acquisition, redevelopment, ownership and management of office real estate and (ii) the acquisition, redevelopment, ownership and management of multifamily real estate.  The products for our office segment include primarily rental of office space and other tenant services including parking and storage space rental. The products for our multifamily segment include rental of apartments and other tenant services including parking and storage space rental.

Asset information by segment is not reported because we do not use this measure to assess performance and make decisions to allocate resources. Therefore, depreciation and amortization expense is not allocated among segments.  Interest and other income, management services, general and administrative expenses, interest expense, depreciation and amortization expense and net derivative gains and losses are not included in rental revenues less rental expenses as the internal reporting addresses these items on a corporate level.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements--(continued)

(in thousands, except shares and per share data)

Rental revenues less rental expenses is not a measure of operating results or cash flows from operating activities as measured by GAAP, and it is not indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. Not all companies may calculate rental revenues less rental expenses in the same manner. We consider rental revenues less rental expenses to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our properties.

	Three Months Ended March 31, 2008
	Office			Multifamily			Total
Rental revenues	$	117,044		$	17,784		$	134,828
Percentage of total		87	%		13	%		100	%
Rental expenses	$	31,364		$	3,877		$	35,241
Percentage of total		89	%		11	%		100	%
Rental revenues less rental expenses	$	85,680		$	13,907		$	99,587
Percentage of total		86	%		14	%		100	%

	Three Months Ended March 31, 2007
	Office			Multifamily			Total
Rental revenues	$	110,898		$	17,005		$	127,903
Percentage of total		87	%		13	%		100	%
Rental expenses	$	33,294		$	4,923		$	38,217
Percentage of total		87	%		13	%		100	%
Rental revenues less rental expenses	$	77,604		$	12,082		$	89,686
Percentage of total		87	%		13	%		100	%

The following is a reconciliation of rental revenues less rental expenses to net loss:

	Three Months Ended March 31,
	2008			2007
Rental revenues less rental expenses	$	99,587		$	89,686
Interest and other income		409			82
General and administrative expenses		(5,285	)		(5,042	)
Interest expense		(41,203	)		(38,302	)
Depreciation and amortization		(56,749	)		(51,121	)
Minority interests		741			1,424
Net loss	$	(2,500	)	$	(3,273	)

13. Subsequent Events

On May 1, 2008, the remaining $115 million of debt described in Note 7 was funded.

As described in Note 3, in February 2008, we acquired an office building in Honolulu, Hawaii.  Located in this building is a private membership athletic and social club known as The Honolulu Club.  We acquired the net assets of the club as part of the transaction to acquire the building.  Subsequent to the end of the first quarter, we entered into an agreement to sell the net assets of The Honolulu Club to a third party, while retaining a lease for the space they occupy in the office building that we now own.  The total sales price was not material.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements.

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act).  You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Report.  We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995.  We caution investors that any forward-looking statements presented in this Report, or those that we may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information currently available to us.  Such statements are based on assumptions and the actual outcome will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict.  Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect.  As a result, our actual future results can be expected to differ from our expectations, and those differences may be material.  Accordingly, investors should use caution in relying on past forward-looking statements, which are based on known results and trends at the time they are made, to anticipate future results or trends.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include the following: adverse economic or real estate developments in Southern California and Honolulu; decreased rental rates or increased tenant incentive and vacancy rates; defaults on, early termination of, or non-renewal of leases by tenants; increased interest rates and operating costs; failure to generate sufficient cash flows to service our outstanding indebtedness; difficulties in identifying properties to acquire and completing acquisitions; failure to successfully operate acquired properties and operations; failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended (the Internal Revenue Code); possible adverse changes in rent control laws and regulations; environmental uncertainties; risks related to natural disasters; lack or insufficient amount of insurance; inability to successfully expand into new markets and submarkets; risks associated with property development; conflicts of interest with our officers; changes in real estate, zoning laws and increases in real property tax rates; and the consequences of any future terrorist attacks. For further discussion of these and other factors, see “Item 1A.  Risk Factors” in our 2007 Annual Report on Form 10-K.

This Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.  We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Report.

Critical Accounting Policies

Our discussion and analysis of our historical financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements in conformity with GAAP requires us to make estimates of certain items and judgments as to certain future events, for example with respect to the allocation of the purchase price of acquired property among land, buildings, improvements, equipment, and any related intangible assets and liabilities, or the effect of a property tax reassessment of our properties in connection with our IPO.  These determinations, even though inherently subjective and prone to change, affect the reported amounts of our assets, liabilities, revenues and expenses.  While we believe that our estimates are based on reasonable assumptions and judgments at the time they are made, some of our assumptions, estimates and judgments will inevitably prove to be incorrect.  As a result, actual outcomes will likely differ from our accruals, and those differences—positive or negative—could be material.  Some of our accruals are subject to adjustment, as we believe appropriate based on revised estimates and reconciliation to the actual results when available.

In addition, we identified certain critical accounting policies that affect certain of our more significant estimates and assumptions used in preparing our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2007.  We have not made any material changes to these policies.

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Historical Results of Operations

Overview

We are a fully integrated, self-administered and self-managed REIT and one of the largest owners and operators of high-quality office and multifamily properties in Los Angeles County, California and in Honolulu, Hawaii.  Our presence in Los Angeles and Honolulu is the result of a consistent and focused strategy of identifying submarkets that are supply constrained, have high barriers to entry and exhibit strong economic characteristics such as population and job growth and a diverse economic base.  In our office portfolio, we focus primarily on owning and acquiring a substantial share of top-tier office properties within submarkets located near high-end executive housing and key lifestyle amenities. In our multifamily portfolio, we focus primarily on owning and acquiring select properties at premier locations within these same submarkets.  Our properties are concentrated in nine premier Los Angeles County submarkets—Brentwood, Olympic Corridor, Century City, Santa Monica, Beverly Hills, Westwood, Sherman Oaks/Encino, Warner Center/Woodland Hills and Burbank—as well as in Honolulu, Hawaii.

Significant Transactions

Acquisitions.  During the first quarter of 2008, we completed the following transactions (see Note 3 to our consolidated financial statements included in this Report):

·   In March 2008, we acquired a 1.4 million square foot office portfolio consisting of six Class “A” buildings located in its core Los Angeles submarkets – Santa Monica, Beverly Hills, Sherman Oaks/Encino and Warner Center/Woodland Hills – for a contract price of approximately $610 million.

·     In February 2008, we acquired a 78,298 square-foot office building located in Honolulu, Hawaii.  As part of the same transaction, we also acquired all of the assets of The Honolulu Club, a private membership athletic and social club, which is located in the building.  The aggregate contract price was approximately $18 million and the purchase was made in a consolidated joint venture with our local partner.

Financings.  During the first quarter of 2008, we completed the following transactions (see Note 7 to our consolidated financial statements included in this Report):

·   We obtained a non-recourse $340 million term loan secured by four of our previously unencumbered office properties.  At March 31, 2008, $225 million was outstanding, and the remaining $115 million was funded on May 1, 2008.

·   We obtained a $380 million bridge loan from an affiliate of the seller in the March 2008 acquisitions described above.

·   The joint venture, in which we have a two-thirds interest, obtained an $18 million loan that financed the February 2008 acquisition described above.

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Comparison of three months ended March 31, 2008 to three months ended March 31, 2007

Revenue

Total Office Revenue.  Total office revenue consists of rental revenue, tenant recoveries and parking and other income.  Total office portfolio revenue increased by $6.1 million, or 5.5 %, to $117.0 million for the three months ended March 31, 2008 compared to $110.9 million for the three months ended March 31, 2007 for the reasons described below.

Rental Revenue.  Rental revenue includes rental revenues from our office properties, percentage rent on the retail space contained within office properties, and lease termination income.  Total office rental revenue increased by $7.4 million, or 8.1%, to $99.0 million for the three months ended March 31, 2008 compared to $91.6 million for the three months ended March 31, 2007.  Rent increased across our existing office portfolio due to increases in average rental rates for new and renewal leases signed since April 1, 2007.  The increase is also due to $2.8  million of incremental rent from the properties we acquired subsequent to April 1, 2007, including the seven additional properties we acquired in the first quarter of 2008, as described above.

Tenant Recoveries.  Total office tenant recoveries decreased by $2.8 million, or 34.4%, to $5.4 million for the three months ended March 31, 2008 compared to $8.2 million for the three months ended March 31, 2007.  This is primarily due to a reduction in the accrual of property tax expenses based on our judgment of the ongoing reassessment process of properties in connection with the IPO.  This was partially offset by incremental recoverable operating expenses from the properties we acquired subsequent to April 1, 2007, including the seven additional properties we acquired in the first quarter of 2008, as described above.

Parking and Other Income.  Total office parking and other income increased by $1.6 million, or 14.0%, to $12.7 million for the three months ended March 31, 2008 compared to $11.1 million for the three months ended March 31, 2007, primarily due to increases in parking rates implemented across the portfolio, increases in ground rent income, and incremental revenues from the properties we acquired subsequent to April 1, 2007, including the seven additional properties we acquired in the first quarter of 2008, as described above.

Total Multifamily Revenue.  Total multifamily revenue consists of rent, parking income and other income.  Total multifamily revenue increased by $0.8 million, or 4.6%, to $17.8 million for the three months ended March 31, 2008, compared to $17.0 million for the three months ended March 31, 2007.  The increase is primarily due to an increase in occupancy and an increase in rents charged to both new and existing tenants, including increases for select Santa Monica multifamily units.  These units were under leases signed prior to a 1999 change in California Law that allows landlords to reset rents to market rates when a tenant moves out.  Therefore, a portion of the multifamily increase was due to the rollover to market rents of several of these rent-controlled units, or “Pre-1999 Units”, since April 1, 2007.

Operating Expenses

Office Rental Expenses.  Total office rental expense decreased by $1.9 million, or 5.8%, to $31.4 million for the three months ended March 31, 2008, compared to $33.3 million for the three months ended March 31, 2007.  This is primarily due to a reduction in the accrual of property tax expenses based on our judgment of the ongoing reassessment process of properties in connection with our IPO. The decrease was partially offset by incremental operating expenses from the office properties we acquired subsequent to April 1, 2007, including the seven additional properties we acquired in the first quarter of 2008, as described above.

Multifamily Rental Expenses.  Total multifamily rental expense decreased by $1.0 million, or 21.2%, to $3.9 million for the three months ended March 31, 2008, compared to $4.9 million for the three months ended March 31, 2007.  This is primarily due to a reduction in the accrual of property tax expenses based on our judgment of the ongoing reassessment process of properties in connection with our IPO.

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Depreciation and Amortization.  Depreciation and amortization expense increased $5.6 million, or 11.0%, to $56.7 million for the three months ended March 31, 2008, compared to $51.1 million for the three months ended March 31, 2007.  The increase is primarily due to the finalization of the purchase price allocation and related lives of real estate assets combined at the time of our IPO and formation transactions, as well as incremental depreciation from the office properties we acquired subsequent to April 1, 2007, including the seven additional properties we acquired in the first quarter of 2008, as described above.

Non-Operating Income and Expenses

Interest Expense.  Interest expense increased $2.9 million, or 7.6%, to $41.2 million for the three months ended March 31, 2008, compared to $38.3 million for the three months ended March 31, 2007.  The increase was primarily due to incremental interest from the $150 million borrowed during the second quarter of 2007, the increase in borrowings outstanding under our corporate revolver, and the additional $623 million borrowed during the current quarter to fund the purchase of our new acquisition properties.  These increases were partially offset by the $1.2 million credit valuation adjustment resulting from the initial application of FAS 157.

Liquidity and Capital Resources

Available Borrowings, Cash Balances and Capital Resources

We had total indebtedness of $3.7 billion at March 31, 2008, excluding a loan premium representing the mark-to-market adjustment on variable rate debt assumed from our predecessor.  Our debt increased $625 million from December 31, 2007 as a result of the $623 million of incremental borrowings and approximately $2 million in additional borrowings under our revolving credit facility.  Please see Note 7 to our consolidated financial statements included in this Report.

We have a revolving credit facility with a group of banks led by Bank of America, N.A. and Banc of America Securities LLC totaling $370 million.  At March 31, 2008, there was approximately $188 million available to us under this credit facility.  We have used our revolving credit facility for general corporate purposes, including funding acquisitions, redevelopment and repositioning opportunities, repurchases of our stock and operating partnership units, tenant improvements and capital expenditures, recapitalizations and providing working capital.

We have historically financed our capital needs through short-term lines of credit and long-term secured mortgages at floating rates.  To mitigate the impact of fluctuations in short-term interest rates on our cash flow from operations, we generally enter into interest rate swap or interest rate cap agreements.  At March 31, 2008, 78% of our debt was effectively fixed at an overall rate of 5.20% by virtue of interest rate swap and interest rate cap agreements in place at the end of the reporting period.  During the first quarter of 2008, we obtained a new $340 million loan facility, under which we borrowed $225 million on March 18, 2008.  The remaining $115 million will be funded on May 1, 2008.  We entered into corresponding interest rate hedges during the first quarter of 2008, which will fix the underlying interest rate of the total $340 million facility at 4.84%, and raise total fixed rate debt to 85% beginning May 1, 2008.  See Notes 7 and 8 to our consolidated financial statements included in this Report.

At March 31, 2008, our total borrowings under secured loans, excluding the portion of consolidated debt attributable to our minority partner on the Honolulu Club joint venture, represented 51.8% of our total market capitalization of $7.1 billion.  Total market capitalization includes our consolidated debt and the value of common stock and operating partnership units each based on our common stock closing price at March 31, 2008 on the New York Stock Exchange of $22.06 per share.

The nature of our business, and the requirements imposed by REIT rules that we distribute a substantial majority of our income on an annual basis, will cause us to have substantial liquidity needs over both the short term and the long term.

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We expect to meet our short-term liquidity requirements generally through cash provided by operations and, if necessary, by drawing upon our senior secured revolving credit facility.  During the first quarter of 2008, we successfully secured $340 million of debt, of which $225 million was outstanding at March 31, 2008 and the remaining $115 million was funded on May 1, 2008.  However, recent economic events have led to tighter and more uncertain credit markets.  As a result, although we have been successful in financings during the current quarter, disruptions in the credit markets could impact the availability of credit in the future or could impact the rates of any borrowings we do obtain.  Currently, we have approximately $562 million of principal payments maturing by the end of 2009, consisting of the $380 million bridge financing borrowed in connection with our March 2008 acquisitions and $182 million under our revolving credit facility.  We anticipate repaying the bridge loan from refinancing proceeds, available cash and borrowings under our credit facility prior to maturity.  Our credit facility contains two renewal options of one year each available to us.  We anticipate that cash provided by operations and borrowings under our senior secured revolving credit facility will be sufficient to meet our liquidity requirements for at least the next 12 months.

Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, redevelopment and repositioning of properties, non-recurring capital expenditures, and repayment of indebtedness at maturity.  We do not expect that we will have sufficient funds on hand to cover all of these long-term cash requirements.  We will seek to satisfy these needs through cash flow from operations, long-term secured and unsecured indebtedness, the issuance of debt and equity securities, including units in our operating partnership, property dispositions and joint venture transactions.  We have historically financed our operations, acquisitions and development, through the use of our revolving credit facility or other short-term acquisition lines of credit, which we subsequently repay with long-term secured floating rate mortgage debt.  To mitigate the impact of fluctuations in short-term interest rates on our cash flow from operations, we generally enter into interest rate swap or interest rate cap agreements at the time we enter into term borrowings.

We are also exploring raising capital for acquisitions through an institutional fund, controlled by an entity affiliated with us, which would receive certain fees as well as a carried interest in any distributions after the participating institutional investors receive a return of their invested capital and a preferred return.  If we close such a fund, it is likely that it would be our exclusive vehicle for most (and perhaps all) cash acquisitions during the investment period of the fund.  The exact terms of any such fund would be based on negotiations and market conditions.  Any securities offered in such a fund will not be registered under the Securities Act of 1933 and could not be offered or sold in the United States absent registration under that act or an applicable exemption from those registration requirements.  Nothing in the foregoing disclosure constitutes an offer to sell any securities in such a fund, nor a solicitation of an offer to purchase any such securities.

Contractual Obligations

During the first quarter of 2008, there were no material changes outside the ordinary course of business in the information regarding specified contractual obligations contained in our Annual Report on Form 10-K for the year ended December 31, 2007.

Off-Balance Sheet Arrangements

At March 31, 2008, we did not have any off balance sheet financing arrangements.

Cash Flows

Net cash provided by operating activities increased $11.5 million to $54.0 million for the three months ended March 31, 2008, compared to $42.6 million for the three months ended March 31, 2007.  The increase reflects higher net cash flow from existing properties that generated improved results, as well as incremental cash flow from acquired properties.

Net cash used in investing activities increased $613.6 million to $627.1 million for the three months ended March 31, 2008 compared to $13.5 million for the three months ended March 31, 2007.  The increase was primarily due to a higher level of spending on property acquisitions in the 2008 period compared to the 2007 period.  See Note 3 to our consolidated financial statements included in this Report.

- 23 - -

Cash flow related to financing activities increased from an outflow of $29.8 million in the first three months of 2007 to an inflow of $571.7 million in the first three months of 2008.   The net cash inflow represents borrowings in excess of equity repurchases and payments of dividends and distributions.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

During the first three months of 2008, there were no material changes in the information regarding market risk contained in our Annual Report on Form 10-K for the year ended December 31, 2007.

Item 4.  Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act)  that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of March 31, 2008, the end of the period covered by this Report, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness in design and operation of our disclosure controls and procedures at the end of the period covered by this Report.  Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded, as of that time, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) is accumulated and communicated to our management including our principal executive officer and our principal financial officer, to allow timely decisions regarding required disclosure.

There have been no significant changes that occurred during the quarter covered by this Report in our internal control over financial reporting identified in connection with the evaluation referenced above that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

We are subject to various legal proceedings and claims that arise in the ordinary course of business.  Most of these matters are generally covered by insurance and we do not believe that the ultimate outcome of these actions will have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A.  Risk Factors

We are not aware of any material changes to the risk factors included in Item 1A, “Risk Factors” in our 2007 Annual Report on Form 10-K.

Item 2.  Unregistered Sales of Securities and Use of Proceeds

Sales.  We did not make any unregistered sales of our securities during the quarter ended March 31, 2008.

Purchases.  We made the following purchases of our share equivalents during the three months ended March 31, 2008.

ISSUER PURCHASES OF EQUITY SECURITIES
Period	(a) Total Number of Share Equivalents Purchased	(b) Average Price Paid per Share (or Unit)
January 2008	-	-
February 2008	1,000,000	$21.55
March 2008	105,867	$20.86
Total	1,105,867	$21.48

All purchases were made in private unsolicited transactions, not pursuant to a publicly announced program.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to a Vote of Security Holders

None.

Item 5.  Other Information

(a)                 Additional Disclosures. None.

(b)                 Stockholder Nominations.  There have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors during the quarter ended March 31, 2008.  Please see the discussion of our procedures in our most recent proxy statement.

- 25 - -

Item 6.  Exhibits

Exhibit Number	Description
31.1	Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(1)
32.2	Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1)
10.1	$18,000,000 Loan Agreement dated as of February 12, 2008 among DEG III, LLC and Wells Fargo Bank, National Association.
10.2	$340,000,000 Loan Agreement dated as of March 18, 2008 among Douglas Emmett 2007, LLC; Douglas Emmett Realty Fund 2002; Douglas Emmett 1995, LLC; the lenders party thereto, EuroHypo AG and ING Real Estate (USA), LLC.
10.3	$380,000,000 Loan Agreement dated as of March 26, 2008 among Douglas Emmett 2008, LLC; the lenders party thereto and General Electric Capital Corporation.

(1)   In accordance with SEC Release No. 33-8212, the following exhibit is being furnished, and is not being filed as part of this Report on Form 10 Q or as a separate disclosure document, and is not being incorporated by reference into any Securities Act of 1933 registration statement.

- 26 - -

Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DOUGLAS EMMETT, INC.
Date:  May 8, 2008	By:	/s/ Jordan L. Kaplan
		Jordan L. Kaplan
		President and Chief Executive Officer
Date: May 8, 2008	By:	/s/ William Kamer
		William Kamer
		Chief Financial Officer

- 27 - -

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jordan L. Kaplan, certify that:

1)   I have reviewed this quarterly report on Form 10-Q of Douglas Emmett, Inc.;

2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)   disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)   The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 8, 2008	By:	/s/ JORDAN L. KAPLAN
		Jordan L. Kaplan
		President and Chief Executive Officer
		Douglas Emmett, Inc.

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William Kamer, certify that:

1)   I have reviewed this quarterly report on Form 10-Q of Douglas Emmett, Inc.;

2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)   disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)   The registrant’s other certifying officers and I have disclosed, based on our recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 8, 2008	By:	/s/ WILLIAM KAMER
		William Kamer
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

OFFICERS’ CERTIFICATIONS

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Douglas Emmett, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that:

(i)   the accompanying quarterly report on Form 10-Q of the Company for the period ended March 31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii)   the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

.

Dated: May 8, 2008	By:	/s/ JORDAN L. KAPLAN
		Jordan L. Kaplan
		President and Chief Executive Officer
		Douglas Emmett, Inc.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. §1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2

EXHIBIT 32.2

OFFICERS’ CERTIFICATIONS

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Douglas Emmett, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that:

(i)   the accompanying quarterly report on Form 10-Q of the Company for the period ended March 31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii)   the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 8, 2008	By:	/s/ WILLIAM KAMER
		William Kamer
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-10.1

LOAN AGREEMENT

between

DEG III, LLC, a Delaware limited liability company

and

Wells Fargo Bank, National Association

Entered into as of February 12, 2008

LOAN AGREEMENT

THIS LOAN AGREEMENT (“Agreement”) is entered into as of February 12, 2008, by and between DEG III, LLC, a Delaware limited liability company (“Borrower”), and Wells Fargo Bank, National Association (“Lender”).

R E C I T A L S

A. Borrower  owns or will own certain real property described in Exhibit A hereto and all improvements now or hereafter existing thereon (collectively, the “Property”).

B. Borrower desires to borrow from Lender, and Lender agrees to loan to Borrower, the amounts described below.

NOW, THEREFORE, Borrower and Lender agree as follows:

ARTICLE 1.                                  DEFINITIONS

1.1   DEFINED TERMS.  The following capitalized terms generally used in this Agreement shall have the meanings defined or referenced below.  Certain other capitalized terms used only in specific sections of this Agreement are defined in such sections.

“ADA” - -  means the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et. seq. as now or hereafter amended or modified.

“Agreement” - shall have the meaning ascribed to such term in the preamble hereto.

“Applicable LIBO Rate” - - shall have the meaning ascribed to such term in the Note.

“Appraisal” – means the appraisal referred to in Section 2.7 and 2.10(f), as applicable.

“Bankruptcy Code” - means the Bankruptcy Reform Act of 1978 (11 USC § 101-1330) as now or hereafter amended or recodified.

“Border Zone Property” - - means any property designated as “border zone property” under the provisions of California Health and Safety Code, Sections 25220 et seq., or any regulation adopted in accordance therewith.

“Borrower” - means DEG III, LLC, a Delaware limited liability company.

“Business Day” - means a day of the week (but not a Saturday, Sunday or holiday) on which the offices of Lender are open to the public for carrying on substantially all of Lender’s business functions. Unless specifically referenced in this Agreement as a Business Day, all references to “days” shall be to calendar days.

“Deed of Trust” - means that certain Mortgage with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing of even date herewith executed by Borrower, as Mortgagor, in favor of Lender, as Mortgagee, as hereafter amended, supplemented, replaced or modified.

“Default” - shall have the meaning ascribed to such term in Section 9.1.

“Effective Date” - means the date the loan proceeds are released to the Borrower pursuant to instructions given by the Lender to the escrow under which the Loan is closed.

“Extended Maturity Date” - means March 1, 2011.

“Gross Coverage Factor” - shall be determined by dividing the Net Operating Income of the Property by the commitment amount of the Loan, said fraction to be expressed as a percentage.

“Gross Operating Income” - shall have the meaning ascribed to such term in Section 8.5 (a).

“Guarantor” – means collectively, Richard W. Gushman, II, an individual and Douglas Emmett Properties, LP, a Delaware limited partnership, and any other person or entity who, or which, in any manner, is or becomes obligated to Lender under any guaranty now or hereafter executed in connection or with respect to the Loan (collectively or severally as the context thereof may suggest or require).

“Hazardous Materials” - - shall have the meaning ascribed to such term in Section 6.1 (a).

“Hazardous Materials Claims” - shall have the meaning ascribed to such term in Section 6.1 (c).

“Hazardous Materials Laws” - shall have the meaning ascribed to such term in Section 6.1 (b).

“Honolulu Club Lease” – means that certain lease dated February 13, 2008, between Borrower and HNLC, Inc., covering a portion of the Property.

“Indemnitor” - means collectively, Richard W. Gushman, II, an individual and Douglas Emmett Properties, LP, a Delaware limited partnership, and any other person or entity who, or which, in any manner, is or becomes obligated to Lender under any indemnity now or hereafter executed in connection or with respect to the Loan (collectively or severally as the context thereof may suggest or require).

“Lender” - means Wells Fargo Bank, National Association.

“LIBO Rate” - shall have the meaning ascribed to such term in the Note.

“Loan” - means the principal sum that Lender agrees to lend and Borrower agrees to borrow pursuant to the terms and conditions of this Agreement:  EIGHTEEN MILLION DOLLARS ($18,000,000).

“Loan Documents” - means those documents, as hereafter amended, supplemented, replaced or modified, properly executed and in recordable form, if necessary, listed in Exhibit B as Loan Documents.

“Loan-to-Value Percentage” - shall have the meaning ascribed to such term in Section 2.7.

“Maturity Date” - means March 1, 2010, subject to extension as provided in Section 2.10 below.

“Net Operating Income” - - for purposes of calculating the Gross Coverage Factor shall mean the appraised As-Is net operating income as set forth in the Appraisal.

“Note” - means that certain Promissory Note Secured by Deed of Trust of even date herewith, in the original principal amount of the Loan, executed by Borrower and payable to the order of Lender, as hereafter amended, supplemented, replaced or modified.

“Operating Statement” - - shall have the meaning ascribed to such term in Section 9.5.

“Option to Extend” - means Borrower’s option, subject to the terms and conditions of Section 2.10, to extend the term of the Loan from the Maturity Date to the Extended Maturity Date.

“Original Maturity Date” - means the Maturity Date.

“Other Related Documents” - means those documents, as hereafter amended, supplemented, replaced or modified from time to time, properly executed and in recordable form, if necessary, listed in Exhibit B as Other Related Documents.

“Participant” - shall have the meaning ascribed to such term in Section 10.13.

“Permitted Encumbrances” – shall have the meaning ascribed to such term in the Deed of Trust.

“Permitted Operating Expenses” - shall have the meaning ascribed to such term in Section 8.5 (b).

“Property” - shall have the meaning ascribed to such term in Recital A.

“Reserve Percentage” - shall have the meaning ascribed to such term in the Note.

“Secured Obligations” - - shall have the meaning ascribed to such term in the Deed of Trust.

“Subdivision Map” - shall have the meaning ascribed to such term in Section 7.6.

“Title Policy” - means the ALTA Lender’s Policy of Title Insurance as issued by Chicago Title Insurance Company.

“Variable Rate” - shall have the meaning ascribed to such term in the Note.

1.2   EXHIBITS INCORPORATED.  All exhibits, schedules or other items attached hereto are incorporated into this Agreement by such attachment for all purposes.

ARTICLE 2.                                  LOAN

2.1   LOAN.  Subject to the terms of this Agreement, Lender agrees to lend to Borrower and Borrower agrees to borrow from Lender the principal sum of EIGHTEEN MILLION DOLLARS ($18,000,000); said sum to be disbursed in full on the Effective Date and evidenced by the Note.  The Note shall be secured, in part, by the Deed of Trust encumbering certain real property and improvements as legally defined therein. Amounts disbursed to or on behalf of Borrower pursuant to the Note shall be used for the acquisition of the Property or for loan fees, closing costs or other fees, costs or expenses of Borrower related to this financing or the acquisition of the Property.

2.2   FEES.  Borrower shall pay to Lender, at Loan closing, a loan fee in the amount of $18,000; an appraisal/review fee in the amount of $9,000.00; an environmental review fee in the amount of $640.00; a flood determination fee of $10.00; and the cost of a Tax Service Contract in the amount of $240.00.  Lender’s legal fees shall be paid by Borrower at closing by wire transfer through escrow.

2.3   LOAN DOCUMENTS.  Borrower shall deliver to Lender concurrently with this Agreement each of the documents, properly executed and in recordable form, as applicable, described in Exhibit B as Loan  Documents, together with those documents described in Exhibit B as Other Related Documents.

2.4   EFFECTIVE DATE.  The date of the Loan Documents is for reference purposes only.  The Effective Date of delivery and transfer to Lender of the security under the Loan Documents and of Borrower’s and Lender’s obligations under the Loan Documents is the date the loan proceeds are released to the Borrower pursuant to instructions given by the Lender to the escrow under which the Loan is closed.

2.5   MATURITY DATE.  On the Maturity Date (or the Extended Maturity Date, if applicable) all sums due and owing under this Agreement and the other Loan Documents shall be repaid in full.  All payments due to Lender under this Agreement, whether at the Maturity Date or otherwise, shall be paid in immediately available funds.

2.6   CREDIT FOR PRINCIPAL PAYMENTS.  Any payment made upon the outstanding principal balance of the Loan shall be credited as of the Business Day received, provided such payment is received by Lender no later than 5:00 p.m. (Pacific Standard Time or Pacific Daylight Time, as applicable) and constitutes immediately available funds.  Any principal payment received after said time or which does not constitute immediately available funds shall be credited upon such funds having become unconditionally and immediately available to Lender.

2.7   APPRAISAL REQUIREMENT.  Prior to the Effective Date, as a condition precedent to making the Loan, Lender shall have received a written appraisal prepared in conformance with the requirements of the Comptroller of the Currency confirming to the satisfaction of Lender that the Loan amount as a percentage of the as-is fair market value of the Property does not exceed seventy-five percent (75%) (“Loan-to-Value Percentage”).

2.8   GROSS COVERAGE FACTOR REQUIREMENT.  As of the Effective Date, as a condition precedent to making the Loan, the projected annualized cash flow of the Property (taking into account pro forma market rents from the Honolulu Club Lease) shall have a Gross Coverage Factor of not less than ten percent (10%).

2.9   FULL REPAYMENT AND RECONVEYANCE.  Upon receipt of all sums owing and outstanding under the Loan Documents, Lender shall cause the lien of the Deed of Trust to be released as an encumbrance on the Property; provided, however, that all of the following conditions shall be satisfied at the time of, and with respect to, such release:  (a) Lender shall have received all recording costs, the costs of preparing and delivering for recording such release, and any sums then due and payable under the Loan Documents; and (b) if applicable, Lender shall have received a written release satisfactory to Lender of any set aside letter, letter of credit or other form of undertaking which Lender has issued to any surety, governmental agency or any other party in connection with the Loan and/or the Property.

2.10   OPTION TO EXTEND.  Borrower shall have the option to extend the term of the Loan from the Maturity Date (for purposes of this Section, “Original Maturity Date”), to the Extended Maturity Date, upon satisfaction of each of the following conditions precedent:

(a)   Borrower shall provide Lender with written notice of Borrower’s request to exercise the Option to Extend not more than one hundred twenty (120) days but not less than sixty (60) days prior to the Original Maturity Date; and

(b)   As of the date of Borrower’s delivery of notice of request to exercise the Option to Extend, and as of the Original Maturity Date, no Default shall have occurred and be continuing, and Borrower shall so certify in writing; and

(c)   Borrower shall execute or cause the execution of all documents reasonably required by Lender to exercise the Option to Extend and shall deliver to Lender, at Borrower’s sole cost and expense, a CLTA 110.5 endorsement to the Title Policy if required by Lender; and

(d)   There shall have occurred no material adverse change, as determined by Lender in its reasonable discretion, in the financial condition of Borrower, any Guarantor or any Indemnitor from that which existed as of the later of: (A) the Effective Date; or (B) the date upon which the financial condition of such party was first represented to Lender; and

(e)   On or before the Original Maturity Date, Borrower shall pay to Lender an extension fee in the amount of Nine Thousand Dollars ($9,000); and

(f)   At Lender’s option, Lender shall have obtained a written appraisal prepared in conformance with the requirements of the Comptroller of the Currency confirming to the satisfaction of Lender that the Loan amount as a percentage of the as-is fair market value of the Property as of the Original Maturity Date does not exceed seventy-five percent (75%) (“Loan-to-Value Percentage”); provided, however, in the event such as-is fair market value is not adequate to meet the required Loan-to-Value Percentage, then Borrower shall pay down the outstanding principal balance of the Loan on the date following the Original Maturity Date which next coincides with the expiration of a Fixed Rate Period (as defined in the Note) and without premium or penalty such that said Loan-to-Value Percentage may be met.  The valuation date of such appraisal shall be within sixty (60) days of the Original Maturity Date.  Any principal balance reduction shall reduce Lender’s commitment by a like amount and may not be reborrowed; and

(g)   The Gross Coverage Factor shall equal or exceed ten percent (10%).

Except as modified by this Option to Extend, the terms and conditions of this Agreement and the other Loan Documents as modified and approved by Lender shall remain unmodified and in full force and effect.

ARTICLE 3.                                  DISBURSEMENT

3.1   CONDITIONS PRECEDENT.  Lender’s obligation to make the Loan shall be subject to satisfaction of each of the following conditions precedent:

(a)   There exists no Default, as defined in this Agreement, or Default as defined in any of the other Loan Documents or in the Other Related Documents, or event, omission or failure of condition which would constitute a Default after notice or lapse of time, or both; and

(b)   Lender shall have received all Loan Documents, other documents, instruments, policies, and forms of evidence or other materials requested by Lender under the terms of this Agreement or any of the other Loan Documents; and

(c)   The Deed of Trust is a valid lien upon the Property and is prior and superior to all other liens and encumbrances thereon except the Permitted Encumbrances and other matters approved by Lender in writing; and

(d)   Credit approval by Lender; and

(e)   Lender’s receipt and satisfactory review and approval of the proposed Honolulu Club Lease and of a Subordination Agreement; Acknowledgment of Lease Assignment, Estoppel, Attornment and Non-Disturbance Agreement on Lender’s approved form; and

(f)   Lender’s receipt and satisfactory review and approval of the Appraisal and an environmental report with respect to the Property; and

(g)   Lender’s receipt and satisfactory review and approval of Borrower’s formation documents; and

(h)   No material adverse change shall have occurred in the financial condition of Borrower and/or Guarantor since the dates of the latest financial statements furnished to Lender and, except as otherwise disclosed to Lender in writing, Borrower shall not have entered into any material transaction which is not disclosed in such financial statements other than (i) its contract to acquire the Property and its consummation of the purchase of the Property, (ii) entering into the Honolulu Club Lease and (iii) entering into arrangements providing for the management of the Property; and

(i)   Lender’s review and approval of all matters relating to Borrower’s title to the Property; and

(j)   Lender’s satisfactory review, approval and analysis of Guarantors’ financial statements; and

(k)   An assignment of Borrower’s rights under any management agreement pursuant to which the Property is being managed; and

(l)   Lender’s receipt and satisfactory review and approval of a property condition report showing the physical condition of the Property; and

(m)   Lender’s receipt and satisfactory review and approval of a capital improvement plan for the Property; and

(n)   All other due diligence matters customary in loan transactions similar to this transaction.

3.2   ACCOUNT, PLEDGE AND ASSIGNMENT, AND DISBURSEMENT AUTHORIZATION.  On the Effective Date, provided all conditions precedent for disbursement have been satisfied, the proceeds of the Loan and Borrower’s Funds, shall be disbursed to or for the benefit or account of Borrower under the terms of this Agreement; provided, however, that any direct disbursements from the Loan which are made by means of wire transfer shall be subject to the provisions of that certain Section entitled Funds Transfer Disbursements or any funds transfer agreement which is identified in Exhibit B hereto.

3.3   FUNDS TRANSFER DISBURSEMENTS.  Borrower hereby authorizes Lender to disburse the proceeds of the Loan made by Lender or its affiliate pursuant to the Loan Documents as requested by an authorized representative of the Borrower to any of the accounts designated in Exhibit “C” attached hereto entitled Transfer Authorizer Designation.  Borrower agrees to be bound by any transfer request: (i) authorized or transmitted by Borrower; or, (ii) made in Borrower’s name and accepted by Lender in good faith and in compliance with these transfer instructions, even if not properly authorized by Borrower.  Borrower further agrees and acknowledges that Lender may rely solely on any bank routing number or identifying bank account number or name provided by Borrower to effect a wire or funds transfer even if the information provided by Borrower identifies a different bank or account holder than named by the Borrower.  Lender is not obligated or required in any way to take any actions to detect errors in information provided by Borrower.  If Lender takes any actions in an attempt to detect errors in the transmission or content of transfer or requests or takes any actions in an attempt to detect unauthorized funds transfer requests, Borrower agrees that no matter how many times Lender takes these actions Lender will not in any situation be liable for failing to take or correctly perform these actions in the future and such actions shall not become any part of the transfer disbursement procedures authorized under this provision, the Loan Documents, or any agreement between Lender and Borrower.  Borrower agrees to notify Lender of any errors in the transfer of any funds or of any unauthorized or improperly authorized transfer requests within 14 days after Lender’s confirmation to Borrower of such transfer.  Lender will, in its sole discretion, determine the funds transfer system and the means by which each transfer will be made.  Lender may delay or refuse to accept a funds transfer request if the transfer would: (i) violate the terms of this authorization (ii) require use of a bank unacceptable to Lender or prohibited by government authority (it being understood that Bank of Hawaii is acceptable to Lender for this purpose); (iii) cause Lender to violate any Federal Reserve or other regulatory risk control program or guideline, or (iv) otherwise cause Lender to violate any applicable law or regulation.  Lender shall not be liable to Borrower or any other parties for (i) errors, acts or failures to act of others, including other entities, banks, communications carriers or clearinghouses, through which Borrower’s transfers may be made or information received or transmitted, and no such entity shall be deemed an agent of the Lender, (ii) any loss, liability or delay caused by fires, earthquakes, wars, civil disturbances, power surges or failures, acts of government, labor disputes, failures in communications networks, legal constraints or other events beyond Lender’s control, or (iii) any special, consequential, indirect or punitive damages, whether or not (a) any claim for these damages is based on tort or contract or (b) Lender or Borrower knew or should have known the likelihood of these damages in any situation.  Lender makes no representations or warranties other than those expressly made in this Agreement.

ARTICLE 4.                                  INSURANCE

Borrower shall, while any obligation of Borrower or any Guarantor under any Loan Document remains outstanding, maintain at Borrower’s sole expense, with licensed insurers approved by Lender, the following policies of insurance in form and substance satisfactory to Lender:

4.1   TITLE INSURANCE.  A Title Policy, together with any endorsements which Lender may require as part of the Title Policy issued on the Effective Date, insuring Lender, in the principal amount of the Loan, of the validity and the priority of the lien of the Deed of Trust upon the Property, subject only to the Permitted Encumbrances or other matters approved by Lender in writing.

4.2   PROPERTY INSURANCE.  An All Risk/Special Form Property Insurance policy, including without limitation, theft coverage and such other coverages and endorsements as Lender may require, insuring Lender against damage to the Property in an amount acceptable to Lender.  Such coverage should adequately insure any and all Loan collateral, whether such collateral is onsite, stored offsite or otherwise.  Lender shall be named on the policy as Mortgagee and named under a Lender’s Loss Payable Endorsement (form #438BFU or equivalent).

4.3   FLOOD HAZARD INSURANCE.  A policy of flood insurance, as deemed necessary by Lender, in an amount required by Lender, but in no event less than the amount sufficient to meet the requirements of applicable law and governmental regulation.

4.4   LIABILITY INSURANCE.  A policy of Commercial General Liability insurance on an occurrence basis, with coverages and limits as required by Lender, insuring against liability for injury and/or death to any person and/or damage to any property occurring on the Property.

4.5   OTHER COVERAGE.  Borrower shall provide to Lender evidence of such other reasonable insurance in such reasonable amounts as Lender may from time to time request against such other insurable hazards which at the time are commonly insured against for property similar to the subject Property located in or around the region in which the subject Property is located.  Such coverage requirements may include but are not limited to coverage for earthquake, acts of terrorism, business income, delayed business income, rental loss, sink hole, soft costs, tenant improvement or environmental.

4.6   GENERAL.  Borrower shall provide to Lender insurance certificates or other evidence of coverage in form acceptable to Lender, with coverage amounts, deductibles, limits and retentions as required by Lender.  All insurance policies shall provide that the coverage shall not be cancelable or materially changed without 10 days prior written notice to Lender of any cancellation for nonpayment of premiums, and not less than 30 days prior written notice to Lender of any other cancellation or any modification (including a reduction in coverage).  Lender shall be named under a Lender’s Loss Payable Endorsement (form #438BFU or equivalent) on all insurance policies which Borrower actually maintains with respect to the Property.  All insurance policies shall be issued and maintained by insurers approved to do business in the state in which the Property is located and must have an A.M. Best Company financial rating and policyholder surplus acceptable to Lender.

4.7   INSURANCE PROGRAM.  Notwithstanding anything to the contrary contained herein, it is understood and agreed that Lender has reviewed and approved Borrower’s existing portfolio insurance program as of the Effective Date (the “Existing Insurance Program”) (including, without limitation, the coverages, deductibles, carriers, ratings, reinsurance and other terms and provisions of such policies) applicable to the Property and, notwithstanding any discrepancies between the Existing Insurance Program and the insurance requirements set forth in Sections 4.2 through 4.6 hereof and in the insurance requirements letter provided by Lender to Borrower prior to closing (the “Insurance Requirements”), the Existing Insurance Program shall be deemed to satisfy the Insurance Requirements as of the Effective Date; provided, however, Lender reserves the right to make changes to the Insurance Requirements from time to time subsequent to the Effective Date to the extent such changes are required pursuant to and in accordance with governmental and regulatory requirements applicable to Lender and Borrower shall be obligated to satisfy such Insurance Requirements as modified during the term of the Loan promptly upon receipt of written notice of such changes.  If and to the extent any insurance maintained under the Existing Insurance Program exceeds the Insurance Requirements, Borrower may reduce the insurance maintained under the Existing Insurance Program to standards that meet or exceed the standards set forth in the Insurance Requirements as they may hereafter be modified or that are otherwise approved by Lender.

ARTICLE 5.                                  REPRESENTATIONS AND WARRANTIES

As a material inducement to Lender’s entry into this Agreement, Borrower represents and warrants to Lender as of the Effective Date and continuing thereafter that:

5.1   AUTHORITY/ENFORCEABILITY.  Borrower is in compliance with all laws and regulations applicable to its organization, existence and transaction of business and has all necessary rights and powers to own, improve (subject to local building permit requirements) and operate the Property as contemplated by the Loan Documents.

5.2   BINDING OBLIGATIONS.  Borrower is authorized to execute, deliver and perform its obligations under the Loan Documents, and such obligations shall be valid and binding obligations of Borrower.

5.3   FORMATION AND ORGANIZATIONAL DOCUMENTS.  Borrower has delivered to Lender all formation and organizational documents of Borrower and its non-member manager, and of all guarantors of the Loan that are not individuals, if any, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they were delivered to Lender.  Borrower shall immediately provide Lender with copies of any amendments or modifications of the formation or organizational documents.

5.4   NO VIOLATION.  Borrower’s execution, delivery, and performance under the Loan Documents do not: (a) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other document; (b) violate any governmental requirement applicable to the Property or any other statute, law, regulation or ordinance or any order or ruling of any court or governmental entity applicable to Borrower; (c) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which the Borrower is or, to Borrower’s knowledge, the Property is bound; or (d) violate any statute, law, regulation or ordinance, or any order of any court or governmental entity applicable to Borrower.

5.5   COMPLIANCE WITH LAWS.  Borrower has, and at all times shall have obtained, or will obtain, all permits, licenses, exemptions, and approvals necessary for Borrower to occupy, operate and market the Property,  and shall maintain compliance with all governmental requirements applicable to the Property to which Borrower is subject and all other applicable statues, laws, regulations and ordinances necessary for the transaction of its business. The Property is a legal parcel lawfully created in compliance with all subdivision laws and ordinances.

5.6   LITIGATION.  Except as disclosed to Lender in writing, there are no claims, actions, suits, or proceedings pending, or, to Borrower’s knowledge, threatened against Borrower or affecting the Property.

5.7   FINANCIAL CONDITION.  All financial statements and information heretofore and hereafter delivered to Lender by Borrower, including, without limitation, information relating to the financial condition of Borrower, the Property, and/or any Guarantors, fairly and accurately represent the financial condition of the subject thereof in all material respects as of the applicable dates thereof and have been prepared (except as noted therein) in accordance with generally accepted accounting principles consistently applied (or other principles acceptable to Lender, as evidenced by Lender’s disbursement of funds to Borrower at Closing); provided, however, that the accuracy of any financial statements or information relating to the Property is to Borrower’s knowledge.  Borrower acknowledges and agrees that Lender may request and obtain additional information from third parties regarding any of the above, including, without limitation, credit reports.

5.8   NO MATERIAL ADVERSE CHANGE.  There has been no material adverse change in the financial condition of Borrower and/or Guarantor since the dates of the latest financial statements furnished to Lender and, except as otherwise disclosed to Lender in writing, Borrower has not entered into any material transaction which is not disclosed in such financial statements except as noted in Section 3.1(h).

5.9   ACCURACY.  To Borrower’s knowledge, all reports, documents, instruments, information and forms of evidence that Borrower has delivered to Lender concerning the Loan or security for the Loan or as required by the Loan Documents are materially accurate, correct and sufficiently complete to give Lender materially true and accurate knowledge of their subject matter, and do not contain any material misrepresentation or omission.

5.10   AMERICANS WITH DISABILITIES ACT COMPLIANCE.  Except as disclosed in the property condition report(s) dated February 6, 2008, furnish to Lender on or prior to the Effective Date, Borrower represents and warrants to Lender, to Borrower’s knowledge, that the Property currently complies and hereafter shall be maintained in compliance with the requirements and regulations of the Americans With Disabilities Act, of July 26, 1990, Pub. L. No. 101-336, 104 Stat. 327, 42 U.S.C. § 12101, et seq., as hereafter amended.  At Lender’s written request from time to time, Borrower shall provide Lender with written evidence of such compliance satisfactory to Lender. Borrower shall be solely responsible for all ADA costs of compliance and reporting required by law.

5.11   TAX LIABILITY.  Borrower has filed all required federal, state, county and municipal tax returns and has paid all taxes and assessments owed and payable, and Borrower has no knowledge of any basis for any additional payment with respect to any such taxes and assessments.

5.12   BUSINESS LOAN.  The Loan is a business loan transaction in the stated amount solely for the purpose of acquiring and financing the Property and carrying on the business of Borrower and none of the proceeds of the Loan will be used for personal, family or agricultural purposes.

5.13   TAX SHELTER REGULATIONS.  Neither Borrower, any Guarantor, nor any subsidiary of any of the foregoing intends to treat the Loan or the transactions contemplated by this Agreement and the other Loan Documents as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4).  If Borrower, or any other party to the Loan determines to take any action inconsistent with such intention, Borrower will promptly notify Lender thereof.  If Borrower so notifies Lender, Borrower acknowledges that Lender may treat the Loan as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and Lender will maintain the lists and other records, including the identity of the applicable party to the Loan as required by such Treasury Regulation.

ARTICLE 6.                                  HAZARDOUS MATERIALS

6.1   SPECIAL REPRESENTATIONS AND WARRANTIES.  Without in any way limiting the other representations and warranties set forth in this Agreement, and after reasonable investigation and inquiry, Borrower hereby represents and warrants to the best of Borrower’s knowledge as of the date of this Agreement as follows:

(a)   Hazardous Materials.  Except as previously disclosed to Lender in that certain Phase I Environmental Site Assessment, prepared by AEI Consultants, AEI Project No. 174030, dated November 19, 2007, the Property is not and has not been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal, transportation or presence of any oil, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are  “hazardous substances,” “hazardous wastes,” “hazardous materials,” “toxic substances,” “wastes,” “regulated substances,” “industrial solid wastes,” or “pollutants” under the Hazardous Materials Laws, as described below, and/or other applicable environmental laws, ordinances and regulations (collectively, the “Hazardous Materials”). “Hazardous Materials” shall not include commercially reasonable amounts of such materials used in the ordinary course of operation of the Property which are used and stored in accordance with all applicable environmental laws, ordinances and regulations.

(b)   Hazardous Materials Laws.  The Property is in compliance with all applicable laws, ordinances and regulations relating to Hazardous Materials (“Hazardous Materials Laws”), including, without limitation:  the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; and, in each case to the extent applicable to the Property, all comparable state and local laws, laws of other jurisdictions or orders and regulations.

(c)   Hazardous Materials Claims.  There are no claims or actions (“Hazardous Materials Claims”) pending or threatened against Borrower or the Property by any governmental entity or agency or by any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws.

(d)   Border Zone Property.  The Property has not been designated as Border Zone Property under the provisions of California Health and Safety Code, Sections 25220 et seq. and there has been no occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be designated as Border Zone Property.

6.2   HAZARDOUS MATERIALS COVENANTS.  Borrower agrees as follows:

(a)   No Hazardous Activities.  Borrower shall not cause or permit the Property to be used as a site for the use, generation, manufacture, storage, treatment, release, discharge, disposal, transportation or presence of any Hazardous Materials.

(b)   Compliance.  Borrower shall comply and cause the Property to comply with all applicable Hazardous Materials Laws.

(c)   Notices.  Borrower shall promptly notify Lender in writing of:  (i) the discovery of any Hazardous Materials on, under or about the Property; (ii) any knowledge by Borrower that the Property does not comply with any Hazardous Materials Laws; (iii) any Hazardous Materials Claims; and (iv) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be designated as Border Zone Property.

(d)   Remedial Action.  In response to the presence of any Hazardous Materials on, under or about the Property in violation of applicable Hazardous Materials laws, within thirty (30) days (or such shorter period mandated by any administrative or court order or judgment) Borrower shall promptly commence and thereafter take, at Borrower’s sole expense, all remedial action required by any applicable Hazardous Materials Laws or any judgment, consent decree, settlement or compromise in respect to any Hazardous Materials Claims.

6.3   INSPECTION BY LENDER.  Upon reasonable prior notice to Borrower, Lender, its employees and agents, may from time to time (whether before or after the commencement of a non-judicial or judicial foreclosure proceeding) enter and inspect the Property for the purpose of determining the existence, location, nature and magnitude of any past or present release or threatened release of any Hazardous Materials into, onto, beneath or from the Property.

6.4   HAZARDOUS MATERIALS INDEMNITY.  BORROWER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES) WHICH LENDER MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF THE USE, GENERATION, MANUFACTURE, STORAGE, DISPOSAL, THREATENED DISPOSAL, TRANSPORTATION OR PRESENCE OF HAZARDOUS MATERIALS IN, ON, UNDER OR ABOUT THE PROPERTY. BORROWER SHALL IMMEDIATELY PAY TO LENDER UPON DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE.  BORROWER’S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER SHALL SURVIVE THE CANCELLATION OF THE NOTE AND THE RELEASE, RECONVEYANCE OR PARTIAL RECONVEYANCE OF THE DEED OF TRUST.

6.5   LEGAL EFFECT OF SECTION.  Borrower and Lender agree that:  (a) this Article 6 is intended as Lender’s written request for information (and Borrower’s response) concerning the environmental condition of the real property security as required by California Code of Civil Procedure §726.5; and (b) each provision in this Article (together with any indemnity applicable to a breach of any such provision) with respect to the environmental condition of the real property security is intended by Lender and Borrower to be an “environmental provision” for purposes of California Code of Civil Procedure §736, and as such it is expressly understood that Borrower’s duty to indemnify Lender hereunder shall survive: (a) any judicial or non-judicial foreclosure under the Deed of Trust, or transfer of the Property in lieu thereof, (b) the release and reconveyance or cancellation of the Deed of Trust; and (c) the satisfaction of all of Borrower’s obligations under the Loan Documents, except that, if and only if the Loan and all other obligations to Lender are repaid in full in immediately available funds and Lender has not made any written claim to Borrower pursuant to this Article 6 on or before the date three (3) years after repayment in full of the Loan and all such other obligations, then the obligations of Borrower under this Article 6 shall terminate upon such date three (3) years after such repayment in full, and, provided further, Borrower shall have no liability to Lender under this Article 6 with respect to losses, damages, liabilities, claims, actions, judgments, court costs and legal or other expenses incurred as a consequence of (A) Hazardous Materials used, generated, manufactured, stored, disposed of, transported or first present in, on, under or about the Property after (I) Borrower is no longer vested with ownership of the Property as a result of a foreclosure or deed in lieu of foreclosure or (II) a receiver has been appointed for the Property and Borrower is no longer in possession of the Property; or (B) the gross negligence or willful misconduct of any indemnified party.

ARTICLE 7.                                  COVENANTS OF BORROWER

7.1   EXPENSES.  Borrower shall immediately pay Lender upon demand all costs and expenses incurred by Lender in connection with: (a) the preparation of this Agreement, all other Loan Documents and Other Related Documents contemplated hereby; (b) the administration of this Agreement, the other Loan Documents and Other Related Documents for the term of the Loan; and (c) the enforcement or satisfaction by Lender of any of Borrower’s obligations under this Agreement, the other Loan Documents or the Other Related Documents.  For all purposes of this Agreement, Lender’s costs and expenses shall include, without limitation, all appraisal fees, cost engineering and inspection fees, legal fees and expenses, accounting fees, environmental consultant fees, auditor fees, UCC filing fees and/or UCC vendor fees, flood certification vendor fees, tax service vendor fees, and the cost to Lender of any title insurance premiums, title surveys, reconveyance and notary fees.  Borrower recognizes and agrees that formal written appraisals of the Property by a licensed independent appraiser may be required by Lender’s internal procedures and/or federal regulatory reporting requirements on an annual and/or specialized basis and that Lender may, at its option, require inspection of the Property by an independent supervising architect and/or cost engineering specialist at least semi-annually.  If any of the services described above are provided by an employee of Lender, Lender’s costs and expenses for such services shall be calculated in accordance with Lender’s standard charge for such services.  Notwithstanding the foregoing, or anything to the contrary contained in the Loan Documents, Borrower shall not be responsible for (a) any costs of preparing the Loan Documents other than Lender’s legal fees to be paid at closing, (b) any costs of administering the Loan, (c) any appraisal, auditing, architectural, engineering or inspection fees or costs except for the cost of the Appraisals, (d) the cost of any environmental assessments or inspections made or contracted for by Lender unless Lender has reason to suspect that there has been a material release of Hazardous Materials on the Property, (e) any survey or flood certification costs other than the survey and flood certification costs incurred by Borrower prior to closing, (f) any costs of releasing the Deed of Trust or the other collateral except recording or filing fees, (g) any costs of title insurance other than the premium for the Title Policy payable at closing and, if applicable, the endorsement required by Section 2.10(c) above or (h) any costs of selling, syndicating or participating the Loan.

7.2   ERISA COMPLIANCE.  Borrower shall at all times comply with the provisions of ERISA with respect to any retirement or other employee benefit plan to which it is a party as employer, and as soon as possible after Borrower knows, or has reason to know, that any Reportable Event (as defined in ERISA) with respect to any such plan of Borrower has occurred, it shall furnish to Lender a written statement setting forth details as to such Reportable Event and the action, if any, which Borrower proposes to take with respect thereto, together with a copy of the notice of such Reportable Event furnished to the Pension Benefit Guaranty Corporation.

7.3   LEASING.  Subject to the rights of tenants under their existing Leases, Borrower shall use commercially reasonable efforts to maintain all leasable space in the Property leased at no less than fair market rental rates.

7.4   APPROVAL OF LEASES.  All leases of the Property affecting ten thousand (10,000) rentable square feet of the Property or more, shall:  (a) be upon terms and with tenants approved by Lender prior to Borrower’s execution of any such lease; and (b) include estoppel, subordination, attornment and mortgagee protection provisions satisfactory to Lender.

7.5   INCOME TO BE APPLIED TO DEBT SERVICE.  Borrower shall apply all gross operating income from the Property for any period to the payment of current operating expenses of the Property for such period and the payment of accrued interest and other amounts that are due and payable under the Loan Documents during such period before making distributions to any member of Borrower.  In no event shall any gross operating income be distributed to any member of Borrower at any time when a Default has occurred and is continuing.

7.6   SUBDIVISION MAPS.  Prior to recording any final map, plat, parcel map, lot line adjustment or other subdivision map of any kind covering any portion of the Property (collectively, “Subdivision Map”), Borrower shall submit such Subdivision Map to Lender for Lender’s review and approval, which approval shall not be unreasonably withheld. Within ten (10) Business Days after Lender’s receipt of such Subdivision Map, Lender shall provide Borrower written notice if Lender disapproves of said Subdivision Map.  Lender shall be deemed to have approved the Subdivision Map if such notice is not provided to Borrower.  Within five (5) Business Days after Lender’s request, Borrower shall execute, acknowledge and deliver to Lender such amendments to the Loan Documents as Lender may reasonably require to reflect the change in the legal description of the Property resulting from the recordation of any Subdivision Map.  In connection with and promptly after the recordation of any amendment or other modification to the Deed of Trust recorded in connection with such amendments, Borrower shall deliver to Lender, at Borrower’s sole expense, a title endorsement to the Title Policy in form and substance satisfactory to Lender insuring the continued first priority lien of the Deed of Trust.  Subject to the execution and delivery by Borrower of any documents required under this Section, Lender shall, if required by applicable law, sign any Subdivision Map approved, or deemed to be approved, by Lender pursuant to this Section.

7.7   OPINION OF LEGAL COUNSEL.  On the Effective Date, as a condition to making the Loan, Borrower shall provide, at Borrower’s expense, an opinion of legal counsel in form and content satisfactory to Lender to the effect that:  (a) upon due authorization, execution and recordation or filing as may be specified in the opinion, each of the Loan Documents shall be legal, valid and binding instruments, enforceable against the makers thereof in accordance with their respective terms; (b) Borrower is duly formed and has all requisite authority to enter into the Loan Documents; and (c) such other matters, incident to the transactions contemplated hereby, as Lender may reasonably request.

7.8   FURTHER ASSURANCES.  Upon Lender’s request and at Borrower’s sole cost and expense, Borrower shall execute, acknowledge and deliver any other instruments and perform any other acts necessary, desirable or proper, as reasonably determined by Lender, to carry out the purposes of this Agreement and the other Loan Documents or that are necessary to perfect and preserve any liens created by the Loan Documents.

7.9   ASSIGNMENT.  Without the prior written consent of Lender, Borrower shall not assign Borrower’s interest under any of the Loan Documents, or in any monies due or to become due thereunder, and any assignment without such consent shall be void.

7.10   MANAGEMENT OF PROPERTY.  Without the prior written consent of Lender, Borrower shall not enter into any agreement providing for the management, leasing or operation of the Property.  Lender’s approval of the entity which is to provide the management, leasing or operation of the Property shall not be required if such entity is Douglas Emmett Management Hawaii, LLC or any other entity controlled directly or indirectly by Douglas Emmett, Inc.

ARTICLE 8.                                  REPORTING COVENANTS

8.1   FINANCIAL INFORMATION.  Borrower shall deliver to Lender, (a) not later than one hundred twenty (120) days after Borrower’s fiscal year end, a current financial statement (i.e., an income and expense statement and balance sheet) for Borrower (signed by the managing member), which may be unaudited, and (b) a copy of the Form 10-K of Douglas Emmett, Inc., to be delivered within the later of one hundred twenty (120) days after Douglas Emmett, Inc.’s fiscal year end or five (5) Business Days after it becomes publicly available.  Delivery of the 10-K may be made by posting it on, or making it accessible to the Lender via, the website of Douglas Emmett, Inc.  These statements shall be prepared in accordance with generally accepted accounting principles consistently applied except as noted therein.

Borrower shall also deliver or cause to be delivered to Lender a personal financial statement from Richard W. Gushman, II, not later than one hundred twenty (120) days of calendar year end.  Such financial statement, and the manner of its preparation, shall be acceptable if they are consistent with the financial statement that Mr. Gushman has provided Lender in connection with the closing of the Loan.

8.2   BOOKS AND RECORDS.  Borrower shall maintain complete books of account and other records for the Property and for disbursement and use of the proceeds of the Loan, and the same shall be available for inspection and copying by Lender upon reasonable prior notice.

8.3   REPORTS.  Intentionally Deleted.

8.4   LEASING REPORTS.  Borrower shall deliver to Lender quarterly rent rolls not later than sixty (60) days after the end of each fiscal quarter.

8.5   OPERATING STATEMENTS FOR PROPERTY.  Until such time as the Note is paid in full, Borrower shall deliver to Lender within sixty (60) days following the end of each fiscal quarter an “Operating Statement” which shows in detail the amounts and sources of gross operating income from the Property for such period received by or on behalf of Borrower and the amounts and purposes of operating expenses for the Property paid by or on behalf of Borrower with respect to the Property for the previous quarter.

ARTICLE 9.                                  DEFAULTS AND REMEDIES

9.1   DEFAULT.  The occurrence of any one or more of the following shall constitute an event of default (“Default”) under this Agreement and the other Loan Documents:

(a)   Monetary.  Borrower’s failure to pay when due any sums payable under the Note or any of the other Loan Documents and such failure shall continue for a period of ten (10) days; or

(b)   Performance of Obligations.  Borrower’s failure to perform any obligation under any of the Loan Documents which failure is not otherwise expressly made a Default under this Section 9.1 and the continuance of such failure for thirty (30) days after notice to Borrower, or within any longer grace period, if any, allowed in this Agreement for such failure; provided, however, that if such failure can be cured but is not reasonably susceptible of cure within thirty (30) days and Borrower commences such cure within such period and thereafter prosecutes such cure with reasonable diligence, then Borrower shall be permitted such additional period that shall be reasonably necessary (but not to exceed an aggregate period of 90 days) to cure such failure; and Borrower’s failure to perform will not constitute a Default until such date as the specified cure period expires; or

(c)   Use.  The prohibition or enjoining of Borrower’s right to occupy, use or lease the Property for a continuous period of more than thirty (30) days and such prohibition or injunction prevents Borrower (and its agents) from collecting rent and operating the Property; or

(d)   Condemnation; Attachment.  (i) The condemnation, seizure or appropriation of, or occurrence of an uninsured casualty with respect to, any material portion of the Property; or (ii) the sequestration or attachment of, or any levy or execution upon any of the Property, any other collateral provided by Borrower under any of the Loan Documents, or of all or substantially all of the other assets of Borrower, which sequestration, attachment, levy or execution is not released, expunged or dismissed prior to the earlier of sixty (60) days or the sale of the assets affected thereby; or

(e)   Representations and Warranties.  (i) The failure of any material representation or warranty of Borrower in any of the Loan Documents and the continuation of such failure for more than thirty (30) days after written notice to Borrower from Lender requesting that Borrower cure such failure; or (ii) any material adverse change in the financial condition of Borrower, any Guarantor, or any Indemnitor from the financial condition represented to Lender as of the later of: (A) the Effective Date; or (B) the date upon which the financial condition of such party was first represented to Lender which impairs the ability of such entity or person to perform its obligations under the Loan Document to which any of them are a party; or

(f)   Voluntary Bankruptcy; Insolvency; Dissolution. (i) The filing of a petition by Borrower for relief under the Bankruptcy Code, or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law; (ii) the filing of any pleading or an answer by Borrower in any involuntary proceeding under the Bankruptcy Code or other debtor relief law which admits the petition’s material allegations regarding Borrower’s insolvency; (iii) a general assignment by Borrower for the benefit of creditors; or (iv) Borrower applying for, or the appointment of, a receiver, trustee, custodian or liquidator of Borrower or any of its property; or

(g)   Involuntary Bankruptcy.  The failure of Borrower to effect a full dismissal of any involuntary petition under the Bankruptcy Code or under any other debtor relief law that is filed against Borrower or in any way restrains or limits Borrower or Lender regarding the Loan or the Property, prior to the earlier of the entry of any court order granting relief sought in such involuntary petition, or sixty (60) days after the date of filing of such involuntary petition; or

(h)   Guarantors.  The occurrence of any of the events specified in Section 9.1 (f) or 9.1 (g) as to any person or entity other than Borrower, including, without limitation, any Guarantor or Indemnitor, which is in any manner obligated to Lender for all or any part of the Borrower’s obligations under the Loan Documents; or

(i)   Death or Incapacity of Borrower.  The death or incapacity of Borrower, if an individual; or

(j)   Change In Management or Control.  The occurrence of any material management or organizational change in Borrower that is reasonably anticipated to have a material adverse effect on the Loan, on the Property, or on the ability of Borrower to perform its obligations under the Loan Documents; provided, however, that the following shall not constitute a Default hereunder: (i) any transfer of any limited liability company interests in Borrower, or (ii) any transfer of the non-member manager’s interest in Borrower, provided in each case that, after any such transfer, Douglas Emmett, Inc. still directly or indirectly “controls” Borrower and any non-member manager of Borrower; or

(k)   Loss of Priority.  The failure at any time of the Deed of Trust to be a valid first lien upon the Property or any portion thereof (which lien, however, may be and remain subject to the Permitted Encumbrances without constituting a Default hereunder); or

(l)   Hazardous Materials.  The discovery of any significant Hazardous Materials in, on or about the Property subsequent to the Effective Date and either Borrower or any Indemnitor is in default of any of its obligations hereunder or under the Hazardous Materials Indemnity Agreement (Unsecured) executed by Indemnitor, as indemnitor, in favor of Lender, as applicable, beyond any applicable notice and/or cure period.  Any such Hazardous Materials shall be “significant” for this purpose if said Hazardous Materials, in Lender’s sole discretion, have a materially adverse impact on the value of the Property; or

(m)   Default Under Credit Lease.  The occurrence of a default (which is continuing after any applicable notice, grace or cure period) by either lessor or lessee under, or the surrender, abandonment, termination or rescission of, that certain lease executed by Borrower, as lessor, and HNLC, Inc., as lessee, dated February 13, 2008, which lease, or a memorandum thereof, was recorded ________________, as instrument or document number _______________ in the Bureau of Conveyances of the State of Hawaii, which default has a material adverse effect on Borrower’s ability to satisfy its obligations under the Loan Documents.

(n)   Other Bankruptcy. The occurrence of any of the events specified in Sections 9.1 (f) or 9.1 (g) of this Agreement with respect to Douglas Emmett, Inc., a Maryland corporation; or

(o)   Adverse Financial Condition - Other Than Borrower.  Any material adverse change in the financial condition of Guarantor or Douglas Emmett, Inc. from the condition shown on the financial statement(s) submitted to Lender and relied upon by Lender in making the Loan, the materiality and adverse effect of such change in financial condition to be reasonably determined by Lender in accordance with its credit standards and underwriting practices in effect at the time of making such determination and which material adverse change materially impairs the ability of Guarantor to perform its obligations under the Repayment Guaranty of even date herewith executed by Guarantor in favor of Lender; or

(p)   Transfer of Assets.  The sale, assignment, pledge, hypothecation, mortgage or transfer of all or substantially all of the assets of Borrower or Guarantor other than in the ordinary course of business of said person or entity; or

(q)   Transfer of Interest in Borrower.  Any sale or transfer of the membership interests in Borrower; provided, however, that any sale or transfer of any membership interests or limited liability company interest in Borrower shall not constitute a Default hereunder, provided that, after such sale or transfer, Douglas Emmett, Inc. still directly or indirectly “controls” Borrower and any non-member manager of Borrower; or

(r)   Unsecured Indemnity Agreement. The occurrence of a default under that certain Hazardous Materials Indemnity Agreement (Unsecured) executed by Indemnitor, as indemnitor, in favor of Lender of even date herewith which is continuing after written notice from Lender to Indemnitor of such default and Indemnitor is not diligently prosecuting the cure of such default within five (5) days of receipt of such written notice and continuously thereafter until such default has been cured.

As used herein, the term “control” shall mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies of Borrower (whether through ownership of securities or other ownership interests, by contract or otherwise).

9.2   ACCELERATION UPON DEFAULT; REMEDIES.  Upon the occurrence of any Default specified in this Article, Lender may, at its sole option, declare all sums owing to Lender under the Note, this Agreement and the other Loan Documents immediately due and payable.

9.3   DISBURSEMENTS TO THIRD PARTIES.  Upon the occurrence of a Default occasioned by Borrower’s failure to pay money to a third party as required by this Agreement, Lender may but shall not be obligated to make such payment.  If such payment is made from funds of Lender, Borrower shall repay such funds within ten (10) days after written demand of Lender.  In either case, the Default with respect to which any such payment has been made by Lender shall not be deemed cured until such deposit or repayment (as the case may be) has been made by Borrower to Lender.

9.4   REPAYMENT OF FUNDS ADVANCED.  Any funds expended by Lender  in the exercise of its rights or remedies under this Agreement and the other Loan Documents shall be payable to Lender upon demand, together with interest at the rate applicable to the principal balance of the Note from the date the funds were expended.

9.5   RIGHTS CUMULATIVE, NO WAIVER.  All Lender’s rights and remedies provided in this Agreement and the other Loan Documents, together with those granted by law or at equity, are cumulative and may be exercised by Lender at any time.  Lender’s exercise of any right or remedy shall not constitute a cure of any Default unless all sums then due and payable to Lender under the Loan Documents are repaid and Borrower has cured all other Defaults.  No waiver shall be implied from any failure of Lender to take, or any delay by Lender in taking, action concerning any Default or failure of condition under the Loan Documents, or from any previous waiver of any similar or unrelated Default or failure of condition.  Any waiver or approval under any of the Loan Documents must be in writing and shall be limited to its specific terms.

ARTICLE 10.                                  MISCELLANEOUS PROVISIONS

10.1   INDEMNITY.  BORROWER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES) WHICH LENDER MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF: (A) THE PURPOSE TO WHICH BORROWER APPLIES THE LOAN PROCEEDS; (B) THE FAILURE OF BORROWER TO PERFORM ANY OBLIGATIONS AS AND WHEN REQUIRED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; (C) ANY FAILURE AT ANY TIME OF ANY OF BORROWER’S REPRESENTATIONS OR WARRANTIES TO BE TRUE AND CORRECT; OR (D) ANY ACT OR OMISSION BY BORROWER OR MEMBER OF BORROWER, ANY CONTRACTOR, SUBCONTRACTOR OR MATERIAL SUPPLIER, ENGINEER, ARCHITECT OR OTHER PERSON OR ENTITY ENGAGED OR HIRED BY BORROWER WITH RESPECT TO ANY OF THE PROPERTY.  BORROWER SHALL IMMEDIATELY PAY TO LENDER UPON DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE. BORROWER’S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER SHALL SURVIVE CANCELLATION OF THE NOTE AND THE RELEASE,  RECONVEYANCE OR PARTIAL RECONVEYANCE OF THE DEED OF TRUST.

10.2   FORM OF DOCUMENTS.  The form and substance of all documents, instruments, and forms of evidence to be delivered to Lender under the terms of this Agreement and any of the other Loan Documents shall be subject to Lender’s approval and shall not be modified, superseded or terminated in any respect without Lender’s prior written approval.

10.3   NO THIRD PARTIES BENEFITED.  No person other than Lender and Borrower and their permitted successors and assigns shall have any right of action under any of the Loan Documents.

10.4   NOTICES.  All notices, demands, or other communications under this Agreement and the other Loan Documents shall be in writing and shall be delivered to the appropriate party at the address set forth on the signature page of this Agreement (subject to change from time to time by written notice to all other parties to this Agreement).  All notices, demands or other communications shall be considered as properly given if delivered personally, by overnight commercial courier service, charges prepaid, or sent by first class United States Postal Service mail, postage prepaid, except that notice of Default may be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon receipt; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.

10.5   ATTORNEY-IN-FACT.  Borrower hereby irrevocably appoints and authorizes Lender, as Borrower’s attorney-in-fact, which agency is coupled with an interest, effective while any Default exists, to execute and/or record in Lender’s or Borrower’s name any notices, instruments or documents that Lender deems appropriate to protect Lender’s interest under any of the Loan Documents.

10.6   ACTIONS.  Borrower agrees that Lender, in exercising the rights, duties or liabilities of Lender or Borrower under the Loan Documents, may commence, appear in or defend any action or proceeding purporting to affect the Property, or the Loan Documents and Borrower shall immediately reimburse Lender upon demand for all reasonable expenses so incurred or paid by Lender, including, without limitation, reasonable attorneys’ fees and expenses and court costs.

10.7   RIGHT OF CONTEST.  Borrower may contest in good faith any claim, demand, levy, assessment, mechanics’ lien or other lien by any person other than Lender which would constitute a Default if: (a) Borrower pursues the contest diligently, in a manner which Lender reasonably determines is not prejudicial to Lender, and does not impair the rights of Lender under any of the Loan Documents; and (b) Borrower deposits with Lender any funds or other forms of assurance which Lender reasonably determines from time to time appropriate to protect Lender from the consequences of the contest being unsuccessful.  Borrower’s compliance with this Section shall operate to prevent such claim, demand, levy, assessment or lien from becoming a Default.

10.8   RELATIONSHIP OF PARTIES.  The relationship of Borrower and Lender under the Loan Documents is, and shall at all times remain, solely that of borrower and lender, and Lender neither undertakes nor assumes any responsibility or duty to Borrower or to any third party with respect to the Property, except as expressly provided in this Agreement and the other Loan Documents.

10.9   DELAY OUTSIDE LENDER’S CONTROL.  Lender shall not be liable in any way to Borrower or any third party for Lender’s failure to perform or delay in performing under the Loan Documents (and Lender may suspend or terminate all or any portion of Lender’s obligations under the Loan Documents) if such failure to perform or delay in performing results directly or indirectly from, or is based upon, the action, inaction, or purported action, of any governmental or local authority, or because of war, rebellion, insurrection, strike, lock-out, boycott or blockade (whether presently in effect, announced or in the sole judgment of Lender deemed probable), or from any Act of God or other cause or event beyond Lender’s control.

10.10   ATTORNEYS’ FEES AND EXPENSES; ENFORCEMENT.  If any attorney is engaged by Lender to enforce or defend any provision of this Agreement, any of the other Loan Documents or Other Related Documents, or as a consequence of any Default under the Loan Documents, with or without the filing of any legal action or proceeding, and including, without limitation, any fees and expenses incurred in any bankruptcy proceeding of the Borrower, then Borrower shall immediately pay to Lender, upon demand, the amount of all attorneys’ fees and expenses and all costs incurred by Lender in connection therewith, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance of the Note as specified therein.

10.11   IMMEDIATELY AVAILABLE FUNDS.  Unless otherwise expressly provided for in this Agreement, all amounts payable by Borrower to Lender shall be payable only in United States currency, immediately available funds.

10.12   LENDER’S CONSENT.  Wherever in this Agreement there is a requirement for Lender’s consent and/or a document to be provided or an action taken “to the satisfaction of Lender”, it is understood by such phrase that Lender shall exercise its consent, right or judgment in a reasonable manner given the specific facts and circumstance applicable at the time.

10.13   LOAN SALES AND PARTICIPATION; DISCLOSURE OF INFORMATION.  Borrower agrees that Lender may elect, at any time, to sell, assign or grant participation in all or any portion of its rights and obligations under the Loan Documents, and that any such sale, assignment or participation may be to one or more financial institutions, private investors, and/or other entities, at Lender’s sole discretion (“Participant”).  Borrower further agrees that Lender may disseminate to any such actual or potential purchaser(s), assignee(s) or participant(s) all documents and information (including, without limitation, all financial information) which has been or is hereafter provided to or known to Lender with respect to:  (a) the Property and its operation; (b) any party connected with the Loan (including, without limitation, the Borrower, any partner, joint venturer or member of Borrower, any constituent partner, joint venturer or member of Borrower, any Guarantor and any Indemnitor); and/or (c) any lending relationship other than the Loan which Lender may have with any party connected with the Loan.  In the event of any such sale, assignment or participation, Lender and the parties to such transaction shall share in the rights and obligations of Lender as set forth in the Loan Documents only as and to the extent they agree among themselves, but no owner of a participation interest shall have any direct rights of enforcement against Borrower or any Guarantor or Indemnitor under this Agreement or any of the Loan Documents.  In connection with any such sale or assignment, Borrower further agrees that the Loan Documents shall be sufficient evidence of the obligations of Borrower to each purchaser or assignee and upon written request by Lender, Borrower shall enter into such amendments or modifications to the Loan Documents as may be reasonably required in order to evidence any such sale or assignment.  The indemnity obligations of Borrower under the Loan Documents shall also apply with respect to any purchaser or assignee.

Anything in this Agreement to the contrary notwithstanding, and without the need to comply with any of the formal or procedural requirements of this Agreement, including this Section, any lender may at any time and from time to time pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from its obligations thereunder.

10.14   CAPITAL ADEQUACY.  If Lender or any Participant in the Loan, or either of them, determines that compliance with any future law or regulation or with any future guideline or request from any central bank or other governmental agency (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by Lender or such Participant, or any corporation controlling Lender or such Participant, as a consequence of, or with reference to, Lender’s or such Participant’s or such corporation’s commitments or its making or maintaining advances below the rate which Lender or such Participant or such corporation controlling Lender could have achieved but for such compliance (taking into account the policies of Lender or such Participant or corporation with regard to capital), then Borrower shall, from time to time, within thirty (30) calendar days after written demand by Lender or such Participant, pay to Lender or such Participant additional amounts sufficient to compensate Lender or such Participant or such corporation controlling Lender to the extent that Lender determines such increase in capital is allocable to Lender’s obligations hereunder.  A certificate as to such amounts, submitted to Borrower by Lender or such Participant, shall be conclusive and binding for all purposes, absent manifest error provided that any discretion exercise by Lender or such Participant in making any such determination was exercised in a reasonable manner.

10.15   LENDER’S AGENTS.  Lender may designate an agent or independent contractor to exercise any of Lender’s rights under this Agreement and any of the other Loan Documents.

10.16   TAX SERVICE.  Lender is authorized to secure, at Borrower’s expense, a tax service contract with a third party vendor which shall provide tax information on the Property satisfactory to Lender.

10.17   BORROWER’S WAIVER.  Borrower hereby waives all of its rights under California Civil Code Section 2822, which provides as follows:  “(a) The acceptance, by a creditor, of anything in partial satisfaction of an obligation, reduces the obligation of a surety thereof, in the same measure as that of the principal, but does not otherwise affect it.  However, if the surety is liable upon only a portion of an obligation and the principal provides partial satisfaction of the obligation, the principal may designate the portion of the obligation that is to be satisfied; and (b) For purposes of this section and Section 2819, an agreement by a creditor to accept from the principal debtor a sum less than the balance owed on the original obligation, without the prior consent of the surety and without any other change to the underlying agreement between the creditor and principal debtor, shall not exonerate the surety for the lesser sum agreed upon by the creditor and principal debtor.”

10.18   SEVERABILITY.  If any provision or obligation under this Agreement and the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from the Loan Documents and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of the Loan Documents, provided, however, that if the rate of interest or any other amount payable under the Note or this Agreement or any other Loan Document, or the right of collectibility therefore, are declared to be or become invalid, illegal or unenforceable, Lender’s obligations to make advances under the Loan Documents shall not be enforceable by Borrower.

10.19   HEIRS, SUCCESSORS AND ASSIGNS.  Except as otherwise expressly provided under the terms and conditions of this Agreement, the terms of the Loan Documents shall bind and inure to the benefit of the heirs, successors and assigns of the parties.

10.20   TIME.  Time is of the essence of each and every term of this Agreement.

10.21   HEADINGS.  All article, section or other headings appearing in this Agreement and any of the other Loan Documents are for convenience of reference only and shall be disregarded in construing this Agreement and any of the other Loan Documents.

10.22   GOVERNING LAW.  This Agreement shall be governed by, and construed and enforced in accordance with the laws of the State of California, except to the extent preempted by federal laws.  Borrower and all persons and entities in any manner obligated to Lender under the Loan Documents consent to the jurisdiction of any federal or state court within the State of California having proper venue and also consent to service of process by any means authorized by California or federal law.

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

10.24   INTEGRATION; INTERPRETATION.  The Loan Documents contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral.  The Loan Documents shall not be modified except by written instrument executed by all parties.  Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Lender in writing.

10.25   JOINT AND SEVERAL LIABILITY.  If more than one person or entity has executed this Agreement or any of the other Loan Documents as “Borrower” or “Mortgagor,” then the obligations of all such persons hereunder or thereunder shall be joint and several.

10.26   COUNTERPARTS.  To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single document.  It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

10.27   SCHEDULE OF LEASES.  Attached hereto as Exhibit D is a Schedule of Leases currently in effect with respect to the Property

IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the date appearing on the first page of this Agreement.

“LENDER”

WELLS FARGO BANK,

NATIONAL ASSOCIATION

By:                                                                           

Gary E. Kasper

Its: Senior Vice President

Lender’s Address: Wells Fargo Bank, National Association Real Estate Group (AU#13161) 707 Wilshire Boulevard, 16th Floor Los Angeles, CA  90017 Attention:Martha Miller With a copy to: Wells Fargo Bank, National Association Disbursement and Operations Center 2120 East Park Place, Suite 100 El Segundo, CA  90245 Attention:Angie Choi

“BORROWER”

DEG III, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation

its Manager

By:                                                              

Name:                                                              

Office:                                                              

Borrower’s Address: DEG III, LLC 808 Wilshire Boulevard, Suite 200 Santa Monica, California 90401 Attention:Jordan L. Kaplan and William Kamer With a copy to: Cox, Castle & Nicholson LLP 2049 Century Park East, 28th Floor Los Angeles, California  90067-3284 Attention:Jonathan Sears, Esq.

EXHIBIT A - DESCRIPTION OF PROPERTY

Exhibit A to LOAN AGREEMENT between DEG III, LLC, a limited liability company, as “Borrower”, and Wells Fargo Bank, National Association, as “Lender”, dated as of February 12, 2008.

All that certain real property located in the County of Honolulu, State of Hawaii, described as follows:

All of that certain parcel of land situate at Kaakaukukui, Kewalo and Kukulueao, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:

LOT 447, area 32,725 square feet, more or less, as shown on Map 35, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 670 of Victoria Ward;

Being land(s) described in Transfer Certificate of Title No. ____________ issued to DEG III, LLC, a Delaware limited liability company.

EXHIBIT B - DOCUMENTS

Exhibit B to LOAN AGREEMENT between DEG III, LLC, a Delaware limited liability company, as “Borrower”, and Wells Fargo Bank, National Association, as “Lender”, of even date herewith.

1.   Loan Documents.  The documents listed below, numbered 1.1 through 1.13, inclusive, and amendments, modifications and supplements thereto which have received the prior written consent of Lender, together with any documents executed in the future that are approved by Lender and that recite that they are “Loan Documents” for purposes of this Agreement are collectively referred to herein as the Loan Documents.

1.1   This Agreement.

1.2   The Promissory Note Secured by Deed of Trust of even date herewith in the original principal amount of the Loan made by Borrower and payable to the order of Lender.

1.3   The Mortgage with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing of even date herewith executed by Borrower, as Mortgagor, in favor of Lender, as Mortgagee.

1.4   Subordination Agreement; Acknowledgement of Lease Assignment, Estoppel, Attornment and Non-Disturbance Agreement by and among Borrower, Lender and HNLC, Inc. relating to the Honolulu Club Lease.

1.5   Assignment, Consent and Subordination of Property Management Agreement.

1.6   Uniform Commercial Code National UCC Financing Statement (Form UCC1), naming Borrower as Debtor and Lender as Secured Party.

1.7   Certificate of Douglas Emmett Management, Inc. dated February 13, 2008 executed by William Kamer to which there is attached the following certificates, resolutions and agreements.

1.8   Corporate Resolution authorizing the execution of the Loan Documents by Borrower and the Repayment Guaranty by Douglas Emmett Properties, LP dated February 13, 2008.

1.9   Certificate of Formation of Borrower.

1.10   Limited Liability Company Agreement of Borrower.

1.11   Certificate of Limited Partnership of Douglas Emmett Properties, LP a Delaware limited partnership.

1.12   Agreement of Limited Partnership of Douglas Emmett Properties, LP.

1.13   Certificate of Incorporation and Bylaws of Douglas Emmett Management, Inc.

Other Related Documents (Which Are Not Loan Documents):

i.   Repayment Guaranty of even date herewith executed by Douglas Emmett Properties, LP and Richard W. Gushman, II, as Guarantor in favor of Lender.

ii.   Agreement For Disbursement Prior To Recording And Amendment To Note of even date herewith executed by and between Borrower and Lender.

iii.   Hazardous Materials Indemnity Agreement (Unsecured) of even date herewith executed by and between Douglas Emmett Properties, LP and Richard W. Gushman, II, as Indemnitor, and Lender.

iv.   Opinion of Borrower’s Legal Counsel dated February 13, 2008, executed by Cox, Castle & Nicholson LLP.

EXHIBIT C

Loan No. 105590

TRANSFER AUTHORIZER DESIGNATION

(For Disbursement of Loan Proceeds by Funds Transfer)

o NEW  o REPLACE PREVIOUS DESIGNATION  o  ADD  o  CHANGE  o  DELETE LINE NUMBER  _____

The following representatives of DEG III, LLC (“Borrower”) are authorized to request the disbursement of Loan Proceeds and initiate funds transfers for Loan Number 105590 dated February 12, 2008 between Wells Fargo Bank, National Association (“Bank”) and Borrower. Bank is authorized to rely on this Transfer Authorizer Designation until it has received a new Transfer Authorizer Designation signed by Borrower, even in the event that any or all of the foregoing information may have changed.

	Name	Title	Maximum Wire Amount
1.	Jordan L. Kaplan	Chief Executive Officer	$18,000,000
2.	William Kamer	Chief Financial Officer	$18,000,000
3.	Andres Gavinet	Executive Vice President	$18,000,000
4.	John Meehan	Vice President	$18,000,000
5.	Greg Hambly	Chief Accounting Officer	$18,000,000

Beneficiary Bank and Account Holder Information
1.
Transfer Funds to (Receiving Party Account Name):  Title Guaranty Escrow Services, Inc.
Receiving Party Account Number:  0001-029630
Receiving Bank Name, City and State: Bank of Hawaii Main Branch Honolulu, Hawaii	Receiving Bank Routing (ABA) Number 121301028
Maximum Transfer Amount:  $17,972,110
Further Credit Information/Instructions: Reference:  Escrow No. A7-101-5975  Attn:  Barbara Paulo

2.

Transfer Funds to (Receiving Party Account Name):
Receiving Party Account Number:
Receiving Bank Name, City and State:	Receiving Bank Routing (ABA) Number
Maximum Transfer Amount:
Further Credit Information/Instructions:

3.

Transfer Funds to (Receiving Party Account Name):
Receiving Party Account Number:
Receiving Bank Name, City and State:	Receiving Bank Routing (ABA) Number
Maximum Transfer Amount:
Further Credit Information/Instructions:

1  Maximum Wire Amount may not exceed the Loan Amount.

Date: February 12, 2008

“BORROWER”

DEG III, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation

its Manager

By:                                                              

Name:                                                              

Office:                                                              

Borrower’s Address:

DEG III, LLC

808 Wilshire Boulevard, Suite 200

Santa Monica, California 90401

Attention: Jordan L. Kaplan and William Kamer

EXHIBIT D

Loan No. 105590

Honolulu club

Schedule of Leases

101           HECO, Inc

Lease dated 12/24/1991

1st Amendment dated 12/31/1996

2nd Amendment dated 3/20/1997

3rd Amendment dated 5/5/2004

4th Amendment dated 9/5/2007

102           Wesco Restaurant Group

Lease dated 11/13/1979

1st Amendment dated 12/19/1979

2nd Amendment dated 9/9/1980

3rd Amendment dated 1/1/1981

4th Amendment dated 3/1/2001

401           World Financial

Lease dated 10/18/2006

410           K. Caswell & G. Uyeda DDS

Lease dated 3/9/1995

1st Amendment dated 3/15/2005

430           Healthcare Association of Hawaii

Lease dated 9/11/1986

1st Amendment dated 9/1/1987

2nd Amendment dated 10/9/1996

3rd Amendment dated 12/6/2006

460           Honolulu Sports Medical Clinic

Lease dated 1/18/2000

1st Amendment dated 10/28/2003

480           Sabrina Fair International, Inc.

Lease dated 1/1/1999

1st Amendment dated 11/14/2003

700           HNLC, Inc.

Lease dated 2/13/2008

600           Kokua Integrative Healthcare

Lease dated 8/1/2002

1st Amendment dated 4/8/2004

EX-10.2

LOAN AGREEMENT

dated as of

March 18, 2008

among

DOUGLAS EMMETT 2007, LLC,

a Delaware limited liability company,

DOUGLAS EMMETT REALTY FUND 2002,

a California limited partnership, and

DOUGLAS EMMETT 1995, LLC,

a Delaware limited liability company,

individually and collectively,

jointly and severally, as Borrower

the LENDERS Party Hereto,

EUROHYPO AG, NEW YORK BRANCH,

as Administrative Agent,

and

ING REAL ESTATE (USA), LLC,

as Documentation Agent

───────────────────

$340,000,000

───────────────────

EUROHYPO AG, NEW YORK BRANCH,

as Lead Arranger and Sole Bookrunner

LOAN AGREEMENT

LOAN AGREEMENT dated as of March 18, 2008 by Douglas Emmett 2007, LLC, a Delaware limited liability company (the “2007 LLC Borrower”), Douglas Emmett Realty Fund 2002, a California limited partnership (the “LP Borrower”) and Douglas Emmett 1995, LLC, a Delaware limited liability company (the “1995 LLC Borrower”; the 1995 LLC Borrower, the 2007 LLC Borrower and the LP Borrower, individually and collectively, jointly and severally, 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.           (i) 2007 LLC Borrower is the owner of (a) a fee simple interest in and to that certain office building listed in Schedule 1A attached hereto known as 1801 Century Park West, in the City of Los Angeles, County of Los Angeles, State of California, on certain land more fully described in Schedule 1B attached hereto (the “Century Park West Project”), and (b) a fee simple interest in and to that certain office building listed in Schedule 1A attached hereto known as Cornerstone Plaza, in the City of Los Angeles, County of Los Angeles, State of California, on certain land more fully described in Schedule 1B attached hereto (the “Cornerstone Plaza Project”); (ii) 1995 LLC Borrower is the owner of a fee simple interest in and to that certain office building listed in Schedule 1A attached hereto known as Executive Tower, in the City of Los Angeles, County of Los Angeles, State of California, on certain land more fully described in Schedule 1B attached hereto (the “Executive Tower Project”); and (iii) the LP Borrower is the owner of a fee simple interest, subject in part to the Ground Lease (as hereinafter defined), in and to that certain real property listed in Schedule 1A attached hereto known as the Trillium Project, in the City of Los Angeles, County of Los Angeles, State of California, more fully described in Schedule 1B attached hereto (the “Trillium Project”) (each of the Century Park West Project, the Cornerstone Plaza Project, the Executive Tower Project and the Trillium Project and the applicable Borrower’s respective rights to the land on which such office building project is located, together with any air rights and other rights, privileges, easements, hereditaments and appurtenances thereunto relating or appertaining thereto, all Improvements (as hereinafter defined) thereon, together with all fixtures and equipment required for the operation thereof, all personal property related to the foregoing and the rights of the applicable 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 herein individually as a “Project” and collectively as the “Projects”).

B.           A portion of the Trillium Project more particularly described in Schedule 1C attached hereto is encumbered by the Ground Lease (the “Ground Leased Property”), and located thereon is a hotel which is owned and operated by the Ground Lessee (as hereinafter defined) known as the Hilton Woodland Hills (the “Hilton Hotel”).  The Hilton Hotel, together with all improvements owned by Ground Lessee located on the Ground Leased Property and all fixtures and equipment required for the operation thereof and all personal property related to the foregoing are referred to herein as the “Hilton Hotel Improvements”.

C.           The Projects consist of eight (8) improved office buildings containing approximately 1,124,445 rentable square feet (each such Project and all other improvements, excluding the Hilton Hotel Improvements, constructed on each Project being, individually and collectively, the “Improvements”).

D.           The Borrower has requested and applied to the Lenders for a loan in the aggregate principal amount of $225,000,000, which under certain circumstances set forth in this Agreement, may be increased to the aggregate principal amount of $340,000,000, 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:

“1995 LLC Borrower” shall have the meaning assigned to such term in the introductory paragraph.

“2007 LLC Borrower” shall have the meaning assigned to such term in the introductory paragraph.

“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 plus Unused Commitments 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 plus Unused Commitments 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 plus Unused Commitments 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 plus Unused Commitments 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 plus Unused Commitments 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 plus Unused Commitments 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.

“Allocated Loan Percentage” means at any time with respect to any Project a percentage determined by multiplying one hundred percent (100%) by a fraction, the numerator of which is the Allocated Loan Amount for such Project and the denominator of which is the Allocated Loan Amounts for all Projects which, at such time, are collateral for the Loans.  The Allocated Loan Percentage for all Projects which, at such time, are collateral for the Loans shall always equal one hundred percent (100%).

“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 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) for Base Rate Loans, 200 basis points per annum; and (b) for Eurodollar Loans, 150 basis points per annum.

“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, 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.

“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 sole 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 any Borrower, any Borrower Party, or any Borrower’s Member/General Partner, as applicable, any of the individual officers serving as the Chief Executive Officer, President, Vice President, Chief Financial Officer, Secretary, Treasurer, Assistant Treasurer or Chief Accounting Officer of Borrower’s Manager, in its respective capacity as the manager, general partner or manager of the general partner of such Person , and whose name appears on a certificate of incumbency executed by the Secretary of Borrower’s Manager, 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.

“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 while such Person qualifies as a “Borrower Party” under the definition of such term, the REIT, its Operating Partnership, and any REIT Subsidiary that holds direct or indirect interests in and controls the Borrower.  “Bankruptcy Party” shall also mean any Subsidiary of any Borrower while such Person remains a Subsidiary of such 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 entitled “International Convergence of Capital Measurement and Capital Standards” dated July 1988, as Modified and in effect from time to time.

“Basel II” shall mean that certain revised at-risk capital framework published by the Basel Committee on Banking Supervision in its paper entitled “International Convergence of Capital Measurement and Capital Standards: a Revised Framework” in June, 2004, as Modified and in effect from time to time.

“Borrower” shall mean individually and collectively, jointly and severally the Borrower named in the preamble to this Agreement until such time (if any) as a Qualified Successor Entity shall acquire any of the Projects owned by a Borrower and assume the obligations of such 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 term “Borrower” shall include such Qualified Successor Entity.

“Borrower Party” shall mean the Borrower and its general partner or manager, but shall not include any other REIT Subsidiary owning a direct or indirect Equity Interest in the Borrower (unless it is the general partner or manager of the Borrower) and shall not include the Operating Partnership or the REIT (regardless of whether the Operating Partnership or the REIT is the general partner or manager of the Borrower). Upon the acquisition of any of the Projects, but not of direct or indirect Equity Interests in any 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 that if the general partner or manager of such Qualified Successor Entity is the REIT or the Operating Partnership, the term “Borrower Party” shall not include the REIT or the Operating Partnership ) and, unless the Borrower, the Borrower’s Manager or any other Person constitutes the general partner or manager of the Qualified Successor Entity, shall no longer include the applicable Borrower, the applicable Borrower’s Manager or such other applicable Person (and in any event shall not include any such Person that is not the general partner or manager of the Qualified Successor Entity).

“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 Douglas Emmett Management, Inc., a Delaware corporation, (a) with respect to the 2007 LLC Borrower, in its capacity as the manager of the 2007 LLC Borrower under the Organizational Documents of the 2007 LLC Borrower, and its successors thereunder in one or more of such capacities as permitted under the Loan Documents, (b) with respect to the 1995 LLC Borrower, in its capacity as the manager of the 1995 LLC Borrower under the Organizational Documents of the 1995 LLC Borrower, and its successors thereunder in one or more of such capacities as permitted under the Loan Documents, and (c) with respect to the LP Borrower, in its capacity as the manager of the LP General Partner under the Organizational Documents of the LP General Partner, 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 each 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 REIT or the Operating Partnership.

“Borrower’s Member/General Partner” shall mean, collectively, (a) with respect to the 2007 LLC Borrower, the Operating Partnership (the “2007 LLC Member”), as sole member under the Organizational Documents of the 2007 LLC Borrower, and its successors thereunder as sole member of the 2007 LLC Borrower as permitted under the Loan Documents, (b) with respect to the 1995 LLC Borrower, Douglas Emmett Realty Fund 1995, a California limited partnership (the “1995 LLC Member”), as sole member under the Organizational Documents of the 1995 LLC Borrower, and its successors thereunder as sole member of the 1995 LLC Borrower as permitted under the Loan Documents, and (c) with respect to the LP Borrower, the LP General Partner, as sole general partner under the Organizational Documents of the LP Borrower, and its successors thereunder as sole general partner of the LP 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/General Partner” shall not be required to be observed by any member or partner of the Borrower consisting of the REIT, the Operating Partnership or any REIT Subsidiary that is not the general partner or manager of the Borrower including, without limitation, the Borrower’s Member/General Partner 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.

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

“Change of Control” shall mean, with respect to the 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 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 REIT entitled to vote for members of the board of directors or equivalent governing body of the 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) or pursuant to a Joinder under Section 2.11(a), as specified in the respective Assignment and Assumption pursuant to which such assignment is effected, or as specified in the respective Joinder, in either case, as such percentage may be modified by any Assignment and Assumption or any Joinder.

“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.

“Contribution Agreement” shall mean the Contribution Agreement substantially in the form of Exhibit Q attached hereto, to be executed, dated and delivered by the Borrower to the Administrative Agent (on behalf of the Lenders) on the Closing Date.

“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.

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

“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, Security Agreement and Fixture Filing and substantially in the form of Exhibit D attached hereto, to be executed, dated and delivered by a 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.

“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.

“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 plus the Unused Commitments under 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 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 covering the Projects by the Borrower and Guarantor 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 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 or the Operating Partnership, 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 the Operating Partnership 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 the Operating Partnership 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 the Operating Partnership 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 the Operating Partnership or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Borrower Party or the Operating Partnership 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 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 Properties owned by any Borrower on the Closing Date other than the Projects which are identified on Schedule 1A, (b) any Qualified Real Estate Interest that is acquired after the Closing Date by any Borrower or by a wholly-owned Subsidiary or Qualified Sub-Tier Entity, and (c) 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).

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

“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.

“First Call Date” shall have the meaning assigned to such term in Section 2.10.

“First Call Notice” shall have the meaning assigned to such term in Section 2.10.

“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, Government Approvals and Other Project Documents 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.

“Ground Lease” shall mean that certain Second Restated Ground Lease dated September 1, 1994, originally by and between the State of California Public Employees’ Retirement System, as ground lessor, and Warner Center Hotel Properties, a California limited partnership, as ground lessee, as amended by Amendment to Second Restated Ground Lease dated December, 1994, and as amended, modified and/or supplemented by the documents and instruments listed on Schedule 1.01(10) attached hereto.

“Ground Leased Property” shall have the meaning assigned to such term in the Recitals.

“Ground Lessee” shall mean the ground lessee under the Ground Lease, its successors and assigns.

“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 Douglas Emmett Properties, LP, a Delaware limited partnership.

“Guarantor Documents” shall mean the Limited Indemnity and Guarantee and, to the extent the Guarantor is obligated thereunder, the Environmental Indemnity.

“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 the date which is the fifth (5th) anniversary of the Closing Date.

“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 and the Bankruptcy Parties (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.

“Increase Date” shall have the meaning assigned thereto in Section 2.11(a).

“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.

“Insolvency Proceeding” shall have the meaning assigned to such term in Section 15.03.

“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.

“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).

“Joinder” shall have the meaning assigned thereto in Section 2.11(a).

“LA Fitness Management Agreement” shall mean that certain Management Agreement for Operation of Warner Center Club dated September 7, 1994 by and between L.A. Fitness, Inc., a California corporation, predecessor-in-interest to L.A. Fitness International, LLC, a California limited liability company, as manager, and Realty Bancorp, a California corporation, predecessor-in-interest to Douglas Emmett Realty Fund 2002, a California limited partnership, as owner.

“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, collectively, (i) all leases and other agreements or arrangements with or assumed by any Borrower as landlord for the use or occupancy of all or any portion of any 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 any Borrower as landlord covering or encumbering all or any portion of any of the Projects), together with any Guarantees, Modifications of the same, and all additional remainders, reversions and other rights and estates appurtenant thereto, and (ii) the LA Fitness Management Agreement, together with any Modifications thereof (including any new agreement entered into with the manager thereunder with respect to the use or occupancy of the premises managed thereunder).

“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 Reuters Screen LIBOR01 Page (formerly operated as 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 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 2.775% 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.

“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 Guarantor 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.

“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.  The Contribution Agreement is not a Loan Document.

“Loan-to-Value Ratio” means, for each Project, the ratio of the Allocated Loan Amount for such Project divided by the appraised value of such Project, as determined by the Appraisal indicating an "as-is" value for such Project and approved by the Administrative Agent.

“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, commencing as of the second calendar quarter in 2009 and continuing 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 Borrower” shall have the meaning assigned to such term in the Recitals.

“LP Borrower MAE Effect” shall have the meaning set forth in Section 8.04  (a)  .

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

“LP General Partner” shall mean Douglas Emmett Management, LLC, a Delaware limited liability company.

“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 or the Operating Partnership 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).

“New Lender” shall have the meaning assigned thereto in Section 2.11(a).

“New Commitment Amount” shall have the meaning assigned thereto in Section 2.11(a).

“Notes” shall mean, collectively, each Note 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, 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”.

“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 at an imputed rate of 1.5% 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); provided, however, that Operating Expenses annualized based on relevant quarterly results will be normalized to fairly present such annualized expenses.

“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 Douglas Emmett Properties LP, a Delaware limited partnership.

“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/General Partner, (ii) any Qualified Successor Entity to whom a Project is transferred pursuant to Section 9.03(a)(iii), (iii) any entity that qualifies under clause (I) of the definition of Qualified Successor Entity, and/or (iv) the REIT, the Operating Partnership or any 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 May 1, 2008.

“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 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 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 or the Operating Partnership 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, the primary revolving credit facility under which the REIT (directly or through its Operating Partnership or another REIT Subsidiary) obtains financing for its general purposes.

“Primary Borrower Obligation” shall have the meaning assigned to such term in Section 15.01.

“Primary Obligor” shall have the meaning assigned to such term in Section 15.01.

“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 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.

“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, collectively (if more than one), each Project-Level Account Security Agreement, by and among a 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 a 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 Management, LLC, a Delaware limited liability 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 or in the Joinder (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 or which may be Modified by a Joinder pursuant to Section 2.11(a).  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 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 Operating Partnership and its Subsidiaries 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 a 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 Douglas Emmett, Inc., a Maryland corporation.

“REIT Subsidiary” shall mean any directly or indirectly wholly-owned Subsidiary of the REIT or the Operating Partnership.

“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 fifty-one percent (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 Personwhich 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 fifty-one (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.

“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” shall mean 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 the Lenders holding at least 66.67% of the aggregate Outstanding Principal Amount of the Loans plus Unused Commitments.

“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.

“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 (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 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.

“Second Call Date” shall have the meaning assigned to such term in Section 2.10.

“Second Call Notice” shall have the meaning assigned to such term in Section 2.10.

“Secondary Obligor” shall have the meaning assigned to such term in Section 15.01.

“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.

“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).

“Subsequent Funding Advance” shall have the meaning assigned to such term in Section 2.112.10  .

“Subsequent Funding Advance Notice” shall have the meaning assigned to such term in Section 2.11.

“Subsequent Funding Commitment” shall have the meaning assigned to such term in Section 2.11.

“Subsequent Funding Commitment Percentage” shall have the meaning assigned to such term in Section 2.11.

“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 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.

“Trillium Project” shall have the meaning assigned to such term in Section 16.01.

“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.

“Unused Commitments” shall mean any portion of the Commitments which have not been advanced to the Borrower pursuant to the terms of this Agreement.  Upon expiration of the Subsequent Funding Commitments of the Lenders pursuant to Section 2.11(a), the amount of the Unused Commitments shall be zero.

“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 non-revolving basis to the Borrower in Dollars in a principal amount up to but not exceeding the amount of the Commitment of such Lender.  The Loans shall be funded in one or more advances and repaid in accordance with this Agreement.  The initial advance of the Loans (the “Initial Advance”), in the amount of $225,000,000, shall be made on the Closing Date.  In the event any of the Subsequent Funding Commitments are not fully funded on the Closing Date, then the Subsequent Funding Advance made after the Closing Date shall be made upon the Borrower’s satisfaction of the conditions for such advances described in Section 2.11.  After the Closing Date, 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.

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%

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, during the period from the Closing Date to and including the date which occurs twelve (12) months after the Closing Date, 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 an amount which is equal to twenty-five percent (25%) of the aggregate sum of all principal amounts of the Loans advanced on or after the Closing Date.

(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                                                  Borrower’s Initials                                                  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 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 a 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 owned by it from the Lien of the applicable Deed 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 applicable Rollover Breakage Costs, if any;

(ii)The Borrower shall remit to the Administrative Agent an amount equal to one hundred ten percent (110%) of the Allocated Loan Amount (as such Allocated Loan Amount may be adjusted pursuant to Section 2.11(i) hereof) for the applicable Project (for application to the principal balance of the Loans), plus any applicable 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 applicable Deed 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)The release of such Project is being made upon the sale of the Project to a purchaser not affiliated with the Borrower pursuant to an arm’s length sale transaction;

(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) but taking into account any Unused Commitments, if any (including any reductions of Subsequent Funding Commitments pursuant to Section 2.11) unless they have expired) shall be equal to or greater than 1.35-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 plus any remaining Unused Commitments (unless the Loans shall be repaid in full) shall not be less than $175,000,000.

(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 a Deed of Trust and the 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 (the “First Call Date”) if (a) Borrower shall not have delivered written notice (the “First Call Notice”) to the Administrative Agent not more than one hundred eighty (180) days and not less than ninety (90) days prior to the First Call Date of its intent to extend the Loans until the sixth (6th) anniversary of the expiration of the Stub Interest Period, (b) on or prior to the First Call 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 ten (10) basis points (0.10%) times the Outstanding Principal Amount under all Notes as of the First Call Date, (c) on the First Call Date a Default or an Event of Default exists, (d) so long as Administrative Agent shall have provided written notice requiring extension of the existing Hedge Agreement to Borrower within thirty (30) days after receipt of the First Call Notice and prior to the First Call Date, on or prior to the First Call Date, the Borrower has not extended any existing Hedge Agreement required by Section 8.19(a), or entered into a new or replacement Hedge Agreement which has an All-in-Rate that is sufficient to satisfy a Debt Service Coverage Ratio for all the Projects then securing the Loans of at least 1.25:1.00, and which otherwise satisfies the terms of Section 8.19(a) with an expiration date of not earlier than six (6) months prior to the sixth (6th) anniversary of the expiration of the Stub Interest Period, (e) the Borrower shall not have demonstrated, to the reasonable satisfaction of the Administrative Agent, as of the First Call Date, that the Debt Service Coverage Ratio for all the Projects then securing the Loans equals or exceeds 1.25:1.00, or (f) the Loan-to-Value Ratio for each of the Projects then securing the Loans does not exceed sixty percent (60%) based on a new or updated Appraisal obtained by the Administrative Agent for each such Project not more than forty-five (45) days prior to the First Call Date, such Appraisal to be at Borrower’s expense and satisfactory to the Administrative Agent in all respects; provided, however, in the event that the required Loan-to-Value Ratio is not met, then Borrower may, in order to satisfy the condition in this clause, pay down the Outstanding Principal Balance of the Loans in an amount such that the required Loan-to-Value Ratio is achieved (subject to the provisions of Section 5.05, as supplemented by the provisions of Section 2.06(b)); and (ii) the Outstanding Principal Amount under all Notes shall become automatically due and payable on the sixth (6th) anniversary of the expiration of the Stub Interest Period (the “Second Call Date”) if (a) Borrower shall not have delivered written notice (the “Second Call Notice”) to the Administrative Agent not more than one hundred twenty (120) days and not less than forty-five (45) days prior to the Second Call Date of its intent to extend the Loans until the seventh (7th) anniversary of the expiration of the Stub Interest Period, (b) on or prior to the Second Call 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 ten (10) basis points (0.10%) times the Outstanding Principal Amount under all Notes as of the Second Call Date, (c) on the Second Call Date a Default or an Event of Default exists, (d) so long as Administrative Agent shall have provided written notice requiring extension of the existing Hedge Agreement to Borrower within thirty (30) days after receipt of the Second Call Notice and prior to the Second Call Date, on or prior to the Second Call Date, the Borrower has not extended any existing Hedge Agreement required by Section 8.19(a), or entered into a new or replacement Hedge Agreement which has an All-in-Rate that is sufficient to satisfy a Debt Service Coverage Ratio for all the Projects then securing the Loans of at least 1.25:1.00, and which otherwise satisfies the terms of Section 8.19(a) with an expiration date of not earlier than six (6) months prior to the seventh (7th) anniversary of the expiration of the Stub Interest Period, or (e) the Borrower shall not have demonstrated, to the reasonable satisfaction of the Administrative Agent, as of the Second Call Date, that the Debt Service Coverage Ratio for all the Projects then securing the Loans equals or exceeds 1.25:1.00.

2.11  Increase in Commitments; Subsequent Funding Advance.

(a)  The total Commitments may be increased by an amount not to exceed $115,000,000 subject to the terms and conditions of this Section 2.11(a).  At any time prior to May 1, 2008, any Person that is an Eligible Assignee may become a Lender (any such Person, a “New Lender”) upon the execution and delivery of a joinder (a “Joinder”) substantially in the form of Exhibit R attached hereto, which, among other things, specifies the amount of such New Lender’s Commitment (“New Commitment Amount”), and acceptance thereof by the Administrative Agent.  Borrower hereby consents to any Joinder executed by a Person that is an Eligible Assignee.  Upon receipt of a Joinder, the Administrative Agent shall provide written notice to all Lenders of the New Commitment Amount and the increase in Commitments.  Upon the effective date of any increase in the Commitments (the “Increase Date”), which Increase Date shall be mutually agreed upon by the Borrower, the Lenders and the Administrative Agent (to, among other things, avoid or minimize breakage costs), each New Lender shall advance to the Administrative Agent an amount equal to such New Lender’s Proportionate Share (as determined by taking into account such New Commitment Amounts) of the Outstanding Principal Amount, which amount shall be paid by the Administrative Agent to the existing Lenders, such that, following such payment on such Increase Date by each New Lender, each Lender (including the New Lenders) holds its Proportionate Share (as determined following the increase in the Commitments by the New Commitment Amounts) of the Outstanding Principal Amount.  Upon the payment by the New Lenders and receipt by the other Lenders of the sums provided for herein, each new Lender shall be deemed to have purchased and acquired portions of the Loans (but not the Commitments) of each existing Lender from payments made by such New Lender.  Notwithstanding the receipt of such payments by the existing Lenders by reason of the foregoing sentence, none of the Commitments of any Lender shall be reduced, and the Borrower may continue to borrower from each Lender up to the amount of its original Commitment, on and subject to the terms and provisions of this Agreement.  In the event that the receipt of such payment on the Increase Date causes any Lender to incur any loss, cost or expense referred to in Section 5.05(a), the Borrower shall pay the same in accordance with the provisions of Section 5.05(a).  The Borrower shall, in connection with each increase of the Commitments and the execution and delivery of each Joinder, (i) issue a new Note to each New Lender evidencing its share of the Loans and its New Commitment Amount as set forth in the applicable Joinder, (ii) deliver opinion letters of Borrower’s counsel with respect to all Loan Documents delivered in connection with the increase in the Commitments, in form and substance satisfactory to the Administrative Agent and in substantially the same form as the opinion letters delivered in connection with the initial advance hereunder, and (iii) pay all of the Administrative Agent’s reasonable out-of-pocket expenses in connection with this Section 2.11.

(b)  In the event the Commitments are increased pursuant to the terms of Section 2.11(a) above, Schedule 1.01(4) shall be revised and replaced with an Amended and Restated Schedule 1.01(4) (Commitments and Proportionate Shares) (the “Amended and Restated Schedule 1.01(4)”) which shall be circulated to the Borrower, the Administrative Agent and the Lenders, which shall reflect the then total Commitments of each Lender and the remaining unused amount of each Lender’s Commitment (which amount shall be referred to herein as the “Subsequent Funding Commitment”) available to fund any subsequent advance of the Loan in accordance with the terms of this Section 2.11.  At such time as the Commitments are increased, all references in the Loan Documents to “Commitments” and all references in the Loan Documents to “Proportionate Share” shall, at such time, thereafter refer to the Amended and Restated Schedule 1.01(4).  Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, each Lender hereby authorizes the Administrative Agent (on behalf of the Lenders) to enter into amendments and modifications of this Agreement and the other Loan Documents to the extent necessary to reflect the adjustment of the Commitments and the Loans, the addition of New Lenders and the other matters contemplated by this Section 2.11.

(c)  In the event the Commitments are increased pursuant to the terms of Section 2.11(a) above, each Lender severally agrees, on the terms and conditions hereinafter set forth in this Section 2.11, to make not more than one (1) subsequent advance of the Loan to Borrower (the “Subsequent Funding Advance”), in an amount not to exceed the Subsequent Funding Commitment of such Lender.  The “Subsequent Funding Commitment Percentage” means, as to any Lender at any time, the percentage equivalent of such Lender’s Subsequent Funding Commitment divided by the Subsequent Funding Commitments of all Lenders at such time.  The Subsequent Funding Commitments of the Lenders having Subsequent Funding Commitments shall expire, and be of no further force and effect, if not drawn on or before May 1, 2008 (the “Expiration Date”).  Thereafter, the obligation of any Lender to make the Subsequent Funding Advance shall terminate, and each Lender’s Commitment shall equal the sum of the then-Outstanding Principal Amount of the Loans funded by such Lender.

(d)  Once repaid or prepaid, the Borrower may not reborrow the Subsequent Funding Advance.  

(e)  Subsequent Funding Advance Notice.  The Subsequent Funding Advance shall be made upon the irrevocable written notice (which may include notice via facsimile confirmed immediately by a telephone call) of the Borrower in the form of Exhibit P attached hereto (the “Subsequent Funding Advance Notice”) as more fully provided below:

(i)Rate and Terms.  The Subsequent Funding Advance shall be a Loan, and shall bear interest and otherwise be subject to the terms and conditions that apply to all other Loans of the same Type.

(ii)Timing of Notice.  The Subsequent Funding Advance Notice shall be submitted to and received by the Administrative Agent prior to 9:00 a.m. (New York time) (A) at least three (3) Business Days prior to the specified borrowing date, in the case of Eurodollar Loans; and (B) at least two (2) Business Days prior to the specified borrowing date, in the case of Base Rate Loans.

(iii)Contents of Notice.  The Subsequent Funding Advance Notice shall set forth the following information with respect to the Loan subject thereto:

1)   a single, specific borrowing date, which shall be a Business Day;

2)   a single, exact amount for the Loan;

3)   whether the Loan is to be made as a Eurodollar Loan or a Base Rate Loan (or both) and in what respective amounts; and

4)   if the Loan is to be made as a Eurodollar Loan, the applicable Interest Period(s).  If the Subsequent Funding Advance Notice shall fail to specify the Type of Loan or shall fail to specify the applicable Interest Period for any Eurodollar Loan requested, such Loan will be made as a Eurodollar Loan with a one month Interest Period.

(f)  Funding of Commitment.  Each Lender shall make an amount equal to its Subsequent Funding Commitment Percentage of the aggregate amount of the Loans requested in the Subsequent Funding Advance Notice available to the Administrative Agent for the account of the Borrower by 12:00 p.m. (New York time) on the borrowing date specified therein in Dollars immediately available to the Administrative Agent.  Unless, in the case of the Subsequent Funding Advance, any applicable condition specified in this Section 2.11 has not been satisfied, such funds shall then be made available to the Borrower by the Administrative Agent by wire transferring to such account as shall have been designated to it by the Borrower the aggregate of the amounts made available to the Administrative Agent by the Lenders (in like funds as received by the Administrative Agent).  All amounts to be funded pursuant to this Section shall be funded in Dollars.

(g)  Notice to Lenders.  Upon receipt of the Subsequent Funding Advance Notice conforming with the terms of this Section 2.11, the Administrative Agent shall promptly notify each Lender thereof and of the amount of such Lender’s Subsequent Funding Commitment Percentage (as applicable) of the Loans described therein.

(h)  Reserved.  

(i)  Effect of Subsequent Funding Commitments on Allocated Loan Amounts.  Upon the making of the Subsequent Funding Advance pursuant hereto, the Allocated Loan Amount for each Project shall be increased as set forth in Schedule 1.01(1) attached hereto.

(j)  Conditions to The Subsequent Funding Advance.  The obligation of each Lender to make the Subsequent Funding Advance is subject to the satisfaction of the following conditions precedent:

(i)Subsequent Funding Advance Notice.  The Administrative Agent shall have received the Subsequent Funding Advance Notice in compliance with the terms of this Section 2.11;

(ii)Representations and Warranties.  The representations and warranties made by the Borrower, the Operating Partnership and the other Borrower Parties contained in the Loan Documents shall be true and correct in all material respects on and as of the date the Subsequent Funding Advance is made, with the same effect as if made on and as of such date, and the Borrower acknowledges that the submission of the Subsequent Funding Advance Notice shall constitute a certification by the Borrower that such representations and warranties are true and correct in all material respects on and as of the date of the Subsequent Funding Advance Notice;

(iii)No Existing Default.  No Default or Event of Default shall exist or shall result from the making of the Subsequent Funding Advance;

(iv)Agreements Supplementing Deeds of Trusts.  Borrower shall execute and deliver such modifications, amendments and/or supplements to the Deeds of Trust and other Loan Documents in form and substance reasonably acceptable to Administrative Agent and the Borrower to reflect the additional Loans made from the Subsequent Funding Advance; and

(v)Title Insurance.  The Title Company shall have issued or irrevocably committed to issue (at the Borrower’s expense) an endorsement to the Title Policy which insures the priority of the Subsequent Funding Advance over all items other than Permitted Title Exceptions.

The Subsequent Funding Advance Notice submitted by the Borrower hereunder shall constitute a representation and warranty by Borrower hereunder, as of the date of such notice and as of the date of the making of the Subsequent Funding Advance, that the conditions in this Section 2.11 have been satisfied.

(i)            Unused Commitment Fee.  In the event Loans in the New Commitment Amounts are not fully funded on the Increase Date, the Borrower shall pay to the Administrative Agent for allocation to the Lenders in accordance with their respective Subsequent Funding Commitment Percentage, an unused commitment fee equal to twenty-five basis points (0.25%) per annum (computed over the applicable monthly period on the basis of a 360-day year and the actual number of days elapsed) times the actual daily amount of the aggregate outstanding Subsequent Funding Commitments of all Lenders having outstanding Subsequent Funding Commitments in effect on such day calculated for each day during the applicable calendar month.  The unused commitment fee shall accrue at all times while the Subsequent Funding Commitments of the Lenders remain in effect pursuant to this Agreement, but not beyond the Expiration Date, and shall be due and payable monthly in arrears on the first Business Day after the end of each calendar month (or portion thereof, in the case of the first payment), commencing with the first Business Day of the first full calendar month to occur after the Closing Date, and ending on the Expiration Date (or the end of such earlier month in which the Subsequent Funding Commitments have been fully funded or expired); provided, however, that if the Lenders fail to advance the Subsequent Funding Advance requested by the Borrower and so long as the provisions of Section 2.11(j) above have been satisfied, the unused commitment fee provided herein shall thereafter cease to accrue.  The unused commitment fee shall be calculated on a monthly basis in arrears.

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 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 (A) 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 (B) 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).

(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 or Section 2.11 shall be made from the Lenders on a pro rata basis according to the amounts of their respective Commitments or, in the case of Subsequent Funding Advances, according to their respective Subsequent Funding Commitments, as applicable; (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, (i) 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 (ii) 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)

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:

(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 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 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 (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 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 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 Reuters Screen LIBOR01 Page (formerly operated as 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 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 (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 Initial Advance 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.

(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.  Each 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/General Partner 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 applicable Borrower is lawfully seized and possessed of a valid and subsisting fee simple (or other applicable) interest in the Projects owned by it 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 relevant 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 for each Project (collectively, the “Leasing Affidavit”) of an Authorized Officer of the applicable Borrower certifying that except as disclosed in the estoppel certificates delivered to the Administrative Agent prior to the Closing Date, that certain Aged Delinquencies report dated March 10/2008 provided to the Administrative Agent for such Project, 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 (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 fifty percent (50%) of all the leased space in the Projects.  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)  Reserved.

(s)  Non-Foreign Status.  A certificate by an Authorized Officer certifying the Borrower’s tax identification number and the fact that no Borrower is a foreign person under the Code.

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

(u)  Appraisal.  The Appraisals for each Project (i) indicating an “as-is” value for each of the Projects, such that the Allocated Loan Amount for each Project shall not exceed sixty-five percent (65%), and (ii) indicating a “stabilized” 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 publicly available Form 10-K and Form 10-Q of the REIT and unaudited annual and quarterly balance sheet, income statements and cash flow projections for each Borrower, and a certificate dated the Closing Date and signed by an Authorized Officer on behalf of the Borrower 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 Account 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)  Organizational Chart and Background Checks.  The Borrower shall have delivered to the Administrative Agent an organizational chart reflecting the ownership of the direct and indirect equity interests in the Borrower and Guarantor, including the percentage of ownership interest of the Persons shown thereon.  The Administrative Agent shall have obtained satisfactory background and “know-your-customer” checks of the Borrower and the Operating Partnership.

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

(ee)  Contribution Agreement.  The Contribution Agreement.

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 or the Guarantor are within such Borrower Party’s or the Guarantor’s respective 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 against the applicable Borrower Party 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).  Each of the Guarantor Documents has been duly executed and delivered by Guarantor and each of the Guarantor Documents when delivered will constitute, a legal, valid and binding obligation of Guarantor, enforceable against Guarantor 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 REIT and of each Borrower.  All such financial statements of the REIT are complete and correct in all material respects and fairly present the financial condition of the REIT as of the applicable respective dates of such financial statements, all in accordance with GAAP.  All such financial statements of each Borrower are complete and correct in all material respects and fairly present the financial condition of such Borrower, as of the applicable respective dates of such financial statements, all in accordance with GAAP.  Except as disclosed on Schedule 7.04 attached hereto, no Borrower nor the 1995 LLC Member, on the date hereof, has 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/General Partner 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/General Partner 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/General Partner 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/General Partner has established any Plan which would cause the Borrower or the Borrower’s Member/General Partner to be subject to ERISA and none of the Borrower’s or the Borrower’s Member/General Partner’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 or the Operating Partnership and, to the knowledge of the Borrower Parties or the Operating Partnership, 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 or the Operating Partnership 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, the REIT or the Operating Partnership 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/General Partner 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 relating to any Project 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/General Partner 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/General Partner 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/General Partner, 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/General Partner 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 2007 LLC Borrower is Douglas Emmett Properties, LP, a Delaware limited partnership; the sole member of 1995 LLC Borrower is Douglas Emmett Realty Fund 1995, a California limited partnership; the general partner of the LP Borrower is Douglas Emmett Management, LLC, a Delaware limited liability company; and the sole limited partner of the LP Borrower is the Operating Partnership.

7.11  Subsidiaries.  Neither the Borrower nor the 1995 LLC Member has any Subsidiaries except 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, the Borrower’s Member/General Partner nor the Operating Partnership 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, the Borrower’s Member/General Partner nor the Operating Partnership has knowledge of any Person contemplating the filing of any such petition against the Borrower, the Borrower’s Member/General Partner, the Operating Partnership or the Borrower’s Manager.  

7.14  Executive Offices; Places of Organization.  The location of the Borrower’s, the Borrower’s Member/General Partner’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 2007 LLC Borrower was organized in the State of Delaware, the 1995 LLC Borrower was organized in the State of Delaware, and the LP Borrower was organized in the State of California.  The 2007 LLC Member was organized in the State of Delaware, the 1995 LLC Member was organized in the State of California, and the LP General Partner was organized in the State of Delaware, and the Borrower’s Manager was organized in the State of Delaware.

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/General Partner 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.  None of the Borrower, the Operating Partnership nor the Borrower’s Member/General Partner 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.  

7.22  Leases.  Except as disclosed in the estoppel certificates delivered to the Administrative Agent prior to the Closing Date, in those certain Aged Delinquencies reports for each Project dated March 10, 2008 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 2008 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).

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 or the Operating Partnership 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 the Operating Partnership 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 the Operating Partnership or such 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 or the Operating Partnership 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 or the Operating Partnership 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/General Partner 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  For Own Account.  The Loans have been requested by the Borrower, and the proceeds of the Loans shall be utilized by the Borrower, for its own account.

7.36  Non-Foreign Status.  The Borrower represents and warrants to the Lenders that under the Code (a) the 2007 LLC Borrower’s tax identification number is 20-8867743, (b) the 1995 LLC Borrower’s tax identification number is 16-1700675, (c) the LP Borrower’s tax identification number is 46-0506810, (d) the Operating Partnership’s tax identification number is 20-3213411, (e) the 1995 LLC Member’s tax identification number is 95-4530838, and (f) the LP General Partner’s tax identification number is 20-5632713.

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 the earlier of (x) one hundred (100) days after the end of each fiscal year of the Borrower's operation of the Project or (y) five (5) Business Days after the annual Form 10-K of the REIT becomes publicly available, the Borrower shall furnish to the Administrative Agent the following:  (i) the annual Form 10-K of the 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 each Borrower (which may be consolidated provided that such financial statements contain notes identifying each item on such financial statements that is attributable to such Borrower or the Projects) and (vi) an updated rent roll for each of the Projects;

(b)  Within the earlier of (x) fifty (50) days after the end of each calendar quarter (which shall instead be based on the REIT’s fiscal quarter) or (y) five (5) Business Days after the Form 10-Q of the REIT for such fiscal quarter becomes publicly available (or, in the case of the fourth quarter of each fiscal year, within the time period required by Section 8.01(a) above), the Borrower shall furnish to the Administrative Agent the following:  (i) the most recent Form 10-Q of the 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 each 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 such 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) 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 (collectively with respect to the Projects and the Loans) 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, or the Bankruptcy Parties 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;

(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 the REIT or a REIT Subsidiary in accordance with Section 9.03(a)(iii), the Borrower shall furnish to the Administrative Agent (i) 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 REIT on or prior to the date(s) required for the delivery thereof by such REIT pursuant to the terms of the Primary Credit Facility of such REIT and (ii) at all other times such compliance certificates, financial statements and all other financial and material reports delivered by the REIT pursuant to the terms of the Primary Credit Facility of the REIT as may be requested by the Administrative Agent from time to time, promptly following such request; and

(g)  within forty-five (45) days of the commencement of the third anniversary of the expiration of the Stub Interest Period (solely for the purpose to comply with Basel II or another banking regulation applicable to the Administrative Agent and/or any Lender), new Appraisals of each Project, which Appraisals shall be obtained at the Borrower’s sole cost and expenses; provided, however, that the Administrative Agent shall endeavor to minimize the costs of such Appraisals.  The Administrative Agent may, at its option, commission one or more new and/or updated Appraisals of each Project from time to time after the Closing Date; provided, however, that Borrower shall only be required to reimburse the Administrative Agent for such new and updated Appraisals if an Event of Default exists or if required by applicable banking laws.

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 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/General Partner 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 or the Borrower 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 and the Operating Partnership 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)  Without limiting the foregoing provisions of clause (a) above as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, the provisions of this clause (b) shall apply solely as to the LP Borrower and its ownership of the Ground Leased Property (and not with respect to the Trillium Project or any of the other Projects).  The LP Borrower shall comply in all material respects (subject to such more stringent requirements as may be set forth elsewhere herein) with all Applicable Laws that are applicable to it or its interest in the Trillium Project (and excluding those Applicable Laws that specifically and exclusively relate to the Ground Lessee or the interest of the Ground Lessee under the Ground Lease), and shall use commercially reasonable efforts to enforce the provisions of the Ground Lease to cause the Ground Lessee to comply with its obligations under the Ground Lease to comply with Applicable Laws to the extent required by the Ground Lease or Applicable Law and within the LP Borrower’s reasonable control.  The LP Borrower shall maintain in full force and effect all required Government Approvals that are applicable to it and shall comply, in all material respects, with all such Government Approvals and keep them in full force and effect.  The LP Borrower shall use commercially reasonable efforts to enforce the provisions of the Ground Lease to cause the Ground Lessee to comply with its obligations under the Ground Lease to obtain all Government Approvals as shall now or hereafter be necessary under Applicable Law in connection with the operation or maintenance of the Ground Leased Property to the extent required by the Ground Lease or Applicable Law and within the LP Borrower’s reasonable control.  Upon request from time to time, the LP Borrower shall promptly furnish a true, correct and complete copy of each Government Approval required to be maintained by the LP Borrower to the Administrative Agent, and shall use commercially reasonable efforts to enforce the provisions of the Ground Lease to cause the Ground Lessee to comply with its obligations under the Ground Lease to deliver a copy of each Governmental Approval necessary under Applicable Law in connection with the operation or maintenance of the Ground Leased Property to the LP Borrower, and shall thereafter deliver a true, correct and complete copy thereof to the Administrative Agent.  Subject to the provisions of the Ground Lease, the LP Borrower shall, unless otherwise approved by the Administrative Agent in writing or prohibited under the terms of the Ground Lease, 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 the Ground Leased Property or could reasonably be expected to have a Material Adverse Effect, but in each case only if and to the extent that the LP Borrower deems such action to be in the best interests of the Trillium Project in the exercise of its business judgment.  The LP Borrower shall be permitted to permit the Ground Lessee to contest the applicability of such Applicable Law or Governmental Approval on the terms set forth in Section 8.04(c) or on such other terms as may be permitted by the Ground Lease.  In the event that the Ground Lessee breaches any of its obligations under the Ground Lease that are referenced in this Section in any material respect, the LP Borrower shall provide the Administrative Agent with notice promptly upon becoming aware thereof, and, if such breach could reasonably be expected either to have a Material Adverse Effect on the Trillium Project (determined as if the Trillium Project were the sole collateral for the Allocated Loan Amount that is allocated to the Trillium Project) or otherwise to have a Material Adverse Effect (either, an “LP Borrower MAE Effect”), the LP Borrower shall (unless the LP Borrower shall be exercising its rights to contest the applicability of such Applicable Law or Governmental Approval in accordance with Section 8.05(b)) furnish to the Administrative Agent for the benefit of the Lenders such security as may be reasonably requested by the Administrative Agent, to ensure that the failure of the Ground Lessee to comply with such Applicable Law or to maintain in effect such Governmental Approval shall not have an LP Borrower MAE Effect.

(c)  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:

(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 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 One Hundred Million and No/100 Dollars ($100,000,000) per occurrence on terms consistent with the commercial general liability insurance policy required under subsection (ii) above and subsections (viii) and (ix) below and if the general liability policy does not contain a per location aggregate endorsement, the umbrella liability shall contain a drop down provision in the event the underlying aggregates are reduced or exhausted;

(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 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 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 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.

(j)           The LP Borrower Insurance Program.  Solely as to the Ground Leased Property (and not any other portion of the Trillium Project), the Borrower Parties shall be deemed in compliance with their obligations to maintain casualty insurance pursuant to Section 8.05 of this Agreement provided that (i) the Ground Lessee maintains the casualty insurance required pursuant to the provisions of the Ground Lease and (ii) the Borrower shall have used commercially reasonable efforts to have the Administrative Agent named as an additional insured or loss payee thereunder, and in any event the LP Borrower is named as an additional insured or loss payee thereunder in accordance with the provisions of the Ground Lease.

8.06  Real Estate Taxes and Other Charges.

(a)  Subject to the provisions of subsection (b) of this Section 8.06, and the last sentence of this subsection (a), 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.  Without limiting the foregoing as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, solely as to the LP Borrower and the Ground Leased Property (and not any other portion of the Trillium Project), subject to the provisions of subsection (b) of this Section 8.06, the LP Borrower’s obligations hereunder with respect to the Ground Leased Property shall be to pay all Real Estate Taxes and Other Charges (but, in the case of Other Charges, only to the extent such Other Charges could become a lien on the Ground Leased Property senior in priority to the lien of the Deed of Trust) now or hereafter levied or assessed or imposed against the Ground Leased Property or any part thereof before any fine, penalty, interest or cost attaches thereto if and to the extent, the Ground Lessee shall not have timely paid such Real Estate Taxes and Other Charges in accordance with the terms of the Ground Lease.

(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 submarket in which such Project is located in Los Angeles County, California, and make all reasonably necessary repairs or replacements thereto; provided, however, without limiting the foregoing as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, solely as to the LP Borrower and the Ground Leased Property (and not any other portion of the Trillium Project), the LP Borrower’s obligations hereunder shall be to use commercially reasonable efforts to enforce the provisions of the Ground Lease requiring the Ground Lessee to maintain or cause to be maintained the Ground Leased Property and the Hilton Hotel Improvements in good condition and repair in a manner consistent with the requirements of the Ground Lease;

(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); provided, however, without limiting the foregoing, as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, solely as to the LP Borrower and the Ground Leased Property (and not any other portion of the Trillium Project), the LP Borrower’s obligation hereunder shall be to use commercially reasonable efforts to enforce the provisions of the Ground Lease that require the Ground Lessee to obtain the consent of the LP Borrower for any removal, demolition or structural alteration of, any of the Hilton Hotel Improvements on the Ground Leased Property or the making of any alteration thereto, and (unless required by the terms of the Ground Lease) the LP Borrower shall not grant any such consent without the prior consent of the Administrative Agent (which consent shall not be unreasonably withheld for any alterations that are required by Applicable Law) if such removal, demolition or alteration would (A) have a Material Adverse Effect or (B) 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 (1) $5,000,000 or (2) ten percent (10%) of the Appraised Value of the Trillium Project; provided, however, that the Administrative Agent’s consent shall not be required for any such removal, demolition or alteration that (x) does not require the LP Borrower’s consent under the Ground Lease or (y) pertains to tenant improvement work which (upon completion of such work) does not adversely affect any structural component of any Hilton Hotel Improvements, any utility or HVAC system contained in any Hilton Hotel 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(vi)(2) in the absence of this proviso) constituting a part of any Hilton Hotel Improvements;

(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); provided, however, without limiting the foregoing as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, solely as to the LP Borrower and the Ground Leased Property (and not any other portion of the Trillium Project), the LP Borrower’s obligation hereunder shall be to use commercially reasonable efforts to enforce the provisions of the Ground Lease that require the Ground Lessee to complete promptly and in a good and workmanlike manner any Hilton Hotel Improvements which may be hereafter constructed and promptly to restore in like manner any portion of such Hilton Hotel Improvements which may be damaged or destroyed thereon from any cause whatsoever, and to enforce the provisions that require the Ground Lessee to pay when due all claims for labor performed and material furnished therefor, subject to the right of the Ground Lessee under any applicable provisions of the Ground Lease to contest such claims and further subject to the LP Borrower’s right to contest any such claims (as long as, with respect to any such claim for which a mechanic’s lien has been filed and that encumbers the LP Borrower’s right, title or interest in the Trillium Project or the Ground Leased Property, such claims contested by the LP Borrower 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; provided, however, without limiting the foregoing as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, solely as to the LP Borrower and the Ground Leased Property (and not any other portion of the Trillium Project), the LP Borrower’s obligation hereunder shall be not to itself commit any waste to the Ground Leased Property, and to use commercially reasonable efforts to enforce any applicable provisions of the Ground Lease and the LP Borrower’s rights under Applicable Law that prohibit the commission of waste by the Ground Lessee, and in the event that the Ground Lessee breaches any of its obligations under the Ground Lease that are referenced in this Section in any material respect, the LP Borrower shall provide the Administrative Agent with notice promptly upon becoming aware thereof, and, if such breach could reasonably be expected to have an LP Borrower MAE Effect, the LP Borrower shall furnish to the Administrative Agent for the benefit of the Lenders such security as may be reasonably requested by the Administrative Agent, to ensure that the failure of the Ground Lessee to comply with such obligation shall not have an LP Borrower MAE Effect; 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 condition with its officers and independent accountants, all at such reasonable times (during normal business hours) and as often as reasonably requested.  Without limiting the foregoing as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, solely with respect to the LP Borrower and the Ground Leased Property (and not any other portion of the Trillium Project), this Section 8.10 (and any similar provision of this Agreement or other Loan Documents granting any rights of entry to, or inspection of, the Ground Leased Property) shall be subject to the provisions of the Ground Lease and the rights of the Ground Lessee and other occupants thereof.

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 (except with respect to the Ground Leased Property, any other Person shall not mean to include the Ground Lessee or other occupants of the Ground Leased Property), shall be in compliance with all Environmental Laws and permits issued pursuant thereto; provided, however, that, without limiting the foregoing as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, solely with respect to the Ground Leased Property, the LP Borrower’s obligation hereunder shall be to use commercially reasonable efforts to enforce the provisions of the Ground Lease that relate to the obligations of the Ground Lessee to comply with all Environmental Laws;

(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; provided, however, that, without limiting the foregoing as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, with respect to the Ground Leased Property, the LP Borrower’s obligation hereunder shall be not to Release or cause a Release of Hazardous Substances in, on, under or from the Ground Leased Property, and the LP Borrower shall use commercially reasonable efforts to enforce any applicable provisions of the Ground Lease and the LP Borrower’s rights under Applicable Law that prohibit any such Release by the Ground Lessee;

(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 (with respect to the Ground Leased Property, to the extent permitted by the Ground Lease and within the LP Borrower’s reasonable control) undertake to supervise and inspect activities occurring on the Projects as may be reasonably prudent to comply with the foregoing obligation; provided, however, that, without limiting the foregoing as it relates to the Projects or any portion of the Trillium Project other than the Ground Leased Property, solely with respect to the LP Borrower and the Ground Leased Property, the LP Borrower’s obligation hereunder shall be to use commercially reasonable efforts to enforce the provisions of the Ground Lease and the LP Borrower’s rights under Applicable Law that relate to the use of Hazardous Substances by the Ground Lessee;

(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; provided, however, that, solely with respect to the Ground Leased Property (and to the extent within the LP Borrower’s reasonable control) the LP Borrower’s obligation shall be to use commercially reasonable efforts to enforce any applicable provisions of the Ground Lease and the LP Borrower’s rights under Applicable Law to cause any such underground storage tank located on the Ground Leased Property to be operated, maintained, repaired and replaced in compliance with Applicable Law;

(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”); provided, however, that , solely with respect to the Ground Leased Property, the LP Borrower’s obligation hereunder shall be to use commercially reasonable efforts to enforce any applicable provisions of the Ground Lease that prohibit any Environmental Liens due to any act or omission of the Ground Lessee or its subtenants or licensees;

(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; provided, however, that, solely with respect to the Ground Leased Property, the LP Borrower’s obligation hereunder shall be upon and following the Closing Date to use commercially reasonable efforts to enforce any applicable provisions of the Ground Lease or its rights under Applicable Law that require the Ground Lessee to implement, comply with and maintain in effect an operations and maintenance program with respect to any existing asbestos or asbestos containing materials located at the Ground Leased Property;

(viii)the Borrower shall cause (or with respect to the Ground Leased Property, the LP Borrower shall use commercially reasonable efforts to enforce the provisions of the Ground Lease so as to cause) the Remediation of  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 subject, in the case of the Ground Leased Property, to any rights of the Ground Lessee under the Ground Lease); and

(ix)the Borrower shall provide (or with respect to the Ground Leased Property, the LP Borrower shall use commercially reasonable efforts to enforce the provisions of the Ground Lease so as to 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 rights of the Ground Lessee under the Ground Lease and the rights of subtenants or other occupants under their subleases), 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 (or with respect to the Ground Leased Property, using commercially reasonable efforts to enforce the provisions of the Ground Lease so as to cause the Ground Lessee to provide) 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.

In the event that the Ground Lessee breaches any of its obligations under the Ground Lease that are referenced in this Section 8.11 in any material respect, the LP Borrower shall provide the Administrative Agent with notice promptly upon becoming aware thereof, and, if such breach could reasonably be expected to have an LP Borrower MAE Effect, the LP Borrower shall furnish to the Administrative Agent for the benefit of the Lenders such security as may be reasonably requested by the Administrative Agent, to ensure that the failure of the Ground Lessee to comply with such obligation shall not have an LP Borrower MAE Effect.  Nothing contained in this Section 8.11 shall limit the rights of the Administrative Agent or any Lender for indemnification under the terms of the Environmental Indemnity Agreement.

(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 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, including the Ground Lease, 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 and the LP Borrower’s obligations under the Ground Lease, 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, including a copy of each notice of default given to the Ground Lessee by the LP Borrower or sent by the Ground Lessee to the LP Borrower, (d) consistent with good business practices and in the best interests of the affected Project, enforce its rights with regard to all Leases and the Ground Lease 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 the LP Borrower shall diligently enforce the terms of the Ground Lease with respect to any construction work to be performed by the Ground Lessee thereunder, 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.  If and to the extent not obtained and delivered to the Administrative Agent as of the Closing Date, Borrower shall use commercially reasonable efforts to obtain 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 as promptly as possible following the Closing Date.  Without limiting the foregoing, 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 2008 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 2008 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 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 (excluding those that are the responsibility of the Ground Lessee under the Ground Lease) on a current basis and before the 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/General Partner.

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, (i) 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 at least one hundred percent (100%) of the Initial Advance, and (ii) in the event the Borrower elects to obtain the Subsequent Funding Advance pursuant to Section 2.11 of this Agreement, no later than the Expiration 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 an amount, which when combined with the Hedge Agreement(s) obtained in satisfaction of the foregoing clause (i) is at least seventy-five percent (75%) of the Outstanding Principal Amount of the Loans plus the Unused Commitments at such time (in either case, the “Aggregate Notional Amount”), in each case, which Hedge Agreement(s) shall be approved by the Administrative Agent in its reasonable discretion with (A) Eurohypo or its Affiliates or (B) 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 applicable Aggregate Notional Amount commencing no later than the date that is thirty (30) days after the Closing Date or no later than the Expiration Date, as the case may be, (or, if such day is not a Business Day, the first Business Day thereafter) to be not in excess of the rate per annum through the Hedging Termination Date that is necessary to satisfy a Debt Service Coverage Ratio for all the Projects of at least 1.25:1.00 as of the date such Hedge Agreement is entered into.  Upon the Closing Date or the Expiration Date, as applicable, 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 or in the case of the Hedge Agreement(s) obtained pursuant to clause (ii) above, on or prior to the Expiration 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, in the case of the Hedge Agreement obtained pursuant to clause (i) above, 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, for the purpose of satisfying the requirements of Section 2.10, for any period after the Hedging Termination Date, at Borrower’s option, one or more Interest Periods of six 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).

(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.  It is understood that Borrower’s failure to provide any Hedge Agreement required by Section 2.10 shall not be an Event of Default or entitle the Administrative Agent to secure or otherwise enter into one or more Hedge Agreements with respect to the Aggregate Notional Amount, but shall instead have the consequences provided in Section 2.10; provided, however, that upon entering into a Hedge Agreement pursuant to Section 2.10, Borrower shall continue to maintain such Hedge Agreement in accordance with, and otherwise as required by the applicable provisions of Sections 2.10 and 8.19 of this Agreement.  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 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 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 at an agreed upon strike rate and otherwise 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 in Section 9.03(a)(viii), 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 clarifyexisting 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, or (iii) Modifications necessary to effectuate Transfers to the extent expressly permitted in this Agreement.

9.02  Limitation on Liens.  Except for the Liens set forth on Schedule 9.02 attached hereto, neither the Borrower, 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 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 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 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 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 their respective Subsidiaries in order to secure their 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 Other Swap Pledgor or their respective Subsidiaries in connection with the Indebtedness permitted by Section 9.04(e) or (g);

(j)  Liens securing the Indebtedness permitted by Section 9.04(e) and encumbering the specific Excluded Projects and/or other real estate assets financed pursuant to such section (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 Excluded Projects and/or other real estate assets financed 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/General Partner or the Borrower’s Manager); (x) directly or indirectly grant any Lien on any direct or indirect interest in any Project or any part thereof, whether voluntarily or involuntarily; (y) 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/General Partner 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/General Partner, or a successor to the Borrower’s Member/General Partner (other than the ownership interests that are covered by Section 9.03(a)(ii)), unless following such transfer, the REIT 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 general partner, manager or managing member of any successor to the Borrower or the Borrower’s Member/General Partner referred to in Section 9.03(a)(iii);

(iii)the conveyance of all of the Projects (or all of the Projects owned by a Borrower) to a Qualified Successor Entity which assumes all of the obligations of  the Borrower under the Loan Documents and the Contribution Agreement 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 Manager or any Borrower Party (as applicable) contained in the Loan Documents except as otherwise provided in the definition of “Borrower’s Manager” (with all references herein to “Borrower” to mean 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 such 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 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 Manager” (with all references herein to “Borrower” to mean 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 REIT Subsidiary, such Projects may be managed by the REIT or any property management company owned or controlled directly or indirectly by the 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 REIT Subsidiary, there shall be no approval rights over the Organizational Documents of such general partner, manager or managing member if it is the REIT or the Operating Partnership ), 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 applicable Projects by such Qualified Successor Entity and the continued priority of the Liens of the applicable 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 or Borrower’s Manager, as shall be deemed necessary by the Administrative Agent to allocate to the Qualified Successor 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 or Borrower’s Manager, and, if and only if the Guarantor Documents do not remain in effect after such Transfer, 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 (if such general partner or manager is not the Guarantor) on terms 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, shall be released from its obligations under the Loan Documents arising from and after such Transfer, but such release shall not limit the obligations of such Borrower to comply with any requirements applicable to it (if any) in other capacities (including, without limitation, in capacities such as the general partner, managing member or manager of such Qualified Successor Entity).  As used herein, “Qualified Successor Entity” shall mean either (I) an entity (other than the REIT, the Operating Partnership or any Subsidiary of such REIT), majority-owned, directly or indirectly, by (A) the Borrower and/or (B) the Borrower’s Member/General Partner, or (II) a REIT Subsidiary (other than the Operating Partnership); and, provided further, however, that in the case of clauses (I) and (II) 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)[reserved];

(vi)any Transfers which are permitted under Section 14.31;

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

(viii)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 REIT or the Operating Partnership; (B) any conversion, into securities of the REIT, of partnership units or other Equity Interests of the Operating Partnership; (C) any issuance or Transfer of any Equity Interests in any REIT Subsidiary owning any direct or indirect Equity Interests in any Borrower Party, so long as following such issuance or Transfer the 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 REIT (or, as applicable, a REIT Subsidiary) is the surviving entity and the 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.

(b)  [reserved];

(c)  [reserved]; and

(d)  As used in Sections 9.03(a)(i), (a)(iii) and (a)(viii), “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/General Partner, 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/General Partner, 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 any Transfer of publicly-traded stocks in the REIT or any Transfers 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 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.  Except for the Indebtedness set forth on Schedule 9.04 attached hereto, none of the Borrower 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 the Borrower and their respective 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’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 or such Subsidiary for collection or deposit in the ordinary course of business or (ii) unsecured Swap Agreements entered into by the Borrower or their respective Subsidiaries with respect to Indebtedness permitted under Section 9.04 (a), (e) or (g);

(d)  Indebtedness for Capital Improvements.  Unsecured Indebtedness of the Borrower and their respective 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 $20,000,000 (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’s and such Subsidiaries’ Properties (including, without limitation, the Projects) or the acquisition of equipment or other assets for the benefit of such Borrower’s and such Subsidiaries’ Properties (including, without limitation, the Projects), and that is not used for the purposes of making Restricted Payments.  Not more than Two Million Dollars ($2,000,000) of the foregoing $20,000,000 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 or their respective 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 and the Bankruptcy Parties (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 a Borrower or one or more of its wholly-owned Subsidiaries (if the Borrower or any such Subsidiary is a borrower of Indebtedness secured thereby), and/or with the consent of the Administrative Agent (which shall not be unreasonably withheld), by Liens on any real estate assets owned by other REIT Subsidiaries (other than a Borrower or its wholly-owned Subsidiaries) (if any such REIT Subsidiary is a borrower of Indebtedness secured thereby), of a type, quality and location satisfying the type, quality and location requirements of a Qualified Real Estate Interest, 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 (or if there is multiple collateral the applicable allocated loan amount), when incurred, does not exceed (A) sixty percent (60%) of the “stabilized” value and (B) sixty-five percent (65%) of the “as-is” value, of any Excluded Project or other real estate, as determined by the lender’s appraisal (or, in the case of financing for the acquisition of Excluded Projects or other real estate, sixty percent (60%) based on the “stabilized” value, or sixty-five percent (65%) based on the “as-is” value, of the acquisition cost of the Excluded Projects or other real estate so acquired) encumbered as collateral for such Indebtedness; 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)  Reserved.

(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 and Bankruptcy Parties (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.

(h)  Guarantees of REIT or Operating Partnership Line of Credit.  Guarantees by the Borrower or its respective Subsidiaries of one or more credit facilities provided to the REIT, the Operating Partnership or another 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 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) reserved, (d) the Projects, (e) the Excluded Projects (which are owned or may hereafter be acquired by the Borrower or any Subsidiary thereof), (f) Borrower’s Equity Interests in any Subsidiary of Borrower 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 Organizational Documents of the Borrower 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 Operating Partnership and its Subsidiaries taken as a whole.

9.06  Restricted Payments.  The Borrower will not 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, the 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  Reserved.

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.

(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 previously delivered to the Administrative Agent in all material respects.  If such Lease Approval Package is not consistent in all material respects, the Borrower shall provide the Administrative Agent with a revised Lease Approval Package showing material changes from the draft previously delivered to the Administrative Agent.  Within five (5) Business Days after the Administrative Agent shall have received such revised 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 five (5) Business Day period, the Administrative Agent shall be deemed to have approved such lease or lease modification.

(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.

9.10  Contribution Agreement.  No Borrower shall amend, modify or terminate the Contribution Agreement without the prior written consent of the Required Lenders.

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.  Any change in ownership or control of the Property Manager other than as specifically set forth herein, or permitted by Section 9.03 or Section 14.31, 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’sconsent, 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.    

9.16  Foreign Assets Control Regulations.  Neither the Borrower, any Borrower Party nor the Operating Partnership 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, any Borrower Party nor the Operating Partnership 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 the Operating Partnership or who (after such inquiry as may be required by Applicable Law) should be known by such Borrower Party or the Operating Partnership 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 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 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 (a) $5,000,000 and (b) 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 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 1.35-to-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 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 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 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 Event 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); provided, however, that in the event there is a Significant Casualty Event or Taking of a Project any Unused Commitments remaining allocable to such Project shall be reduced in proportion to the amount of the Project taken or destroyed, as determined by the Administrative Agent, and provided, further, that, during the period of Restoration of a Project in accordance with this Section 10.03, the rights of the Borrower under Section 2.11 to obtain a Subsequent Funding Advance with respect to such Project shall be suspended until such time as the Restoration has been completed in accordance with the provisions of this Section 10.03.  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).

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 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 on behalf of the Borrower, 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 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

(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 or the Operating Partnership 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

(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 REIT); 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 and such event of default shall be continuing following the expiration of applicable notice and cure periods thereunder; 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; provided, however, that the foregoing provisions shall not apply if the obligations under the applicable Guarantee thereof furnished by the Borrower or any Subsidiary of the Borrower in conformity with Section 9.04(h) of this Agreement are secured, in compliance with Section 9.02(k) of this Agreement, exclusively by Liens on one or more Excluded Projects or other real estate, and the obligations under such Guarantee are non-recourse to the Borrower and its Subsidiaries (except for “carve-outs” for the Borrower’s or such Subsidiary’s fraud, misrepresentation, misappropriation and other exceptions-from-non-recourse with respect to the acts of such Borrower or Subsidiary customary in the real estate finance industry); or

(n)  At any time the REIT fails to satisfy the requirements of being a real estate investment trust as defined in the Code if such failure could reasonably be expected to result in a Material Adverse Effect;

(o)  The Borrower uses, or permits the use of, funds from the SecurityAccounts 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)  Reserved.

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 Bankruptcy 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 Bankruptcy 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):

(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 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 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 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; provided, however, that, prior to consummating a sale of any Project, the Administrative Agent shall obtain the consent of the Required Lenders to the price and other material economic terms upon which such Project shall be sold.  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 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 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 or, at the time it becomes successor Administrative Agent hereunder will hold (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 in an aggregate principal amount not less than ten percent (10%) of the aggregate Outstanding Principal Amount of the Loans plus any Unused Commitments; 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 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 (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  Documentation Agents.  No Lender identified on the cover page of or elsewhere in this Agreement as a “Documentation Agent” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to a Lender having that Lender’s Commitment under this Agreement and the other Loan Documents.

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 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 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 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 or increase the aggregate Commitments of all Lenders to an amount in excess of Three Hundred Forty Million Dollars minus the amount of all prepayments (including, without limitation amounts paid pursuant to Section 2.09) theretofore made by the Borrower hereunder, without the consent of all Lenders; and provided, further, that without the consent of the Required Lenders, in no event shall the Administrative Agent: (I) waive any interest accrued at the Post-Default Rate (to the extent such interest exceeds the interest which would have accrued at the interest rate that would be in effect if the Post-Default Rate was not then applicable) or late fees; (II) waive any covenant of Borrower set forth in Section 9.02 (except for the waiver, in accordance with the Administrative Agent’s standard of care set forth in Article XIII hereof, of any matter which the Administrative Agent, pursuant to the express terms of Section 9.02, is required or permitted to approve) or grant any consent pursuant to Section 9.03 or 9.04 with respect to the incurrence of Indebtedness to be secured by a Lien encumbering any Project (except for the grant of consent, in accordance with the Administrative Agent’s standard of care set forth in Article XIII hereof, with respect to any matter which the Administrative Agent, pursuant to the express terms of Section 9.03 or 9.04, is required or permitted to approve); or (III) waive any material Default or Event of Default.  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, Joinders 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 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.

(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 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:  (i) 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 (ii) 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/General Partner 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.  

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, 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.  The Borrower hereby agrees that it shall pay any and all brokerage commissions or finders fees owing to any broker or finder engaged by Borrower or any of its Affiliates 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 any broker or finder engaged by Borrower or any of its Affiliates that such Person acted on behalf of the Borrower and is entitled to compensation 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.

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.

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 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, partner in, or manager of the 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 (but not  any past, present or future member in, partner in, or manager of the 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:  (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, partner in or manager of the 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 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. Subject to the terms set forth in this sentence, Borrower authorizes Administrative Agent and each of the Lenders to issue, at their own expense, press releases, advertisements and other promotional materials in connection with Administrative Agent’s or such Lender’s own promotional and marketing activities, so long as such materials describe the Loans in a manner which is consistent with any accurate description of the Loans contained in any press release or public filing issued by the Borrower; provided, however, that prior to issuing any such press release, advertisement or other promotional materials, the Lender seeking to issue the same shall first deliver the proposed form of the same to the Administrative Agent for its review and submission to the Borrower, and provided, further, that no such press release, advertisement or other promotional materials shall be issued unless Borrower has approved the form of the same (which approval shall not be unreasonably withheld, conditioned or delayed, and which approval shall be granted so long as the information set forth therein is consistent with the description of the Loans contained in any press release or public filing issued by the Borrower).

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 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, including, without limitation, revisions necessary to utilize a separate deposit account control agreement reasonably satisfactory to the Administrative Agent, the Depository Bank and the Borrower) 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.

(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 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.

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 Loans plus Unused Commitments amount 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 the Loans plus Unused Commitments amount of all the Notes (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 Loans plus Unused  Commitments amount of all the  Notes (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, the Guarantor 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 REIT Provisions.  

(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 REIT or any other REIT Subsidiary determined by the 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 REIT.  The Borrower shall provide written notice thereof to the Administrative Agent within ten (10) Business Days after the occurrence of such change.

(c)  [reserved]

(d)  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 REIT or by a management company controlled directly or indirectly by the REIT (including, without limitation, the Operating Partnership of the REIT or any other wholly-owned REIT Subsidiary).  If any Project is managed by the REIT or a 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 REIT or a 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 REIT or its Affiliates to comply with tax or other Applicable Laws pertaining to their status.

ARTICLE XV

CO-BORROWER WAIVERS AND PROVISIONS

15.01                      Definitions and Background.  Each of 2007 LLC Borrower, 1995 LLC Borrower and LP Borrower acknowledge that they will each receive substantial benefits from the Lenders’ extension of credit pursuant to this Agreement to the Borrower on the joint and several, cross-collateralized basis provided for herein and in the Loan Documents.  The parties to this Agreement acknowledge and agree that the intention of the parties is that each of 2007 LLC Borrower, 1995 LLC Borrower and LP Borrower shall be direct, primary, joint and several obligors with respect to all Obligations (except to the extent expressly provided to the contrary in this Agreement).  However, in the event that for any reason any of 2007 LLC Borrower, 1995 LLC Borrower or LP Borrower (in such event, such party is referred to herein as the “Secondary Obligor”) is held or deemed to be a guarantor of or surety for the payment and performance of the obligations of any other Borrower (in such event, such other party is referred to herein as the “Primary Obligor”) under this Agreement or any of the other Loan Documents (such obligations are collectively referred to herein as the “Primary Obligor Obligations” and all documents evidencing, securing or relating to the Primary Obligor Obligation are referred to herein as the “Primary Obligor Documents”), the Primary Obligor and Secondary Obligor hereby agree as follows.

15.02                      Rights of the Administrative Agent and Lenders.  Without modifying or otherwise limiting any of the Primary Obligor’s rights under this Agreement or the other Loan Documents with respect to any or all of the following acts, the Secondary Obligor authorizes the Administrative Agent and the Lenders to perform any or all of the following acts at any time in their sole discretion, all without notice to the Secondary Obligor and without affecting the rights of the Administrative Agent or the Lenders or the Secondary Obligor's obligations under this Agreement and the Loan Documents:

(a)           The Administrative Agent or the Lenders may alter any terms of the Primary Obligor Obligations or any part thereof, including renewing, compromising, extending or accelerating, or otherwise changing the time for payment of, or increasing or decreasing the rate of interest on, the Primary Obligor Obligations or any part thereof.

(b)           The Administrative Agent or the Lenders may take and hold security for the Primary Obligor Obligations, accept additional or substituted security therefor, and subordinate, exchange, enforce, waive, release, compromise, fail to perfect and sell or otherwise dispose of any such security.

(c)           The Administrative Agent or the Lenders may direct the order and manner of any sale of all or any part of any security now or later to be held for the Primary Obligor Obligations, and the Administrative Agent or the Lenders may also bid at any such sale.

(d)           The Administrative Agent or the Lenders may apply any payments or recoveries from the Primary Obligor, the Secondary Obligor or any other source, and any proceeds of any security, to the Primary Obligor Obligations in such manner, order and priority as the Administrative Agent or the Lenders may elect.

(e)           The Administrative Agent or the Lenders may release the Primary Obligor from its liability for the Primary Obligor Obligations or any part thereof.

(f)           The Administrative Agent or the Lenders may substitute, add or release any one or more guarantors or endorsers.

15.03                      Obligations of Secondary Obligor to be Absolute.  The Secondary Obligor expressly agrees that, until all Obligations have been paid and performed in full, the Secondary Obligor shall not be released by or because of:

(a)           Any act or event which might otherwise discharge, reduce, limit or modify the Secondary Obligor’s obligations under this Agreement or the other Loan Documents;

(b)           Any waiver, extension, modification, forbearance, delay or other act or omission of the Administrative Agent or the Lenders, or any failure to proceed promptly or otherwise against the Primary Obligor, the Secondary Obligor or any security;

(c)           Any action, omission or circumstance which might increase the likelihood that the Secondary Obligor may be called upon to perform under this Agreement or the other Loan Documents or which might affect the rights or remedies of the Secondary Obligor against the Primary Obligor; or

(d)           Any dealings occurring at any time between the Primary Obligor and the Administrative Agent or the Lenders, whether relating to the Primary Obligor Obligations or otherwise.

The Secondary Obligor hereby acknowledges that, absent this Section 15.03, the Secondary Obligor might have a defense to its Obligations as a result of one or more of the foregoing acts, omissions, agreements, waivers or matters.  The Secondary Obligor hereby expressly waives and surrenders any defense to any liability on account of its Obligations based upon any of such acts, omissions, agreements, waivers or matters.

15.04                      Waivers of Defenses.  The Secondary Obligor waives:

(a)           Any right it may have to require the Administrative Agent or the Lenders to proceed against the Primary Obligor, proceed against or exhaust any security held from the Primary Obligor, or pursue any other remedy in the Administrative Agent's or Lenders’ power to pursue;

(b)           Any defense based on any claim that the Secondary Obligor’s obligations exceed or are more burdensome than those of the Primary Obligor;

(c)           Any defense based on:  (i) any legal disability of the Primary Obligor; (ii) any release, discharge, modification, impairment or limitation of the liability of the Primary Obligor to the Administrative Agent or the Lenders from any cause, whether consented to by the Administrative Agent or the Lenders or arising by operation of law or from any bankruptcy or other voluntary or involuntary proceeding, in or out of court, for the adjustment of debtor-creditor relationships ("Insolvency Proceeding") and (iii) any rejection or disaffirmance, of the Primary Obligor Obligations, or any part thereof, or any security held therefor, in any such Insolvency Proceedings;

(d)           Any defense based on any action taken or omitted by the Administrative Agent or the Lenders in any Insolvency Proceeding involving the Primary Obligor, including any election to have their claim allowed as being secured, partially secured or unsecured, any extension of credit by the Administrative Agent or the Lenders to the Primary Obligor in any Insolvency Proceeding and the taking and holding by the Administrative Agent or the Lenders of any security for any such extension of credit;

(e)           All presentments, demands for performance, notice of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of the Obligations and of the existence, creation, or incurring of new or additional indebtedness, and demands and notices of every kind, but only in Secondary Obligor’s capacity as Secondary Obligor and not in its capacity as Primary Obligor or as otherwise provided in the Loan Documents; and

(f)           Any defense based on or arising out of any action of the Administrative Agent or the Lenders described in Sections 15.02 or 15.03 above, subject to the provisions of Sections 15.02 and 15.03 above.

15.05                      Impairment of Subrogation Rights.

(a)           Upon an Event of Default by the Primary Obligor, the Administrative Agent in its sole discretion, without prior notice (except as required by this Agreement or Applicable Law) to or consent of the Secondary Obligor, may elect to foreclose either judicially or nonjudicially against any real or personal property security it may hold for the Primary Obligor Obligations, or accept a transfer of any such security in lieu of foreclosure, or compromise or adjust the Primary Obligor Obligations or any part thereof or make any other accommodation with the Primary Obligor, or exercise any other remedy against the Primary Obligor or any security.  No such action by the Administrative Agent shall release or limit the liability of the Secondary Obligor, who shall, subject to the provisions of Section 14.23(a), remain liable for the Obligations after the action, even if the affect of the action is to deprive the Secondary Obligor of any subrogation rights, rights of indemnity, or other rights to collect reimbursement from the Primary Obligor for any sums paid to the Administrative Agent or any Lender, whether contractual or arising by operation of law or otherwise.  The Secondary Obligor expressly agrees that under no circumstances shall it be deemed to have any right, title, interest or claim in or to any real or personal property held by the Administrative Agent or any third party after any foreclosure or transfer in lieu of foreclosure of any security for the Primary Obligor Obligations.

(b)           Regardless of whether the Secondary Obligor may have made any payments to the Administrative Agent or the Lenders, the Secondary Obligor hereby waives:  (i) except as expressly permitted by the Contribution Agreement, all rights of subrogation, indemnification, contribution and any other rights to collect reimbursement from the Primary Obligor or any other party for any sums paid to the Administrative Agent  or the Lenders whether contractual or arising by operation of law (including, without limitation, under Sections 2847 or 2848 of the California Civil Code, under any provisions of the United States Bankruptcy Code, or any successor or similar statutes) or otherwise, (ii) all rights to enforce any remedy that the Administrative Agent or the Lenders may have against the Primary Obligor, and (iii) all rights to participate in any security now or later held by the Administrative Agent or the Lenders for the Primary Obligor Obligations.  The Secondary Obligor further agrees that, to the extent the foregoing waiver is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement, contribution and indemnification the Secondary Obligor may have against the Primary Obligor or against any collateral or security, shall be junior and subordinate to any rights the Administrative Agent or the Lenders may have against the Primary Obligor, and to all right, title and interest the Administrative Agent or the Lenders may have in any such collateral or security.  If any amount shall be paid to the Secondary Obligor on account of any such subrogation, reimbursement, contribution or indemnification rights at any time when all the Primary Obligor Obligations have not been paid in full, such amount shall be held in trust by the Secondary Obligor and shall forthwith be paid over to the Administrative Agent to be credited and applied against the Primary Obligor Obligations, whether matured or unmatured, in accordance with the terms of the Primary Obligor Documents.  The waivers given in this Section 15.05(b) shall be effective until the Primary Obligor Obligations have been paid and performed in full.

(c)           The Secondary Obligor understands and acknowledges that, if the Administrative Agent forecloses judicially or nonjudicially against any real property security for the Primary Obligor Obligations, that foreclosure could impair or destroy the ability that the Secondary Obligor may have to seek reimbursement, contribution or indemnification from the Primary Obligor.  The Secondary Obligor further understands and acknowledges that in the absence of this Section 15.05, such potential impairment or destruction of the Secondary Obligor’s rights, if any, may entitle the Secondary Obligor to assert a defense to its liability on account of the Obligations based on Section 580d of the California Code of Civil Procedure as interpreted in Union Bank v. Gradsky, 286 Cal.App.2d 40 (1968).  The Secondary Obligor freely, irrevocably and unconditionally:  (i) waives and relinquishes that defense and agrees that the Secondary Obligor will be fully liable for the Obligations even though the Administrative Agent may foreclose judicially or nonjudicially against any real property security for the Primary Obligor Obligations; (ii) agrees that the Secondary Obligor will not assert that defense in any action or proceeding which the Administrative Agent may commence to enforce the Secondary Obligor’s liability on account of the Obligations, (iii) acknowledges and agrees that the rights and defenses waived by the Secondary Obligor hereunder on account of the Primary Obligor Obligations include any right or defense that the Secondary Obligor may have or be entitled to assert based upon or arising out of any one or more of Sections 580a, 580b or 726 of the California Code of Civil Procedure or Section 2848 of the California Civil Code; and (iv) acknowledges and agrees that the Lenders are relying on this waiver in extending the credit to the Primary Obligor and the Secondary Obligor, and that this waiver is a material part of the consideration which the Administrative Agent and the Lenders are receiving for providing the Commitments under this Agreement to the Primary Obligor.

(d)           The Secondary Obligor waives any rights and defenses that are or may become available to the Secondary Obligor on account of the Primary Obligor Obligations by reason of Sections 2787 to 2855, inclusive, of the California Civil Code.

(e)           The Secondary Obligor waives all rights and defenses that the Secondary Obligor may have because the Primary Obligor Obligations are secured by real property.  This means, among other things, (i) the Administrative Agent and the Lenders may collect from the Secondary Obligor and pursue any real or personal property pledged by the Secondary Obligor without first foreclosing on any real or personal property collateral pledged by the Primary Obligor; (ii) the amount of the Obligations for which Secondary Obligor is liable may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and (iii) the Administrative Agent and the Lenders may collect from the Secondary Obligor even if the Administrative Agent, by foreclosing on the real property collateral, has destroyed any right the Secondary Obligor may have to collect from the Primary Obligor.  This is an unconditional and irrevocable waiver of any rights and defenses the Secondary Obligor may have because the Primary Obligor Obligations are secured by real property.  These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure.  In addition, Secondary Obligor waives all rights and defenses arising out of an election of remedies by the Administrative Agent or the Lenders, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for the guaranteed obligation, has destroyed the Secondary Obligor’s rights of subrogation and reimbursement against the Primary Obligor by the operation of Section 580d of the Code of Civil Procedure or otherwise.

15.06                      Revival and Reinstatement.  If the Administrative Agent or any Lender is required to pay, return or restore to the Primary Obligor or any other person any amounts previously paid on the Primary Obligor Obligations because of any Insolvency Proceeding of the Primary Obligor, any stop notice or any other reason, the obligation of the Secondary Obligor shall be reinstated and revived and the rights of the Administrative Agent and the Lenders shall continue with regard to such amounts, all as though they had never been paid.

15.07                      The Primary Obligor’s Financial Condition.  The Secondary Obligor assumes full responsibility for keeping informed of the Primary Obligor’s financial condition and business operations and all other circumstances affecting the Primary Obligor's ability to pay and perform its obligations to the Administrative Agent, and agrees that the Administrative Agent shall have no duty to disclose to the Secondary Obligor any information which the Administrative Agent may receive about the Primary Obligor's financial condition, business operations, or any other circumstances bearing on its ability to perform.

15.08                      Intent of Waivers.  The waivers and other provisions of this Article 15 are made by the Secondary Obligor solely for itself and not on behalf of the Primary Obligor.  Furthermore, the waivers and other provisions of this Article 15 are made by the Secondary Obligor solely in its capacity as a Secondary Obligor and not in its capacity as a Primary Obligor.  Nothing herein is intended to, or shall, modify, or constitute a waiver or surrender by the Secondary Obligor of, any right, remedy or defense that would otherwise be available to the Secondary Obligor on account of its Obligations in its capacity as a Primary Obligor.

15.09                      Borrower’s Joint and Several.  2007 LLC Borrower, 1995 LLC Borrower and LP Borrower hereby agree that: (i) 2007 LLC Borrower, 1995 LLC Borrower and LP Borrower are (subject to Section 14.23 of this Agreement) jointly and severally liable for all of the obligations of the Borrower set forth in this Agreement and the other Loan Documents; (ii) the occurrence of any Event of Default shall be an Event of Default by 2007 LLC Borrower, 1995 LLC Borrower and LP Borrower; (iii) the Obligations which are secured by all Security Documents are the Obligations of the 2007 LLC Borrower, 1995 LLC Borrower and LP Borrower, and (iv) each of 2007 LLC Borrower, 1995 LLC Borrower and LP Borrower assumes the obligations of each of 2007 LLC Borrower, 1995 LLC Borrower and LP Borrower under each and every Loan Document entered into by any of 2007 LLC Borrower, 1995 LLC Borrower or LP Borrower.

ARTICLE XVI

GROUND LEASE PROVISIONS

16.01                      Ground Lease.  The Administrative Agent and the Lenders acknowledge that a portion of the LP Borrower’s fee interest in the Trillium Project is subject to the Ground Lease.  For all purposes of this Agreement and the other Loan Documents, the Ground Lease is a “Lease,” an “Approved Lease,” and a “Major Lease.”  Accordingly, notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents (including, without limitation, the Deed of Trust encumbering the Trillium Project), the following provisions shall apply with respect to the Ground Leased Property and the LP Borrower (but not with respect to any other Project (including the Trillium Project (other than that portion of the Trillium Project which is the Ground Leased Property) or the 2007 LLC Borrower or 1995 LLC Borrower):

(i)           No representation or warranty in Article 7 of this Agreement pertaining to any Person or any Project shall be interpreted as a representation or warranty concerning (a) the Ground Lessee or the interest of the Ground Lessee (or any subtenant or licensee of the Ground Leased Property), (b) title to any property owned by the Ground Lessee, (c) except as to Borrower’s knowledge, the physical or other condition of the Hilton Hotel Improvements or the compliance of such Hilton Hotel Improvements, or the Ground Lessee (or any subtenant or licensee of the Ground Leased Property), with Applicable Laws or Governmental Approvals, (d) except as to Borrower’s knowledge, Governmental Approvals pertaining to the Ground Leased Property, or (e) any Lease other than the Ground Lease.

(ii)           Notwithstanding anything to the contrary contained in this Agreement, solely as to the LP Borrower and the Ground Leased Property, the following representations and warranties are true and correct as of the date hereof:

(1)           The LP Borrower has not entered into any Lease of the Ground Leased Property other than the Ground Lease.  The LP Borrower is the sole owner and lessor of landlord's interest under the Ground Lease.  The Ground Lease is in full force and effect and, to LP Borrower’s knowledge, there are no defaults thereunder by the LP Borrower or by Ground Lessee.  To LP Borrower’s knowledge, there are no conditions that, with the passage of time or the giving of notice, or both, would constitute defaults thereunder by the LP Borrower or by Ground Lessee.  No right or claim of rescission, offset, abatement, diminution, defense or counterclaim has been asserted and is pending with respect to the Ground Lease by the LP Borrower or, to Borrower’s knowledge, by Ground Lessee. There is no existing condition known to LP Borrower that, with the passage of time or giving of notice, or both, would result in a right or claim of rescission, offset, abatement, diminution, defense or counterclaim by the LP Borrower or, to Borrower’s knowledge, by Ground Lessee under the terms and provisions of the Ground Lease. No Rent under the Ground Lease has been paid more than one (1) month in advance of its due date.

(2)           The LP Borrower does not have any material monetary obligations under the Ground Lease and all material monetary obligations associated with using, managing, owning, developing and operating the Ground Leased Property (including, without limitation, all costs associated with utilities, real estate taxes, insurance, maintenance and repairs) are obligations of Ground Lessee pursuant to the terms and provisions of the Ground Lease. There does not currently exist any unperformed non-monetary obligations under the terms and provisions of the Ground Lease which could reasonably be expected to give Ground Lessee cause to interrupt the payment of Rent or other monetary obligations of Ground Lessee pursuant to the Ground Lease, and, to LP Borrower’s knowledge, all work required to be performed by the LP Borrower under the Ground Lease has been performed as required and, to Borrower’s knowledge, has been accepted by Ground Lessee. There is no free rent, and no allowances or abatements are required to be given by the LP Borrower to Ground Lessee, under the Ground Lease.

(3)           There is no presently effective sale, transfer, assignment, hypothecation or pledge of the interest of the LP Borrower in the Ground Lease or of the Rent received pursuant to the Ground Lease, other than in connection with the Loan Documents.  Neither Ground Lessee nor any other Person has a right or option pursuant to the Ground Lease or otherwise to purchase all or any part of the Ground Leased Property.

(4)           The Ground Lease has an original term ending on or after the Maturity Date.  The Rent under the Ground Lease is payable without notice or demand.  The LP Borrower has no knowledge of any current fact, circumstance or condition which is reasonably likely to give Ground Lessee a right of setoff, recoupment, abatement or reduction under the Ground Lease. The LP Borrower has not released, in whole or in part, Ground Lessee from any of its obligations under the Ground Lease.  If Ground Lessee sublets its interest or obligations under the Ground Lease, Ground Lessee shall remain fully and primarily liable thereunder pursuant to the provisions of the Ground Lease.

(iii)           Notwithstanding the provisions of Section 9.09(a) of this Agreement, solely as to the LP Borrower and the Ground Leased Property, the LP Borrower shall not (i) accept from the Ground Lessee, nor permit the Ground Lessee to pay, Rent for more than one pay period under the Ground Lease in advance except for payment in the nature of security for performance of a tenant’s obligations, escalations, percentage rents, taxes, insurance and other pass-throughs paid by the Ground Lessee pursuant to the Ground Lease, (ii) Modify, terminate, or accept surrender of, the Ground Lease, without the prior written consent of the Administrative Agent, except in accordance with any existing rights of Modification or termination exercisable by the Ground Lessee pursuant to the terms of the Ground Lease as in effect on the date hereof, (iii) except for the Deed of Trust, assign, transfer (except for a Transfer permitted by this Agreement), pledge, subordinate or mortgage any of the LP Borrower’s interest in the Ground Lease or in or to 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 under the Ground Lease without the Administrative Agent’s prior written consent, or (v) release any guarantor from its obligations under any guaranty of the Ground Lease or any letter of credit or other credit support for a tenant’s performance under the Ground Lease, except as expressly permitted pursuant to the terms of the Ground Lease.  Notwithstanding the foregoing or anything to the contrary contained herein, the LP Borrower shall have the right, at its option, to terminate or accept the surrender of the Ground Lease, and to pursue any other rights and remedies the LP Borrower may have under the Ground Lease or Applicable Laws, following an uncured material default by the Ground Lessee.

(iv)           Solely as to the LP Borrower and the Ground Leased Property, Section 9.12 of this Agreement (and any similar provision of this Agreement or other Loan Documents restricting changes in zoning or entitlements, or pertaining to any restrictions on use), shall be subject to the provisions of the Ground Lease and the rights of the Ground Lessee thereunder.  The LP Borrower shall deliver to the Administrative Agent notice of any such change promptly after becoming aware of it.

(v)           Solely as to the LP Borrower and the Ground Leased Property, the provisions of Article 10 of this Agreement (and any similar provision of this Agreement or other Loan Documents pertaining to Casualty Events, Insurance Proceeds, Takings, Condemnation Awards or Restoration) shall be subject to the provisions of the Ground Lease and the rights of the Ground Lessee thereunder.

[Signature Pages Follow]

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 2007, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Douglas Emmett 1995, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Douglas Emmett Realty Fund 2002, a California

limited partnership

By:           Douglas Emmett Management, LLC,

a Delaware limited liability company,

its General Partner

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Address for Notices:

Douglas Emmett 2007, LLC; Douglas Emmett 1995, LLC; Douglas Emmett Realty Fund 2002

c/o Douglas Emmett Properties, LP

808 Wilshire Boulevard, Suite 200

Santa Monica, California  90401

Attention:  Jordan L. Kaplan

Telecopier No.:  (310) 255-7702

With copies to:

Douglas Emmett 2007, LLC; Douglas Emmett 1995, LLC; Douglas Emmett Realty Fund 2002

c/o Douglas Emmett Properties, LP

808 Wilshire Boulevard, Suite 200

Santa Monica, California  90401

Attention: William Kamer, Esq.

Telecopier No.: (310) 255-7702

LENDERS

EUROHYPO AG, NEW YORK BRANCH

By:_________________________

     Name:

     Title:

By:_________________________

     Name:

     Title:

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

ADMINISTRATIVE AGENT

EUROHYPO AG, NEW YORK BRANCH,

as Administrative Agent

By:_________________________

     Name:

     Title:

By:_________________________

     Name:

     Title:

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.           Executive Tower, 11400 Olympic Boulevard, Los Angeles, California

2.           Trillium Project, 6300-6336 Canoga Avenue, Woodland Hills, California

3.           1801 Century Park West, Century City, California

4.           Cornerstone Plaza, 1990 S. Bundy Drive, Los Angeles, California

SCHEDULE 1B

LEGAL DESCRIPTION OF THE

PROJECTS

[See attached]

SCHEDULE 1B-1

LEGAL DESCRIPTION

1801 Century Park West, Century City, California

All of that certain real property located in the County of Los Angeles, State of California described as follows:

LOTS 1, 2 AND 3 IN BLOCK 34 TRACT NO. 7260, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 79 PAGES 98 AND 99 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

SCHEDULE 1B-2

LEGAL DESCRIPTION

Cornerstone Plaza, 1990 S. Bundy Drive, Los Angeles, California

All of that certain real property located in the County of Los Angeles, State of California described as follows:

PARCEL B OF PARCEL MAP NO. 3084, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 66, PAGES 33 AND 34 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

SCHEDULE 1B-3

LEGAL DESCRIPTION

Executive Tower, 11400 Olympic Boulevard, Los Angeles, California

All of that certain real property located in the County of Los Angeles, State of California described as follows:

PARCEL 1:

LOTS 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72 AND 76 OF TRACT NO. 8369, TOGETHER WITH THE NORTHEASTERLY ONE-HALF OF THAT CERTAIN ALLEY 20 FEET WIDE LYING NORTHWESTERLY OF THE SOUTHWESTERLY PROLONGATION OF THE SOUTHEASTERLY LINE OF LOT 72 OF TRACT NO. 8369 AND SOUTHEASTERLY OF THE SOUTHWESTERLY PROLONGATION OF THE NORTHWESTERLY LINE OF LOT 60 OF TRACT NO. 8369, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 94 PAGES 24 AND 25 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

PARCEL 2:

NON-EXCLUSIVE EASEMENT APPURTENANT TO PARCEL 1 FOR INGRESS AND EGRESS, FOR THE PASSAGE AND PARKING OF VEHICLES, AND FOR PASSAGE AND ACCOMMODATION OF PEDESTRIANS ON SUCH RESPECTIVE PORTIONS OF THE ALLEY AS ARE SET ASIDE, MAINTAINED AND AUTHORIZED FOR SUCH USE, AS DISCLOSED IN A RECIPROCAL EASEMENT AGREEMENT, RECORDED OCTOBER 26, 1989 AS INSTRUMENT NO. 89-1732036 OF LOS ANGELES COUNTY, CALIFORNIA.

SCHEDULE 1B-4

LEGAL DESCRIPTION

Trillium Project, 6300-6336 Canoga Avenue, Woodland Hills, California

All of that certain real property located in the County of Los Angeles, State of California described as follows:

PARCEL A:

THAT PORTION OF LOT 3 OF TRACT 30715, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS RECORDED IN BOOK 790 PAGES 63 AND 64 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE SOUTHERLY LINE OF SAID LOT 3 WHICH LIES 259.48 FEET EASTERLY OF THE SOUTHWEST CORNER OF SAID LOT; THENCE ALONG A LINE PARALLEL TO THE WESTERLY LINE OF SAID LOT NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST 151.92 FEET; THENCE AT RIGHT ANGLES NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 87.42 FEET; THENCE AT RIGHT ANGLES NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST 130.00 FEET; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 213.67 FEET; THENCE AT RIGHT ANGLES NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST 22.55 FEET; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 42.33 FEET; THENCE AT RIGHT ANGLES SOUTH 0 DEGREES 03 MINUTES 01 SECONDS WEST 12.17 FEET; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 214.48 FEET TO A POINT ON THE EASTERLY LINE OF SAID LOT 3 WHICH IS 292.31 FEET NORTHERLY OF THE SOUTHERLY TERMINUS OF SAID EASTERLY LINE; THENCE SOUTH 0 DEGREES 03 MINUTES 55 SECONDS EAST 292.31 FEET ALONG SAID EASTERLY LINE TO THE SOUTHEAST CORNER OF SAID LOT 3, THENCE NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 383.14 FEET ALONG SAID SOUTHERLY LINE TO A POINT OF BEGINNING.

PARCEL B:

THAT PORTION OF LOT 3 OF TRACT 30715, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS RECORDED IN BOOK 790 PAGES 63 AND 64 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 3; THENCE NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST 374.05 FEET ALONG THE WESTERLY LINE OF SAID LOT 3, SAID WESTERLY LINE BEING THE EASTERLY RIGHT OF WAY LINE OF CANOGA AVENUE, 100 FEET WIDE, THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 172.06 FEET, THENCE AT RIGHT ANGLES SOUTH 0 DEGREES 03 MINUTES 01 SECONDS WEST 222.13 FEET; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 87.42 FEET; THENCE AT RIGHT ANGLES SOUTH 0 DEGREES 03 MINUTES 01 SECONDS WEST 151.92 FEET TO THE SOUTHERLY LINE OF SAID LOT 3; THENCE ALONG SAID SOUTHERLY LINE NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 259.48 FEET TO THE POINT OF BEGINNING.

PARCEL C:

THAT PORTION OF LOT 3 OF TRACT 30715, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS RECORDED IN BOOK 790 PAGES 63 AND 64 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE WESTERLY LINE OF SAID LOT 3, 412.38 FEET NORTHERLY OF THE SOUTHWESTERLY CORNER OF SAID LOT; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 69.39 FEET; THENCE SOUTH 44 DEGREES 56 MINUTES 59 SECONDS EAST 25.92 FEET; THENCE SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 90.00 FEET; THENCE NORTH 45 DEGREES 03 MINUTES 01 SECONDS EAST 25.92 FEET; THENCE SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 181.00 FEET TO A LINE PARALLEL WITH AND DISTANT EASTERLY 377.04 FEET FROM SAID WESTERLY LINE, THENCE SOUTH 0 DEGREES 03 MINUTES 01 SECONDS WEST 107.91 FEET; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 8.69 FEET; THENCE AT RIGHT ANGLES SOUTH 0 DEGREES 03 MINUTES 01 SECONDS WEST 22.55 FEET; THENCE AT RIGHT ANGLES  NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 213.67 FEET; THENCE AT RIGHT ANGLES NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST 92.13 FEET TO A LINE PARALLEL WITH AND DISTANT SOUTHERLY 20.00 FEET FROM THE HEREON DESCRIBED THIRD COURSE; THENCE NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 172.06 FEET TO SAID WESTERLY LINE OF SAID LOT 3; THENCE ALONG SAID WESTERLY LINE NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST 38.33 FEET TO THE POINT OF BEGINNING.

PARCEL D:

THAT PORTION OF LOT 3 OF TRACT 30715, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS RECORDED IN BOOK 790 PAGES 63 AND 64 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE WESTERLY LINE OF SAID LOT 3, 412.38 FEET NORTHERLY OF THE SOUTHWESTERLY CORNER OF SAID LOT; THENCE CONTINUING ALONG SAID WESTERLY LINE NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST 126.25 FEET TO THE NORTHWEST CORNER OF SAID LOT 3; THENCE NORTH 89 DEGREES 56 MINUTES 05 SECONDS EAST 446.06 FEET ALONG THE NORTHERLY LINE OF SAID LOT 3 TO A LINE PARALLEL WITH SAID WESTERLY LINE; THENCE SOUTH 0 DEGREES 03 MINUTES 01 SECONDS WEST 247.23 FEET OF THE NORTHERLY LINE OF THE SOUTHERLY 292.31 FEET OF SAID LOT 3; THENCE AT RIGHT ANGLES NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 18.00 FEET; THENCE AT RIGHT ANGLES NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST 120.08 FEET; THENCE AT RIGHT ANGLES NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 232.02 FEET; THENCE SOUTH 45 DEGREES 03 MINUTES 01 SECONDS WEST 25.92 FEET; THENCE NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 90.00 FEET; THENCE NORTH 44 DEGREES 56 MINUTES 59 SECONDS WEST 25.92 FEET; THENCE NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 69.39 FEET TO THE POINT OF BEGINNING.

EXCLUDING PARCEL I DURING THE TERM OF THE LEASE REFERRED TO IN PARAGRAPH 38 OF SCHEDULE B (AND ANY NEW LEASE ENTERED INTO PURSUANT TO SECTION 10.6 OF SAID LEASE).

PARCEL D1 (FOR THE BENEFIT OF PARCEL D ONLY):

A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS CREATED PURSUANT TO GRANT OF EASEMENT RECORDED AUGUST 2, 1965 AS INSTRUMENT NO. 4467 IN THE OFFICIAL RECORDS OVER THAT PORTION OF LOT 1 OF TRACT 22482, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 713 PAGES 32 AND 33 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AND LOCATED AS SHOWN ON THE SURVEY (AS DEFINED HEREIN), DESCRIBED AS FOLLOWS:

BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 1; THENCE ALONG THE SOUTHERLY LINE OF SAME, NORTH 89 DEGREES 55 MINUTES 30 SECONDS EAST, 75.00 FEET; THENCE NORTH 0 DEGREES 04 MINUTES 30 SECONDS WEST, 22.00 FEET; THENCE WESTERLY PARALLEL TO SAID SOUTHERLY LINE SOUTH 89 DEGREES 55 MINUTES 30 SECONDS WEST, 59.92 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 15.00 FEET AND A LENGTH OF 23.39 FEET; THENCE NORTHWESTERLY ALONG SAID CURVE 23.59 FEET TO A POINT IN THE WESTERLY LINE OF SAID LOT THAT IS NORTHERLY, ALONG SAID WESTERLY LINE 37.03 FEET FROM THE SOUTHWESTERLY CORNER OF SAME; THENCE SOUTH 0 DEGREES 02 MINUTES 45 SECONDS WEST, ALONG SAID WESTERLY LINE 37.03 FEET TO THE POINT OF BEGINNING.

SAID LAND IS NOW SHOWN AS A PORTION OF PARCEL B ON PARCEL MAP RECORDED IN BOOK 58 PAGE 23 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

PARCEL E:

THAT PORTION OF LOT 3 OF TRACT 30715, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS RECORDED IN BOOK 790 PAGES 63 AND 64 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE EASTERLY LINE OF SAID LOT 3, 292.31 FEET NORTHERLY

OF THE SOUTHERLY TERMINUS OF SAID EASTERLY LINE; THENCE NORTH 0 DEGREES 03 MINUTES 55 SECONDS WEST 247.62 FEET ALONG SAID EASTERLY LINE TO THE NORTHEAST CORNER OF SAID LOT 3; THENCE SOUTH 89 DEGREES 56 MINUTES 05 SECONDS WEST 195.48 FEET ALONG THE NORTHERLY LINE OF SAID LOT 3 TO A LINE PARALLEL WITH AND DISTANT EASTERLY 446.06 FEET FROM THE WESTERLY LINE OF SAID LOT 3; THENCE SOUTH 0 DEGREES 03 MINUTES 01 SECONDS WEST 247.23 FEET TO THE NORTHERLY LINE OF THE SOUTHERLY 292.31 FEET OF SAID LOT 3; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 195.98 FEET TO THE POINT OF BEGINNING.

PARCEL F:

THAT PORTION OF LOT 3 OF TRACT 30715, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS RECORDED IN BOOK 790 PAGES 63 AND 64 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE WESTERLY LINE OF SAID LOT 3, 412.33 FEET NORTHERLY OF THE SOUTHWESTERLY CORNER OF SAID LOT; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 69.39 FEET; THENCE SOUTH 44 DEGREES 56 MINUTES 59 SECONDS EAST 25.92 FEET; THENCE SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 90.00 FEET; THENCE NORTH 45 DEGREES 03 MINUTES 01 SECONDS EAST 25.92 FEET; THENCE SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 181.00 FEET TO THE TRUE POINT OF BEGINNING; SAID TRUE POINT OF BEGINNING BEING ON A LINE PARALLEL WITH AND DISTANT EASTERLY 377.04 FEET FROM SAID WESTERLY LINE; THENCE SOUTH 0 DEGREES 03 MINUTES 01 SECONDS WEST 107.91 FEET; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 51.02 FEET; THENCE AT RIGHT ANGLES NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST 107.91 FEET; THENCE AT RIGHT ANGLES SOUTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 51.02 FEET TO THE POINT OF BEGINNING.

PARCEL G: (FOR THE BENEFIT OF PARCELS A, B, C, D, E AND F):

AN EXCLUSIVE EASEMENT CREATED PURSUANT TO CORPORATION GRANT DEED, DATED JULY 31, 1985, RECORDED AUGUST 27, 1985 AS INSTRUMENT NO. 85-993699 IN THE OFFICIAL RECORDS, AND LOCATED AS SHOWN ON THE SURVEY (AS DEFINED HEREIN), IN, UPON, ALONG, OVER AND UNDER THE ENTIRE SURFACE OF THE PROPERTY DESCRIBED HEREINAFTER TO CONSTRUCT, RECONSTRUCT, REPLACE, REPAIR, MAINTAIN AND USE STORM DRAINS, UTILITY LINES, DRIVEWAYS, WALKWAYS, PARKING AND TRAFFIC CONTROL FACILITIES, AND OTHER APPURTENANT FACILITIES TOGETHER WITH THE RIGHT OF INGRESS THERETO AND EGRESS THEREFROM IN, UPON, OVER AND ACROSS THE FOLLOWING DESCRIBED PROPERTY, TOGETHER WITH THE RIGHT TO GRANT TO THE CITY OF LOS ANGELES AN EASEMENT TO MAINTAIN TRAFFIC SIGNAL DEVICES AND APPURTENANCES, TO WIT:

THAT PORTION OF PARCEL A OF PARCEL MAP 3689, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 90 PAGES 17 AND 18 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHWESTERN CORNER OF PARCEL A, PARCEL MAP 3689, SAID CORNER BEING THE TRUE POINT OF BEGINNING; THENCE,

1ST: SOUTH 89 DEGREES 56 MINUTES 59 SECONDS EAST 642.62 FEET ALONG THE NORTH BOUNDARY LINE OF SAID PARCEL A, SAID BOUNDARY LINE ALSO BEING THE SOUTHERLY LINE OF LOT 3, OF TRACT 30715, AS MAP FILED IN BOOK 790 PAGES 63 AND 64 IN SAID COUNTY, TO THE SOUTHEAST CORNER OF SAID LOT; THENCE,

2ND: SOUTH 00 DEGREES 03 MINUTES 01 SECONDS WEST 5.00 FEET, THENCE WESTERLY ALONG A LINE PERPENDICULAR TO CANOGA AVENUE,

3RD: NORTH 89 DEGREES 56 MINUTES 59 SECONDS WEST 632.62 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE TO THE SOUTHEAST HAVING A RADIUS OF 20.00 FEET; THENCE,

4TH: SOUTH WEST ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 30 DEGREES 00 MINUTES 00 SECONDS AN ARC DISTANCE OF 10.47 FEET, TO A POINT ON THE EASTERLY RIGHT OF WAY LINE OF CANOGA AVENUE; THENCE,

5TH: NORTH 0 DEGREES 03 MINUTES 01 SECONDS EAST ALONG SAID WESTERLY AVENUE TO THE TRUE POINT OF BEGINNING.

PARCEL H: (FOR THE BENEFIT OF PARCELS A, B, C, D, E & F):

NON-EXCLUSIVE EASEMENTS AS PROVIDED FOR AND UPON THE TERMS AND CONDITIONS CONTAINED IN THE DECLARATION OF COVENANTS, RESTRICTIONS AND EASEMENTS RECORDED JULY 17, 1987 AS INSTRUMENT NO. 87-1141027, OFFICIAL RECORDS, AND THE AMENDMENT THERETO RECORDED DECEMBER 15, 1987 AS INSTRUMENT NO. 87-1984241, OFFICIAL RECORDS AND LOCATED AS SHOWN ON THE SURVEY (AS DEFINED HEREIN) AND AS OTHERWISE DESCRIBED IN SAID DECLARATION FOR THE FOLLOWING PURPOSES: (A) PEDESTRIAN AND VEHICULAR ACCESS, A LOADING DECK AND DRIVE-UP TELLER FACILITIES, FIRE HYDRANTS, UNDERGROUND LINES, CONDUITS, PIPES, CATCH BASINS, AND DEVICES AND APPURTENANCES FOR GAS, WATER, ELECTRICITY, TELEPHONE AND OTHER COMMUNICATIONS, SEWERS AND STORM DRAINS; (B) STORM DRAIN PIPES, CATCH BASINS AND APPURTENANCES; (C) FIRE HYDRANTS AND UNDERGROUND PIPES FOR WATER AND (D) ELEVATOR TOWER SERVING ALL SEVEN LEVELS OF THE GARAGE STRUCTURES ON PARCELS A AND E; AND (E) SUCH OTHER EASEMENTS AS ARE SET FORTH IN SAID DECLARATION.

PARCEL I:

THE BUILDINGS AND IMPROVEMENTS NOW LOCATED ON PARCEL D, ABOVE DESCRIBED, UPON THE EXPIRATION OF EARLIER TERMINATION OF THE GROUND LEASE REFERRED TO IN THE MEMORANDUM OF GROUND LEASE RECORDED IN THE OFFICIAL RECORDS OF LOS ANGELES COUNTY, CALIFORNIA ON JULY 17, 1987 AS INSTRUMENT NO. 87-1141028 AND RESTATED LEASE RECORDED IN SAID OFFICIAL RECORDS ON SEPTEMBER 22, 1994 AS INSTRUMENT NO. 94-1753369 (UNLESS A NEW LEASE IS ENTERED INTO PURSUANT TO SECTION 10.6 OF SUCH GROUND LEASE, IN WHICH EVENT UPON THE EXPIRATION OR EARLIER TERMINATION OF SUCH NEW LEASE.

PARCEL J:

A NON-EXCLUSIVE COMMON EASEMENT FOR THE BENEFIT OF PARCELS A, B, C, D AND E OF SCHEDULE A OF THIS POLICY AS GRANTED IN THAT CERTAIN GRANT OF EASEMENTS RECORDED AUGUST 2, 1965 AS INSTRUMENT NO. 4465 IN BOOK D2999 PAGE 857 OFFICIAL RECORDS, FOR A STORM DRAIN OR PUBLIC AND PRIVATE UTILITIES AND FOR THE MAINTENANCE AND IMPROVEMENT THEREOF.

SCHEDULE 1C

LEGAL DESCRIPTION OF THE

GROUND LEASED PROPERTY

[See attached]

SCHEDULE 1.01(1)

ALLOCATED LOAN AMOUNTS

PROPERTY	ALLOCATED LOAN AMOUNT UPON FUNDING THE INITIAL ADVANCE	ALLOCATED LOAN AMOUNT UPON FUNDING OF THE SUBSEQUENT FUNDING ADVANCE
Projects
Executive Tower	$51,030,000	$77,100,000
Trillium Project	$122,085,000	$184,500,000
1801 Century Park West	$14,962,500	$22,600,000
Cornerstone Plaza	$36,922,500	$55,800,000
Total	$225,000,000	$340,000,000

SCHEDULE 1.01(2)

APPLICABLE LENDING OFFICES

1.           Eurohypo AG, New York Branch:

(a) Lending Office for Base Rate Loans and Eurodollar Loans:

Eurohypo AG, New York Branch

1114 Avenue of the Americas

New York, New York  10036

SCHEDULE 1.01(3)

APPRAISED AMOUNTS

PROPERTY	APPRAISED AMOUNT
Executive Tower	$130,000,000
Trillium Project	$311,000,000
1801 Century Park West	$38,100,000
Cornerstone Plaza	$94,100,000

SCHEDULE 1.01(4)

COMMITMENTS AND PROPORTIONATE SHARES1

LENDER	PROPORTIONATE SHARE	TOTAL COMMITMENT
Eurohypo AG, New York Branch	33.333333333%	$75,000,000
Bayerische Landesbank, New York Branch	33.333333333%	$75,000,000
ING Real Estate Finance (USA) LLC	33.333333333%	$75,000,000
Totals	100%	$225,000,000

 

1 This Schedule 1.01(4) is subject to being replaced by an Amended and Restated Schedule 1.01(4) in accordance with Section 2.11 of this Agreement.

SCHEDULE 1.01(5)

CERTAIN ELIGIBLE ASSIGNEES

1.   Landesbank Hessen-Thüringen Girozentrale

2.   Aareal Bank AG

3.   Massachusetts Mutual Life Insurance Company

4.   General Electric Capital Assurance Company

5.   General Electric Capital Markets Group Inc.

6.   Landesbank Baden-Württemberg

7.   Landesbank Sachsen Girozentrale

8.   Metropolitan Life Insurance Company

9.   MetLife Bank, N.A.

10.   PB Capital

11.   LRP Landesbank Rheinland-Pfalz

12.   Bank of America

13.   Bank of Montreal

14.   Bayerische Landesbank

15.   KeyBank Commercial Real Estate

16.   New York Life Insurance Co.

17.   New York State Teachers Retirement System

18.   Principal Capital Management

19.   Prudential Capital Group

20.   Union Bank REIG

21.   Wells Fargo

22.   Wurttembergische Hypothekenbank Aktiengesellschaft

23.   EssenHyp

24.   Wachovia Bank N.A.

25.   PNC

26.   AHBR (Allgemeine Hypotekenbank Rheinboden)

27.   Barclays Capital Real Estate Inc.

28.   Teachers Insurance and Annuity Association

29.   PB (USA) Realty Corporation

SCHEDULE 1.01(6)

LIST OF ENVIRONMENTAL REPORTS

All of the Phase I Environmental Site Assessment reports were performed by [________] and titled as follows:

[____________________]

Phase I Environmental Site Assessment

1) Executive Tower                                                                           dated  [_______, 2008]

2) Trillium Project                                                                           dated  [_______, 2008]

3) 1801 Century Park West                                                                                     dated  [_______, 2008]

4) Cornerstone Plaza                                                                           dated  [_______, 2008]

SCHEDULE 1.01(7)

LIST OF PROPERTY CONDITION REPORTS

All Property Condition Assessment reports were prepared by:  [_____________]

1) Executive Tower                                                                           dated  [_______, 2008]

2) Trillium Project                                                                           dated  [_______, 2008]

3) 1801 Century Park West                                                                                     dated  [_______, 2008]

4) Cornerstone Plaza                                                                           dated  [_______, 2008]

SCHEDULE 1.01(8)

LIST OF PROPERTY MANAGEMENT AGREEMENTS

1. Property Management Agreement for 11400 Olympic Boulevard (Executive Tower), dated October 30, 2006, by and between Douglas Emmett 1995, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent.

2. Property Management Agreement for 6300-6336 Canoga Avenue (Trillium Project), dated October 30, 2006, by and between Douglas Emmett Realty Fund 2002, as Owner, and Douglas Emmett Management, LLC , as Agent.

3. Property Management Agreement for 1801 Century Park West, dated May 11, 2007, by and between Douglas Emmett 2007, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent.

4. Property Management Agreement for 1990 S. Bundy Drive (Cornerstone Plaza), dated October 31, 2007, by and between Douglas Emmett 2007, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent.

SCHEDULE 1.01(9)

TITLE COMPANIES

Company	Primary Liability	Secondary Liability	Total
Chicago Title Insurance Company	$17,000,000	$158,000,000	$175,000,000
Fidelity National Title Insurance Company	$0	$165,000,000	$165,000,000
TOTAL	$17,000,000	$323,000,000	$340,000,000.00

SCHEDULE 1.01(10)

GROUND LEASE

SCHEDULE 7.04

FINANCIAL CONDITION EVENTS

SCHEDULE 7.05

PENDING LITIGATION

Served/Filed	Caption	Nature of Action	Building	Status
Covered by Liability Insurance:

SCHEDULE 7.09

ENVIRONMENTAL MATTERS

Matters listed on Schedule 8.11.

SCHEDULE 7.11

SUBSIDIARIES

SUBSIDIARIES OF 1995 LLC MEMBER:

Douglas Emmett 1995, LLC

SUBSIDIARIES OF BORROWER:

Subsidiaries of 1995 LLC Borrower:

None.

Subsidiaries of LP Borrower:

Douglas Emmett 2002, LLC

DEG, LLC

Subsidiaries of 2007 LLC Borrower:

None.

SCHEDULE 7.22

RENT ROLL

[See Attached]

SCHEDULE 8.11

LIST OF UNDERGROUND STORAGE TANKS

SCHEDULE 8.21

REQUIRED WORK

SCHEDULE 9.02

EXISTING LIENS

SCHEDULE 9.04

EXISTING INDEBTEDNESS

SCHEDULE 9.12

OTHER EXISTING NON-CONFORMING USES

EXHIBIT A

[Form of Assignment and Assumption]

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement identified below (as amended, the “Loan Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Loan Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Loan Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Loan Agreement, any other documents or instruments delivered pursuant thereto or the Loan Transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.           Assignor:                                ______________________________

2. Assignee: ______________________________

[and is an Affiliate of [identify Lender]2]

3.          Borrower: Douglas Emmett 2007, LLC, a Delaware limited liability company, Douglas Emmett Realty Fund 2002, a California limited partnership, and Douglas Emmett 1995, LLC, a Delaware limited liability company

4. Administrative Agent: Eurohypo AG, New York Branch, as the administrative agent under the Loan Agreement

5.Loan Agreement: The $350,000,000 Loan Agreement dated as of ______ __, 2008 among Douglas Emmett 2007, LLC, a Delaware limited liability company, Douglas Emmett Realty Fund 2002, a California limited partnership, and Douglas Emmett 1995, LLC, a Delaware limited liability company, the Lenders parties thereto, and Eurohypo AG, New York Branch, as Administrative Agent

 

2 Select as applicable.

--

6. Assigned Interest:

Aggregate Amount of Assignor’s Outstanding Loan	Amount of Loan Assigned	Proportionate Share Assigned 3
$	$	%

Effective Date:   _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:______________________________

     Name:

     Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:______________________________

     Name:

     Title:

Applicable Lending Office

Address for Notices:

Telephone No.:                                (   )

Telecopier No.:                                (   )

 

3Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

--

[Consented to and]4 Accepted:

EUROHYPO AG, NEW YORK BRANCH,

as Administrative Agent

By___________________________

    Name:

    Title:

By:_________________________

     Name:

     Title:

[Consented to:]5

Douglas Emmett 2007, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Douglas Emmett 1995, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

[Signatures continue on next page]

 

4 To be added only if the consent of the Administrative Agent is required by the terms of the Loan Agreement.

 

5 To be added only if the consent of the Borrower is required by the terms of the Loan Agreement.

--

Douglas Emmett Realty Fund 2002, a California

limited partnership

By:           Douglas Emmett Management, LLC,

a Delaware limited liability company,

its General Partner

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.  Representations and Warranties.

1.1   Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the Transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Loan Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the Transactions contemplated hereby and to become a Lender under the Loan Agreement, (ii) it satisfies the requirements, if any, specified in the Loan Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Loan Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Loan Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, (v) it satisfies the requirements of an Eligible Assignee as defined in the Loan Agreement, and (vi) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Loan Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2.   Payments.    From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3.  General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

EXHIBIT B

[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]

NOTE

 _______ __, 2008

 Los Angeles, California

FOR VALUE RECEIVED, Douglas Emmett 2007, LLC, a Delaware limited liability company, Douglas Emmett Realty Fund 2002, a California limited partnership, and Douglas Emmett 1995, LLC, a Delaware limited liability company (individually and collectively, jointly and severally, the “Company”), hereby promises to pay to the order of __________________ (the “Lender”), for account of its respective Applicable Lending Office provided for by the Loan Agreement referred to below, at the principal office of Eurohypo AG, New York Branch, at 1114 Avenue of the Americas, New York, New York 10036, the principal sum of _______________ Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Lender to the Company under the Loan Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Loan Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates and on the dates provided in the Loan Agreement.

This Note is one of the Notes referred to in the Loan Agreement dated as of ________ __, 2008 (as Modified and in effect from time to time, the “Loan Agreement”) among the Company, the lenders party thereto (including the Lender) and Eurohypo AG, New York Branch, as Administrative Agent, evidences a Loan made by the Lender thereunder and is secured by the Deeds of Trust.  Terms used but not defined in this Note have the respective meanings assigned to them in the Loan Agreement.

The Loan Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of the Loan upon the terms and conditions specified therein.  The Company may prepay this Note in whole or in part subject to and in accordance with the terms set forth in the Loan Agreement.

Should the indebtedness represented by this Note or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any other court proceeding (whether at the trial or appellate level), or should this Note be placed in the hands of attorneys for collection upon default, the Company agrees to pay, in addition to the principal, interest and other sums due and payable hereon, all costs of collecting or attempting to collect this Note, including attorneys’ fees and disbursements.

All parties to this Note, whether principal, surety, guarantor or endorser, hereby waive presentment for payment, demand, protest, notice of protest and notice of dishonor.

The sale, assignment, transfer or pledge of this Note by the Lender to any other Person is subject to the restrictions set forth in Section 14.07 of the Loan Agreement.

This Note shall be governed by, and construed in accordance with, the laws of the State of California.

The liability of the Company and certain other parties for the Company’s obligations hereunder is subject to the limitation on liability provisions of Section 14.23(a) of the Loan Agreement.

Douglas Emmett 2007, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Douglas Emmett 1995, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

[Signatures continue on next page]

- 3 -

Douglas Emmett Realty Fund 2002, a California

limited partnership

By:           Douglas Emmett Management, LLC,

a Delaware limited liability company,

its General Partner

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

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

[Form of Notice of Conversion or Continuation]

_________ __, 200_

Eurohypo AG, New York Branch, as Administrative Agent

for the Lenders party to the Loan Agreement

referred to below

1114 Avenue of the Americas

New York, NY 10036

Attn:

Ladies and Gentlemen:

Reference is made to that certain Loan Agreement dated as of ________ __, 2008 (as Modified and in effect from time to time, the “Loan Agreement”) by and among the undersigned, Eurohypo AG, New York Branch, as Administrative Agent, and the Lenders party thereto.  Terms used but not defined in this Interest Election Request have the respective meanings assigned to such terms in the Loan Agreement.

Pursuant to Section 4.05 of the Loan Agreement, the undersigned notifies you that it hereby elects to Continue or Convert Loans as follows:

1. Effective Date of Election: _________ __, 200_

2. Amount, Type and Interest Period of Eurodollar Loans to be Continued as Eurodollar Loans:

 Eurodollar Loans in the aggregate amount of $____________ to be Continued as Eurodollar Loans with an Interest Period of ___ months

3. Amount, Type and Interest Period of Base Rate Loans to be Converted to Eurodollar Loans:

 Base Rate Loans in the aggregate amount of $____________ to be Converted to Eurodollar Loans with an Interest Period of ___ months

4. Amount and Type of Eurodollar Loans to be Converted to Base Rate Loans:

 Eurodollar Loans in the aggregate amount of $____________ to be Converted to Base Rate Loans

You are hereby irrevocably instructed to continue and/or convert such Loans in accordance with the foregoing instructions.

The undersigned hereby certifies that no Default exists.

Douglas Emmett 2007, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Douglas Emmett 1995, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Douglas Emmett Realty Fund 2002, a California

limited partnership

By:           Douglas Emmett Management, LLC,

a Delaware limited liability company,

its General Partner

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

EXHIBIT M

SURVEY REQUIREMENTS

Eurohypo must obtain an acceptable as-built survey (the “Survey”) meeting the requirements set forth below accompanied by a certificate in the form prescribed by Eurohypo from time to time.

A.   As-Built Survey. The Survey shall satisfy the following requirements:

1.   The Survey for the property shall be prepared by a land surveyor licensed to practice surveying in the jurisdiction where the property is located and done pursuant to the 2005 ALTA/ACSM Minimum Standard Detail Requirements for Land Title Surveys (the “ACSM Standards”) including items 2, 3, 4, 6, 7(a), 7(b)(1), 8, 9, 10, 11(a) (as to utilities, surface matters only), 13 and 16 of Table A thereof.  In certain cases, other Table A items may be required.

2.   The Survey shall be dated no more than thirty (30) days prior to closing, must be certified to Eurohypo AG, New York Branch, as the Administrative Agent for the Lenders party to the Loan Agreement with the Borrower (the “Administrative Agent”) and to the Lenders, and to their respective successors and/or assigns, must contain the certification set forth in the ACSM Standards, and must be signed and sealed by the surveyor.  A copy of the certification contained in the ACSM Standards is set forth below.

3.   The Survey shall also be certified to the title insurance company insuring title in the transaction, shall be satisfactory to the title insurance company, shall refer to the title insurance commitment by number and effective date, and shall list every recorded exception appearing in the title insurance commitment, with a note stating whether the exception affects the property, and if so whether the exception is plottable.  If the exception is plottable, it must be plotted on the Survey.  Any appurtenant easement that is plottable must also be plotted on the Survey.

4.   Where the loan is a construction loan, the proposed locations of all improvements shown on the site plan shall be plotted on the Survey, and identified as proposed improvements; and the Survey shall indicate the locations of all necessary utility lines and the distances from the property to the proposed connections to distribution lines.

5.   The Survey shall contain a note concerning the flood zone designation of the property in substantially the following form:  “Said described property is located within an area having a Zone Designation _______________ by the Secretary of Housing and Urban Development, on Flood Insurance Rate Map No. ____________, with a date of identification of __________, for Community Number __________, in ___________ County, State of ___________, which is the current Flood Insurance Rate Map for the community in which said property is situated.”

6.   All set back, side yard and rear yard lines shown on the recorded plat or set forth in the applicable zoning ordinance shall be drawn on the Survey, and identified by recording number or zoning ordinance, as the case may be.

7.   The number of regular and handicap parking spaces located on the property shall be stated on the Survey, and all parking spaces shall be drawn on the Survey to the extent possible.

B.   SURVEY CERTIFICATION REQUIREMENTS.  The Survey shall be prepared by a land surveyor licensed to practice surveying in the jurisdiction where the Mortgaged Property is located, shall be dated no more than thirty (30) days prior to the Closing Date and shall contain the following certification:

To Eurohypo AG, New York Branch, as the Administrative Agent for the Lenders party to the Loan Agreement with ___________ (the Borrower) (the “Administrative Agent”) and to such Lenders, and to their respective successors and/or assigns, (name of title insurance company), (name of others as instructed by client):

This is to certify that this map or plat and the survey on which it is based were made in accordance with “Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys,” jointly established and adopted by ALTA and NSPS in 2005, and includes items 2, 3, 4, 6, 7(a), 7(b)(1), 8, 9, 10, 11(a) (as to utilities, surface matters only), 13 and 16 of Table A thereof.  Pursuant to the Accuracy Standards as adopted by ALTA and NSPS and in effect on the date of this certification, undersigned further certifies that in my professional opinion, as a land surveyor registered in the State of _____________, (a) the Relative Positional Accuracy of this survey does not exceed that which is specified therein; (b) the information shown on the Survey is correct as of the last revision date; (c) the property description included in the Survey (the “Land”) is identical to the property description attached to the Title Company's Commitment dated ___________________ (Order No. _______________) (the “Title Commitment”) and the Survey is a correct representation of the property; (d) the Survey correctly shows the size and location of all buildings, structures, and visible improvements, if any; (e) all visible indications of and recorded rights of way, easements, set-backs and other significant matters of a similar nature of which the Surveyor has been advised or is aware, including, without limitation, those matters shown on the Title Commitment, whether burdening or benefiting the Land, have been correctly plotted and identified on the Survey, and there are no visible indications of or recorded rights of way, easements, set-backs, discrepancies, conflicts, encroachments on or off the Land, or overlapping of visible improvements except as shown on the Survey; (f) all evidence showing use of the Land by occupants other than the Owner or lessees specifically identified in the Title Commitment is noted on the Survey; (g) all streets or roads adjoining the Land are shown, and the Land has access to and from [name of road(s)], which is(are) a paved, public roadway(s), currently in use as such and maintained by [name of maintaining authority], as shown on the Survey; (h) if the Land is composed of several parcels, all interior lines, calls and distances are correctly set forth on the Survey and there are no gaps or unclosed interior lines; and (i) all visible and recorded evidence of easements or rights of way benefiting the Land or across adjoining land are indicated on the Survey.

Date: _______________

(signed)_______________________(seal)

 Registration No.

**

Date:_______________

(signed)_______________________(seal)

 Registration No.

EXHIBIT N

[FORM OF LEASE INFORMATION SUMMARY]

LEASE INFORMATION TO BE FURNISHED AND

CERTIFIED TO BY THE BORROWER

Note:  If any item listed below is not referred to in the Lease, please indicate by using the symbol “NR”; items which are not under any circumstances applicable should be designated by the symbol “NA”.  If the Lease is the Borrower’s standard form, this abstract should so indicate, and only the items proper to the Lease under consideration and any deviations from the standard form need be referred to.

Borrower:

Premises:                      ___________________

___________________

Standard Form Lease:  Yes ____  No ____

Type of Lease:                                  Office ____  Retail ____

Date:

Article, Page

or Section:

________

Tenant:

________                      1.           Trade Name:

________                      2.           Date of Lease:

________                      3.           Premises:

________                                a.           Location:

________                                b.           Area (sq. ft.):

4.           Term:

________                                a.           Basic:

________                                b.           Renewals:

5.           Rent:

________                                a.           Minimum Annual Rent:

________                                           1.           Original Term:

________                                           2.           Renewal Term:

________ b. Percentage Rent:  (Gross Receipts X Rate-Base)

________                                           1.           Rate:

________                                           2.           Base:

________                                c.           Tax escalation:

________                                d.           Applicable Operating Expense Escalation:

________                      6.           Allowances by Landlord:

________                                a.           Construction Work Letter:

________                                b.           Other:

________                      7.           Permitted Use:

________                      8.           Conditions Precedent to Lease Commencement:

________                                a.           Key Tenant Requirements:

________                                b.           Completion of Tenant Improvements:

________                                c.           Other:

9.           Construction:

________                                a.           Scope of Landlord’s Work:

________                                b.           Period for Completion of Landlord’s Work:

________                                c.           Scope of Tenant’s Work:

________                                d.           Period for Completion of Tenant’s Work:

10.           Rent Abatement or Concessions:

11.           Rent Setoff:

12.           Tenant’s Cancellation Rights:

________                                a.           Condemnation:

________                                           _________% of leased premises:

________                                           _________% of common area:

________                                           Other:

________                                b.           Casualty, whether or not restored.

________ c. Destruction ______% of leased premises during last ________ years of _______ term.

________                                d.           Other:

________                      13.           Subordination:

________                                a.           Subordination provided:

________                                b.           Conditioned on Non-Disturbance:

________                                c.           Attornment:

________                      14.           Options:

________                                a.           Additional Space:

________                                b.           Purchase:

________                      15.           Exclusivity Rights or Other Restrictions on Landlord:

CERTIFICATE

The undersigned (“Borrower”) hereby certifies that the foregoing information is true and correct, that tenant’s use of the leased premises in accordance with its lease will not violate use restrictions contained in any other leases affecting the Premises and that the use by tenants of their premises in accordance with their respective leases does not violate use restrictions contained in this lease.  This Certificate is made with the intent that it be relied upon by Eurohypo AG, New York Branch, as administrative agent, and the Lenders that are party to that certain Loan Agreement, dated __________, 2008 among Eurohypo AG, New York Branch, as Administrative Agent, certain Lenders thereto and the Borrower.

[Douglas Emmett 2007, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer]

[Douglas Emmett 1995, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer]

[Douglas Emmett Realty Fund 2002, a California

limited partnership

By:           Douglas Emmett Management, LLC,

a Delaware limited liability company,

its General Partner

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer]

EXHIBIT O

[Form of Controlled Account Agreement]

EXHIBIT P

Form of Subsequent Funding Advance Notice

_________ __, 200_

Eurohypo AG, New York Branch, as Administrative Agent

for the Lenders party to the Loan Agreement

referred to below

1114 Avenue of the Americas

New York, NY 10036

Attn:

Ladies and Gentlemen:

Reference is made to that certain Loan Agreement dated as of [________], 2008, as Modified and in effect from time to time, (the “Loan Agreement”) by and among, inter alia, the undersigned, Eurohypo AG, New York Branch, as Administrative Agent, and the Lenders party thereto.  Terms used but not defined in this Subsequent Funding Advance Notice have the respective meanings assigned to such terms in the Subsequent Funding Loan Agreement.

This Subsequent Funding Advance Notice constitutes Borrower’s request to borrow Loans in the amounts and in the manner set forth below and is otherwise subject to the terms of the Loan Agreement.  The information relating to the proposed Loans is as follows:

1.   The funding date of the proposed Loans is ___________ __, ____.  The Loans constitute Subsequent Funding Advances.

2.   The aggregate amount of the proposed

Loans to be funded pursuant to this Subsequent Funding Advance Notice is$_________.

3.   The aggregate amount of the proposed

Loans to be funded pursuant to this Subsequent Funding Advance Notice which are to bear interest as Base Rate Loans is

$__________.

4.   The aggregate amount of the proposed

Loans to be funded pursuant to this Subsequent Funding Advance Notice which are to bear interest  as Eurodollar Loans is

$__________.

5.   The Interest Periods and the aggregate amounts of the proposed Eurodollar Loans with respect to each such Interest Period are as follows:

- 1 month                                                      $__________.

- 2 month                                                      $__________.

- 3 month                                                      $__________.

- 6 month                                                      $__________.

- 12 month (if available)                                                                $__________.

The undersigned hereby represent as follows:

(1)Representations and Warranties.  All representations and warranties of the Borrower contained in the Loan Documents are true and correct as of the date hereof and shall be true and correct on the date of the making of the Loans requested herein, both before and after giving effect to the making of such Loans.

(2)No Event of Default.  No Default or Event of Default exists as of the date hereof or will result from the making of the Loans.

(3)Conditions Satisfied.  All conditions to the making of the Loans set forth in the Loan Agreement are satisfied.

IN WITNESS WHEREOF, the undersigned have executed this Subsequent Funding Advance Notice as of the date set forth above.

BORROWER:

Douglas Emmett 2007, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Douglas Emmett 1995, LLC,

a Delaware limited liability company

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Douglas Emmett Realty Fund 2002, a California

limited partnership

By:           Douglas Emmett Management, LLC,

a Delaware limited liability company,

its General Partner

By:           Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

EXHIBIT Q

Form of Contribution Agreement

EXHIBIT R

Form of Joinder

This JOINDER AGREEMENT (this “Agreement”) is dated as of ___________ ___, 2008, and is made with reference to that certain Loan Agreement dated as of _________ ___, 2008 (as Modified from time to time, the “Loan Agreement”) by and among Douglas Emmett 2007, LLC, a Delaware limited liability company, Douglas Emmett 1995, LLC, a Delaware limited liability company, and Douglas Emmett Realty Fund 2002, a California Limited Partnership (individually and collectively, jointly and severally, the “Borrower”), the lenders from time to time party thereto (the “Lenders”) and Eurohypo AG, New York Branch, as administrative agent for the Lenders (together with its successors and assigns, the “Administrative Agent”).  Capitalized terms used herein and not otherwise defined have the meanings ascribed to such terms in the Loan Agreement.

The undersigned (the “New Lender”) hereby agrees to make a Loan to the Borrower up to the maximum the amount of the Commitment set forth opposite the New Lender’s name on the signature page hereof.  The Proportionate Share of the New Lender (after adjusting the Proportionate Shares of the other Lenders as a result of New Lender’s Commitment made hereunder) is set forth opposite the New Lender’s name on the signature page hereof.  The New Lender hereby acknowledges and confirms that it has received copies of the Loan Documents.  The New Lender represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Loan Agreement, (ii) from and after the date hereof, it shall be bound by the provisions of the Loan Agreement as a Lender thereunder and, to the extent of its Commitment, shall have the obligations of a Lender thereunder, and (iii) if it is a Foreign Lender, attached to this Agreement is any documentation required to be delivered by it pursuant to the terms of the Loan Agreement, duly completed and executed by it.

Except as otherwise provided in the Loan Agreement, effective as of the date of acceptance hereof by the Administrative Agent, the New Lender:

(i)shall be deemed automatically to have become a party to the Loan Agreement and have all the rights and obligations of a “Lender” under the Loan Agreement and the other Loan Documents as if it were an original signatory thereto; and

(ii)it is an Eligible Assignee and otherwise agrees to be bound by the terms and conditions set forth in the Loan Agreement and the other Loan Documents as if it were an original signatory thereto.

This Agreement shall be binding upon, and inure to the benefit of, the New Lender, the Lenders, the Borrower and the Administrative Agent and their respective successors and permitted assigns.  This Agreement may be executed in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery by a manually executed counterpart of this Agreement.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date first written above.

[NEW LENDER]

Amount of Commitment:  $____________ By:___________________________

Proportionate Share:  ________%        Name:  ______________________

       Title:  _______________________

Accepted and acknowledged

this ____ day of _______, 200_:

ADMINISTRATIVE AGENT:

EUROHYPO AG, NEW YORK BRANCH,

as Administrative Agent

By:  _______________________________

Name:  _________________________

Title:  __________________________

By:  _______________________________

Name:  _________________________

Title:  __________________________

EX-10.3

LOAN AGREEMENT

between

DOUGLAS EMMETT 2008, LLC,

as Borrower

THE LENDERS PARTY HERETO,

as Lenders

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Administrative Agent

Dated as of March 26, 2008

LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”) is entered into as of March 26, 2008 among DOUGLAS EMMETT 2008, LLC, a Delaware limited liability company (“Borrower”); each of the lenders that is a signatory hereto identified under the caption “LENDERS” on the signature pages hereof and each lender that becomes a “Lender” after the date hereof pursuant to Section 12.24(2) (individually, a “Lender” and, collectively, the “Lenders”); and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”).

ARTICLE 1

CERTAIN DEFINITIONS

Section 1.1                                Certain Definitions

.  As used herein, the following terms have the meanings indicated:

(1)           “Additional Costs” has the meaning assigned in Section 2.7(1)(a).

(2)           “Adjusted Libor Rate” means, for any Interest Period for any Eurodollar Loan, a rate per annum (rounded upwards, if necessary, to the nearest 1/10,000 of 1%) determined by the Administrative Agent to be equal to the Libor Base Rate for such Interest Period divided by 1 minus the Reserve Requirement (if any) for such Eurodollar Loan for such Interest Period.

(3)           “Advance Date” has the meaning assigned in Section 2.6(3).

(4)           “Affiliate” means, as to any Person, (a) any corporation in which such Person or any partner, shareholder, director, officer, member, or manager of such Person, at any level, directly or indirectly owns or controls more than ten percent (10%) of the beneficial interest, (b) any partnership, joint venture or limited liability company in which such Person or any partner, shareholder, director, officer, member, or manager of such Person, at any level, is a partner, joint venturer or member, (c) any trust in which such Person or any partner, shareholder, director, officer, member or manager of such Person, at any level, or any individual related by birth, adoption or marriage to such Person, is a trustee or beneficiary, (d) any entity of any type which is directly or indirectly owned or controlled by (or is under common control with) such Person or any partner, shareholder, director, officer, member or manager of such Person, at any level, (e) any partner, shareholder, director, officer, member, manager or employee of such Person, or (f) any individual related by birth, adoption or marriage to any partner, shareholder, director, officer, member, manager, or employee of such Person.  Each Borrower Party shall be deemed to be an Affiliate of Borrower for purposes of this Agreement.

(5)           “Agreement” means this Loan Agreement, as amended from time to time.

(6)           “Allocated Loan Amount” means, for any Project, the portion of the Loans allocated to such Project in Exhibit B attached hereto solely for the purposes of performing certain calculations hereunder; provided, however, that in the case of either a condemnation or a fire or other casualty where the Administrative Agent is not required to, and does not, make the insurance or condemnation proceeds available to the Borrower to complete the restoration of the same and where, in either case, the insurance or condemnation proceeds received by the Administrative Agent and applied to repay the principal of the Loans are less than the Allocated Loan Amount for the Project in question, each Allocated Loan Amount for each remaining Project (exclusive of the Project in question) shall be increased by an amount equal to the product of (a) the difference between the applicable Allocated Loan Amount for the Project in question and the insurance or condemnation proceeds so applied to repay the principal of the Loans and (b) a fraction, the numerator of which is the applicable Allocated Loan Amount (prior to the adjustment in question) for such remaining Projects and the denominator of which is the Allocated Loan Amounts (prior to such adjustment) for all such Remaining Projects.

(7)           “Alternate Base Rate” means, for any day, a rate per annum equal to the Prime Rate in effect for such day.

(8)           “Alternate Base Rate Loans” means Loans that bear interest at rates based upon the Alternate Base Rate.

(9)           “Anti-Money Laundering Laws” means those laws, regulations and sanctions, state and federal, criminal and civil, that (a) limit the use of and/or seek the forfeiture of proceeds from illegal transactions; (b) limit commercial transactions with designated countries or individuals believed to be terrorists, narcotics dealers or otherwise engaged in activities contrary to the interests of the United States; (c) require identification and documentation of the parties with whom a Financial Institution conducts business; or (d) are designed to disrupt the flow of funds to terrorist organizations.  Such laws, regulations and sanctions shall be deemed to include the Patriot Act, the Bank Secrecy Act , the Trading with the Enemy Act, 50 U.S.C. App. Section 1 et seq., the International Emergency Economic Powers Act, 50 U.S.C. Section 1701 et seq., and the sanction regulations promulgated pursuant thereto by the OFAC, as well as laws relating to prevention and detection of money laundering in 18 U.S.C. Sections 1956 and 1957.

(10)           “Applicable Lending Office” means, 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 the respective signature pages hereof 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 Borrower as the office by which its Loans of such Type are to be made and maintained.

(11)           “Assignment and Acceptance” means an Assignment and Acceptance, duly executed by the parties thereto, in substantially the form of Exhibit D hereto and consented to by the Administrative Agent in accordance with Section 12.24(2).

(12)           “Assignment of Rents and Leases” means each Assignment of Rents and Leases, executed by Borrower for the benefit of the Administrative Agent (on behalf of the Lenders), and pertaining to leases of space in a Project, as the same may be modified or amended from time to time.

(13)           “Bankruptcy Party” has the meaning assigned in Section 10.8.

(14)           “Bank Secrecy Act” means the Bank Secrecy Act, 31 U.S.C. Sections 5311 et seq.

(15)           “Basle Accord” means the proposals for risk-based capital framework described by the Basle Committee on Banking Regulations and Supervisory Practices in its paper entitled “International Convergence of Capital Measurement and Capital Standards” dated July 1988, as amended, modified and supplemented and in effect from time to time or any replacement thereof.

(16)           “Borrower Party” shall mean the Borrower and Borrower’s Manager but shall not include the Operating Partnership or the REIT (regardless of whether the Operating Partnership or the REIT is the member, general partner or manager of the Borrower).  Upon the acquisition of the Projects, but not of direct or indirect ownership interests in  Borrower, by a Controlled Subsidiary, “Borrower Party” shall also mean and include any such Controlled Subsidiary and the general partner or manager thereof (except that if the general partner or manager of such Fund is the REIT or the Operating Partnership, the term “Borrower Party” shall not include the REIT or the Operating Partnership) and, unless the Borrower, the Borrower’s Manager or any other Person constitutes the general partner or manager of such Controlled Subsidiary , shall no longer include the applicable Borrower, the Borrower’s Manager or such other applicable Person (and in any event shall not include any such Person that is not the general partner or manager of such Controlled Subsidiary).

(17)           “Borrower’s Manager” shall mean Douglas Emmett Management, Inc., a Delaware corporation, or any successor thereto in such capacity permitted by this Agreement.

(18)           “Borrower’s Member” means Douglas Emmett Properties, LP, a Delaware limited partnership.

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

(20)           Reserved.

(21)           “Closing Date” means the date on which Lenders make the  advance of Loan proceeds, which shall be the date of this Agreement.

(22)           “Collateral” means Borrower’s interest in the Projects and all other “Mortgaged Property” described in the applicable Mortgages, and any other property that at any time secures the Loan or any portion thereof.

(23)           “Commitment” means, as to each Lender, the obligation of such Lender to make a Loan in the principal amount equal  to but not exceeding the amount set opposite the name of such Lender on Schedule 1 under the caption “Commitment” or, in the case of a Person that becomes a Lender pursuant to an assignment permitted under Section 12.24(2), as specified in the respective instrument of assignment pursuant to which such assignment is effected.  The original aggregate principal amount of the Commitments is $380,000,000.

(24)           “Continue” “Continuation” and “Continued” refer to the continuation pursuant to Section 2.2 of a Eurodollar Loan from one Interest Period to the next Interest Period for such Loan.

(25)           “Contract Rate” has the meaning assigned in Article 2.

(26)           “Control” means that a Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract or otherwise.

(27)           “Controlled Subsidiary” means an entity that the Operating Partnership, directly or indirectly, (i) manages and Controls, and (ii) owns at least ten percent (10%) of the equity interests.

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

(29)           “Debt” means, for any Person, without duplication:  (a) all indebtedness of such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase price of property for which such Person or any of its assets is liable, (b) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which such Person or any of its assets would be liable or subject, if such amounts were advanced under the credit facility, (c) all amounts required to be paid by such Person as a guaranteed payment to partners, members, shareholders or other equity holders, or a preferred or special dividend, including any mandatory redemption of shares or interests, (d) all indebtedness guaranteed by such Person, directly or indirectly, (e) all obligations under leases that constitute capital leases for which such Person or any of its assets is liable or subject, and (f) all obligations of such Person under interest rate swaps, caps, floors, collars and other interest hedge agreements, in each case whether such Person or any of its assets is liable or subject, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person otherwise assures a creditor against loss.

(30)           “Debt Service” means the aggregate interest, monthly principal (if any), and other scheduled payments due under the Loans for the period of time for which calculated.

(31)           Reserved.

(32)           “Default Rate” means the lesser of (a) the maximum rate of interest allowed by applicable law, and (b) five percent (5%) per annum in excess of (i) with respect to Alternate Base Rate Loans required to be maintained pursuant to Sections 2.8(2) or 2.8(3) of this Agreement, the Alternate Base Rate as in effect from time to time or (ii) with respect to Eurodollar Loans, the respective Contract Rate for such Eurodollar Loan.

(33)           “Dollars” and “$” means lawful money of the United States of America.

(34)           “Environmental Indemnity” means that certain Hazardous Materials Indemnity Agreement dated concurrently herewith by Borrower in favor of Administrative Agent for the Lenders.

(35)           “Environmental Laws” means any federal, state or local law (whether imposed by statute, ordinance, rule, regulation, administrative or judicial order, or common law), now or hereafter enacted, governing health, safety, industrial hygiene, the environment or natural resources, or Hazardous Materials, including, without limitation, such laws governing or regulating (a) the use, generation, storage, removal, recovery, treatment, handling, transport, disposal, control, release, discharge of, or exposure to, Hazardous Materials, (b) the transfer of property upon a negative declaration or other approval of a governmental authority of the environmental condition of such property, or (c) requiring notification or disclosure of releases of Hazardous Materials or other environmental conditions whether or not in connection with a transfer of title to or interest in property.

(36)           “ERISA” has the meaning assigned in the Section 6.8(1).

(37)           “Eurodollar Loans” means Loans that bear interest at rates based on rates referred to in the definition of “Libor Base Rate”.

(38)           “Event of Default” has the meaning assigned in Article 10.

(39)           “Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if such rate is not so published for any Business Day, the Federal Funds Rate for such Business Day shall be the average rate charged to Bankers Trust Company on such Business Day on such transactions as determined by the Administrative Agent, or such other commercial bank as selected by the Administrative Agent.

(40)           “Financial Institution” means a United States Financial Institution as defined in 31 U.S.C. 5312, as periodically amended.

(41)           “Fund” means a real estate investment fund that is a Controlled Subsidiary.

(42)           “GECC” means General Electric Capital Corporation.

(43)           “Hazardous Materials” means (a) petroleum or chemical products, whether in liquid, solid, or gaseous form, or any fraction or by-product thereof, (b) asbestos or asbestos-containing materials, (c) polychlorinated biphenyls (pcbs), (d) radon gas, (e) underground storage tanks, (f) any explosive or radioactive substances, (g) lead or lead-based paint, or (h) any other substance, material, waste or mixture which is or shall be listed, defined, or otherwise determined by any governmental authority to be hazardous, toxic, dangerous or otherwise regulated, controlled or giving rise to liability under any Environmental Laws.

(44)           “Improvements” has the meaning assigned in the Mortgage.

(45)           “Indebtedness” has the meaning assigned in the Mortgage.

(46)           “Interest Period” means, for any Eurodollar Loan, each period commencing on the date such Eurodollar Loan is made or Converted from a Loan of another Type or (in the event of a Continuation) the day immediately following the last day of the preceding Interest Period for such Loan, and ending on (but not including) the first Business Day of the next calendar month.  In no event may Borrower have more than one Interest Period in respect of Eurodollar Loans from all Lenders outstanding at any one time.  Notwithstanding the foregoing, the first Interest Period shall be the Stub Interest Period.

(47)           “Libor Base Rate” means, for any Interest Period, the British Bankers Association LIBOR Rate (rounded upward, if necessary, to the nearest 1/10,000th of one percent) listed on Reuters Screen LIBOR01 Page at approximately 11:00 a.m. London time on the date two Business Days prior to the first day of such Interest Period as the rate for the offering of Dollar deposits having a one month or 30 day Interest Period, provided that if such rate does not appear on such page, or if such page shall cease to be publicly available, or if the information contained on such page, in the reasonable judgment of the Administrative Agent shall cease accurately to reflect the rate offered by leading banks in the London interbank market as reported by any publicly available source of similar market data selected by the Administrative Agent, the Libor Base Rate for such Interest Period shall be determined from such substitute financial reporting service as the Administrative Agent in its reasonable discretion shall determine.

(48)           “Licenses” has the meaning assigned in Section 6.20.

(49)           “Lien” means any interest, or claim thereof, in the Collateral securing an obligation owed to, or a claim by, any Person other than the owner of the Collateral, whether such interest is based on common law, statute or contract, including the lien or security interest arising from a deed of trust, mortgage, assignment, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes.  The term “Lien” shall include reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting the Collateral.

(50)           “Loans” means the loans to be made by the Lenders to Borrower under this Agreement and all other amounts evidenced or secured by the Loan Documents.

(51)           “Loan Documents” means: (a) this Agreement, (b) the Notes, (c) the Mortgage, (d) the Assignment of Rents and Leases, (e) the Environmental Indemnity Agreement, (f) the Subordination of Management Agreement, (g) Uniform Commercial Code financing statements, (h) such assignments of management agreements, contracts and other rights as may be required under the Commitment or otherwise requested by the Administrative Agent, (i) all other documents executed and delivered by Borrower or any other Borrower Party in accordance with this Agreement evidencing, securing, governing or otherwise pertaining to the Loans, and (j) all amendments, modifications, renewals, substitutions and replacements of any of the foregoing.

(52)           “Majority Lenders” means Lenders holding at least sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding principal amount of the Loans or, if the Loans shall not have been made, at least sixty-six and two-thirds percent (66 2/3%) of the Commitments.

(53)           “Management Agreement” means each of the management agreements identified on Schedule 6.14 hereof, between Manager and Borrower with respect to the management of the Projects by the Manager, together with any management agreements entered into with future Managers in accordance with the terms of this Agreement (or otherwise contemplated by Section 8.1(2)(d)), individually or collectively, in each case while such management agreement remains in effect.

(54)           “Manager” means Douglas Emmett Management, LLC, a Delaware limited liability company, which is initially the manager of the Projects under the Management Agreements, together with any successor property managers appointed for the Projects in accordance with the terms of this Agreement or otherwise contemplated by Section 8.1(2)(d).

(55)           “Maturity Date” means the earlier of (a) January 2, 2009, or (b) any earlier date on which all of the Loans are required to be paid in full, by acceleration or otherwise, under this Agreement or any of the other Loan Documents.

(56)           “Mortgage” means each Deed of Trust, Security Agreement and Fixture Filing, executed by Borrower in favor of the Administrative Agent (on behalf of the Lenders), covering a Project and any amendments, modifications, renewals, substitutions, consolidations, severances and replacements thereof.

(57)           “Net Operating Income” means the amount by which Operating Revenues exceed Operating Expenses.

(58)           “Notes” means the promissory note or notes of even date herewith as provided for in Section 2.1(4) and all promissory notes delivered in substitution or exchange therefor, in each case as the same may be consolidated, replaced, severed, modified, amended or extended from time to time.

(59)           “OFAC” means the Office of Foreign Assets Control, Department of the Treasury.

(60)           “Operating Expenses” means, for any period, all reasonable and necessary expenses of operating the Projects in the ordinary course of business which are paid in cash by Borrower during such period and which are directly associated with and fairly allocable to the Projects for the applicable period, including ad valorem real estate taxes and assessments, insurance premiums, maintenance costs, management fees and costs, accounting, legal, and other professional fees, fees and other expenses incurred by the Administrative Agent and reimbursed by Borrower under this Agreement and the other Loan Documents, wages, salaries, and personnel expenses.  Operating Expenses shall exclude Debt Service, capital expenditures, tenant improvement costs, leasing commissions, any of the foregoing operating expenses which are paid from deposits to cash reserves and such deposits were previously included as Operating Expenses, any payment or expense for which Borrower was or is to be reimbursed from proceeds of the Loans or insurance or by any third party, and any non-cash charges such as depreciation and amortization.    Operating Expenses shall not include federal, state or local income taxes.

(61)           “Operating Partnership” shall mean Douglas Emmett Properties LP, a Delaware limited partnership.

(62)           “Operating Revenues” means, for any period, all cash receipts of Borrower during such period from operation of the Projects or otherwise arising in respect of the Projects after the date hereof which are properly allocable to the Projects for the applicable period, including receipts from leases and parking agreements, concession fees and charges, other miscellaneous operating revenues and proceeds from rental or business interruption insurance, but excluding (a) security deposits and earnest money deposits until they are forfeited by the depositor, (b) advance rentals until they are earned, and (c) proceeds from a sale or other disposition.

(63)           “Participant” has the meaning assigned in Section 12.24(3).

(64)           “Patriot Act” means the USA PATRIOT Act of 2001, Pub. L. No. 107-56.

(65)           “Payment Date” has the meaning assigned in Section 2.3(1).

(66)           “Payor” has the meaning assigned in Section 2.6(3).

(67)           “Permitted Encumbrances” has the meaning set forth in the Mortgage.

(68)           “Permitted Transfers” means (i) a Transfer of any or all of the Projects to a Controlled Subsidiary that is a Single Purpose Entity and in accordance with the provisions of Section 8.1(2), (ii) so long as the Fund remains a Controlled Subsidiary, a Transfer of the direct or indirect equity interests in the Borrower to the Fund or any direct or indirect subsidiary of the Fund that is a Controlled Subsidiary, (iii) so long as the Borrower remains a Controlled Subsidiary, the Transfer of any direct or indirect ownership interests in, or the admission or withdrawal of any partner, member or shareholder to or from, Borrower’s Member, (iv) following any of the Transfers made pursuant to clauses (i) or (ii) above, and so long as the transferee (pursuant to clause (i) above) remains a Controlled Subsidiary that is a Single Purpose Entity, or the Fund (pursuant to clause (ii) above) remains a Controlled Subsidiary, the Transfer of any direct or indirect ownership interests in such Controlled Subsidiary or the Fund, (v) the Permitted Encumbrances, (vi) any leases affecting any of the Projects in effect as of the Closing Date and any future leases entered into after the Closing Date that are permitted pursuant to the Loan Documents, and/or (vii) any Liens permitted pursuant to the Loan Documents.

(69)           “Person” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, trustee, estate, limited liability company, unincorporated organization, real estate investment trust, government or any agency or political subdivision thereof, or any other form of entity.

(70)           “Potential Default” means the occurrence of any event or condition which, with the giving of notice, the passage of time, or both, would constitute an Event of Default.

(71)           “Prime Rate” means the highest prime rate (or base rate) reported in the Money Rates column or section of The Wall Street Journal as the rate in effect for corporate loans at large United States money center commercial banks (whether or not such rate has actually been charged by any such bank) from time to time.  If The Wall Street Journal ceases publication of the Prime Rate, the “Prime Rate” shall mean the prime rate (or base rate) announced by Citibank, New York, New York (whether or not such rate has actually been charged by such bank).  If such bank discontinues the practice of announcing the Prime Rate, the “Prime Rate” shall mean the prime or base rate charged by a large United States commercial bank selected by the Administrative Agent to its most creditworthy large corporate borrowers.

(72)           “Project” means each of the office buildings identified on Exhibit A-1, and all related land, facilities, amenities, fixtures, and personal property owned by Borrower and any improvements now or hereafter located on the real property described in Exhibit A-2; provided, however, the term “Project” shall not include any Project which is released from the Liens, assignments and security interests of the Mortgage pursuant to Section 2.4 hereof from and after the date of such release

(73)           “Proposed Lender” has the meaning assigned in Section 2.7(7).

(74)           “Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System of the United States of America (or any successor), as the same may be modified and supplemented and in effect from time to time.

(75)           “Regulatory Change” means, with respect to any Lender, any change after the date hereof in Federal, state or foreign law or regulations (including, without limitation, 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 court or governmental or monetary authority charged with the interpretation or administration thereof.

(76)           “REIT” shall mean Douglas Emmett, Inc., a Maryland corporation.

(77)           Reserved.

(78)           “Requesting Lender” has the meaning assigned in Section 2.7(7).

(79)           “Required Payment” has the meaning assigned in Section 2.6(3).

(80)           “Reserve Requirement” means, for any Interest Period for any Eurodollar Loan, the average maximum rate at which reserves (including, without limitation, 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 $1,000,000,000 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 Libor Base Rate for any Interest Period for any Eurodollar Loans is to be determined as provided in the definition of “Libor Base Rate” or (ii) any category of extensions of credit or other assets that includes Eurodollar Loans.

(81)           “Restoration Threshold” means, as of any date, $10,000,000.

(82)           “Secondary Market Transaction” has the meaning assigned in Section 12.9(2).

(83)           “Single Purpose Entity” shall mean a corporation, limited partnership or limited liability company which at all times on and after the date hereof, unless otherwise approved in writing by the Administrative Agent:

(a)does not have and will not have any assets other than (i) the Projects, (ii) those related to the Projects and (iii) any of the Projects (or assets related to Projects) that are released from the Liens, assignments and security interests of the Mortgage pursuant to Section 2.4 hereof; and

(b)has not incurred and will not incur any Debt other than (A) the Loans and (B) trade and operational debt and equipment leases which is (i) incurred in the ordinary course of business, (ii) not more than sixty (60) days past due, (iii) with trade creditors, (iv) in the aggregate, in an amount not to exceed $5,000,000, (v) not evidenced by a note, and (C) non-recourse Debt (which may include “carve outs” for fraud, misrepresentation, misappropriation and environmental matters and other exceptions from non-recourse that are not materially more favorable to such lender than the exceptions from non-recourse set forth in Article 13 or than exceptions from non-recourse that are customary in the real estate finance industry) secured by Liens on Projects (it being understood that such Liens may also include Liens encumbering interest in accounts, rents, lease, management and other contracts, personal property and other items related to the applicable Project) that have been released from the Collateral pursuant to Section 2.4 hereof (which Debt may also be secured by Liens on other real estate projects owned by any direct or indirect subsidiary of the REIT or the Fund), provided that the amount of such Debt (or if there is multiple collateral the applicable allocated loan amount), when incurred, does not exceed seventy percent (70%) of the value of such Projects or other real estate projects, as determined by the lender’s appraisal.  No Debt other than the Loans (and equipment leases permitted herein) may be secured (subordinate or pari passu) by the Projects unless such Project has been released from the Collateral pursuant to Section 2.4 hereof.

(84)           “Site Assessment” means each environmental engineering report for the Projects listed on Schedule 1.1(84) attached hereto.

(85)           “Specially Designated National and Blocked Persons” means those Persons that have been designated by executive order or by the sanction regulations of OFAC as Persons with whom United States Persons may not transact business or must limit their interactions to types approved by OFAC.

(86)           Reserved.

(87)           “State” means the State of California.

(88)           “Stub Interest Period” has the meaning assigned in Section 2.3(1).

(89)           “Subordination of Management Agreement” means each Manager’s Consent and Subordination of Management Agreement, dated the date hereof, by the Manager in favor of the Administrative Agent (on behalf of the Lenders) and relating to the Projects.

(90)           “Taxes” has the meaning assigned in Section 8.2.

(91)           “Type” has the meaning assigned in Section 1.2.

(92)           “UCC” means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State; provided, that to the extent that the UCC is used to define any term herein or in any other Loan Document and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, the Administrative Agent’s or any Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

(93)           “Underwritten NOI” means the amount by which Underwritten Operating Revenues exceed Underwritten Operating Expenses.

(94)           “Underwritten Operating Expenses” means Operating Expenses as determined and adjusted by the Administrative Agent to reflect the Standard Adjustments and otherwise in accordance with its then current audit policies and procedures for properties similar to the Project.

(95)           “Underwritten Operating Revenues” means Operating Revenues as determined and adjusted by the Administrative Agent to reflect the Standard Adjustments and otherwise in accordance with its then current audit policies and procedures for properties similar to the Project.

(96)           “United States Person” means any United States citizen, any entity organized under the laws of the United States or its constituent states or territories, or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories.

Section 1.2                                Types of Loans.  Loans hereunder are distinguished by “Type”.  The “Type” of a Loan refers to whether such Loan is an Alternate Base Rate Loan or a Eurodollar Loan, each of which constitutes a Type.

ARTICLE 2

LOAN TERMS

Section 2.1                                The Commitments, Loans and Notes.

(1)           Loans.  Each Lender severally agrees, on the terms and conditions of this Agreement, to make a term loan to Borrower in Dollars in a principal amount equal  to but not exceeding the amount of the Commitment of such Lender.  The Loans in the aggregate amount of Three Hundred Eighty Million Dollars and No/100s ($380,000,000.00) shall be funded in one advance and repaid in accordance with this Agreement.  The initial advance of the Loans, in the aggregate amount of Three Hundred Eighty Million Dollars and No/100s ($380,000,000.00), shall be made upon Borrower’s satisfaction of the conditions to the initial advance described in Schedule 2.1.  The Loans are not a revolving credit loan, and Borrower is not entitled to any readvances of any portion of the Loans which it may  prepay pursuant to the provisions of this Agreement.

(2)           Lending Offices.  The Loans of each Lender shall be made and maintained at such Lender’s Applicable Lending Office for Loans of such Type.

(3)           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, 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.

(4)           Notes.

(a)           Loan Notes.  The Loans made by each Lender shall be evidenced by a single promissory note of Borrower substantially in the form of Exhibit C, payable to such Lender in a principal amount equal to the amount of its Commitment as originally in effect and otherwise duly completed.

(b)           Endorsements on Notes.  The date, amount, Type, interest rate and duration of Interest Period (if applicable) of each Loan made by each Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by such Lender on its books and, prior to any transfer of the Note held by it, endorsed by such Lender on the schedule attached to such Note or any continuation thereof; provided that the failure of such Lender to make any such recordation or endorsement shall not affect the obligations of Borrower to make a payment when due of any amount owing hereunder or under such Note in respect of such Loans.

(c)           Substitution, Exchange and Subdivision of Notes.  No Lender shall be entitled to have its Notes substituted or exchanged for any reason, or subdivided for promissory notes of lesser denominations, except in connection with a permitted assignment of all or any portion of such Lender’s Commitment, Loans and Note pursuant to Sections 12.9(3), 12.10 and 12.24 (and, if requested by any Lender, Borrower agrees to so substitute or exchange any Notes and enter into note splitter agreements in connection therewith provided the original note or notes so substituted or exchanged are delivered to Borrower).

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

(e)           Funding of Loans.  Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders.  The Administrative Agent will promptly make such Loans available to Borrowers by wire transfer of immediately available funds to an account in the United States designated by the Borrower.

Section 2.2                                Interest Rate; Late Charge. The outstanding principal balance of the Loans (including any amounts added to principal under the Loan Documents) shall bear interest at a variable rate of interest equal to two percent (2.0%) per annum in excess of the Adjusted Libor Rate (the “Contract Rate”). Subject to the provisions of this Agreement which, in certain instances, require payment of interest at the Alternate Base Rate, so long as no Event of Default exists, such Eurodollar Loans shall automatically Continue from one Interest Period to the next Interest Period.  Interest shall be computed on the basis of a fraction, the denominator of which is three hundred sixty (360) and the numerator of which is the actual number of days elapsed (including the first day but excluding the last day) during the period for which payable.  If Borrower fails to pay any installment of interest  within five (5) days after the applicable Payment Date , Borrower shall pay to the Administrative Agent (on behalf of the Lenders) a late charge on such past-due amount, as liquidated damages and not as a penalty, equal to five percent (5%) of such amount, but not in excess of the maximum amount of interest allowed by applicable law, it being understood that the foregoing late charge shall not apply to the payment due on the Maturity Date.  The foregoing late charge is intended to compensate the Administrative Agent and the Lenders for the expenses incident to handling any such delinquent payment and for the losses incurred by the Administrative Agent and the Lenders as a result of such delinquent payment.  Borrower, the Administrative Agent and the Lenders agree that, considering all of the circumstances existing on the date this Agreement is executed, the late charge represents a reasonable estimate of the costs and losses the Administrative Agent and the Lenders will incur by reason of late payment.  Borrower, the Administrative Agent and the Lenders further agree that proof of actual losses would be costly, inconvenient, impracticable and extremely difficult to fix.  Acceptance of the late charge shall not constitute a waiver of the default arising from the overdue installment, and shall not prevent the Administrative Agent and the Lenders from exercising any other rights or remedies available to the Administrative Agent and/or the Lenders.  While any Event of Default exists, the Loans shall bear interest at the Default Rate; provided, that during the continuance of an Event of Default the Administrative Agent may suspend the right of Borrower to Continue any Loan as a Eurodollar Loan, in which event all Loans shall be Converted (on the last day(s) of the respective Interest Periods therefor) into Alternate Base Rate Loans and, thereafter, the Default Rate shall be computed using the Alternate Base Rate.

Section 2.3                                Terms of Payment.  The Loans shall be payable as follows:

(1)           Interest.  On the Closing Date, Borrower shall make a payment of interest only (covering the period from the Closing Date through March 31, 2008 (the “Stub Interest Period”).  Commencing on May 1, 2008, and continuing on the first Business Day of each month thereafter through the Maturity Date (each, a “Payment Date”), Borrower shall pay accrued interest on the Loans for the prior Interest Period in accordance with the wire transfer instructions set forth in Schedule 2.3(1) hereto (or such other instructions as the Administrative Agent may from time to time provide by notice to Borrower).

(2)           Reserved.

(3)           Maturity.  On the Maturity Date, Borrower shall pay to the Administrative Agent (on behalf of the Lenders) all outstanding principal, accrued and unpaid interest, and any other amounts due under the Loan Documents.

(4)           Prepayment.  Except as otherwise permitted by Section 2.4 below, Borrower may prepay the Loans, in whole but not in part, upon not less than five (5) days prior written notice to the Administrative Agent and without payment of any prepayment premium.  If the Loans are prepaid such prepayment shall be made to the Administrative Agent on the prepayment date specified in the notice to the Administrative Agent pursuant hereto (unless such notice is revoked (or the date of prepayment is postponed) by a further written notice delivered by the Borrower 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, Borrower shall pay any losses, costs or expenses of Lender that may subsequently result from the early repayment, termination, cancellation or failure of the Borrower to continue any Eurodollar Loan that was to have been automatically continued), and together with (a) the accrued and unpaid interest on the principal amount prepaid and (b) any amounts payable to a Lender pursuant to Section 2.8(5) as a result of such prepayment while a Eurodollar Loan is in effect.  If the Loans are prepaid for any reason (including acceleration), other than casualty or condemnation, Borrower shall pay to the Administrative Agent (on behalf of the Lenders) the amount(s) described in clauses (a) and (b) of the immediately preceding sentence.  The prepayment premiums, if any, required by this Section 2.3(4) are acknowledged by Borrower to be partial compensation to Lenders for the costs of reinvesting the Loan proceeds and for the loss of the contracted rate of return on the Loan.  Furthermore, Borrower acknowledges that the loss that may be sustained by Lenders as a result of such a prepayment by Borrower is not susceptible of precise calculation and the prepayment premium, if any, represents the good faith effort of Borrower and Lenders to compensate Lender for such loss.  By initialing this provision where indicated below, Borrower waives any rights it may have under California Civil Code Section 2954.10, or any successor statute, and Borrower confirms that Lenders’ agreement to make the Loan at the interest rate and on the other terms set forth herein constitutes adequate and valuable consideration, given individual weight by Borrower, for the prepayment provisions set forth in this Section 2.3(4).

______________________

Borrower’s Initials

(5)           Application of Payments.  All payments received by the Administrative Agent under the Loan Documents shall be applied:  (a) first, to any fees and expenses due to the Administrative Agent and the Lenders under the Loan Documents; (b) second, to any Default Rate interest or late charges, if any; (c) third, to accrued and unpaid interest; and (d) fourth, to the principal sum and other amounts due under the Loan Documents; provided, however, that, if an Event of Default exists, the Administrative Agent shall apply such payments in any order or manner as the Administrative Agent shall determine.

(6)           Security.  The Loans shall be secured by the Mortgages creating a first Lien on each of the Projects (subject to the Permitted Encumbrances), the Assignments of Rents and Leases and the other Loan Documents.

Section 2.4                                Release of Properties.  Except as set forth in this Section 2.4, no repayment or prepayment of all or any portion of the Notes (other than the payment of the Loans in full) shall cause, give rise to a right to require, or otherwise result in, the release of the Lien of the Mortgage on any Project or other collateral securing the Loans.

(1)           Release of Individual Projects.  Borrower on one or more occasions may obtain, and the Administrative Agent and Lenders shall take such actions as are necessary to effectuate pursuant to this Section 2.4, (a) the release of any Project or Projects from the Lien of the Mortgage thereon (and related Loan Documents) and (b) the release of Borrower’s obligations under the Loan Documents with respect to such Project or Projects (other than those expressly stated to survive repayment, including, but not limited to, those set forth in the Environmental Indemnity Agreement), upon satisfaction of each of the following conditions to the reasonable satisfaction of the Administrative Agent:

(i)Borrower shall remit to the Administrative Agent an amount equal to the Allocated Loan Amount (as such amount may have been reduced by any insurance or condemnation proceeds previously paid to Administrative Agent with respect to such Project and applied to the principal of the Loans in accordance with the terms hereof) for the applicable Project;

(ii)Borrower shall pay to the Administrative Agent all sums, including, but not limited to, interest payments (including accrued interest on the principal amount required to be paid pursuant to clause (i) above ), and all costs due pursuant to subsection 2.8(5) below and subpart (vii) hereof;

(iii)The applicable Project is transferred by Borrower to another Person which is not an Affiliate of Borrower pursuant to a contract of sale that is a bona fide arm's length contract with market-rate terms, or is refinanced subject to the limitations on debt set forth in clause (b) of the definition of Single Purpose Entity;

(iv)Borrower shall submit to the Administrative Agent (on behalf of the Lenders), prior to the date of such release, a release of Lien and related Loan Documents (or, in the case of a Mortgage, a request for reconveyance) for such Project for execution by the Administrative Agent, which the Administrative Agent shall promptly execute and deliver to the Borrower for recordation upon satisfaction of all conditions set forth in this Section 2.4(1).  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;

(v)So long as the Project known as the “Warner Corporation Center” has not been released in accordance with the terms hereof, then, after giving effect to such release, there shall be at least one Project other than the Project known as the “Warner Corporation Center” remaining as Collateral for the Loan;

(vi)No Potential Default or Event of Default shall have occurred and be continuing on the date of the proposed release or after giving effect thereto;

(vii)Borrower shall pay all actual and reasonable costs and expenses (including reasonable legal fees and disbursements) incurred by Administrative Agent or Lenders in connection with such release; and

(viii)Such release shall be in compliance with all applicable legal requirements, and will not impair or otherwise adversely affect the Liens, security interests and other rights of the Administrative Agent or 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).

Section 2.5                                Reserved.

Section 2.6                                Reserved.

Section 2.7                                Payments; Pro Rata Treatment; Etc.

(1)           Payments Generally.

(a)           Payments by Borrower.  Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by Borrower under this Agreement and the Notes, and, except to the extent otherwise provided therein, all payments to be made by Borrower under any other Loan Document, shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Administrative Agent at an account designated by the Administrative Agent by notice to Borrower, 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)           Reserved.

(c)           Forwarding of Payments by Administrative Agent.  Except as otherwise agreed by the Administrative Agent and the Lenders, each payment received by the Administrative Agent under this Agreement  or any Note for account of any Lender shall be paid by the Administrative Agent promptly to such Lender, in immediately available funds, for account of such Lender’s Applicable Lending Office for the Loans or other obligation in respect of which such payment is made.

(d)           Extensions 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.

(2)           Pro Rata Treatment.  Except to the extent otherwise provided herein:  (a) each advance of a Loan from the Lenders under Section 2.1(1) shall be made from the Lenders, and any termination of the obligation to make an advance of the Loans shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (b) except as otherwise provided in Section 2.7(4), Loans 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 or Continuations of Loans); (c) each payment or prepayment of principal of Loans by Borrower shall be made for account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; and (d) each payment of interest on Loans by Borrower shall be made for account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders.

(3)           Non-Receipt of Funds by the Administrative Agent.  Unless the Administrative Agent shall have been notified by a Lender or Borrower (in either case, the “Payor”) prior to the date on which the 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 Lender hereunder or (in the case of Borrower) a payment to the Administrative Agent for account of any Lender hereunder (in either case, such payment being herein called the “Required Payment”), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to the Administrative Agent, the Administrative Agent may assume that the 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 the Payor has not in fact made the Required Payment to the Administrative Agent, the recipient(s) of such payment 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 Borrower to the Administrative Agent and, if such recipient(s) shall fail promptly to make such payment, the Administrative Agent shall be entitled to recover such amount, on demand, from the Payor, together with interest as aforesaid, provided that if neither the recipient(s) nor the Payor shall return the Required Payment to the Administrative Agent within three (3) Business Days of the Advance Date, then, retroactively to the Advance Date, the Payor and the recipient(s) shall each be obligated to pay interest on the Required Payment as follows:

(a)           if the Required Payment shall represent a payment to be made by Borrower to the Lenders, Borrower and the recipient(s) shall each be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the Default Rate (without duplication of the obligation of Borrower under Section 2.2 to pay interest on the Required Payment at the 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 Borrower under Section 2.2 to pay interest at the Default Rate in respect of the Required Payment, and

(b)           if the Required Payment shall represent proceeds of a Loan to be made by the Lenders to Borrower, the Payor and 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 2.2 is applicable to the Type of such Loan, it being understood that the return by Borrower of the Required Payment to the Administrative Agent shall not limit any claim Borrower may have against the Payor in respect of such Required Payment.

(4)           Sharing of Payments, Etc.

(a)           Right of Set-off.  Borrower agrees that, in addition to (and without limitation of) any right of set-off, banker’s lien or counterclaim a Lender may otherwise have, each Lender shall be entitled, at its option (to the fullest extent permitted by law), to set off and apply any deposit (general or special, time or demand, provisional or final), or other indebtedness, held by it for the credit or account of Borrower at any of its offices, in Dollars or in any other currency, against any principal of or interest on any of such Lender’s Loans or any other amount payable to such Lender hereunder, that is not paid when due (regardless of whether such deposit or other indebtedness is then due to Borrower), in which case it shall promptly notify Borrower and the Administrative Agent thereof, provided that such Lender’s failure to give such notice shall not affect the validity thereof.

(b)           Sharing.  If any Lender shall obtain from Borrower 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 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 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.

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

(d)           Rights of Lenders; Bankruptcy.  Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of 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 2.7(4) applies, 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 2.7(4) to share in the benefits of any recovery on such secured claim.

(e)           GECC Sole Lender.  Notwithstanding any provisions of this Agreement to the contrary, it is acknowledged and agreed that GECC will be the Administrative Agent and sole Lender during the term of the Loans.

Section 2.8                                Yield Protection; Etc.

(1)           Additional Costs.

(a)           Costs of Making or Maintaining Eurodollar Loans.  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 any reduction in any amount receivable by such Lender hereunder in respect of any of such Loans or such obligation (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”), resulting from any Regulatory Change that:

(i)           shall subject any Lender (or its Applicable Lending Office for any of such Loans) to any new or increased tax, duty or other charge in respect of such 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 Loans (excluding income, franchise, gross receipts or similar taxes and changes in the rate of tax on the overall net income of such Lender or of such Applicable Lending Office by the jurisdiction in which such Lender has its principal office or such Applicable Lending Office); or

(ii)           imposes or modifies any reserve, special deposit or similar requirements (other than the Reserve Requirement used in the determination of the Adjusted Libor Rate for any Interest Period for such Loan) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Lender (including, without limitation, any of such Loans or any deposits referred to in the definition of “Libor Base Rate”), or any commitment of such Lender (including, without limitation, the Commitment of such Lender hereunder); or

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

If any Lender requests compensation from Borrower under this paragraph (a), 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 Loans into Eurodollar Loans, until the Regulatory Change giving rise to such request ceases to be in effect (in which case the provisions of Section 2.8(4) shall be applicable), provided that such suspension shall not affect the right of such Lender to receive the compensation so requested.

(b)           Costs Attributable to Regulatory Change or Risk-Based Capital Guidelines.  Without limiting the effect of the foregoing provisions of this Section 2.8(1) (but without duplication), Borrower shall pay directly 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 of which such Lender is a subsidiary) for any costs that it determines are attributable to the maintenance of the Eurodollar Loans hereunder by such Lender (or any Applicable Lending Office or such bank holding company), 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 court or governmental or monetary authority (i) following any Regulatory Change or (ii) implementing any risk-based capital guideline or other requirement (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) hereafter issued by any government or governmental or supervisory authority implementing at the national level the Basle Accord, of capital in respect of its Commitment or Eurodollar Loans (such compensation to include, without limitation, 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) to a level below that which such Lender (or any Applicable Lending Office or such bank holding company) could have achieved but for such law, regulation, interpretation, directive or request).

(c)           Notification and Certification.  Each Lender shall notify Borrower of any event occurring after the date hereof entitling such Lender to compensation under paragraph (a) or (b) of this Section 2.8(1) as promptly as practicable, but in any event within 45 days, after such Lender obtains actual knowledge thereof; provided that (i) if any Lender fails to give such notice within 45 days after it obtains actual knowledge of such an event, such Lender shall, with respect to compensation payable pursuant to this Section 2.8(1) in respect of any costs resulting from such event, only be entitled to payment under this Section 2.8(1) for costs incurred from and after the date 45 days prior to the date that such Lender does give such notice and (ii) each Lender will designate a different Applicable Lending Office for the 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, except that such Lender (if not a United Stated Person) shall have no obligation to designate an Applicable Lending Office located in the United States of America.  Each Lender will furnish to Borrower a certificate setting forth the basis and amount of each request by such Lender for compensation under paragraph (a) or (b) of this Section 2.8(1).  Determinations and allocations by any Lender for purposes of this Section 2.8(1) of the effect of any Regulatory Change pursuant to paragraph (a) of this Section 2.8(1), or of the effect of capital maintained pursuant to paragraph (b) of this Section 2.8(1), on its costs or rate of return of maintaining Loans or its obligation to make Loans, or on amounts receivable by it in respect of Loans, and of the amounts required to compensate such Lender under this Section 2.8(1), shall be conclusive absent manifest error, provided that such determinations and allocations are made on a reasonable basis.  Notwithstanding anything to the contrary contained herein, it shall be a condition to the Borrower’s obligation to pay compensation under this Section 2.8(1) 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 2.8(1).

(2)           Limitation on Types of Loans.  Anything herein to the contrary notwithstanding, if, on or prior to the determination of the Libor Base 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, as a result of circumstances arising after the Closing Date, quotations of interest rates for the relevant deposits referred to in the definition of Libor Base Rate 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 Majority Lenders determine, which determination shall be conclusive absent manifest error, and notify the Administrative Agent that, as a result of circumstances arising after the Closing Date, the relevant rates of interest referred to in the definition of Libor Base Rate 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 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 Loans of any other Type into Eurodollar Loans, and Borrower shall, on the last day(s) of the then current Interest Period(s) for the outstanding Eurodollar Loans, either prepay such Loans or such Loans shall be automatically Converted into Alternate Base Rate Loans.

(3)           Illegality.  Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its Applicable Lending Office to honor its obligation to make or maintain Eurodollar Loans 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 Borrower thereof (with a copy to the Administrative Agent) and such Lender’s obligation to make or Continue, or to Convert Loans 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 2.8(4) shall be applicable).

(4)           Treatment of Affected Loans.  If the obligation of any Lender to make Eurodollar Loans or to Continue, or to Convert Alternate Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to Section 2.8(1) or 2.8(3), such Lender’s Loans shall be automatically Converted into Alternate Base Rate Loans on the last day(s) of the then current Interest Period(s) for Loans (or, in the case of a Conversion resulting from a circumstance described in Section 2.8(3), on such earlier date as such Lender may specify to Borrower with a copy to the Administrative Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 2.8(1) or 2.8(3) that gave rise to such Conversion no longer exist:

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

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

If such Lender gives notice to Borrower with a copy to the Administrative Agent that the circumstances specified in Section 2.8(1) or 2.8(3) that gave rise to the Conversion of such Lender’s Loans pursuant to this Section 2.8(4) no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Eurodollar Loans made by other Lenders are outstanding, such Lender’s Alternate 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 Alternate Base Rate Loans and Eurodollar Loans are allocated among the Lenders ratably (as to principal amounts, Types and Interest Periods) in accordance with their respective Commitments.

(5)           Compensation.  Borrower shall pay to the Administrative Agent for account of each Lender, upon the request of such Lender through the Administrative Agent, such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any actual out-of-pocket  cost or expense that such Lender determines is attributable to any payment, prepayment or Conversion of a Eurodollar Loan made by such Lender for any reason (including, without limitation, the acceleration of the Loans pursuant to the Administrative Agent’s or the Lenders’ rights referred to in Article 10) on a date other than the last day of the Interest Period for such Loan.

Without limiting the effect of the preceding sentence, 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 rate of interest for such Loan provided for herein over (ii) the amount of interest that otherwise would have accrued on such principal amount at a rate per annum equal to the interest component of the amount 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 cease to make such bids, the equivalent rate, as reasonably determined by such Lender, derived from Page 3750 of the Dow Jones Markets (Telerate) Service or other publicly available source as described in the definition of Libor Base Rate.

(6)           United States Taxes.

(a)           Gross-up for Deduction or Withholding of United States Taxes.  Borrower agrees to pay to each Lender that is not a United States Person such additional amounts as are necessary in order that the net payment of any amount due to such non-United States Person hereunder after deduction for or withholding in respect of any United States Taxes imposed with respect to such payment (or in lieu thereof, payment of such United States Taxes by such non-United States Person), will not be less than the amount stated herein to be then due and payable, provided that the foregoing obligation to pay such additional amounts shall not apply:

(i)           to any payment to any Lender hereunder unless such Lender is, on the date hereof (or on the date it becomes a Lender hereunder as provided in Section 12.24(2)) and on the date of any change in the Applicable Lending Office of such Lender, either entitled to submit a Form W-8BEN (relating to such Lender and entitling it to a complete exemption from withholding on all interest to be received by it hereunder in respect of the Loans) or Form W-8ECI (relating to all interest to be received by such Lender hereunder in respect of the Loans), or

(ii)           to any United States Taxes imposed solely by reason of the failure by such non-United States Person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such non-United States Person if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such United States Taxes.

For the purposes hereof, (A) “United States Person” means a citizen, national or resident of the United States of America, a corporation, limited liability company, partnership or other entity created or organized in or under any laws of the United States of America or any State thereof, or any estate or trust that is subject to Federal income taxation regardless of the source of its income, (B) “United States Taxes” means any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof or therein, (C) ”Form W-8BEN” means Form W-8BEN of the Department of the Treasury of the United States of America and (D) ”Form W-8ECI” means Form W-8ECI of the Department of the Treasury of the United States of America.  Each of the Forms referred to in the foregoing clauses (C) and (D) shall include such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates.

(b)           Evidence of Deduction, Etc.  Within 30 days after paying any amount to the Administrative Agent or any Lender from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, Borrower shall deliver to the Administrative Agent for delivery to such non-United States Person evidence satisfactory to such Person of such deduction, withholding or payment (as the case may be).

(7)           Replacement of Lenders.  If any Lender requests compensation pursuant to Section 2.8(1) or 2.8(6), 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 2.8(2) or 2.8(3) (any such Lender requesting such compensation, or whose obligations are so suspended, being herein called a “Requesting Lender”), Borrower, upon three Business Days notice, may require that such Requesting Lender transfer all of its right, title and interest under this Agreement and such Requesting Lender’s Note to any bank or other financial institution (a “Proposed Lender”) identified by Borrower that is satisfactory to the Administrative Agent (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 Loans hereunder for consideration equal to the aggregate outstanding principal amount of such Requesting Lender’s Loans, together with interest thereon to the date of such purchase (to the extent not paid by 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 2.8(5) as if all of such Requesting Lender’s Loans were being prepaid in full on such date) and (ii) if such Requesting Lender has requested compensation pursuant to Section 2.8(1) or 2.8(6), such Proposed Lender’s aggregate requested compensation, if any, pursuant to Section 2.8(1) or 2.8(6) with respect to such Requesting Lender’s Loans is lower than that of the Requesting Lender.  Subject to the provisions of Section 12.24(2), such Proposed Lender shall be a “Lender” for all purposes hereunder.  Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements of Borrower contained in Sections 2.8(1), 2.8(6) and 12.5 (without duplication of any payments made to such Requesting Lender by Borrower or the Proposed Lender) shall survive for the benefit of such Requesting Lender under this Section 2.8(7) with respect to the time prior to such replacement.

ARTICLE 3

INSURANCE AND CONDEMNATION

Section 3.1                                Insurance.  Borrower shall maintain insurance as follows:

(1)           Casualty; Business Interruption.  Borrower shall keep the Projects insured against damage by fire and the other hazards covered by a standard extended coverage and all-risk insurance policy for the full insurable value thereof on a replacement cost claim recovery basis (without reduction for depreciation or co-insurance and without any exclusions or reduction of policy limits for acts of domestic and foreign terrorism or other specified action/inaction), and shall maintain boiler and machinery, earthquake, acts of domestic and foreign terrorism endorsement coverage and such other casualty insurance as reasonably required by the Administrative Agent.  The Administrative Agent reserves the right to require from time to time the following additional insurance:  flood, windstorm and/or building law or ordinance.  Borrower shall keep the Projects insured against loss by flood if such Project is located currently or at any time in the future in an area identified by the Federal Emergency Management Agency as an area having special flood hazards and in which flood insurance has been made 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 such acts may from time to time be amended) in an amount at least equal to the lesser of (a) the Allocated Loan Amount for such Projects or (b) the maximum limit of coverage available under said acts.  Any such flood insurance policy shall be issued in accordance with the requirements and current guidelines of the Federal Insurance Administration.  Borrower shall maintain business interruption insurance, including use and occupancy, rental income loss and extra expense, against all periods covered by Borrower’s property insurance for a limit equal to twelve (12) calendar months’ exposure, all without any exclusions or reduction of policy limits for acts of domestic and foreign terrorism or other specified action/inaction.  Borrower shall maintain earthquake insurance and terrorism coverage in such amounts and with such coverages and deductibles as are then being maintained with respect to institutionally-owned “Class A” office buildings in the market where the properties are located.  Borrower shall not maintain any separate or additional insurance which is contributing in the event of loss unless it is properly endorsed and otherwise satisfactory to the Administrative Agent in all respects.  The proceeds of insurance paid on account of any damage or destruction to the Projects in excess of the Restoration Threshold shall be paid to the Administrative Agent to be applied as provided in Section 3.2.

(2)           Liability.  Borrower shall maintain (a) commercial general liability insurance with respect to the Projects providing for limits of liability of not less than $5,000,000 for both injury to or death of a person and for property damage per occurrence; (b) worker’s compensation insurance to statutory limits (but in no event less than $1,000,000), and employer’s liability insurance covering employees at the Projects employed by Borrower or Manager (to the extent required, and in the amounts required by applicable laws); (c) umbrella liability on a following-form basis with limits of $1,000,000 per occurrence and annual aggregate; (d) 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 such coverage is not provided through the other insurance maintained by or for the benefit of the Borrower, builder’s risk insurance, as applicable, in amounts and with coverages reasonably required by Administrative Agent; and (e) other liability insurance as reasonably required by the Administrative Agent.

(3)           Form and Quality.  All insurance policies shall be endorsed in form and substance acceptable to the Administrative Agent to name the Administrative Agent (on behalf of the Lenders) as an additional insured, loss payee or mortgagee thereunder, as its interest may appear, with loss payable to the Administrative Agent, without contribution, under a standard New York (or local equivalent) mortgagee clause.  All such insurance policies and endorsements shall be fully paid for, shall be issued by appropriately licensed insurance companies acceptable to the Administrative Agent with a rating of “A-VII” or better as established by A.M. Best’s Rating Guide, and shall be in such form, and shall contain such provisions, deductibles (with no increased deductible for acts of terrorism or other specified action/inaction) and expiration dates, as are acceptable to the Administrative Agent.  Notwithstanding anything to the contrary contained herein, the insurance carried by Borrower as of the Closing Date is hereby accepted by Administrative Agent as satisfying the requirements of this Section 3.1, absent any changes in circumstances; provided, however, that Borrower shall not reduce any existing insurance coverages (i) with respect to earthquake insurance and terrorism coverage to less than such amounts and such coverages and deductibles as are then being maintained with respect to institutionally-owned “Class A” office buildings in the market where the Projects are located, or (ii) to include insurance carriers rated lower than A(Minus)/VII (7), or (iii) to have rental loss insurance for a period shorter than one year.  Each policy shall provide that such policy may not be canceled or materially changed except upon thirty (30) days' prior written notice of intention of non-renewal, cancellation or material change to the Administrative Agent and that no act or thing done by Borrower shall invalidate any policy as against the Administrative Agent or any Lender.  Blanket policies shall be permitted only if the Administrative Agent receives appropriate endorsements and/or duplicate policies containing the Administrative Agent’s right to continue (for the benefit of the Lenders) coverage on a pro rata pass-through basis and that coverage will not be affected by any loss on other properties covered by the policies.  If Borrower fails to maintain insurance in compliance with this Section 3.1, the Administrative Agent may obtain such insurance and pay the premium therefor and Borrower shall, on demand, reimburse the Administrative Agent for all expenses incurred in connection therewith.

(4)           Assignment.  Borrower shall assign Borrower’s interest in the policies or proofs of insurance to the Administrative Agent (for the benefit of the Lenders), in such manner and form that the Administrative Agent and its successors and assigns shall at all times have and hold the same as security for the payment of the Loan.  Borrower shall deliver copies of all original policies certified to the Administrative Agent by the insurance company or authorized agent as being true copies, together with the endorsements required hereunder.  If Borrower elects to obtain any insurance for the Projects which is not required under this Agreement all related insurance policies shall be endorsed in compliance with Section 3.1(3), and such additional insurance shall not be canceled without prior notice to the Administrative Agent.  From time to time upon the Administrative Agent’s request, Borrower shall identify to the Administrative Agent all insurance maintained by Borrower with respect to the Projects.  The proceeds of insurance policies coming into the possession of the Administrative Agent shall not be deemed trust funds, and the Administrative Agent shall be entitled to apply such proceeds as herein provided.

(5)           Adjustments.  Borrower shall give prompt written notice of any loss exceeding $1,000,000 to the insurance carrier and to the Administrative Agent.  Without the Administrative Agent’s prior consent which shall not be unreasonably withheld or delayed, Borrower shall not agree to any insurance adjustment, compromise or settlement in excess of $10,000,000, it being understood that Borrower may adjust, compromise or settle claims, and directly collect the insurance proceeds, for claims not in excess of $10,000,000.  With respect to claims in excess of $10,000,000, the Administrative Agent may participate in any such proceeding (not to the exclusion of Borrower), and may make proof of loss, adjust and compromise any such claim under Borrower’s insurance policies, and  appear in and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds on account of such claim, and to deduct therefrom the Administrative Agent’s reasonable expenses incurred in the collection of such proceeds.  Nothing contained in this Section 3.1(5), however, shall require the Administrative Agent to incur any expense or take any action hereunder.

Section 3.2                                Use and Application of Insurance Proceeds. The Administrative Agent shall apply (or permit Borrower to apply) insurance proceeds to costs of restoring a Project or the Loans as follows:

(1)           if the loss is less than or equal to the Restoration Threshold, Borrower may directly collect and apply the insurance proceeds for restoration provided (a) no Event of Default or Potential Default exists, and (b) Borrower promptly commences and is diligently pursuing restoration of such Project;

(2)           if the loss exceeds the Restoration Threshold the Administrative Agent shall apply the insurance proceeds to restoration provided that at all times during such restoration (a) no Event of Default or Potential Default exists; (b) the Administrative Agent determines that there are sufficient funds available to restore and repair the Project to its condition prior to the casualty or to such other condition approved by the Administrative Agent; (c) the Administrative Agent determines that the Net Operating Income of the subject Project during restoration together with the Net Operating Income of the other Projects will be sufficient to pay Debt Service;  (d) the Administrative Agent determines that restoration and repair of the Project to its condition prior to the casualty or to such other  condition approved by the Administrative Agent will be completed within six months after the date of loss or casualty and in any event thirty (30)  days prior to the Maturity Date; (e) Borrower promptly commences and is diligently pursuing restoration of the Project; and (f) the Project after the restoration will be in compliance with and permitted under all applicable zoning, building and land use laws, rules, regulations and ordinances;

(3)           if the conditions set forth above are not satisfied, in the Administrative Agent’s sole but reasonable discretion, the Administrative Agent may (subject to the approval of the Majority Lenders) apply any insurance proceeds it may receive to the payment of the amounts owing under the Loan Documents in such order and manner as the Administrative Agent in its sole discretion determines (and provided there is a  concomitant reduction in the Allocated Loan Amount for such Project) or allow all or a portion of such proceeds to be used for the restoration of the Project; and

(4)           insurance proceeds applied to restoration will be disbursed on receipt of satisfactory plans and specifications, contracts and subcontracts, schedules, budgets, lien waivers and architects’ certificates, and otherwise in accordance with prudent commercial construction lending practices for construction loan advances, including, as applicable, the advance conditions under Schedule 2.1.  Any insurance proceeds remaining after payment of all restoration costs shall be applied by the Administrative Agent to the outstanding principal balance of the Loans or, at the Administrative Agent’s sole option, remitted to Borrower.

Section 3.3                                Condemnation Awards.  Borrower shall promptly notify the Administrative Agent of the institution of any proceeding for the condemnation or other taking of the Project or any portion thereof.  The Administrative Agent may participate in any such proceeding and Borrower will deliver to the Administrative Agent all instruments necessary or required by the Administrative Agent to permit such participation.  Without the Administrative Agent’s prior consent (subject to the approval of the Majority Lenders), Borrower (1) shall not agree to any compensation or award, and (2) shall not take any action or fail to take any action which would cause the compensation to be determined.  All awards and compensation for the taking or purchase in lieu of condemnation of the Project or any part thereof are hereby assigned to and shall be paid to the Administrative Agent.  Borrower authorizes the Administrative Agent to collect and receive such awards and compensation, to give proper receipts and acquittances therefor, and in the Administrative Agent’s sole discretion (which the Administrative Agent shall exercise at the direction of the Majority Lenders) to apply the same toward the payment of the Loans (provided there is a concomitant reduction in the Allocated Loan Amount for such Project), notwithstanding that the Loans may not then be due and payable, or to the restoration of the Project; however, if the award is less than or equal to the $50,000, and Borrower requests that such proceeds be used for non-structural site improvements (such as landscape, driveway, walkway and parking area repairs) required to be made as a result of such condemnation, the Administrative Agent will apply the award to such restoration in accordance with disbursement procedures applicable to insurance proceeds provided there exists no Potential Default or Event of Default.  Borrower, upon request by the Administrative Agent, shall execute all instruments requested to confirm the assignment of the awards and compensation to the Administrative Agent, free and clear of all Liens.

ARTICLE 4

ENVIRONMENTAL MATTERS

Section 4.1                                Reserved.

Section 4.2                                Covenants on Environmental Matters.

(1)           Borrower shall (a) comply with applicable Environmental Laws; (b) notify the Administrative Agent promptly upon Borrower’s discovery of any spill, discharge, release or presence of any Hazardous Material at, upon, under, within, contiguous to or otherwise affecting any Project; (c) promptly remove such Hazardous Materials and remediate any Project in  compliance with applicable Environmental Laws and in accordance with the recommendations and specifications of an independent environmental consultant approved by the Administrative Agent to the extent such recommendations and specifications are necessary to comply with applicable Environmental Laws; and (d) promptly forward to the Administrative Agent copies of all orders, notices, permits, applications or other communications and reports in connection with any spill, discharge, release or the presence of any Hazardous Material or any other matters relating to the Environmental Laws or any similar laws or regulations, as they may affect any Project or Borrower.

(2)           Borrower shall not cause, shall prohibit any other Person within the control of Borrower from causing, and shall use prudent, commercially reasonable efforts to prohibit other Persons (including tenants) from causing (a) any spill, discharge or release, or the use, storage, generation, manufacture, installation, or disposal, of any Hazardous Materials at, upon, under, within or about any Project or the transportation of any Hazardous Materials to or from any Project (except for cleaning and other products used in connection with the routine maintenance or repair of a Project in  compliance with applicable Environmental Laws), (b) any underground storage tanks to be installed at any Project, or (c) any activity that requires a permit or other authorization under Environmental Laws to be conducted at any Project unless such activity is currently conducted pursuant to such permit or authorization.

(3)           If the Administrative Agent has a reasonable suspicion that a release of Hazardous Materials has occurred at or near any Project after the Closing Date, Borrower shall provide to the Administrative Agent, at Borrower’s expense promptly upon the written request of the Administrative Agent , a Site Assessment or, if required by the Administrative Agent, an update to any existing Site Assessment, to assess the presence or absence of any Hazardous Materials and the potential costs in connection with abatement, cleanup or removal of any Hazardous Materials found on, under, at or within any Project.  

Section 4.3                                Allocation of Risks and Indemnity.  As between Borrower, the Administrative Agent and the Lenders, all risk of loss associated with non-compliance with Environmental Laws, or with the presence of any Hazardous Material at, upon, within, contiguous to or otherwise affecting any Project, shall lie solely with Borrower.  Accordingly, Borrower shall bear all risks and costs associated with any loss (including any loss in value attributable to Hazardous Materials), damage or liability therefrom, including all costs of removal of Hazardous Materials or other remediation required by  applicable Environmental Law.  Borrower shall at all times indemnify, defend and hold the Administrative Agent and the Lenders harmless from and against any and all claims, suits, actions, debts, damages, losses, liabilities, litigations, judgments, charges, costs and expenses (including reasonable costs of defense), of any nature whatsoever proffered or incurred by the Administrative Agent and/or the Lenders, whether as mortgagee or beneficiary under the Mortgage, as mortgagee in possession, or as successor-in-interest to Borrower by foreclosure deed or deed in lieu of foreclosure, and whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, including those arising from the joint, concurrent or comparative negligence of the Administrative Agent and the Lenders, under or on account of the Environmental Laws, including the assertion of any Lien thereunder, with respect to:  (1) a breach of any representation, warranty or covenant of Borrower contained in this Article 4; (2) any acts performed by the Administrative Agent or any Lender pursuant to the provisions of this Article 4; (3) any discharge of Hazardous Materials, the threat of discharge of any Hazardous Materials or the storage or presence of any Hazardous Materials affecting any Project whether or not the same originates or emanates from such Project or any contiguous real estate, including any loss of value of such Project as a result of the foregoing (but Borrower shall not be responsible for any such loss or diminution in value if the Loans have been repaid); (4) any costs of removal or remedial action incurred by the United States Government or any costs incurred by any other Person or damages from injury to, destruction of, or loss of natural resources including reasonable costs of assessing such injury, destruction or loss incurred pursuant to any Environmental Laws; (5) liability for personal injury or property damage arising under any statutory or common law tort theory, including without limitation damages assessed for the maintenance of a public or private nuisance or for the carrying on of an abnormally dangerous activity at, upon, under or within any Project; and/or (6) any other environmental matter affecting any Project within the jurisdiction of the Environmental Protection Agency, any other federal agency or any state or local environmental agency.  The foregoing notwithstanding, Borrower shall not be liable under such indemnification to the extent such loss, liability, damage, claim, suits, actions, debts, damages, litigations, judgments, charges, cost or expense results solely from the Administrative Agent’s or any Lender’s gross negligence or willful misconduct.  Borrower’s obligations under this Section 4.4 shall arise upon the discovery of the presence of any Hazardous Material subject to indemnification hereunder, whether or not the Environmental Protection Agency, any other federal agency or any state or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Material and shall continue notwithstanding the repayment of the Loans or any transfer or sale of any right, title and interest in the Project (by foreclosure, deed in lieu of foreclosure or otherwise).  Notwithstanding the foregoing, , Borrower shall not be liable under this Section 4.3 to the extent such loss, liability, damage, claim, suits, actions, debts, damages, litigations, judgments, charges, cost or expense arise out of, relate to or result from either (A) Hazardous Materials existing on, in, under or about any of the Projects as of the Closing Date or (B)  events or conditions caused or created by the Administrative Agent and first existing after the Administrative Agent acquires title to the Project by foreclosure or acceptance of a deed in lieu thereof..

Section 4.4                                Lender’s Right to Protect Collateral.  If (1) any discharge of Hazardous Materials or the threat of a discharge of Hazardous Material affecting any Project occurs after the Closing Date, whether originating or emanating from such Project or any contiguous real estate, and/or (2) Borrower fails to comply with any applicable Environmental Laws or related regulations, the Administrative Agent may at its election, but without the obligation so to do, give such notices and/or cause such work to be performed at such Project and/or take any and all other actions as the Administrative Agent shall deem necessary or advisable in order to abate the discharge of any Hazardous Material, remove the Hazardous Material or cure Borrower’s noncompliance.

Section 4.5                                No Waiver.  Notwithstanding any provision in this Article 4 or elsewhere in the Loan Documents, or any rights or remedies granted by the Loan Documents, the Administrative Agent and the Lenders do not waive and expressly reserve all rights and benefits now or hereafter accruing to the Administrative Agent and/or any Lenders under the “security interest” or “secured creditor” exception under applicable Environmental Laws, as the same may be amended.  No action taken by the Administrative Agent and/or any Lender pursuant to the Loan Documents shall be deemed or construed to be a waiver or relinquishment of any such rights or benefits under the “security interest exception”.

ARTICLE 5

LEASING MATTERS

Section 5.1                                Reserved.

Section 5.2                                Standard Lease Form; Approval Rights.  All leases and other rental arrangements in effect on the Closing Date are in all respects  approved by the Administrative Agent.  Except as provided herein, all future leases shall be on a standard lease form approved by the Administrative Agent with no modifications (except as approved by the Administrative Agent).  Such lease form shall provide that the tenant shall attorn to the Administrative Agent (on behalf of the Lenders).  Borrower shall hold, in trust, all tenant security deposits , and, to the extent required by applicable law, shall not commingle any such funds with any other funds of Borrower.  Within ten (10) days after the Administrative Agent’s request, Borrower shall furnish to the Administrative Agent a statement of all tenant security deposits, and copies of all leases not previously delivered to the Administrative Agent, certified by Borrower as being true and correct.  Notwithstanding anything to the contrary contained herein or in the Loan Documents, Borrower shall have the right to enter into, renew, amend, cancel, terminate or otherwise modify any lease without the Administrative Agent’s approval, provided such lease is not a Major Lease.  .  If Administrative Agent’s approval is required for the execution, amendment, or mutual termination of any lease pursuant to this Section 5.2, the Borrower shall deliver to the Administrative Agent the following information (collectively, the “Lease Approval Package”):  (i) the identity of the proposed tenant; (ii) such information with respect to the prospective tenant as shall permit the Administrative Agent to assess such proposed tenant’s business, character and creditworthiness; and (iii) a draft of the proposed lease or lease modification and a summary of the material terms of such lease or modification .  Within five (5) 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 five (5) Business Day period, the Administrative Agent shall be deemed to have consented to such proposed lease or lease modification.   Any lease of space within a Project that, when combined with all other space in the Project leased to the same tenant or to any affiliate of such tenant, exceeds 30,000 rentable square feet is referred to herein as a “Major Lease.”

Section 5.3                                Covenants.  Borrower (1) shall perform the material obligations which Borrower is required to perform under the leases; (2) shall enforce the material obligations to be performed by the tenants; (3) shall promptly furnish to the Administrative Agent any notice of default or termination received by Borrower from any tenant under a Major Lease, and any notice of default or termination given by Borrower to any tenant under a Major Lease; (4) shall not collect any rents for more than thirty (30) days in advance of the time when the same shall become due, except for bona fide security deposits not in excess of an amount equal to two month’s rent escalations, percentage rents and estimated payments of operating expenses, taxes and other pass-throughs paid by tenants pursuant to their leases; (5) shall not enter into any ground lease or master lease of any part of the Project; (6) shall not further assign or encumber any lease while such Project remains security for the Loans; (7) shall not, except with the Administrative Agent’s prior written consent or as otherwise permitted pursuant to the Loan Documents, cancel or accept surrender or termination of any lease; and (8) shall not, except with the Administrative Agent’s prior written consent, modify or amend any Major Lease (except for minor modifications and amendments entered into in the ordinary course of business, consistent with prudent property management practices, not affecting the economic terms of the lease), and any action in violation of clauses (5), (6), (7), and (8) of this Section 5.3 shall be void at the election of the Administrative Agent.

Section 5.4                                Subordination Agreements.  With respect to leases approved by the Administrative Agent, 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 a subordination and non-disturbance agreement with such tenant on the Administrative Agent’s normal form (with such commercially reasonable changes thereto as may be requested by such tenant).

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

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

Section 6.1                                Organization and Power.  Borrower, each Borrower Party and Borrower’s Member is duly organized, validly existing and in good standing under the laws of the state of its formation or existence, and is in compliance with legal requirements applicable to doing business in the State.  Borrower is not a “foreign person” within the meaning of §1445(f)(3) of the Internal Revenue Code.  The organizational chart for Borrower in Schedule 6.1 accurately reflects the ownership structure of Borrower and its constituent entities as of the date hereof.  Borrower’s and each Borrower Party’s name as it appears in official filings in the state of its incorporation or other organization, the type of entity of Borrower and each Borrower Party (including corporation, partnership, limited partnership or limited liability company), organizational identification number issued by Borrower’s  state of incorporation or organization or a statement that no such number has been issued, Borrower’s and each Borrower Party’s state of organization or incorporation, Borrower’s and each Borrower Party’s chief executive office, other offices, and all premises (other than the Projects) where Collateral is stored or located are set forth on Schedule 6.1 attached hereto or in the “Address for Notice” area below Borrower’s signature hereto.  Borrower and each Borrower Party has only one state of incorporation or organization, which is set forth in Schedule 6.1.  All other information regarding Borrower and each Borrower Party contained in Schedule 6.1 is true and correct as of the Closing Date.

Section 6.2                                Validity of Loan Documents.  The execution, delivery and performance by Borrower of the Loan Documents: (1) are duly authorized and do not require the consent or approval of any other party or governmental authority which has not been obtained; and (2) will not violate any law or result in the imposition of any Lien upon the assets of any such party, except as contemplated by the Loan Documents.  The Loan Documents constitute the legal, valid and binding obligations of Borrower , enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, or similar laws generally affecting the enforcement of creditors’ rights and the application of equitable principles.

Section 6.3                                Liabilities; Litigation; Other Secured Loan Transactions.

(1)           The financial statements, to the extent, if any, that are delivered by Borrower and each Borrower Party to Administrative Agent are true and correct in all material respects as of the date or dates thereof with no significant change since the date of preparation.  Except as disclosed in such financial statements, there are no liabilities (fixed or contingent) affecting Borrower, or, to Borrower’s knowledge, the Projects except for Borrower’s obligations under the Loan Documents and liabilities relating to the Projects.  Except as disclosed in such financial statements or in the litigation searches provided to the Administrative Agent (or its counsel) prior to the Closing Date, there is no litigation, administrative proceeding, investigation or other legal action (including any proceeding under any state or federal bankruptcy or insolvency law) pending or threatened in writing against the Project, Borrower or any Borrower Party which if adversely determined could have a material adverse effect on such party, any of the Projects or the Loans.

(2)           Borrower is not, and has not been, bound (whether as a result of a merger or otherwise) as a debtor under a pledge or security agreement entered into by another Person, which has not heretofore been terminated.

Section 6.4                                Reserved.

Section 6.5                                Other Agreements; Defaults.  Borrower is not a party to any agreement or instrument or subject to any court order, injunction, permit, or restriction which might adversely affect any Project or the business, operations, or condition (financial or otherwise) of Borrower .  Borrower is not in violation of any agreement which violation would have an adverse effect on any Project or Borrower, or  Borrower’s  business, properties, or assets, operations or condition, financial or otherwise.

Section 6.6                                Compliance with Law.  Borrower and each Borrower Party have all requisite licenses, permits, franchises and qualifications to own its interest  in the Projects and carry on its respective business.

Section 6.7                                Location of Borrower.  Borrower’s principal place of business and chief executive offices are located at the address identified in the “Address for Notice” area below Borrower’s signature hereto.

Section 6.8                                ERISA.

(1)As of the Closing Date and throughout the term of the Loan, (a) Borrower is not and will not be an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which is subject to Title I of ERISA, and (b) the assets of Borrower do not and will not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA; and

(2)As of the Closing Date and throughout the term of the Loan Borrower is not and will not be a “governmental plan” within the meaning of Section 3(3) of ERISA.

Section 6.9                                Margin Stock.  No part of proceeds of the Loans will be used for purchasing or acquiring any “margin stock” within the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve System.

Section 6.10                                Tax Filings.  Borrower and each Borrower Party have filed (or have obtained effective extensions for filing) all federal, state and local tax returns required to be filed and have paid or made adequate provision for the payment of all federal, state and local taxes, charges and assessments payable by Borrower and each Borrower Party, respectively.

Section 6.11                                Solvency. Giving effect to the Loans, the fair saleable value of Borrower’s assets exceeds and will, immediately following the making of the Loans, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent liabilities.  The fair saleable value of Borrower’s assets is and will, immediately following the making of the Loans, be greater than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities on its Debts as such Debts become absolute and matured.  Borrower’s assets do not and, immediately following the making of the Loans will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted.  Borrower does not intend to, and does not believe that it will, incur Debts and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such Debts as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of obligations of Borrower).  Except as expressly disclosed to the Administrative Agent in writing, no petition in bankruptcy has been filed by or against Borrower or any Borrower Party in the last seven (7) years, and neither Borrower nor any Borrower Party in the last seven (7) years has ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors.  Neither Borrower nor any Borrower Party is contemplating either the filing of a petition by it under state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property, and neither Borrower nor any Borrower Party has knowledge of any Person contemplating the filing of any such petition against it.

Section 6.12                                Full and Accurate Disclosure.  No statement of fact made by or on behalf of Borrower or any  Borrower Party in this Agreement or in any of the other Loan Documents or in any certificate, statement or questionnaire delivered by Borrower or any Borrower Party in connection with the Loans contains any untrue statement of a material fact known to Borrower or any  Borrower Party or omits to state any material fact known to Borrower or any  Borrower Party that is necessary to make statements contained herein or therein not misleading.  There is no fact presently known to Borrower or any Borrower Party which has not been disclosed to the Administrative Agent which adversely affects, nor as far as Borrower can foresee, might adversely affect, the business, operations or condition (financial or otherwise) of Borrower or any Borrower Party.  All information supplied by Borrower to the Administrative Agent with respect to any of the Collateral is, to Borrowers’ knowledge, accurate and complete in all material respects.  All evidence of Borrower’s and each Borrower Party’s identity provided to Lender is genuine, and all related information is accurate.

Section 6.13                                Single Purpose Entity.  Borrower is and has at all times since its formation been a Single Purpose Entity.

Section 6.14                                Management Agreement.  The Management Agreements identified in Schedule 6.14 attached hereto are the only management agreements in existence with respect to the operation or management of the Projects.  The copies of the Management Agreements delivered to the Administrative Agent are true and correct copies, and such agreements have not been amended or modified.  Neither party to any such agreement is in default under such agreement and the Manager has no defense, offset right or other right to withhold performance under or terminate any such agreement.

Section 6.15                                No Conflicts.  The execution, delivery and performance of this Agreement and the other Loan Documents by Borrower will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien (other than pursuant to the Loan Documents) upon any of the property or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, operating agreement or other agreement or instrument to which Borrower is a party or by which any of Borrower’s property or assets is subject, nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over Borrower or any of Borrower’s properties or assets, and any consent, approval, authorization, order, registration or qualification of or with any court or any such regulatory authority or other governmental agency or body required for the execution, delivery and performance by Borrower of this Agreement or any other Loan Documents has been obtained and is in full force and effect.

Section 6.16                                Title.  To Borrower’s knowledge, Borrower has, on the Closing Date, good, marketable and insurable title the portion of the Projects consisting of real property, and to Borrower’s knowledge such title is free and clear of all Liens whatsoever, except for the Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and has rights and the power to transfer each item of Collateral upon which it purports to grant a Lien under the Mortgages or any of the other Loan Documents.  The Mortgages create (and upon the recordation thereof and of any related financing statements there will be perfected) (1) a valid Lien on the Projects, subject only to Permitted Encumbrances and (2) valid security interests in and to, and collateral assignments of, all personality (including the leases), all in accordance with the terms thereof, in each case subject only to any applicable Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents.  There are no claims for payment for work, labor or materials affecting the Projects contracted for by Borrower which are or may become a Lien prior to, or of equal priority with, the Liens created by the Loan Documents.

Section 6.17                                Reserved.

Section 6.18                                Reserved.

Section 6.19                                Insurance.  Borrower has obtained and has delivered to the Administrative Agent certified copies of (or certificates of insurance with respect to ) all of the insurance policies for the Projects reflecting the insurance coverages, amounts and other insurance requirements required by  this Agreement.  No claims have been made under any such policy with respect to the Projects, and no Person, including Borrower, has done, by act or omission, anything which would impair the coverage of any such policy.

Section 6.20                                Reserved.

Section 6.21                                Reserved.

Section 6.22                                Reserved.

Section 6.23                                Reserved.

Section 6.24                                Reserved.

Section 6.25                                Filing and Recording Taxes.  All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable legal requirements currently in effect in connection with the transfer of each Project to Borrower or any transfer of a controlling interest in Borrower have been paid or will be paid on the Closing Date.

Section 6.26                                Investment Company Act.  Borrower is not (1) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (2) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (3) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

ARTICLE 7

FINANCIAL REPORTING

Section 7.1                                Financial Statements Quarterly Reports.  Within the earlier of  five (5) Business Days after the Form 10-Q of the REIT for any fiscal quarter becomes publicly available (or, in the case of clause (ii), (iii) and (iv) below, within sixty (60) days following the end of such fiscal quarter) , the Borrower shall furnish to the Administrative Agent the following:  (i) the most recent Form 10-Q of the REIT (which may be delivered by posting it on the REIT’s website), (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) an unaudited balance sheet and income statement for  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 such Borrower or the Projects) and (iv) an updated rent roll for each of the Projects.

(1)           Annual Reports.  Within  five (5) Business Days after the annual Form 10-K of the REIT for fiscal year 2008 becomes publicly available (or, in the case of clause (ii), (iii) and (iv) below, within one hundred (100) days following the end of such fiscal year), the Borrower shall furnish to the Administrative Agent the following:  (i) the annual Form 10-K of the REIT (which may be delivered by posting it on the REIT’s website), (ii) an annual summary of operating results for each of the Projects for such year, (iii) an unaudited balance sheet and income statement for such year for  Borrower (which may be consolidated provided that such financial statements contain notes identifying each item on such financial statements that is attributable to such Borrower or the Projects) and (iv) an updated rent roll for each of the Projects.

(2)           Certification; Supporting Documentation.  Each quarterly financial statement required hereunder shall be in scope and detail reasonably satisfactory to the Administrative Agent and certified by the chief financial representative of Borrower’s Manager.

Section 7.2                                Accounting Principles.  All financial statements shall be prepared in accordance with generally accepted accounting principles, consistently applied from year to year.

Section 7.3                                Other Information.  Borrower shall deliver to the Administrative Agent such additional information regarding Borrower, its business, and the Projects within thirty (30) days after the Administrative Agent’s reasonable request therefor.

Section 7.4                                Audits.  Borrower shall permit the Administrative Agent and the Administrative Agent’s agents and consultants to examine such records, books and papers of Borrower which reflect upon its financial condition, the income and expenses relative to the Projects and the representations set forth in Article 9.

ARTICLE 8

COVENANTS

Borrower covenants and agrees with the Administrative Agent and the Lenders as follows:

Section 8.1                                Due on Sale and Encumbrance; Transfers of Interests.

(1)           Except for Permitted Transfers, without the prior written consent of the Administrative Agent and the Lenders (to the extent required under Section 12.2), no Transfer shall occur or be permitted, nor shall Borrower enter into any easement or other agreement granting rights in or restricting the use or development of the Project;

(2)           Without limiting the foregoing, the conveyance of all of the Projects (or all of the Projects owned by Borrower) to a Controlled Subsidiary which is a Single Purpose Entity and 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 shall be permitted subject to the following terms and conditions:

(a)           the Controlled Subsidiary and the general partner, manager or managing member of such Controlled Subsidiary, after giving effect to such Transfer, is in compliance with all of the covenants of the Borrower  or any Borrower Party (as applicable) contained in the Loan Documents  (with all references herein to “Borrower” to mean such Controlled Subsidiary, and all references herein to “Borrower’s Manager” to mean  any general partner, manager or managing member of the Controlled Subsidiary;

(b)           no Potential Default or Event of Default is then existing or would result therefrom;

(c)           upon the transfer of such Projects to such Controlled Subsidiary, such Controlled Subsidiary, and the general partner, manager or managing member of such Controlled Subsidiary are in compliance in all material respects with all of the representations and warranties of the Borrower or applicable to the Borrower’s Manager  contained herein and in the other Loan Documents (after giving effect to the modifications reflecting the identity of the transferee resulting from such transfer)  (with all references herein to “Borrower” to mean such Controlled Subsidiary, and all references herein to “Borrower’s Manager” to mean  any general partner, manager or managing member of the Controlled Subsidiary);

(d)           such Projects shall be managed by the REIT or any property management company owned or controlled directly or indirectly by the REIT;

(e)           prior to such Transfer, the Administrative Agent shall have received notice of the proposed transferee and, within thirty (30) days after the date of such Transfer, the Administrative Agent shall have received copies of the Organizational Documents of such Controlled Subsidiary and the general partner, manager or managing member of such Controlled Subsidiary;

(f)           concurrently with such Transfer, the Administrative Agent shall have received such endorsements to the Title Policies insuring  the continued priority of the Liens of the applicable Mortgages after giving effect to the delivery by such entity of the assumption agreement referred to above (subject only to Permitted Encumbrances), in form and substance satisfactory to the Administrative Agent;

(g)           the assumption agreement to be entered into by the Borrower and the Controlled Subsidiary  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 or Borrower’s Manager, as shall be deemed necessary by the Administrative Agent to allocate to the Controlled Subsidiary 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 or Borrower’s Manager; and

(h)           upon compliance with the foregoing requirements in this Section 8.1(2) in connection with such Transfer, the Borrower, shall be released from its obligations under the Loan Documents arising from and after such Transfer, but such release shall not limit the obligations of the Borrower to comply with any requirements applicable to it (if any) in other capacities (including, without limitation, in capacities such as the general partner, managing member or manager of such Controlled Subsidiary).

As used in this Agreement, “Transfer” shall mean any direct or indirect sale, transfer, conveyance, installment sale, master lease, mortgage, pledge, encumbrance, grant of Lien or other interest, license, lease, alienation or assignment, whether voluntary or involuntary, of all or any portion of the direct or indirect legal or beneficial ownership of, or any interest in (a) the Project or any part thereof, or (b) Borrower, including any agreement to transfer or cede to another Person any voting, management or approval rights, or any other rights, appurtenant to any such legal or beneficial ownership or other interest in Borrower.  “Transfer” is specifically intended to include any pledge or assignment, directly or indirectly, of a controlling interest in Borrower or its general partner, controlling limited partner or controlling member for purposes of securing so-called “mezzanine” indebtedness.  “Transfer” shall not include (i) the leasing of space within the Project so long as Borrower complies with the provisions of the Loan Documents relating to such leasing activity; (ii) the transfer of limited partner or non-managing member interests in Borrower so long as the transfer does not violate the provisions of Sections 8.1(2), does not violate the provisions of Article 9, and so long as Borrower remains a Controlled Subsidiary; or (iii) any sale, transfer, conveyance, pledge, hypothecation, encumbrance, grant of Lien or other interest in, alienation, assignment, issuance, conversion or redemption of any shares, stock, securities, warrants, membership interests, partnership interests or other equity interests of any kind or nature in, or relating to, the REIT, the Operating Partnership, the Fund (so long as the Fund remains a Controlled Subsidiary), any direct or indirect subsidiary of any of the foregoing, or any direct or indirect constituents of any of the foregoing, so long as the Borrower (or any Controlled Subsidiary that acquires ownership to the Projects as permitted herein) remains a Controlled Subsidiary.  Notwithstanding anything to the contrary set forth herein no Transfer shall be permitted which would result in a violation of the provisions of Article 9.

Section 8.2                                Taxes; Charges.  Borrower shall pay prior to delinquency and before any fine, penalty, interest or cost may be added thereto, and shall not enter into any agreement to defer, any real estate taxes and assessments, franchise taxes and charges, and other governmental charges that may become a Lien upon any Project or become payable during the term of the Loans (collectively, the “Taxes”), and, upon request, will promptly furnish the Administrative Agent with evidence of such payment.  Borrower shall not suffer or permit the joint assessment of any Project with any other real property constituting a separate tax lot or with any other real or personal property.  Borrower shall pay when due all claims and demands of mechanics, materialmen, laborers and others which, if unpaid, might result in a Lien on Borrower’s interest in the Project; however, Borrower may contest the validity of such claims and demands or taxes so long as (1) Borrower notifies the Administrative Agent that it intends to contest such claim or demand, (2) if Borrower has not caused the Lien to be removed prior to the earlier of (i) thirty (30) days and (ii) the commencement of any foreclosure action related thereto, Borrower provides the Administrative Agent with an indemnity, bond or other security satisfactory to the Administrative Agent (including an endorsement to the Administrative Agent’s title insurance policy insuring against such claim or demand) assuring the discharge of Borrower’s obligations for such claims and demands, including interest and penalties, and (3) Borrower is diligently contesting the same by appropriate legal proceedings in good faith and at its own expense and concludes such contest prior to the tenth (10th) day preceding the earlier to occur of the Maturity Date or the date on which the Project is scheduled to be sold for non-payment.

Section 8.3                                Control; Management.  Without the prior written consent of the Administrative Agent, except for changes contemplated by Section 8.1 above, there shall be no change in the day-to-day control and management of Borrower or Borrower’s Manager, and no change in their respective organizational documents relating to control over Borrower, Borrower’s Manager and/or the Project.  Except for changes contemplated by Section 8.1 above, Borrower shall not terminate, replace or appoint any property manager or terminate or amend any property management agreement for any Project without the Administrative Agent’s prior written approval.  Except for changes contemplated by Section 8.1 above, any change in ownership or control of the property manager shall be cause for the Administrative Agent to re-approve such property manager and property management agreement.  Each property manager shall hold and maintain all necessary licenses, certifications and permits required by law.  Borrower shall fully perform all of its covenants, agreements and obligations under the property management agreement.

Section 8.4                                Operation; Maintenance; Inspection.  Borrower shall observe and comply with all legal requirements applicable to its existence and to the ownership, use and operation of the Projects.  Borrower shall maintain the Projects in good condition and promptly repair any damage or casualty.  Subject to Section 8.15 below, Borrower shall not, without the prior written consent of the Administrative Agent, undertake any material alteration of the Projects or permit any of the fixtures or personalty owned by Borrower to be removed at any time from the Projects, unless the removed item is removed temporarily for maintenance and repair or, if removed permanently, is either (i) obsolete and  replaced by an article of equal or better suitability and value, owned by Borrower and free and clear of any Liens except those in favor of the Administrative Agent (on behalf of the Lenders) and Liens permitted pursuant to the Loan Documents or (ii) no longer necessary for the operation of the Project.  Borrower shall permit the Administrative Agent and the Lenders and their agents, representatives and employees, upon reasonable prior notice to Borrower, to inspect the Projects and conduct, at its own expense, such environmental and engineering studies as the Administrative Agent may require, provided such inspections and studies do not materially or unreasonably interfere with the use and operation of the Projects.

Section 8.5                                Taxes on Security.  Borrower shall pay all taxes, charges, filing, registration and recording fees, excises and levies payable with respect to the Notes or the Liens created or secured by the Loan Documents, other than income, franchise and doing business taxes imposed on the Administrative Agent or any Lender.  If there shall be enacted any law (1) deducting the Loans from the value of the Projects for the purpose of taxation, (2) adversely affecting any Lien on the Projects created under the Loan Documents, or (3) changing existing laws of taxation of mortgages, deeds of trust, security deeds, or debts secured by real property, or changing the manner of collecting any such taxes, Borrower shall promptly pay to the Administrative Agent, on demand, all taxes, costs and charges for which the Administrative Agent or any Lender is or may be liable as a result thereof; however, if such payment would be prohibited by law or would render the Loans usurious, then instead of collecting such payment, the Administrative Agent may (and on the request of the Majority Lenders shall) give notice of such event to Borrower and declare all amounts owing under the Loan Documents to be immediately due and payable ninety (90) days after the giving of such notice to Borrower.

Section 8.6                                Legal Existence; Name, Etc.  Borrower shall preserve and keep in full force and effect its existence as a Single Purpose Entity, and Borrower and Borrower’s Member shall each preserve and keep in full force and effect its entity status, franchises, rights and privileges under the laws of the state of its formation, and all qualifications, licenses and permits applicable to the ownership, use and operation of the Project.  Borrower shall not wind up, liquidate, dissolve, reorganize, merge, or consolidate with or into, or convey, sell, assign, transfer, lease, or otherwise dispose of all or substantially all of its assets, or acquire all or substantially all of the assets of the business of any Person, or permit any subsidiary or Affiliate of Borrower to do so.  Without limiting the foregoing, Borrower shall not reincorporate or reorganize itself under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or organized as of the Closing Date.  Borrower shall not change its name, identity, or organizational structure, state of formation or the location of its chief executive office or principal place of business except upon thirty (30) days prior written notice to the Administrative Agent, provided that no such change shall cause Borrower to no longer maintain its existence as a Single Purpose Entity.

Section 8.7                                Affiliate Transactions.  Without the prior written consent of the Administrative Agent or as otherwise specifically permitted under the Loan Documents, except for the Management Agreements, Borrower shall not engage in any transaction affecting the Project with an Affiliate of Borrower, other than on arm’s length terms pursuant to contracts which are terminable without penalty or premium on thirty (30) days notice.

Section 8.8                                Limitation on Other Debt.  Borrower shall not, without the prior written consent of the Administrative Agent and the Majority Lenders, incur any Debt other than the Loans and Debt described in subsection (b) of the definition of Single Purpose Entity.

Section 8.9                                Further Assurances.  Borrower, upon request, shall promptly (1) cure any defects in the execution and delivery of the Loan Documents, (2) provide, and to cause each Borrower Party to provide, the Administrative Agent such additional information and documentation on Borrower’s and each Borrower Party’s legal or beneficial ownership, policies, procedures and sources of funds as the Administrative Agent deems necessary or prudent to enable the Administrative Agent to comply with Anti-Money Laundering Laws as now in existence or hereafter amended, and (3) execute and deliver, or cause to be executed and delivered, all such other documents, agreements and instruments as the Administrative Agent may reasonably request to further evidence and more fully describe the collateral for the Loan, to correct any omissions in the Loan Documents, to perfect, protect or preserve any Liens created under any of the Loan Documents, or to make any recordings, file any notices, or obtain any consents, as may be necessary or appropriate in connection therewith.  From time to time upon the written request of the Administrative Agent, Borrower shall deliver to the Administrative Agent a schedule of the name, legal domicile address and jurisdiction of organization, if applicable, for each Borrower Party and each holder of a legal interest in Borrower.

Section 8.10                                Estoppel Certificates.  Borrower, within ten (10) days after request, shall furnish to the Administrative Agent a written statement, duly acknowledged, setting forth the amount due on the Loans, the terms of payment of the Loans, the date to which interest has been paid, whether, to Borrower’s knowledge, any offsets or defenses exist against the Loans and, if any are alleged to exist, the nature thereof in reasonable detail, and such other matters as the Administrative Agent reasonably may request.

Section 8.11                                Notice of Certain Events.  Borrower shall promptly notify the Administrative Agent of (1)  any Potential Default or Event of Default, together with a reasonably detailed statement of the steps being taken to cure such Potential Default or Event of Default; (2) any notice of default received by Borrower or any Borrower Party under any Major Lease or under any other obligations relating to the Project that could reasonably be expected to have a material adverse effect on Borrower’s business or the Projects or on Borrower’s ability to pay the indebtedness evidenced by, or perform its material obligations under, the Loan Documents; and (3)  any threatened or pending legal, judicial or regulatory proceedings, including any dispute between Borrower and any governmental authority, affecting Borrower or the Projects.

Section 8.12                                Indemnification.  Borrower shall indemnify, defend and hold the Administrative Agent and each Lender harmless from and against any and all losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs or disbursements of any kind or nature whatsoever, including the reasonable fees and actual expenses of their counsel, which may be imposed upon, asserted against or incurred by any of them relating to or arising out of (1) the Projects or (2) any of the Loan Documents or the transactions contemplated thereby, including, without limitation, (a) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about any of the Projects or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways, (b) at any time after the occurrence of an Event of Default, any inspection, review or testing of or with respect to the Projects relating to the Administrative Agent’s enforcement of its rights or remedies under the Loan Documents, (c) any investigative, administrative, mediation, arbitration, or judicial proceeding, whether or not the Administrative Agent or any Lender is designated a party thereto, commenced or threatened at any time (including after the repayment of the Loans) in any way related to the execution, delivery or performance of any Loan Document or to the Administrative Agent’s interest in the Projects, (d) any proceeding instituted by any Person claiming a Lien against any of the Collateral, and (e) any brokerage commissions or finder’s fees claimed by any broker or other party engaged by Borrower or any Borrower Party in connection with the Loans, the Projects, or any of the transactions contemplated in the Loan Documents, including those arising from the joint, concurrent, or comparative negligence of the Administrative Agent or any Lender, except to the extent any of the foregoing is caused by the Administrative Agent’s or any Lender’s gross negligence or willful misconduct, in which case the party to whom the gross negligence or willful misconduct is attributable (but not any other party) shall not be entitled to the indemnification provided for hereunder to the extent of such gross negligence or willful misconduct.

Section 8.13                                Application of Operating Revenues.  Borrower shall first apply all Operating Revenues to the payment of current Debt Service and to other payments then due under the Loan Documents, and to pay when due (or prior to delinquency in the case of taxes or assessments) taxes, assessments, water charges, sewer rents and other governmental charges levied, assessed or imposed against the Projects, insurance premiums, operations and maintenance charges relating to the Projects, and other obligations of the lessor under leases of space at the Projects, in each case on a current basis, before using Operating Revenues for any other purpose.

Section 8.14                                Payment for Labor and Materials.  Borrower will promptly pay when due (unless the same are being contested in good faith) all bills and costs for labor, materials, and specifically fabricated materials incurred by Borrower in connection with the Projects and never permit to exist beyond the due date thereof in respect of Borrower’s interest in any of the Projects or any part thereof any Lien (other than the Permitted Encumbrances and Liens created by or permitted pursuant to the Loan Documents), even though inferior to the Liens of the Loan Documents, and in any event never permit to be created or exist in respect of Borrower’s interest in any Project or any part thereof any other or additional Lien other than the Liens or security of the Loan Documents, except for the Permitted Encumbrances and Liens permitted pursuant to the Loan Documents.

Section 8.15                                Alterations.  Borrower shall obtain the Administrative Agent’s prior written consent, which consent shall not be unreasonably withheld or delayed, to any alterations to any improvements that equals or exceeds $10,000,000 or that otherwise may have a material adverse effect on Borrower’s financial condition, the use, operation or value of any Project or the actual Net Operating Income with respect to any Project, other than (a) tenant improvement work performed pursuant to the terms of any lease executed on or before the date hereof, (b) tenant improvement work performed pursuant to the terms and provisions of a lease and not adversely affecting any structural component of any improvements, any utility or HVAC system contained in any improvements or the exterior of any building constituting a part of any improvements at the Projects, or (c) alterations performed in connection with the restoration of the Projects after the occurrence of a casualty or condemnation in accordance with the terms and provisions of this Agreement.

Section 8.16                                Handicapped Access.

(1)           Notwithstanding any provisions set forth herein or in any other document regarding the Administrative Agent’s approval of alterations of the Projects, Borrower shall not alter the Projects in any manner which would materially increase Borrower’s responsibilities for compliance with the applicable requirements of the Americans with Disabilities Act of 1990, the Fair Housing Amendments Act of 1988, all state and local laws and ordinances related to handicapped access and all rules, regulations, and orders issued pursuant thereto including, without limitation, the Americans with Disabilities Act Accessibility Guidelines for Buildings and Facilities (collectively, “Access Laws”) without the prior written approval of the Administrative Agent.  The foregoing shall apply to tenant improvements constructed by Borrower or by any of its tenants.  The Administrative Agent may condition any such approval upon receipt of a certificate of Access Law compliance from an architect, engineer, or other person reasonably acceptable to the Administrative Agent.

(2)           Borrower agrees to give prompt notice to the Administrative Agent of the receipt by Borrower of any written complaints related to violation of any Access Laws with respect to the Projects and of the commencement of any proceedings or investigations which relate to compliance with applicable Access Laws.

ARTICLE 9

ANTI-MONEY LAUNDERING AND

INTERNATIONAL TRADE CONTROLS

Section 9.1                                Compliance with International Trade Control Laws and OFAC Regulations.  Borrower represents, warrants and covenants to the Administrative Agent and the Lenders that:

(1)           It is not now nor shall it be at any time until after the Loan is fully repaid a Person with whom a United States Person, including a Financial Institution, is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under United States law, regulation, executive orders and lists published by the OFAC (including those executive orders and lists published by OFAC with respect to Specially Designated Nationals and Blocked Persons) or otherwise.

(2)           No Borrower Party and no Person who owns a direct interest in Borrower is now nor shall be at any time until after the Loans are fully repaid a Person with whom a United States Person, including a Financial Institution, is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under United States law, regulation, executive orders and lists published by the OFAC (including those executive orders and lists published by OFAC with respect to Specially Designated Nationals and Blocked Persons) or otherwise.

Section 9.2                                Borrower’s Funds.   Borrower represents, warrants and covenants to the Administrative Agent and the Lenders that:

(1)           It has taken, and shall continue to take until after the Loans are fully repaid, such measures as are required by law to assure that the funds invested in the Borrower and/or used to make payments on the Loan are derived (a) from transactions that do not violate United States law nor, to the extent such funds originate outside the United States, do not violate the laws of the jurisdiction in which they originated; and (b) from permissible sources under United States law and to the extent such funds originate outside the United States, under the laws of the jurisdiction in which they originated.

(2)           To the best of its knowledge after making due inquiry, neither Borrower, nor any Borrower Party, nor any holder of a direct interest in Borrower, nor any Person providing funds to Borrower (a) is under investigation by any governmental authority for, or has been charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities, any crimes which in the United States would be predicate crimes to money laundering, or any violation of any Anti-Money Laundering Laws; (b) has been assessed civil or criminal penalties under any Anti-Money Laundering Laws; and (c) has had any of its funds seized or forfeited in any action under any Anti-Money Laundering Laws.

(3)           Borrower shall make payments on the Loan using funds invested in Borrower, Operating Revenues or insurance proceeds unless otherwise agreed to by Lender.

(4)           To the best of Borrower’s knowledge, as of the Closing Date and at all times during the term of the Loan, all Operating Revenues are and will be derived from lawful business activities of Project tenants or other permissible sources under U.S. law.

(5)           On the Maturity Date, Borrower will take reasonable steps to verify that funds used to repay the Loan in full (whether in connection with a refinancing, asset sale or otherwise) are from sources permissible under U.S. law and to the extent such funds originate outside the United States, permissible under the laws of the jurisdiction in which they originated.

ARTICLE 10

EVENTS OF DEFAULT

Each of the following shall constitute an Event of Default under the Loans:

Section 10.1                                Payments.  Borrower’s failure to pay any regularly scheduled installment of principal, interest, or other amount due under the Loan Documents within five (5) days of (and including) the date when due, or Borrower’s failure to pay the Loans at the Maturity Date, whether by acceleration or otherwise.

Section 10.2                                Insurance.  Borrower’s failure to maintain insurance as required under Section 3.1 of this Agreement.

Section 10.3                                Single Purpose Entity.  If Borrower breaches its covenant under Section 8.6 with respect to its status as a Single Purpose Entity.

Section 10.4                                Taxes. If any of the Taxes are not paid  prior to delinquency.

Section 10.5                                Sale, Encumbrance, Etc.  Any Transfer occurs in violation of Section 8.1 of this Agreement.

Section 10.6                                Representations and Warranties.  Any representation or warranty made in any Loan Document proves to be untrue in any material respect when made or deemed made.

Section 10.7                                Other Encumbrances.  Any default under any document or instrument, other than the Loan Documents, evidencing or creating a Lien on any of the Projects or any part thereof, that could reasonably be expected to have a material adverse effect on Borrower’s business or the Projects or on Borrower’s ability to pay the indebtedness evidenced by, or perform its material obligations under, the Loan Documents.

Section 10.8                                Involuntary Bankruptcy or Other Proceeding.  Commencement of an involuntary case or other proceeding against Borrower, Borrower’s Member or any Borrower Party (each, a “Bankruptcy Party”) which seeks liquidation, reorganization or other relief with respect to it or its debts or other liabilities under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeks the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any of its property, and such involuntary case or other proceeding shall remain undismissed or unstayed for a period of sixty (60) days; or an order for relief against a Bankruptcy Party shall be entered in any such case under the Federal Bankruptcy Code.

Section 10.9                                Voluntary Petitions, Etc. Commencement by a Bankruptcy Party of a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its Debts or other liabilities under any bankruptcy, insolvency or other similar law or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for it or any of its property, or consent by a Bankruptcy Party to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or the making by a Bankruptcy Party of a general assignment for the benefit of creditors, or the failure by a Bankruptcy Party, or the admission by a Bankruptcy Party in writing of its inability, to pay its debts generally as they become due, or any action by a Bankruptcy Party to authorize or effect any of the foregoing.

Section 10.10                                Covenants.  Borrower’s failure to perform, observe or comply with any of the agreements, covenants or provisions contained in this Agreement or in any of the other Loan Documents (other than those agreements, covenants and provisions referred to elsewhere in this Article 10), and the continuance of such failure for thirty (30) days after notice by the Administrative Agent to Borrower; however, subject to any shorter period for curing any failure by Borrower as specified in any of the other Loan Documents, Borrower shall have an additional sixty (60) days to cure such failure if (1) such failure does not involve the failure to make payments on a monetary obligation under the Loan Documents; (2) such failure cannot reasonably be cured within thirty (30) days but, using reasonable diligence, is curable within such 60-day period; and (3) Borrower is diligently undertaking to cure such default.  The notice and cure provisions of this Section 10.4 do not apply to the other Events of Default described in this Article 10 or the Events of Default described in Article 9.

ARTICLE 11

REMEDIES

Section 11.1                                Remedies - Insolvency Events.  Upon the occurrence of any Event of Default described in Section 10.8 or 10.9, the obligations of the Lenders to advance amounts hereunder shall immediately terminate, and all amounts due under the Loan Documents immediately shall become due and payable, all without written notice and without presentment, demand, protest, notice of protest or dishonor, notice of intent to accelerate the maturity thereof, notice of acceleration of the maturity thereof, or any other notice of default of any kind, all of which are hereby expressly waived by Borrower; however, if the Bankruptcy Party under Section 10.8 or 10.9 is other than Borrower, then all amounts due under the Loan Documents shall become immediately due and payable at the Administrative Agent’s election, in the Administrative Agent’s sole discretion.

Section 11.2                                Remedies - Other Events.  Except as set forth in Section 11.1 above, while any Event of Default exists, the Administrative Agent may (1) by written notice to Borrower, declare the entire amount of the Loans to be immediately due and payable without presentment, demand, protest, notice of protest or dishonor, notice of intent to accelerate the maturity thereof, notice of acceleration of the maturity thereof, or other notice of default of any kind, all of which are hereby expressly waived by Borrower, (2) terminate the obligation, if any, of the Lenders to advance amounts hereunder, and (3) subject to the provisions of Section 13.1, exercise all rights and remedies therefor under the Loan Documents and at law or in equity.

Section 11.3                                Administrative Agent’s Right to Perform the Obligations.  If Borrower shall fail, refuse or neglect to make any payment or perform any act required by the Loan Documents, then while any Event of Default exists, and without notice to or demand upon Borrower and without waiving or releasing any other right, remedy or recourse the Administrative Agent or any Lender may have because of such Event of Default, the Administrative Agent may (but shall not be obligated to) make such payment or perform such act for the account of and at the expense of 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 reference 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, while an Event of Default exists, if any Hazardous Materials affect or threaten 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 any Hazardous Materials or remove the Hazardous Materials.  Subject to the limitations contained in Section 4.3, Borrower shall indemnify, defend and hold the Administrative Agent and the Lenders harmless from and against any and all losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs or disbursements of any kind or nature whatsoever, including reasonable attorneys’ fees and disbursements, incurred or  accruing by reason of any acts performed by the Administrative Agent or any Lender pursuant to the provisions of this Section 11.3, including those arising from the joint, concurrent, or comparative negligence of the Administrative Agent and any Lender, except as a result of the Administrative Agent’s or any Lender’s gross negligence or willful misconduct.  All sums paid by the Administrative Agent pursuant to this Section 11.3, and all other sums expended by the Administrative Agent or any Lender to which it shall be entitled to be indemnified, together with interest thereon at the Default Rate from the date of such payment or expenditure until paid unless paid within 10 Business days after demand therefor, shall constitute additions to the Loans, shall be secured by the Loan Documents and shall be paid by Borrower to the Administrative Agent upon demand.

ARTICLE 12

MISCELLANEOUS

Section 12.1                                Notices.  Any notice required or permitted to be given under this Agreement shall be in writing and either shall be mailed by certified mail, postage prepaid, return receipt requested, or sent by overnight air courier service, or personally delivered to a representative of the receiving party, or sent by telecopy (provided that for telecopy delivery, an identical notice is also sent simultaneously by mail, overnight courier or personal delivery as otherwise provided in this Section 12.1).  All such notices shall be mailed, sent or delivered, addressed to the intended recipient at the “Address for Notices” specified below its name on the signature pages hereof.  Any notice so addressed and sent by United States mail or overnight courier shall be deemed to be given on the earliest of (1) when actually delivered, (2) on the first Business Day after deposit with an overnight air courier service, or (3) on the third Business Day after deposit in the United States mail, postage prepaid, in each case to the address of the intended addressee (except as otherwise provided in the Mortgage).  Any notice so delivered in person shall be deemed to be given when receipted for by, or actually received by, the Administrative Agent, a Lender or Borrower, as the case may be.  If given by telecopy, a notice shall be deemed given and received when the telecopy is transmitted to the party’s telecopy number specified above and confirmation of complete receipt is received by the transmitting party during normal business hours or on the next Business Day if not confirmed during normal business hours, and an identical notice is also sent simultaneously by mail, overnight courier, or personal delivery as otherwise provided in this Section 12.1.  Except for telecopy notices sent as expressly described above, no notice hereunder shall be effective if sent or delivered by electronic means.  Either party may designate a change of address by written notice to the other by giving at least ten (10) days prior written notice of such change of address.

Section 12.2                                Amendments, Waivers, Etc.

(1)Subject to any consents required pursuant to this Section 12.2 and any other provisions of this Agreement and any other Loan Document which expressly require the consent, approval or authorization of the Majority Lenders, this Agreement and any other Loan Document may be modified or supplemented only by an instrument in writing signed by Borrower and the Administrative Agent; provided that, the Administrative Agent may (without any Lender’s consent) give or withhold its agreement to any amendments of the Loan Documents or any waivers or consents in respect thereof or exercise or refrain from exercising any other rights or remedies which the Administrative Agent may have under the Loan Documents or otherwise provided that such actions do not, in the Administrative Agent’s judgment reasonably exercised, materially adversely affect the value of any collateral, taken as a whole, or represent a departure from Administrative Agent’s standard of care described in Section 14.5 (and the assignment or granting of a participation by GECC shall not limit or otherwise affect its discretion in respect of any of the foregoing), except that the Administrative Agent will not, without the consent of each Lender, agree to the following (provided that no Lender’s consent shall be required for any of the following which are otherwise required or contemplated under the Loan Documents): (a) reduce the principal amount of the Loans or reduce the interest rate thereon; (b) extend any stated payment date for principal of or interest on the Loans payable to such Lender; (c) release Borrower or any other party from liability under the Loan Documents (except for any assigning Lender pursuant to Section 12.24 and any resigning Administrative Agent pursuant to Section 14.8); (d) release or subordinate in whole or in part any material portion of the collateral given as security for the Loans; (e) modify any of the provisions of this Section, the definition of “Majority Lenders” or any other provision in the Loan Documents specifying the number or percentage of Lenders required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder; (f) modify the terms of any Event of Default; or (g) consent to (i) the sale, transfer or encumbrance of any portion of the Project (or any interest therein) or any direct or indirect ownership interest therein and (ii) the incurrence by Borrower of any additional indebtedness secured by the Project, in each case to the extent (and subject to any standard of reasonability) such consent is required under the Loan Documents.

(2)Notwithstanding anything to contrary contained in this Agreement, any modification or supplement of Article 14, or of any of the rights or duties of the Administrative Agent hereunder, shall require the consent of the Administrative Agent.

Section 12.3                                Limitation on Interest.  It is the intention of the parties hereto to conform strictly to applicable usury laws.  Accordingly, all agreements between Borrower, the Administrative Agent and the Lenders with respect to the Loans are hereby expressly limited so that in no event, whether by reason of acceleration of maturity or otherwise, shall the amount paid or agreed to be paid to the Administrative Agent or any Lender or charged by any Lender for the use, forbearance or detention of the money to be lent hereunder or otherwise, exceed the maximum amount allowed by law.  If the Loans would be usurious under applicable law (including the laws of the State and the laws of the United States of America), then, notwithstanding anything to the contrary in the Loan Documents: (1) the aggregate of all consideration which constitutes interest under applicable law that is contracted for, taken, reserved, charged or received under the Loan Documents shall under no circumstances exceed the maximum amount of interest allowed by applicable law, and any excess shall be credited on the Notes by the holders thereof (or, if the Notes have been paid in full, refunded to Borrower); and (2) if maturity is accelerated by reason of an election by the Administrative Agent in accordance with the terms hereof, or in the event of any prepayment, then any consideration which constitutes interest may never include more than the maximum amount allowed by applicable law.  In such case, excess interest, if any, provided for in the Loan Documents or otherwise, to the extent permitted by applicable law, shall be amortized, prorated, allocated and spread from the date of advance until payment in full so that the actual rate of interest is uniform through the term hereof.  If such amortization, proration, allocation and spreading is not permitted under applicable law, then such excess interest shall be cancelled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited on the Notes (or, if the Notes have been paid in full, refunded to Borrower).  The terms and provisions of this Section 12.3 shall control and supersede every other provision of the Loan Documents.  The Loan Documents are contracts made under and shall be construed in accordance with and governed by the laws of the State in accordance with Section 12.21, except that if at any time the laws of the United States of America permit the Lenders to contract for, take, reserve, charge or receive a higher rate of interest than is allowed by the laws of the State (whether such federal laws directly so provide or refer to the law of any state), then such federal laws shall to such extent govern as to the rate of interest which the Lenders may contract for, take, reserve, charge or receive under the Loan Documents.

Section 12.4                                Invalid Provisions.  If any provision of any Loan Document is held to be illegal, invalid or unenforceable, such provision shall be fully severable; the Loan Documents shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part thereof; the remaining provisions thereof shall remain in full effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance therefrom; and in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as a part of such Loan Document a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible to be legal, valid and enforceable.

Section 12.5                                Reimbursement of Expenses.  Borrower shall pay or reimburse the Administrative Agent and/or the Lenders on demand of the applicable party for: (1) the reasonable attorney’s fees and expenses incurred by the Administrative Agent in connection with the negotiation, documentation and closing of the Loans; and (2) all amounts expended, advanced or incurred by the Administrative Agent and the Lenders to collect the Notes, or to enforce the rights of the Administrative Agent and the Lenders under this Agreement or any other Loan Document, or to defend or assert the rights and claims of the Administrative Agent and the Lenders under the Loan Documents or with respect to the Project (by litigation or other proceedings), which amounts under this clause (2) will include all court costs, attorneys’ fees and expenses, fees of auditors and accountants, and investigation expenses as may be incurred by the Administrative Agent and the Lenders in connection with any such matters (whether or not litigation is instituted), together with interest at the Default Rate on each such amount from the date of disbursement until the date of reimbursement to the Administrative Agent and the Lenders unless paid within 10 Business Days after demand therefor, all of which shall constitute part of the Loans and shall be secured by the Loan Documents.

Section 12.6                                Approvals; Third Parties; Conditions.  All approval rights retained or exercised by the Administrative Agent and the Lenders with respect to leases, contracts, plans, studies and other matters are solely to facilitate the Lenders’ credit underwriting, and shall not be deemed or construed as a determination that the Lenders have passed on the adequacy thereof for any other purpose and may not be relied upon by Borrower or any other Person.  This Agreement is for the sole and exclusive use of the Administrative Agent, the Lenders and Borrower and may not be enforced, nor relied upon, by any Person other than the Administrative Agent, the Lenders and Borrower.  All conditions of the obligations of the Administrative Agent and the Lenders hereunder, including the obligation to make advances, are imposed solely and exclusively for the benefit of the Administrative Agent and the Lenders, their successors and assigns, and no other Person shall have standing to require satisfaction of such conditions or be entitled to assume that the Lenders will refuse to make advances in the absence of strict compliance with any or all of such conditions, and no other Person shall, under any circumstances, be deemed to be a beneficiary of such conditions, any and all of which may be freely waived in whole or in part by the Administrative Agent and the Lenders at any time in their sole discretion.

Section 12.7                                Lenders and Administrative Agent Not in Control; No Partnership.  None of the covenants or other provisions contained in this Agreement shall, or shall be deemed to, give the Administrative Agent or any Lender the right or power to exercise control over the affairs or management of Borrower, the power of the Administrative Agent and the Lenders being limited to the rights to exercise the remedies referred to in the Loan Documents.  The relationship between Borrower and the Lenders is, and at all times shall remain, solely that of debtor and creditor.  No covenant or provision of the Loan Documents is intended, nor shall it be deemed or construed, to create a partnership, joint venture, agency or common interest in profits or income between the Administrative Agent, the Lenders and Borrower or to create an equity in the Project in the Administrative Agent or any Lender.  The Administrative Agent and the Lenders neither undertake nor assume any responsibility or duty to Borrower or to any other person with respect to the Project or the Loans, except as expressly provided in the Loan Documents; and notwithstanding any other provision of the Loan Documents: (1)  neither the Administrative Agent nor any Lender is, nor shall be construed as, a partner, joint venturer, alter ego, manager, controlling person or other business associate or participant of any kind of Borrower or its stockholders, members, or partners and neither the Administrative Agent nor any Lender intends to ever assume such status; (2) no Lender or the Administrative Agent shall in any event be liable for any Debts, expenses or losses incurred or sustained by Borrower; and (3) no Lender or the Administrative Agent shall be deemed responsible for or a participant in any acts, omissions or decisions of Borrower or its stockholders, members, or partners.  The Administrative Agent, the Lenders and Borrower disclaim any intention to create any partnership, joint venture, agency or common interest in profits or income between the Administrative Agent, the Lenders and Borrower, or to create an equity in the Project in the Administrative Agent or any Lender, or any sharing of liabilities, losses, costs or expenses.

Section 12.8                                Time of the Essence.  Time is of the essence with respect to this Agreement.

Section 12.9                                Successors and Assigns; Secondary Market Transactions.

(1)           Subject to the provisions of Section 12.24, this Agreement shall be binding upon and inure to the benefit of the Administrative Agent, the Lenders and Borrower and their respective successors and permitted assigns.

(2)           Borrower acknowledges that Administrative Agent and each Lender and its respective successors and assigns may without notice to or consent from Borrower, and at the Administrative Agent’s sole cost and expense, (a) sell this Agreement, the Mortgages, the Notes, the other Loan Documents, and any and all servicing rights thereto, or any portions thereof, to one or more investors, (b) participate and/or syndicate the Loans to one or more investors, (c) deposit this Agreement, the Notes and the other Loan Documents, or any portions thereof, with a trust, which trust may sell certificates to investors evidencing an ownership interest in the trust assets, or (d) otherwise sell, transfer or assign the Loans or interests therein in one or more transactions to investors (the transactions referred to in clauses (a) through (d) are hereinafter each referred to as a “Secondary Market Transaction”).  Borrower shall reasonably cooperate with the Administrative Agent and each Lender in effecting any such Secondary Market Transaction and shall reasonably cooperate and use all reasonable efforts, at no cost or expense to Borrower or any Borrower Party, to satisfy the market standards to which the Administrative Agent and each Lender customarily adheres or which may be reasonably required by any participant, investor, purchaser or any Rating Agency involved in any Secondary Market Transaction ..  Borrower shall provide such information and documents relating to Borrower and the Projects as the Administrative Agent and each Lender may reasonably request in connection with such Secondary Market Transaction.  In addition, Borrower shall make available to the Administrative Agent and the Lenders all information concerning the Projects, its business and operations that the Administrative Agent and the Lenders may reasonably request.  The Administrative Agent and the Lenders shall be permitted to share all information with the participants, investors, purchasers, investment banking firms, Rating Agencies, accounting firms, law firms and third-party advisory firms involved with the Loans and Loan Documents or the applicable Secondary Market Transaction.  The Administrative Agent and the Lenders and all of the aforesaid participants, investors, purchasers, advisors, Rating Agencies and professional firms shall be entitled to rely on the information supplied by or on behalf of Borrower.  Borrower also agrees to execute any amendment of or supplement to this Agreement and the other Loan Documents as the Administrative Agent and the Lenders may reasonably request in connection with any Secondary Market Transaction, provided that such amendment or supplement does not change any of the economic terms of the Loans, reduce any of Borrower’s rights, or increase any of Borrower’s duties, responsibilities or liabilities under the Loan Documents.

(3)           The Administrative Agent and each Lender shall have the right, at any time (whether prior to, in connection with, or after any Secondary Market Transaction), with respect to all or any portion of the Loan, to modify, split and/or sever all or any portion of the Loan as hereinafter provided.  Without limiting the foregoing, Administrative Agent may (i) cause the Notes and Mortgages to be split into a first and second mortgage loan, (ii) create one more senior and subordinate notes, or (iii) create multiple components of the Notes (and allocate or reallocate the principal balance of the Loans among such components) , in each such case, in whatever proportion and whatever priority Administrative Agent determines; provided, however, in each such instance the outstanding principal balance of all the Notes evidencing the Loans (or components of such Notes) immediately after the effective date of such modification equals the outstanding principal balance of the Loans immediately prior to such modification and the weighted average of the interest rates for all such Notes (or components of such Notes) immediately after the effective date of such modification equals the interest rate of the original Note immediately prior to such modification.  If requested by Administrative Agent, Borrower (and Borrower’s constituent members, if applicable) shall execute within two (2) Business Days after such request, such documentation as Lender may reasonably request to evidence and/or effectuate any such modification or severance.

Section 12.10                                Renewal, Extension or Rearrangement.  All provisions of the Loan Documents shall apply with equal effect to each and all promissory notes and amendments thereof hereinafter executed which in whole or in part represent a renewal, extension, increase or rearrangement of the Loans.  For portfolio management purposes, the Lenders may elect to divide the Loans into two or more separate loans evidenced by separate promissory notes so long as the payment and other obligations of Borrower are not effectively increased or otherwise modified.  Borrower agrees to cooperate with the Administrative Agent and the Lenders and to execute such documents as the Administrative Agent reasonably may request to effect such division of the Loans.

Section 12.11                                Waivers.  No course of dealing on the part of the Administrative Agent or any Lender, their officers, employees, consultants or agents, nor any failure or delay by the Administrative Agent or any Lender with respect to exercising any right, power or privilege of the Administrative Agent or any Lender under any of the Loan Documents, shall operate as a waiver thereof.

Section 12.12                                Cumulative Rights.  Rights and remedies of the Administrative Agent and the Lenders under the Loan Documents shall be cumulative, and the exercise or partial exercise of any such right or remedy shall not preclude the exercise of any other right or remedy.

Section 12.13                                Singular and Plural.  Words used in this Agreement and the other Loan Documents in the singular, where the context so permits, shall be deemed to include the plural and vice versa.  The definitions of words in the singular in this Agreement and the other Loan Documents shall apply to such words when used in the plural where the context so permits and vice versa.

Section 12.14                                Phrases.  When used in this Agreement and the other Loan Documents, the phrase “including” shall mean “including, but not limited to,” the phrases “satisfactory to any Lender” or “satisfactory to the Administrative Agent” shall mean in form and substance satisfactory to such Lender or the Administrative Agent, as the case may be, in all respects, the phrases “with Lender’s consent”, “with Lender’s approval”, “with the Administrative Agent’s consent” or “with the Administrative Agent’s approval” shall mean such consent or approval at Lender’s or the Administrative Agent’s, as the case may be, discretion, and the phrases “acceptable to Lender” or “acceptable to the Administrative Agent” shall mean acceptable to Lender or the Administrative Agent, as the case may be, in such party’s sole discretion.”

Section 12.15                                Exhibits and Schedules.  The exhibits and schedules attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein.

Section 12.16                                Titles of Articles, Sections and Subsections.  All titles or headings to articles, sections, subsections or other divisions of this Agreement and the other Loan Documents or the exhibits hereto and thereto are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such articles, sections, subsections or other divisions, such other content being controlling as to the agreement between the parties hereto.

Section 12.17                                Promotional Material.  Subject to the terms set forth in this sentence, Borrower authorizes the Administrative Agent and each of the Lenders to issue press releases, advertisements and other promotional materials in connection with the Administrative Agent’s or such Lender’s own promotional and marketing activities, so long as such materials describe the Loans in a manner which is consistent with any accurate description of the Loans contained in any press release or public filing issued by the Borrower; provided, however, that prior to issuing any such press release, advertisement or other promotional materials, the Lender seeking to issue the same shall first deliver the proposed form of the same to the Administrative Agent for its review and submission to the Borrower, and provided, further, that no such press release, advertisement or other promotional materials shall be issued unless Borrower has approved the form of the same (which approval shall not be unreasonably withheld, conditioned or delayed, and which approval shall be granted so long as the information set forth therein is consistent with the description of the Loans contained in any press release or public filing issued by the Borrower).   All references to the Administrative Agent or any Lender contained in any press release, advertisement or promotional material issued by Borrower shall be approved in writing by the Administrative Agent and such Lender in advance of issuance.

Section 12.18                                Survival.  All of the indemnities of  Borrower hereunder (including environmental matters under Article 4, and Borrower’s obligations under Sections 2.8(1), 2.8(5) and 2.8(6)), and under the indemnification provisions of the other Loan Documents shall survive (a) the repayment in full of the Loans and the release of the Liens evidencing or securing the Loans, (b) the transfer (by sale, foreclosure, conveyance in lieu of foreclosure or otherwise) of any or all right, title and interest in and to the Project to any party, whether or not an Affiliate of Borrower and (c) in the case of any Lender that may assign any interest in its Commitment or Loans hereunder in accordance with the terms of this Agreement, the making of such assignment, notwithstanding that such assigning Lender may cease to be a “Lender” hereunder.

Section 12.19                                WAIVER OF JURY TRIAL.  TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF EITHER PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING TO THE LOANS OR THE PROJECTS (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE).  THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND EACH LENDER TO ENTER THIS AGREEMENT.

Section 12.20                                Waiver of Punitive or Consequential Damages.  None of the Administrative Agent, the Lenders or Borrower shall be responsible or liable to the other or to any other Person for any punitive, exemplary or consequential damages which may be alleged as a result of the Loans or the transaction contemplated hereby, including any breach or other default by any party hereto.  Borrower represents and warrants to the Administrative Agent and the Lenders that as of the Closing Date neither Borrower nor any Borrower Party has any claims against the Administrative Agent or any of the Lenders in connection with the Loan.

Section 12.21                                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.

Section 12.22                                Entire Agreement.  This Agreement and the other Loan Documents embody the entire agreement and understanding between the Administrative Agent, the Lenders and Borrower and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof, including any commitment letter (if any) issued by any Lender with respect to the Loans.  Accordingly, the Loan Documents may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties.  There are no unwritten oral agreements between the parties.  If any conflict or inconsistency exists between this Agreement and any of the other Loan Documents, the terms of this Agreement shall control.

Section 12.23                                Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall constitute an original, but all of which shall constitute one document.

Section 12.24                                Assignments and Participations.

(1)           Assignments by Borrower.  Borrower may not assign any of its rights or obligations hereunder or under the Notes without the prior consent of all of the Lenders and the Administrative Agent.

(2)           Assignments by the Lenders.  Each Lender may assign any of its Loans, its Note and its Commitment (but only with the consent of the Administrative Agent); provided that:

(a)           no such consent by the Administrative Agent shall be required in the case of any assignment by any Lender to another Lender or an affiliate of such Lender or such other Lender;

(b)           except to the extent the Administrative Agent shall otherwise consent, any such partial assignment (other than to another Lender or an affiliate of a Lender) shall be in an amount at least equal to $10,000,000;

(c)           each such assignment (including an assignment to another Lender or an affiliate of a Lender) by a Lender of its Loans or Commitment shall be made in such manner so that the same portion of its Loans and Commitment is assigned to the respective assignee;

(d)           subject to the applicable Lender’s compliance with the provisions of clauses (b) and (c) above, the Administrative Agent’s consent to an assignment shall not be unreasonably withheld, delayed or conditioned if (i) in the reasonable judgment of the Administrative Agent, such assignment is made to a reputable institutional investor with substantial experience in real estate lending and originating mortgage loans similar to the Loans, and a financial net worth of at least $100,000,000, (ii) such assignment is first offered to the Administrative Agent in accordance with the terms and conditions a separate agency agreement among the Administrative Agent and the Lenders, and (iii) the provisions of clause (e) have been satisfied; and

(e)           upon execution and delivery by the assignee (even if already a Lender) to Borrower and the Administrative Agent of an Assignment and Acceptance pursuant to which such assignee agrees to become a “Lender” hereunder (if not already a Lender) having the Commitment and Loans specified in such instrument, and upon consent thereto by the Administrative Agent to the extent required above, the assignee shall have, to the extent of such assignment (unless otherwise consented to by the Administrative Agent), the obligations, rights and benefits of a Lender hereunder holding the Commitment and Loans (or portions thereof) assigned to it (in addition to the Commitment and Loans, if any, theretofore held by such assignee) and the assigning Lender shall, to the extent of such assignment, be released from the Commitment (or portion thereof) so assigned.  Upon each such assignment the assigning Lender shall pay the Administrative Agent a processing and recording fee of $3,500 and  the reasonable fees and disbursements of the Administrative Agent’s counsel incurred in connection therewith.

(3)           Participations.  A Lender may sell or agree to sell to one or more other Persons (each a “Participant”) a participation in all or any part of any Loans held by it, or in its Commitment, provided that such Participant shall not have any rights or obligations under this Agreement or any Note or any other Loan Document (the Participant’s rights against such Lender in respect of such participation to be those set forth in the agreements executed by such Lender and the applicable Participant).  All amounts payable by Borrower to any Lender under Section 2.7 in respect of Loans held by it and its Commitment shall be determined as if such Lender had not sold or agreed to sell any participations in such Loans and Commitment, and as if such Lender were funding each of such Loans and Commitment in the same way that it is funding the portion of such Loans and Commitment in which no participations have been sold.  In no event shall a Lender that sells a participation agree with the Participant to take or refrain from taking any action hereunder or under any other Loan Document except that such Lender may agree with the Participant that it will not, without the consent of the Participant, agree to (i) increase or extend the term of such Lender’s Commitment, (ii) extend the date fixed for the payment of principal of or interest on the related Loan or Loans or any portion of any fee hereunder payable to the Participant, (iii) reduce the amount of any such payment of principal, (iv) reduce the rate at which interest is payable thereon, or any fee hereunder payable to the Participant, to a level below the rate at which the Participant is entitled to receive such interest or fee or (v) consent to any modification, supplement or waiver hereof or of any of the other Loan Documents to the extent that the same, under Section 12.2, requires the consent of each Lender.

(4)           Certain Pledges.  In addition to the assignments and participations permitted under the foregoing provisions of this Section 12.24 (but without being subject thereto), any Lender may (without notice to 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 fully transferable as provided therein.  No such assignment shall release the assigning Lender from its obligations hereunder.

(5)           Provision of Information to Assignees and Participants.  A Lender may furnish any information concerning Borrower or any of its Affiliates in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants), subject to Section 12.26.

(6)           No Assignments to Borrower or Affiliates.  Anything in this Section 12.24 to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan held by it hereunder to Borrower or any of its Affiliates without the prior consent of each Lender.

Section 12.25                                Brokers. Borrower hereby represents to the Administrative Agent and each Lender that Borrower has not engaged any broker, underwriters, placement agent, or finder in connection with the transactions contemplated by this Agreement and the other Loan Documents.  Borrower hereby agrees to pay any other fees and commissions due and payable to any broker engaged by Borrower in connection with the Loans and to 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 any broker engaged by Borrower that such Person acted on behalf of Borrower in connection with the transactions contemplated herein.

Section 12.26                                Confidential Information.  The Administrative Agent and each Lender and Participant agree to keep confidential any non-public information that any such Person may receive from the Borrower or otherwise discover with respect to the Borrower or the Borrower’s business pursuant to the Loan Documents or any investigation by any such Person thereunder (collectively "Confidential Information"), and not to use Confidential Information in order to compete with Borrower in Borrower’s markets and main line of business.  The foregoing shall not limit disclosures: (i) specifically and previously authorized in writing by the Borrower; (ii) to any actual or prospective assignee or participant of any such Person so long as such actual or prospective assignee or participant has agreed in writing to keep such Confidential Information confidential in accordance with, and not to use such Confidential Information in violation of, the terms of this Section 12.26; (iii) to legal counsel, accountants, auditors, environmental consultants, title insurance representatives and other professional advisors to each such Person so long as any such Person shall be informed in writing of the confidential nature of such Confidential Information and shall be directed to treat such Confidential Information confidentially and not to use such Confidential Information in violation of this Section 12.26; (iv) to regulatory officials having jurisdiction over any such Person; (v) as required by legal process or in connection with any action to enforce the obligations of the Borrower under the Loan Documents; and (vi) of information which has previously become publicly available through the actions or inactions of a third party not, to such Person’s knowledge, in breach of an obligation of confidentiality to the Borrower or which has become stale through the passage of time or other change in circumstances.

ARTICLE 13

LIMITATIONS ON LIABILITY

Section 13.1                                Limitation on Liability.

(1)           Except as provided below, neither Borrower nor any past, present or future member in, partner in, or manager of the Borrower, Borrower’s Member or any Borrower Party, nor any owner of any direct or indirect equity interests in the Borrower, Borrower’s Member or any Borrower Party, shall  be personally liable for amounts due under the Loan Documents.

(2)           Borrower shall be personally liable to the Administrative Agent and the Lenders for any deficiency, loss or damage suffered by the Administrative Agent or any Lender because of:  (a) Borrower’s commission of a criminal act; (b)the failure by Borrower or any Borrower Party to apply any funds derived from the Projects, including Operating Revenues, security deposits, insurance proceeds and condemnation awards as required by the Loan Documents; (c) the fraud or intentional misrepresentation by Borrower or any Borrower Party made in or in connection with the Loan Documents or the Loan; (d) Borrower’s collection of rents more than one month in advance (except as otherwise permitted pursuant to the Loan Documents) , or receipt of monies by Borrower or any Borrower Party in connection with the modification or cancellation of any Major Leases, in violation of this Agreement or any of the other Loan Documents; (e) Borrower’s interference with the Administrative Agent’s exercise of rights under the Assignment of Rents and Leases; (f) Borrower’s failure to turn over to the Administrative Agent all tenant security deposits upon the Administrative Agent’s demand following an Event of Default; (g)  [reserved]; (h) Borrower’s failure to maintain insurance as required by this Agreement ; (i) damage or destruction to any of the Projects caused by the negligent or intentional acts or omissions of Borrower, its agents, employees, or contractors; (j) Borrower’s failure to perform its obligations with respect to environmental matters under Article 4; (k) Borrower’s failure to pay for any loss, liability or expense (including attorneys’ fees) incurred by the Administrative Agent or any Lender arising out of any claim or allegation made by Borrower, its successors or assigns, that this Agreement or the transactions contemplated by the Loan Documents establish a joint venture, partnership or other similar arrangement between Borrower, the Administrative Agent and any Lender; (l) any brokerage commission or finder’s fees claimed by any broker or finder engaged by Borrower in connection with the transactions contemplated by the Loan Documents; or (m) any amount due pursuant to Section 2.7(5) hereof.  Borrower also shall be personally liable to Lender for any and all attorneys’ fees and expenses and court costs incurred by the Administrative Agent and the Lenders in enforcing this Section 13.1(2) or otherwise incurred by the Administrative Agent and the Lenders in connection with any of the foregoing matters, regardless of whether such matters are legal or equitable in nature or arise under tort or contract law.

(3)           Notwithstanding anything to the contrary contained in the Loan Documents, the limitation on Borrower’s liability contained in Section 13.1(1) SHALL BECOME NULL AND VOID and shall be of no further force and effect if:  (a) any Transfer in violation of the Loan Documents occurs; (b) Borrower files a petition under the United States Bankruptcy Code or similar state insolvency laws; or (c) Borrower becomes the subject of an involuntary proceeding under the United States Bankruptcy Code or similar state insolvency laws, and either (i) Borrower or any Affiliate of Borrower conspired or cooperated with one or more creditors of Borrower (other than the Administrative Agent or the Lenders) to commence such involuntary proceeding, or (ii) Borrower fails to use commercially reasonable efforts to obtain a dismissal of such involuntary proceeding.

(4)           Reserved.

(5)           Nothing in this Section 13.1 shall be deemed to be a waiver of any right which the Administrative Agent or any Lender may have under Sections 506(a), 506(b), 1111(b) or any other provision of the United States Bankruptcy Code, as such sections may be amended, or corresponding or superseding sections of the Bankruptcy Amendments and Federal Judgeship Act of 1984, to file a claim for the full amount due to the Administrative Agent or such Lender under the Loan Documents or to require that all collateral shall continue to secure the amounts due under the Loan Documents

Section 13.2                                Limitation on Liability of the Administrative Agent’s and the Lenders’ Officers, Employees, Etc. Any obligation or liability whatsoever of the Administrative Agent or any Lender which may arise at any time under this Agreement or any other Loan Document shall be satisfied, if at all, out of the Administrative Agent’s or such Lender’s respective assets only.  No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, the property of any of the Administrative Agent’s or any Lender’s shareholders, directors, officers, employees or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise.

ARTICLE 14

THE ADMINISTRATIVE AGENT

Section 14.1                                Appointment, Powers and Immunities.  The provisions of this Article 14 constitute agreements between the Administrative Agent and the Lenders.  Each Lender hereby 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 14.5 and the first sentence of Section 14.6 shall include reference to its affiliates and its own and its affiliates’ officers, directors, employees and agents):

(1)           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 trustee for any Lender;

(2)           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 Borrower or any other Person to perform any of its obligations hereunder or thereunder; and

(3)           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 to the extent any such action taken or omitted violates the Administrative Agent’s standard of care set forth in the first sentence of Section 14.5.

The Administrative Agent may employ agents and attorneys-in-fact, and may delegate all or any part of its obligations hereunder, to third parties and shall not be responsible for the negligence or misconduct of any such agents, attorneys-in-fact or third parties 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.

Section 14.2                                Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon any certification, notice or other communication (including, without limitation, 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.  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 Majority Lenders, and such instructions of the Majority Lenders and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders.

Section 14.3                                Defaults.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Potential Default or Event of Default unless the Administrative Agent has received notice from a Lender or Borrower specifying such Potential Default or Event of Default and stating that such notice is a “Notice of Default”.  In the event that the Administrative Agent receives such a notice of the occurrence of a Potential Default or Event of Default, the Administrative Agent shall give prompt notice thereof to the Lenders.  The Administrative Agent shall (subject to Section 14.7) take such action with respect to such Potential Default or Event of Default and other matters relating to the Loans as shall be directed by the Lenders in accordance with a separate agreement entered into by the Administrative Agent and the Lenders.

Section 14.4                                Rights as a Lender.  With respect to GECC’s Commitment and the Loans made by it, GECC (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.  GECC (and any successor acting as Administrative Agent) and its affiliates (including GECC) may (without having to account therefor to any Lender) lend money to, make investments in and generally engage in any kind of lending, trust or other business with Borrower (and any of its Affiliates) as if it were not acting as the Administrative Agent, and GECC and its affiliates (including GECC may accept fees and other consideration from Borrower for services in connection with this Agreement or otherwise without having to account for the same to the Lenders.

Section 14.5                                Standard of Care; Indemnification.  In performing its duties under the Loan Documents, the Administrative Agent will exercise the same degree of care as GECC normally exercises in connection with real estate loans in which no syndication or participations are involved, but the Administrative Agent shall have no further responsibility to any Lender except as expressly provided herein and except for its own gross negligence or willful misconduct which resulted in actual loss to such Lender, and, except to such extent, the Administrative Agent shall have no responsibility to any Lender for the failure by the Administrative Agent to comply with any of the Administrative Agent’s obligations to Borrower under the Loan Documents or otherwise.  The Lenders agree to indemnify the Administrative Agent (to the extent not reimbursed under Section 12.5, but without limiting the obligations of Borrower under Section 12.5) ratably in accordance with the aggregate principal amount of the Loans held by the Lenders (or, if no Loans are at the time outstanding, ratably in accordance with their respective Commitments), 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 (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 contemplated hereby or thereby (including, without limitation, the costs and expenses that Borrower is obligated to pay under Section 12.5, but excluding, unless a Event of 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 or of any such other documents, provided that no Lender shall be liable for any of the foregoing to the extent they arise from the Administrative Agent’s breach of its standard of care set forth in the first sentence of this Section.

Section 14.6                                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 Borrower and its Affiliates and 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.  Subject to the provisions of the first sentence of Section 14.5, the Administrative Agent shall not be required to keep itself informed as to the performance or observance by 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 Project or the books of Borrower or any of its Affiliates.  Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder or as otherwise agreed by the Administrative Agent and the Lenders, 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 Borrower or any of its Affiliates that may come into the possession of the Administrative Agent or any of its affiliates.

Section 14.7                                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 14.5 against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

Section 14.8                                Resignation of Administrative Agent.  The Administrative Agent may resign at any time by giving notice thereof to the Lenders and Borrower.  Upon any such resignation, the Majority Lenders shall have the right to appoint a successor Administrative Agent which shall be a financial institution that has (a) an office in New York, New York with a combined capital and surplus of at least $500,000,000 and (b) knowledge and experience comparable to the resigning Administrative Agent’s knowledge and experience in the servicing of loans similar to the Loans hereunder.  If no successor Administrative Agent shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent’s giving of notice of resignation of the retiring Administrative Agent, then the retiring Administrative Agent’s resignation shall nonetheless become effective and (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and (ii) the Majority Lenders shall perform the duties of the Administrative Agent (and all payments and communications provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly) until such time as the Majority Lenders appoint a successor agent as provided for above in this Section 14.8.  Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder (if not already discharged therefrom as provided above in this Section 14.8).  The fees payable by Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor.  After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article 14 and Section 12.5 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.

[Signature Pages Follow]

EXECUTED as of the date first written above.

LENDER: GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation

By:

Name:

Title:  Authorized Signatory

Address for Notices:

General Electric Capital Corporation

1901 Main Street, 7th Floor

Irvine, California 92614

Attention:  Asset Manager: Douglas Emmett LA Portfolio

Telecopier No.:  949 477-0904

Lending Office for Eurodollar and

Alternate Base Rate Loans:

General Electric Capital Corporation

1901 Main Street, 7th Floor

Irvine, California 92614

Attention:  Asset Manager: Douglas Emmett LA Portfolio

Telecopier No.:  949 477-0904

[Signatures Continued on Next Page]

BORROWER: DOUGLAS EMMETT 2008, LLC,

a Delaware limited liability company

By: Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           __________________

Name:                      William Kamer

Title:                      Chief Financial Officer

Address for Notices:

Douglas Emmett 2008, LLC

c/o Douglas Emmett Properties, LP

808 Wilshire Boulevard, Suite 200

Santa Monica, California  90401

Attention:  Jordan L. Kaplan

Telecopier No.:  (310) 255-7702

With copies to:

Douglas Emmett 2008, LLC

c/o Douglas Emmett Properties, LP

808 Wilshire Boulevard, Suite 200

Santa Monica, California  90401

Attention:  William Kamer, Esq.

Telecopier No.:  (310) 255-7702

[Signatures Continue on Next Page]

ADMINISTRATIVE AGENT: GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation,

as Administrative Agent

By:

Name:

Title:  Authorized Signatory

Address for Notices:

General Electric Capital Corporation

1901 Main Street, 7th Floor

Irvine, California 92614

Attention:  Asset Manager: Douglas Emmett LA Portfolio

Telecopier No.:  949 477-0904

EXHIBIT A-1

THE PROJECTS

Address	Square Footage	Year Built	No. Floors
2001 Wilshire Blvd., Santa Monica, CA	101,125	1980	6
8383 Wilshire Blvd., Beverly Hills, CA	424,375	1971/1993	10
9100 Wilshire Blvd., Beverly Hills, CA	331,551	1971/1990	10
15250 Ventura Blvd., Sherman Oaks, CA	112,954	1970/1991	12
16000 Ventura Blvd., Encino, CA	174,841	1980/1996	12
21300 Victory Blvd., Woodland Hills, CA	245,159	1988	12

EXHIBIT A-2

LEGAL DESCRIPTION OF EACH PROJECT

(See Attached)

EXHIBIT B

ALLOCATED LOAN AMOUNTS

Project	Allocated Loan Amount
2001 Wilshire Blvd., Santa Monica, CA	$30,000,000
8383 Wilshire Blvd., Beverly Hills, CA	$125,000,000
9100 Wilshire Blvd., Beverly Hills, CA	$100,000,000
15250 Ventura Blvd., Sherman Oaks, CA	$26,000,000
16000 Ventura Blvd., Encino, CA	$42,000,000
21300 Victory Blvd., Woodland Hills, CA	$57,000,000
TOTAL	$380,000,000

EXHIBIT C

[Form of Note]

PROMISSORY NOTE

$380,000,000 March 28, 2008

 Los Angeles, California

FOR VALUE RECEIVED, DOUGLAS EMMETT 2008, LLC, a Delaware limited liability company (“Borrower”), hereby promises to pay to GENERAL ELECTRIC CAPITAL CORPORATION (the “Lender”), for account of its respective Applicable Lending Offices provided for by the Agreement referred to below, at the principal office of General Electric Capital Corporation at 1901 Main Street, 7th Floor, Irvine, California 92614, the principal sum of Three Hundred Eighty Million and No/100s Dollars ($380,000,000) (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Lender to Borrower under the Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Agreement.

The date, amount, Type, interest rate and duration of Interest Period (if applicable) of each Loan made by the Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation thereof, provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Agreement or hereunder in respect of the Loans made by the Lender.

Borrower, co-makers, sureties, endorsers and Guarantors, and each of them, expressly waive demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of intent to accelerate the maturity hereof, notice of the acceleration of the maturity hereof, bringing of suit and diligence in taking any action to collect amounts called for hereunder and in the handling of securities at any time existing in connection herewith; such parties are and shall be jointly, severally, directly and primarily liable for the payment of all sums owing and to be owing hereon, regardless of and without any notice (except for notices required by the Loan Documents), diligence, act or omission as or with respect to the collection of any amount called for hereunder or in connection with any right, lien, interest or property at any and all times had or existing as security for any amount called for hereunder.

This Note is one of the Notes referred to in the Loan Agreement dated as of March 28, 2008 (as modified, supplemented, extended and in effect from time to time, the “Agreement”) between Borrower, the lenders party thereto (including the Lender) and General Electric Capital Corporation, as Administrative Agent, and evidences Loans made by the Lender thereunder.  Terms used but not defined in this Note have the respective meanings assigned to them in the Loan Agreement.

The Loan Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Loans upon the terms and conditions specified therein.

Except as permitted by Sections 12.9 and 12.24 of the Loan Agreement, this Note may not be assigned by the Lender to any other Person.

This Note shall be governed by, and construed in accordance with, the law of the State of California .

The liability of the Borrower and certain others for the Borrower’s obligations hereunder is subject to the limitation on liability provisions of Section 13.1 of the Loan Agreement.

IN WITNESS WHEREOF, the Borrower has executed this Note as of the date first written above.

DOUGLAS EMMETT 2008, LLC,

a Delaware limited liability company

By: Douglas Emmett Management, Inc.,

a Delaware corporation, its Manager

By:           

Name: William Kamer

Title:Chief Financial Officer

SCHEDULE OF LOANS

This Note evidences Loans made, Continued or Converted under the within-described Agreement to Borrower, on the dates, in the principal amounts, of the Types, bearing interest at the rates and having Interest Periods (if applicable) of the durations set forth below, subject to the payments, Continuations, Conversions and prepayments of principal set forth below:

EXHIBIT D

[Form of Assignment and Acceptance]

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Loan Agreement dated as of _________ __, 2008 (as amended and in effect on the date hereof, the “Agreement”), between DOUGLAS EMMETT 2008, LLC, a Delaware limited liability company, the Lenders named therein and GENERAL ELECTRIC CAPITAL CORPORATION, as Administrative Agent for the Lenders.  Terms defined in the Agreement are used herein with the same meanings.

The Assignor named below hereby sells and assigns, without recourse, to the Assignee named below, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Assignment Date set forth below, the interests set forth below (the “Assigned Interest”) in the Assignor’s rights and obligations under the Agreement, including, without limitation, the interests set forth below in the Commitment of the Assignor on the Assignment Date and Loans owing to the Assignor which are outstanding on the Assignment Date, together with (a) interest on the assigned Loans from and after the Assignment Date and (b) the amount, if any, set forth below of the fees accrued to the Assignment Date for account of the Assignor.  The Assignee hereby acknowledges receipt of a copy of the Agreement and the Agency Agreement.  From and after the Assignment Date (i) the Assignee shall be a party to and be bound by the provisions of (x) the Agreement and (y) the Agency Agreement and, in each case, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Agreement and the Agency Agreement.

This Assignment and Acceptance is being delivered to the Administrative Agent together with, if the Assignee is not already a Lender under the Agreement, an administrative questionnaire in the form supplied by the Administrative Agent, duly completed by the Assignee.  The [Assignee/Assignor] shall pay the fee payable to the Administrative Agent pursuant to Section 12.24(2)(e) of the Agreement.

This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of New York.

The Assignor represents and warrants to the Assignee that the Assignor is the legal and beneficial owner of the Assigned Interest and has not created any adverse interest therein.  The Assignor and the Assignee represent and warrant to each other that they are, respectively, authorized to execute and deliver this Assignment and Acceptance.

Date of Assignment:

Legal Name of Assignor:

Legal Name of Assignee:

Assignee’s Address for Notices:

Effective Date of Assignment

(“Assignment Date”)1:

Percentage Assigned of

Facility/Commitment

(set forth, to at

least 4 decimals, as a

percentage of the

Facility and the

aggregate Commitments

Principal Amount                                                                of all Lenders

Assigned                                                      thereunder

Current Outstanding

Loans Assigned:                                                      $                                                                                     %] 2

Future Funding

Commitment:                                                      $                                                                                     0;%

[Fees Assigned (if any):]

The terms set forth above and below are hereby agreed to:

[NAME OF ASSIGNOR]      , as Assignor

By:_________________________

    Name:

    Title:

[NAME OF ASSIGNEE]      , as Assignee

By:_________________________

    Name:

    Title:

The undersigned hereby consent to the within assignment:3

[                                               ],

as Administrative Agent

By:_________________________

Name:

Title:

 

1           Must be at least five Business Days after execution hereof by all required parties.

 

    2           Delete if no future advances are involved.

 

3           Consent to be included to the extent required by Section 112.24(2) of the Agreement.

SCHEDULE 1

COMMITMENTS

LENDER COMMITMENT

GENERAL ELECTRIC CAPITAL CORPORATION                                                                                                                     $380,000,000

SCHEDULE 2.1

ADVANCE CONDITIONS

The initial advance of the Loans shall be subject to the Administrative Agent’s receipt, review, approval and/or confirmation of the following, each in form and content satisfactory to the Administrative Agent in its sole discretion:

1.           The Loan Documents, executed by Borrower and, as applicable, each Borrower Party and each other party thereto.

2.           An ALTA (or equivalent) mortgagee policy of title insurance in the maximum amount of the Loans, with reinsurance and endorsements as the Administrative Agent may require, containing no exceptions to title (printed or otherwise) which are unacceptable to the Administrative Agent, and insuring that the Mortgages are a first-priority Lien on the Projects and related collateral (subject to Permitted Encumbrances).

3.           All documents evidencing the formation, organization, valid existence, good standing, and due authorization of and for Borrower and each Borrower Party for the execution, delivery, and performance of the Loan Documents by Borrower and each Borrower Party.

4.           Legal opinions issued by counsel for Borrower and each Borrower Party, opining as to the due organization, valid existence and good standing of Borrower and each Borrower Party, and the due authorization, execution, delivery, enforceability and validity of the Loan Documents with respect to Borrower; that the Loans, as reflected in the Loan Documents, are not usurious; and as to such other matters as the Administrative Agent and the Administrative Agent’s counsel reasonably may specify.

5.           Current Uniform Commercial Code searches, and litigation, bankruptcy and judgment reports as requested by the Administrative Agent, with respect to Borrower, Borrower’s Member and Borrower’s Manager.  As of the Closing Date, the Administrative Agent acknowledges that this item has been satisfied or waived.

6.           Evidence of insurance as required by this Agreement, and conforming in all respects to the requirements of the Administrative Agent, as set forth herein.

7.           A current ALTA/ACSM survey of each Project, certified to the Administrative Agent (on behalf of the Lenders) and the issuer of the title insurance, prepared by a licensed surveyor acceptable to the Administrative Agent and the issuer of the title insurance, and conforming to the Administrative Agent’s current standard survey requirements.  As of the Closing Date, the Administrative Agent acknowledges that this item has been satisfied or waived.

8.           A current engineering report or architect’s certificate with respect to the Project, covering, among other matters, inspection of heating and cooling systems, roof and structural details, showing no failure of compliance with building plans and specifications, applicable legal requirements (including requirements of the Americans with Disabilities Act) and fire, safety and health standards.  As requested by the Administrative Agent, such report shall also include an assessment of any Project’s tolerance for earthquake and seismic activity.  As of the Closing Date, the Administrative Agent acknowledges that this item has been satisfied or waived.

9.           A current Site Assessment for each Project. The Administrative Agent acknowledges that this item has been satisfied or waived.  As of the Closing Date, the Administrative Agent acknowledges that this item has been satisfied or waived.

10.           All environmental reports, building condition reports and Site Assessments delivered to the Administrative Agent prior to the execution of this Agreement shall be certified to the Administrative Agent (on behalf of the Lenders and their successors and assigns) without modification or change thereto in the form reasonably requested by the Administrative Agent.  As of the Closing Date, the Administrative Agent acknowledges that this item has been satisfied or waived.

11.           A current rent roll of the Projects, certified as being true and correct by Borrower or the current owner of the Projects.  As of the Closing Date, the Administrative Agent acknowledges that this item has been satisfied or waived.

12.           A copy of each Management Agreement, certified by Borrower as being true, correct and complete.

13.           All fees and commissions payable to real estate brokers, mortgage brokers, or any other brokers or agents engaged by Borrower in connection with the Loans or the acquisition of the Projects have been paid.

14.           Payment of the Administrative Agent’s attorneys’ fees and costs in documenting, and closing the transaction.

15.           Such credit checks, background investigations and other information required by The Administrative Agent regarding Borrower, each Borrower Party and any other Person holding a direct or indirect interest in Borrower, including such additional information as The Administrative Agent may request regarding compliance by Borrower, and by direct and indirect interest holders in Borrower, with the provisions of Article 9.  As of the Closing Date, the Administrative Agent acknowledges that this item has been satisfied or waived.

16.           Licenses and permits, applicable to the operation or use of the Project.  As of the Closing Date, the Administrative Agent acknowledges that this item has been satisfied or waived.

17.           The representations and warranties contained in this Loan Agreement and in all other Loan Documents are true and correct in all material respects.

18.           The title policy, survey, insurance policies, appraisal, environmental report, engineering report and other third party reports shall run in favor of “General Electric Capital Corporation or its designee, as Administrative Agent on behalf of the lenders in its lending syndicate from time to time, and the successors and assigns of each of the foregoing, all of whom may rely thereon.”  Except solely with respect to naming the Administrative Agent as an additional insured or loss payee, as applicable, with respect to the insurance policies required to be provided by Borrower pursuant to the Loan Documents, as of the Closing Date, the Administrative Agent acknowledges that this item has been satisfied or waived.

19.           No Potential Default or Event of Default shall have occurred or exist.

SCHEDULE 2.3(1)

WIRE INSTRUCTIONS

Deutsche Bank

ABA# 021001033

Acct# 50-256-477

Acct Name: GEMSA Incoming Wire Account

Ref:  Douglas Emmett LA Portfolio

SCHEDULE 6.1

ORGANIZATIONAL CHART AND INFORMATION

(See organizational chart attached)

Borrower:

Name:  Douglas Emmett 2008, LLC

Entity Type:   Limited Liability Company

State of Formation:  Delaware

Organizational Identification Number:  4516254

Borrower’s Manager:

Name:  Douglas Emmett Management, LLC

Entity Type:  Limited Liability Company

State of Formation:  Delaware

Organizational Identification Number:  4210851

SCHEDULE 6.14

PROPERTY MANAGEMENT AGREEMENTS

1. Property Management Agreement for 2001 Wilshire Blvd., dated March 24, 2008, by and between Douglas Emmett 2008, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent.

2. Property Management Agreement for 8383 Wilshire Blvd., dated March 24, 2008, by and between Douglas Emmett 2008, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent.

3. Property Management Agreement for 9100 Wilshire Blvd., dated March 24, 2008, by and between Douglas Emmett 2008, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent.

4. Property Management Agreement for 15250 Ventura Blvd., dated March 24, 2008, by and between Douglas Emmett 2008, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent.

5. Property Management Agreement for 16000 Ventura Blvd., dated March 24, 2008, by and between Douglas Emmett 2008, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent.

6. Property Management Agreement for 21300 Victory Blvd. (Warner Corporate Center), dated March 24, 2008, by and between Douglas Emmett 2008, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent.

SCHEDULE 1.1(84)

ENVIRONMENTAL REPORTS

(1)           2001 Wilshire - Phase I Environmental Site Assessment by Citadel Environmental Services, Inc., dated January 25, 2008;

(2)           8383 Wilshire - Phase I Environmental Site Assessment by Citadel Environmental Services, Inc., dated January 25, 2008;

(3)           9100 Wilshire - Exit Assessment report by Citadel Environmental Services, Inc., dated February 13, 2008;

(4)           15250 Ventura - Phase I Environmental Site Assessment by Vertex Environmental Services, Inc., dated January 25, 2008;

(5)           16000 Ventura - Phase I Environmental Site Assessment by Citadel Environmental Services, Inc., dated January 25, 2008; and

(6)           Warner Corp Ctr/21300 Victory - Phase I Environmental Site Assessment by Citadel Environmental Services, Inc., dated January 25, 2008.

LIST OF DEFINED TERMS

Page No.

Additional Costs1, 21

Adjusted Libor Rate1

Administrative Agent1

Advance Date1, 19

Affiliate1

Agreement1, 2, 4, 3

Allocated Loan Amount2

Alternate Base Rate2

Alternate Base Rate Loans2

Anti-Money Laundering Laws2

Applicable Lending Office2

Assignment and Acceptance3

Assignment of Rents and Leases3

Bank Secrecy Act3

Bankruptcy Party3

Basle Accord3

Borrower1

Borrower Party3

Borrower’s Manager3

Borrower’s Member3

Business Day3, 6

Closing Date4

Collateral4

Commitment4

Continue4

Contract Rate4, 14

Control4

Controlled Subsidiary4

Convert4

Debt4

Debt Service5

Default Rate5

Dollars5

Environmental Indemnity5

Environmental Laws5

ERISA5, 35

Eurodollar Loans5

Event of Default5

Federal Funds Rate5

Financial Institution6

Fund6

GECC6

Hazardous Materials6

Improvements6

Indebtedness6

Interest Period6

Lender1

Lenders1

Libor Base Rate6, 21

Licenses7

Lien7

Loan Documents7

Loans7

Majority Lenders7

Management Agreement7

Manager7

Maturity Date8

Mortgage8

Net Operating Income8

Notes8

OFAC8

Operating Expenses8

Operating Partnership8

Operating Revenues8

Participant9, 60

Patriot Act9

Payment Date9, 15

Payor9, 18

Permitted Encumbrances9

Permitted Transfers9

Person9

Potential Default9

Prime Rate9

Project10

Proposed Lender10, 25

Regulation D10

Regulatory Change10

REIT10

Requesting Lender10, 25

Required Payment10, 18

Reserve Requirement10

Restoration Threshold10

Secondary Market Transaction11

Single Purpose Entity11

Site Assessment11

Specially Designated National and Blocked Persons11

Standard Adjustments11

State11

Stub Interest Period12, 15

Subordination of Management Agreement12

Taxes12, 42

Transfer41

Type12

UCC12

Underwritten NOI12

Underwritten Operating Expenses12

Underwritten Operating Revenues12

United States Person12, 25

United States Taxes25