REVOLVING LOAN AGREEMENT

REVOLVING LOAN AGREEMENT
between

COLUMBIA EQUITY, LP, a Virginia limited partnership

as Borrower,

HOLUALOA/CARR CAPITAL SHERWOOD, LLC, a Virginia limited liability company,
CARR CAPITAL GREENBRIAR, LLC, a Virginia limited liability company,
FAIR OAKS CORPORATE CENTER, LLC, a Virginia limited liability company, and
CARR GATEWAY IV, LLC, a Virginia limited liability company
collectively as Owner,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

together with those assignees

becoming parties hereto pursuant

to Section 12.13 , as Lenders,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

Entered into as of November 28, 2005

1

WFB LOAN NO. 102195
TABLE OF CONTENTS

Page

2.12 CONDITIONS PRECEDENT TO APPROVAL OF A REAL ESTATE ASSET AS AN APPROVED ASSET. 27

6.10 TAX LIABILITY. 35

EXHIBITS AND SCHEDULES

2

REVOLVING LOAN AGREEMENT

THIS REVOLVING LOAN AGREEMENT (“ Agreement ”) dated as of November 28, 2005 by and among (i) COLUMBIA EQUITY, LP, a limited partnership formed under the laws of the Commonwealth of Virginia (“ Borrower ”), (ii) HOLUALOA/CARR CAPITAL SHERWOOD, LLC , a limited liability company under the laws of the Commonwealth of Virginia (“ Sherwood Owner ”), CARR CAPITAL GREENBRIAR, LLC , a limited liability company under the laws of the Commonwealth of Virginia (“ Greenbriar Owner ”), FAIR OAKS CORPORATE CENTER, LLC , a limited liability company under the laws of the Commonwealth of Virginia (“ Fair Oaks Owner ”), and CARR GATEWAY IV, LLC , a limited liability company under the laws of the Commonwealth of Virginia (“ Loudoun Gateway Owner ”; Sherwood Owner, Greenbriar Owner, Fair Oaks Owner and Loudoun Gateway Owner are herein collectively referred to as “ Owner ”), (iii) each of the financial institutions initially a signatory hereto together with their assignees under Section 12.13 (“ Lenders ”), and (iv) WELLS FARGO BANK, NATIONAL ASSOCIATION (“ Wells Fargo ”) as contractual representative of the Lenders to the extent and in the manner provided in Article 12 (in such capacity, the “ Administrative Agent ”).

R E C I T A L S

A.

Borrower has requested from Lenders a revolving credit facility for the purpose of paying predevelopment costs, development costs, acquisitions, working capital, equity investments, capital expenditures, tenant improvements, leasing commissions, repayment of indebtedness, scheduled amortization payments of debt and general corporate purposes.

 

B.

Sherwood Owner owns the real property more particularly described in Exhibit A-1 attached hereto, as well as the improvements thereon, together with all appurtenances, fixtures, and tenant improvements now or hereafter located thereon (the “ Sherwood Property ”); Greenbriar Owner owns the real property more particularly described in Exhibit A-2 attached hereto, as well as the improvements thereon, together with all appurtenances, fixtures, and tenant improvements now or hereafter located thereon (the “ Greenbriar Property ”); Fair Oaks Owner owns the real property more particularly described in Exhibit A-3 attached hereto, as well as the improvements thereon, together with all appurtenances, fixtures, and tenant improvements now or hereafter located thereon (the “ Fair Oaks Property ”), and Loudoun Gateway Owner owns the real property more particularly described in Exhibit A-4 attached hereto, as well as the improvements thereon, together with all appurtenances, fixtures, and tenant improvements now or hereafter located thereon (the “ Loudoun Gateway Property ”). The Sherwood Property, Greenbriar Property, Fair Oaks Property and Loudoun Gateway Property are individually and collectively referred to as the “ Property ”, as the context may require.

 

C.

Sherwood Owner, Greenbriar Owner, Fair Oaks Owner and Loudoun Gateway Owner are each a wholly-owned subsidiary of Borrower and have agreed to secure the loan from the Lenders to Borrower by executing an Owner’s Guaranty of all amounts payable under the loan and granting a lien on their respective Property.

 

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.

“ Acquisition Property ” — means any Property owned for a period of twelve (12) months or less. For all purposes of this Agreement, an Acquisition Property shall not cease to be an Acquisition Property until the beginning of the first fiscal quarter immediately following the expiration of such twelve (12) month period.

“ ADA ” — means 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 amended from time to time.

“ Adjusted EBITDA ” shall mean EBITDA for the preceding two (2) fiscal quarters, annualized, net of a capital expenditure reserve equal to $0.50 per square foot for Real Estate Assets (other than Construction in Process).

“ Adjusted NOI ” — shall mean net operating income of Borrower from Real Estate Assets measured on a consolidated basis in accordance with GAAP plus Borrower or any of its subsidiaries’ ownership share of net operating income in unconsolidated affiliates from such affiliates’ real estate assets, after adjusting for straight-lining of rents, for the most recent two (2) fiscal quarters, annualized, produced from tenants pursuant to leases in full force and effect on the Calculation Date, less a deduction for a capital expenditure reserve equal to $0.50 per square foot for Real Estate Assets (other than Construction in Process and Redevelopment Property) and the greater of (x) actual management fees or (y) an imputed management fee equal to three percent (3%) of base rent revenues.

“ Administrative Agent ” — means Wells Fargo Bank, National Association, or any successor Administrative Agent appointed pursuant to Section 11.14 .

“ Affiliate ” — means, with respect to any Person, (a) in the case of any such Person which is a partnership or limited liability company, any partner or member in such partnership or limited liability company, respectively, (b) any other Person which is directly or indirectly controlled by, controls or is under common control with such Person or one or more of the Persons referred to in the preceding clause (a), (c) any other Person who is an officer, director, trustee or employee of, or partner in, such Person or any Person referred to in the preceding clauses (a) and (b), (d) any other Person who is a member of the immediate family of such Person or of any Person referred to in the preceding clauses (a) through (c), and (e) any other Person that is a trust solely for the benefit of one or more Persons referred to in clause (d) and of which such Person is sole trustee; provided , however , in no event shall Administrative Agent, any Lender or any of their respective Affiliates be an Affiliate of Borrower or Owner. For purposes of this definition, “control” (including with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or by contract or otherwise. The Affiliates of a Person shall include any officer or director of such Person

“ Agreement ” — shall have the meaning given to such term in the preamble hereto.

“ Alternate Rate ” — is a rate of interest per annum four percent (4%) in excess of the applicable Effective Rate in effect from time to time.

“ Applicable LIBO Rate ” is the rate of interest, rounded upward to the nearest whole multiple of one-one hundredth of one percent (0.01%), equal to the sum of : (a) the Applicable Margin plus (b) the LIBO Rate, which rate is divided by one (1.00) minus the Reserve Percentage:

“ Applicable Margin ” — shall initially equal 1.10% and shall be revised in accordance with the provisions of Section 2.7(j) hereof to the amount set forth below corresponding to the Leverage Ratio as of the last day of the preceding calendar quarter:

“ Application for Payment ” — shall have the meaning given to such term in Exhibit C attached hereto.

“ Appraisal ” – means a written appraisal prepared by an independent MAI appraiser engaged by or acceptable to Administrative Agent and subject to Administrative Agent’s customary independent appraisal requirements and prepared in compliance with all applicable regulatory requirements, including the Financial Institutions Recovery, Reform and Enforcement Act of 1989, as amended from time to time.

“ Approved Asset ” — means an Unencumbered Asset (including, without limitation, a Proposed Acquisition that would constitute an Unencumbered Asset upon the acquisition thereof by Borrower or an Approved Subsidiary) which (a) has been approved by Administrative Agent (and, if the aggregate Commitments have been increased pursuant to Section 2.4 hereof and Wells Fargo is not the sole Lender hereunder, by Requisite Lenders), (b) is leased for office use, (c) meets the Minimum Lease-Up Requirement, and (d) is not a Redevelopment Asset or Construction in Process. Each Property constitutes an Approved Asset as of the Effective Date.

“ Approved Subsidiary” - means a Subsidiary that (x) is wholly and directly owned and controlled by Borrower or Guarantor or a combination thereof, (y) has delivered an Owner’s Guaranty and a deed of trust or mortgage encumbering the Approved Asset(s) owned by said Approved Subsidiary, and (z) holds fee simple title to one or more Approved Assets.

“ Assignee ” — shall have the meaning given in Section 12.13(c) .

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

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

“ Borrower ” — shall have the meaning given in the preamble hereto.

“ Borrower’s Funds ” — means all funds of Borrower and/or Owner deposited with Administrative Agent, for the benefit of Lenders, pursuant to the terms and conditions of the Loan Documents, including any escrows or reserves required to be deposited with Administrative Agent pursuant to Section 5.3 of the Deed of Trust.

“ Borrower’s Funds Account ” — means the account with Administrative Agent into which all Borrower’s Funds deposited with Administrative Agent pursuant to this Agreement shall be placed.

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

“ Calculation Date ” — means the first day of each January, April, July and October, the date upon which Borrower submits a Draw Request, the date upon which Borrower requests that Administrative Agent issue a Letter of Credit, an Approved Asset Closing Date, the date upon which a Capital Event occurs, or the date upon which there exists a Default under the Loan, as applicable.

“ Capital Event ” — means the occurrence from time to time of an equity or debt offering by Borrower (which shall specifically exclude stock issued in connection with a dividend reinvestment plan), a Disqualifying Environmental Event, a material acquisition, disposition, merger or asset purchase or if a Lien arises against an Approved Asset.

“ Cash and Cash Equivalents ” — means (i) unrestricted cash, (ii) securities issued or directly or fully guaranteed or insured by the United States of America or any agency or instrumentality thereof ( provided , that the full faith and credit of the United States of America is pledged in support thereof); and (iii) unrestricted domestic and LIBOR certificates of deposit and time deposits, bankers’ acceptances and floating rate certificates of deposit issued by any commercial bank organized under the laws of the United States, any state thereof, the District of Columbia, any foreign bank, or its branches or agencies (fully protected against currency fluctuations), which, at the time of acquisition, are rated A-1 (or better) by S&P or P-1 (or better) by Moody’s (any such bank an “ Approved Bank”), maturing within one year from the date of acquisition, (iv) commercial paper issued by any Approved Bank or by the parent company of any Approved Bank and commercial paper issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s, or guaranteed by any industrial company with a long term unsecured debt rating of at least A or A2, or the equivalent of each thereof, from S&P or Moody’s, as the case may be, and in each case maturing within one year after the date of acquisition, (v) marketable direct obligations issued by the District of Columbia or any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s and (vi) investments in money market funds substantially all the assets of which are comprised of securities of the any type described in any one or more of clauses (i) through (vi) above, but without regard to the maturity date of the underlying assets of any such money market fund.

“ Collateral ” – means the Property and any personal property or other collateral with respect to which a Lien or security interest was granted to Administrative Agent, for the benefit of Lenders, pursuant to the Loan Documents.

“ Commitment ” means, as to each Lender, such Lender’s obligation to make disbursements pursuant to Section 3.4 and Section 11.3 , to participate in Letters of Credit pursuant to Section 2.11(f) , and to participate in Swingline Loans pursuant to Section 2.5(e) , in an amount up to, but not exceeding the amount set forth for such Lender on Schedule 1.1 attached hereto as such Lender’s “Commitment Amount” or as set forth in the applicable Assignment and Assumption Agreement, as the same may be increased from time to time pursuant to Section 2.4 hereof or changed as appropriate to reflect any assignments to or by such Lender effected in accordance with Section 12.13 hereof.

“ Construction in Process ” means any Real Estate Asset owned by Borrower or a Subsidiary which is raw land, vacant out-parcels, or other property on which construction of material improvements has commenced and is continuing to be performed (such commencement evidenced by foundation excavation) without undue delay from permit denial, construction delays or otherwise, but has not yet been (a) completed (as evidenced by a certificate of occupancy permitting use of such property by the general public) provided that such Real Estate Asset will no longer be considered Construction in Process upon the sooner of (a) achievement of seventy percent (70%) occupancy or (b) twelve (12) months after substantial completion and receipt by the Borrower (or Subsidiary) of a base building occupancy permit or its equivalent, excluding any Redevelopment Property or Acquisition Property. Notwithstanding the foregoing, tenant improvements to previously constructed and/or leased Real Estate Assets shall not be considered Construction in Process.

“ Contingent Obligations ” means as to any Person (the “ guaranteeing person ”), without duplication, (i) the amount of any contingent obligation of such Person required to be shown on such Person’s balance sheet in accordance with GAAP, and (ii) the amount of any obligation required to be disclosed in the footnotes to such Person’s financial statements in accordance with GAAP, which obligation guarantees or in effect guarantees any Indebtedness, leases, dividends or other obligations (the “ primary obligations ”) of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) to reimburse, indemnify or otherwise protect any other person for any advance of funds, issuance of a letter of credit or undertaking of other obligations by such person for the benefit of the primary obligor, or (e) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided , however , that the term “Contingent Obligations” shall not include (x) endorsements of instruments for deposit or collection in the ordinary course of business, or (y) guarantees or indemnification given to a lender in connection with any non-recourse indebtedness of Borrower, its Subsidiaries or Minority Holdings, with respect to claims that (A) are based on fraud, intentional misrepresentation, misapplication of funds, gross negligence or willful misconduct, (B) result from intentional mismanagement of or waste at the Real Estate Asset securing such non-recourse indebtedness, (C) arise from the presence of any Hazardous Materials on such Real Estate Asset securing such non-recourse indebtedness, (D) are the result of any unpaid real estate taxes and assessments relating to the Real Estate Asset securing such non-recourse indebtedness, (E) arise as a result of a voluntary bankruptcy filing, or (F) are based on any usual and customary exclusions for non-recourse limitations governing any non-recourse indebtedness of Borrower, its Subsidiaries and Minority Holdings, in each case, until such claim is made with respect thereto, and then only to the extent of the amount of such claim. Notwithstanding anything contained herein to the contrary, guarantees of completion shall not be deemed to be Contingent Obligations unless and until a claim for payment has been made thereunder, at which time any such guaranty of completion shall be deemed to be a Contingent Obligation in an amount equal to any such claim. Subject to the above provisions, in the case of a joint and several guaranty given by such Person and another Person (but only to the extent such guaranty is not non-recourse debt, directly or indirectly to the applicable guarantor), the amount of the guaranty shall be deemed to be 100% thereof; provided that (i) so long as such other Person holds an Investment Grade Credit Rating, the amount of such Person’s guaranty to be included in Contingent Obligations shall be reduced by an amount equal to the Contingent Obligation Amount, or (ii) in the event such other Person does not hold an Investment Grade Credit Rating, the amount of such Person’s guaranty to be included as Contingent Obligations may be reduced by an amount based on the creditworthiness of such other Person, as such amount is approved by the Requisite Lenders.

“ Contingent Obligation Amount ” — means the sum of (i) the total amount of the obligations guaranteed pursuant to any joint and several guaranty multiplied by a fraction the numerator of which is the amount of the guaranteed obligations attributable (pursuant to an agreement among the guarantors) to the guarantors (other than such guaranteeing person) holding an Investment Grade Credit Rating and the denominator of which is the total amount of the obligations guaranteed pursuant to such joint and several guaranty and (ii) the total amount of the obligations guaranteed multiplied by the product of (a) a fraction the numerator of which is the amount of such guaranteed obligations attributable (pursuant to an agreement among the guarantors) to the guarantors (other than such guaranteeing person) not holding an Investment Grade Credit Rating and the denominator of which is the total amount of the obligations guaranteed pursuant to such joint and several guaranty times (b) a fraction the numerator of which is the amount of such guaranteed obligations attributable (pursuant to an agreement among the guarantors) to the guarantors (other than such guaranteeing person) holding an Investment Grade Credit Rating and the denominator of which is the amount of such guaranteed obligations attributable (pursuant to an agreement among the guarantors) to the guarantors (including such guaranteeing person) holding an Investment Grade Credit Rating.

“ Deed of Trust ” — means collectively, the Credit Line Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing of even date herewith executed by Owner, as Grantor, to the Trustees named therein, in favor of Administrative Agent, for the benefit of Lenders, as Beneficiary, encumbering the Property as hereafter amended, supplemented, replaced or modified, and with such other deeds of trust or mortgages granted by Borrower, Guarantor or an Approved Subsidiary with respect to an Approved Asset to secure the Loan in the future.

“ Default ” — shall have the meaning given to such term in Section 10.1 .

“ Defaulting Lender ” – means any Lender which fails or refuses to perform its obligations under this Agreement within the time period specified for performance of such obligation or, if no time frame is specified, if such failure or refusal continues for a period of five (5) Business Days after notice from Administrative Agent.

“ Disqualifying Environmental Event ” — means any release or threatened release of Hazardous Materials, any violation of Hazardous Materials Laws or any other similar environmental event with respect to a Real Estate Asset which is not cured within sixty (60) days or that would cause, in Administrative Agent’s determination, such Real Estate Asset to no longer be financeable on a non-recourse (with customary exceptions) debt basis under the then generally accepted underwriting standards of national insurance company or pension fund real estate institutional lenders.

“ Dollars ” and “ $ ” – means the lawful money of the United States of America.

“ EBITDA ” – means the sum of (i) with respect to any Real Estate Asset for the immediately preceding two (2) fiscal quarters, an amount, measured on a consolidated basis, equal to (x) total revenues relating to such property for such period (after adjustment for straight lining of rents), less (y) total operating expenses relating to such property for such period (it being understood that the foregoing calculations shall exclude interest, income taxes (but not real estate taxes), depreciation, amortization and other non-cash charges as determined in accordance with GAAP, plus (ii) Management Fees. EBITDA shall include the pro rata share of EBITDA of unconsolidated Affiliates of Borrower and shall be adjusted for non-recurring items, plus (iii) interest income, minus general and administrative expenses.

“ Effective Date ” — means the date of this Agreement.

“ Effective Rate ” — shall have the meaning given in Section 2.6(e) .

“ Eligible Assignee ” — means any Person that is: (a) an existing Lender; (b) a commercial bank, trust company, savings and loan association, savings bank, insurance company, investment bank or pension fund organized under the laws of the United States of America, any state thereof or the District of Columbia, and having total assets in excess of $5,000,000,000; or (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Co-operation and Development, or a political subdivision of any such country, and having total assets in excess of $10,000,000,000, provided that such bank is acting through a branch or agency located in the United States of America. If such entity is not currently a Lender, such entity’s (or in the case of a bank which is a subsidiary, such bank’s parent’s) senior unsecured long term indebtedness must be rated BBB or higher by S&P, Baa2 or higher by Moody’s or the equivalent or higher of either such rating by another rating agency acceptable to the Administrative Agent.

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

“ Extension Option ” — shall have the meaning ascribed thereto in Section 2.6(b) hereof.

" Extended Maturity Date ” — means November 28, 2008.

“ FFO ” — means net income, measured for the prior four (4) fiscal quarters as determined in accordance with GAAP, excluding gains (or losses) from debt restructuring, sales of property and foreign currency exchange rate changes (whether or not associated with a foreign currency contract) and non-cash expenses related to stock compensation, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures (which will be calculated to reflect funds from operations on the same basis).

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

“ Fixed Charges ” — means, for the immediately preceding consecutive two (2) fiscal quarters, annualized, the sum of (a) Interest Expense and (b) the aggregate of all scheduled principal payments on Total Indebtedness according to GAAP made or required to be made during such fiscal period for the Borrower, measured on a consolidated basis, and Minority Holdings (but excluding balloon payments of principal due upon the stated maturity of an Indebtedness), and (c) the aggregate of all dividends payable on the preferred stock of Borrower not owned by the Guarantor or any of its Affiliates.

“ Fixed Rate ” is the Applicable LIBO Rate as accepted by Borrower as an Effective Rate for a particular Fixed Rate Period and Fixed Rate Portion.

“ Fixed Rate Commencement Date ” — means the date upon which the Fixed Rate Period commences.

“ Fixed Rate Notice ” is a written notice in the form shown on Exhibit F hereto which requests a Fixed Rate for a particular Fixed Rate Period and Fixed Rate Portion.

“ Fixed Rate Period ” is the period or periods of (a) one (1), two (2), three (3) or six (6) months; or (b) any other shorter period which ends at the Maturity Date, which periods are selected by Borrower and confirmed in a Fixed Rate Notice; provided that no Fixed Rate Period shall extend beyond the Maturity Date.

“ Fixed Rate Portion ” is the portion or portions of the principal balance of the Loan which Borrower selects to have subject to a Fixed Rate, each of which is an amount: (a) equal to the unpaid principal balance of the Loan not subject to a Fixed Rate; and (b) is not less than One Million Dollars ($1,000,000.00) and is an even multiple of One Hundred Thousand Dollars ($100,000.00).

“ Fixed Rate Price Adjustment ” — shall have the meaning set forth in Section 2.7(h) .

“ Fixed Rate Taxes ” — are, collectively, all withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related in any manner to a Fixed Rate.

“ Funding Date ” – shall have the meaning given to such term in Exhibit C attached hereto.

“ GAAP ” — means generally accepted accounting principles, consistently applied.

“ Governmental Authority ” — means any nation or government, any federal, state, local, municipal or other political subdivision thereof or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“ Gross Asset Value ” will be defined as the sum of the following, without duplication:

i)

Operating Property Value, plus

 

ii)

Cash and Cash Equivalents,

 

iii)

the aggregate sums expended on the construction of Construction In Process, including land acquisition costs; provided that for purposes of making any calculation under this Agreement, the amount attributable to Construction in Process held by Minority Holdings that are not consolidated with Borrower in accordance with GAAP will be equal to (without duplication) the sum of (a) the Borrower’s contributed equity, (b) the Borrower’s pro rata share of debt from items that are not consolidated in accordance with GAAP, (c) the Borrower’s Contingent Obligations related to items that are not consolidated in accordance with GAAP (to the extent not redundant with clause (b) above), plus (d) any non-Affiliated co-venturer’s equity in such items that are not so consolidated to the extent that such co-venturer’s share of debt was included in the calculation of the Borrower’s Total Indebtedness,

 

iv)

the aggregate sums expended on the construction of Redevelopment Property, including land acquisition costs; provided that for purposes of making any calculation under this Agreement, the amount attributable to Redevelopment Property held by Minority Holdings that are not consolidated with Borrower in accordance with GAAP will be equal to (without duplication) the sum of (a) the Borrower’s contributed equity, (b) the Borrower’s pro rata share of debt from items that are not consolidated in accordance with GAAP, (c) the Borrower’s Contingent Obligations related to items that are not consolidated in accordance with GAAP (to the extent not redundant with clause (b) above), plus (d) any non-Affiliated co-venturer’s equity in such items that are not so consolidated to the extent that such co-venturer’s share of debt was included in the calculation of the Borrower’s Total Indebtedness,

 

v)

the cost or unimproved land holdings.

 

vi)

mortgages and loans secured by partnership or similar interests in real estate single purpose entities, provided, however, that any such loans shall be limited to ten percent (10%) for purposes of calculating Gross Asset Value,

 

vii)

Management Fee income divided by twenty percent (20%), and

 

viii)

the contractual purchase price of properties subject to purchase obligations, repurchase obligations, and forward commitments to the extent such obligations are accounted for under Total Liabilities.

For purposes of this definition, unconsolidated joint venture and Minority Holdings are measured at the greater of Borrower or Guarantor’s economic interest in such entity or the percentage of Indebtedness guarantied by Borrower or Guarantor relating to such entity.

“ Guarantor ” — means Columbia Equity Trust, Inc., and any other person or entity who, or which, in any manner, is or becomes obligated to Lenders under any guaranty now or hereafter executed in connection with respect to the Loan (collectively or severally as the context thereof may suggest or require).

“ Hazardous Materials ” — shall have the meaning given to such term in Section 7.1(a) .

“ Hazardous Materials Claims ” — shall have the meaning given to such term in Section 7.1(c) .

“ Hazardous Materials Laws ” — shall have the meaning given to such term in Section 7.1(b) .

“ Indebtedness ” means, as applied to any Person at any time without duplication, (a) all indebtedness, obligations or other liabilities of such Person (whether consolidated or representing the proportionate interest in any other Person) (i) for borrowed money (including construction loans) or evidenced by debt securities, debentures, acceptances, notes or other similar instruments, and any accrued interest, fees and charges relating thereto, (ii) under profit payment agreements that are not contingent or in respect of obligations to redeem, repurchase or exchange any securities of such Person or agreements to pay dividends in respect of any stock (excluding any ordinary declaration of a dividend or exchange of securities for replacement securities), (iii) with respect to letters of credit or bankers’ acceptances issued for such Person’s account, (iv) to pay the deferred purchase price of acquired property or rendered services, except accounts payable and accrued expenses arising in the ordinary course of business, (v) in respect of capital leases or “synthetic leases”, or (vi) which are Contingent Obligations; (b) all indebtedness, obligations or other liabilities of such Person or others secured by a Lien on any property of such Person, whether or not such indebtedness, obligations or liabilities are assumed by such Person; (c) all indebtedness, obligations or other liabilities of such Person in respect of interest rate contracts, foreign exchange contracts and derivatives contracts, net of liabilities owed to such Person by the counterparties thereon; (d) all preferred stock subject (upon the occurrence of any contingency or otherwise) to mandatory redemption; and (e) all Contingent Obligations with respect to any of the foregoing.

“ Initial Maturity Date ” — shall mean November 28, 2007.

“ Interest Expense ” — includes (without redundancy), for the previous two (2) fiscal quarters, annualized, all accrued, paid or capitalized interest cost of the Borrower (excluding capitalized interest funded from an interest reserve) plus the Borrower’s pro rata ownership share of interest expense in unconsolidated Affiliates, plus 100% of any accrued, paid or capitalized interest incurred (without redundancy) on any obligation for which the Borrower is wholly or partially liable under repayment, interest carry, or performance guarantees, or other relevant liabilities.

“ Investment Grade Credit Rating ” means (i) with respect to Moody’s a rating of Baa3 or higher and (ii) with respect to S&P, a rating of BBB- or higher, in each instance as to a Person’s senior unsecured debt.

“ L/C Commitment Amount ” has the meaning given to that term in Section 2.11(a) of this Agreement.

“ Lender ” — means each financial institution from time to time party hereto as a “Lender”, together with its respective successors and permitted assigns, and, as the context requires, includes the Swingline Lender. With respect to matters requiring the consent or approval of all Lenders at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and, for voting purposes only, “all Lenders” shall be deemed to mean “all Lenders other than Defaulting Lenders”.

" Letter of Credit ” has the meaning set forth in Section 2.11(a) of this Agreement.

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

" Letter of Credit Liabilities ” shall mean, without duplication, at any time and in respect of any Letter of Credit, the sum of (a) the Stated Amount of such Letter of Credit plus (b) the aggregate unpaid principal amount of all Reimbursement Obligations of the Borrower at such time due and payable in respect of all drawings made under such Letter of Credit. For purposes of this Agreement, a Lender (other than the Lender then acting as Administrative Agent) shall be deemed to hold a Letter of Credit Liability in an amount equal to its participation interest in the related Letter of Credit under Section 2.11(f) of this Agreement, and the Lender then acting as Administrative Agent shall be deemed to hold a Letter of Credit Liability in an amount equal to its retained interest in the related Letter of Credit after giving effect to the acquisition by the Lenders (other than Administrative Agent) of their participation interests under such Section.

“ Leverage Ratio ” — means Total Liabilities divided by Gross Asset Value as of the Business Day preceding any Calculation Date.

“ LIBO Rate ” — is the rate of interest, rounded upward to the nearest whole multiple of one-sixteenth of one percent (.0625%), quoted by Administrative Agent from time to time as the London Inter-Bank Offered Rate for deposits in U.S. Dollars at approximately 9:00 a.m. California time, two (2) Business Days prior to a Fixed Rate Commencement Date or a Price Adjustment Date, as appropriate, for purposes of calculating effective rates of interest for loans or obligations making reference thereto for an amount approximately equal to a Fixed Rate Portion and for a period of time approximately equal to a Fixed Rate Period or the time remaining in a Fixed Rate Period after a Price Adjustment Date, as appropriate.

“ Lien ” – means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights-of-way, zoning restrictions and the like), lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including without limitation any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, any restriction of sale or encumbrance, any pledge of equity interests in the owner of the property, and the filing of any financing statement or document having similar effect (other than a financing statement filed by a “true” lessor pursuant to Section 9408 (or a successor section) of the Uniform Commercial Code) naming the owner of the asset to which such Lien relates as debtor, under the Uniform Commercial Code or other comparable law of any jurisdiction.

“ Loan ” — means the principal sum that Lenders agree to lend on a revolving basis and Borrower agrees to borrow pursuant to the terms and conditions of this Agreement: SEVENTY-FIVE MILLION AND NO/100THS DOLLARS ($75,000,000.00), as same may be increased pursuant to Section 2.4 hereof.

“ Loan Availability ” — means that portion of the Commitment determined by Administrative Agent to be available to be advanced as more particularly described in Section 2.13 hereof.

“ 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 Party ” – means Borrower, Owner, Guarantor, and any other person or entity obligated under the Loan Documents.

“ Management Fees ” — means for a specified period, all amounts recorded by Borrower, or its pro rata share received through Minority Holdings (which are not consolidated in accordance with GAAP, as property management fees or asset management fees.

“ Maturity Date ” — means the Initial Maturity Date, as same may be extended to the Extended Maturity Date, in accordance with the provisions of this Agreement.

“ Minimum Lease Up Requirement ” The requirement that (a) any Real Estate Asset that on any date of determination has been improved with a building or buildings with not less than seventy percent (70%) leasing to third party tenants on the last day of the fiscal quarter most recently ended (other than the Greenbriar Property which shall initially be deemed to satisfy such requirement and constitute an Approved Asset, notwithstanding the fact that as of the Effective Date, such Property does not satisfy the Minimum Lease Up Requirement) and (b) all Approved Assets (including such Real Estate Asset which is proposed by Borrower to become an Approved Asset) taken in the aggregate on the date of determination are not less than eighty percent (80%) leased on the last day of such fiscal quarter; provided, however, in the event that the leasing rate with respect to any Approved Asset previously meeting (or deemed to have met) the Minimum Lease Up Requirement falls below seventy percent (70%) or the aggregate leasing of all Approved Assets falls below eighty percent (80%), Borrower shall have a period of nine (9) months thereafter to re-lease such asset(s) in order to satisfy the Minimum Lease Up Requirement before such Real Estate Asset shall no longer be deemed an Approved Asset. If, at any time thereafter, such Real Estate Asset again meets the Minimum Lease-Up Requirement as well as all other requirements set forth in Section 2.12 hereof, it shall, as of the date it meets such requirement, again be deemed an Approved Asset. For purposes of this definition, a tenant shall be deemed to have leased space even if the tenant is not in occupancy provided that the subject lease is in full force and effect and it is current with its rent payments, or its subtenant(s) is in possession of the leased premises and such subtenant is paying stipulated rent, if any.

“ Minimum Tangible Net Worth ” — means the Borrower’s consolidated tangible net worth, measured on a consolidated basis in accordance with GAAP.

“ Minority Holdings ” — means partnerships, joint ventures, corporations, limited liability companies or other business associations held or owned directly or indirectly by the Borrower which are not directly or indirectly wholly-owned by the Borrower.

“ Moody’s ” — means Moody’s Investor Services, Inc.

“ Net Equity Proceeds ” — shall mean the proceeds of a sale after the date hereof of an equity interest in the Borrower or the Guarantor (including those attributable to a dividend reinvestment program), net of usual and customary closing costs and expenses.

“ Non-Pro Rata Advance ” – shall mean a Protective Advance or a disbursement under the Loan with respect to which fewer than all Lenders have funded their respective Pro Rata Shares in breach of their obligations under this Agreement.

“ Non-Stabilized Property ” — means a Real Estate Asset which is less than eighty percent (80%) leased at any time during the preceding two consecutive quarters and which is not unimproved land, an Acquisition Property, Construction in Process or a Redevelopment Property.

“ Note ” or “ Notes ” – means the Revolving Note(s) and/or the Swingline Note, collectively in the original principal amount of the Loan, executed by Borrower and payable to the order of a Lender, together with such other replacement notes as may be issued from time to time pursuant to Section 12.13 , as hereafter amended, supplemented, replaced or modified.

“ Operating Property Value ” will be defined as the sum of the following, without duplication:

i)

the aggregate Adjusted NOI for the most recent two quarters, annualized (excluding Adjusted NOI for Acquisition Properties, Non-Stabilized Properties, Construction in Process and Redevelopment Properties and assets sold during the previous two (2) quarters) and divided by 8.0%, plus

 

ii)

the acquisition cost of Acquisition Properties, plus (ii) the transaction costs associated with the acquisition thereof, plus (iii) without duplication, the aggregate sum expended on construction of improvements after the initial acquisition, including the costs of any subsequent land acquisitions relating to such Acquisition Property, plus

 

iii)

for each Non-Stabilized Property, the undepreciated cost of such Real Estate Asset.

" Option to Extend ” — means Borrower’s option, subject to the terms and conditions of Section 2.6(b) , to extend the term of the Loan from the Initial Maturity Date to the Extended Maturity Date.

“ Owner ” — shall mean Sherwood Owner, Greenbriar Owner, Fair Oaks Owner and Loudoun Gateway Owner, together with any other Approved Subsidiary or other Affiliate of Borrower owning an Approved Asset hereunder in the future.

“ Owner’s Guaranty ” — shall mean that certain Repayment Guaranty executed by the Owners, as amended and supplemented in the future, together with all Joinders thereto executed by new Owners in the future.

“ Participant ” — shall have the meaning given to such term in Section 12.13 .

“ Permanent Loan Estimate ” shall mean for any period of determination, a determination by Administrative Agent of a hypothetical principal amount of indebtedness which Borrower could incur assuming (i) payments of annual debt service equal to Adjusted NOI measured with respect to the Approved Assets divided by 1.20, and (ii) a debt constant equal to the greater of (a) one and one-half percent (1.50%) in excess of the then-current annual yield on ten-year United States Treasury obligations issued most recently prior to such date and a thirty (30) year principal amortization schedule and (b) eight percent (8.0%) and no required principal amortization. In no event shall Adjusted NOI from any individual Property comprise more than forty percent (40%) of Adjusted NOI for all of the Properties.

“ Permit ” – means any permit, approval, authorization, license, variance or permission required from a Governmental Authority under an applicable Requirement of Law.

“ Permitted Lease ” – shall have the meaning given to such term in Section 8.4 .

“ Permitted Liens ” – means:

(a)

Liens (other than environmental Liens and any Lien imposed under ERISA) for taxes, assessments or charges of any Governmental Authority for claims not yet due;

 

(b)

any laws, ordinances or regulations affecting the Real Estate Asset;

 

(c)

Liens imposed by laws, such as mechanics’ liens and other similar liens, arising in the ordinary course of business which secure payment of obligations not more than thirty (30) days past due;

 

(d)

All matters shown on the Title Policy as exceptions to Lender’s coverage thereunder; and

 

(e)

Liens in favor of Administrative Agent, for the benefit of Lenders, under the Deed of Trust.

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

“ Potential Default ” – means an event, circumstance or condition which, with the giving of notice or the lapse of time, or both, would constitute a Default.

“ Price Adjustment Date ” — shall have the meaning set forth in Section 2.7(h) .

“ Prime Rate ” — means a base rate of interest which Administrative Agent establishes from time to time and which serves as the basis upon which the effective rates of interest are calculated for those loans making reference thereto. Any change in an effective rate due to a change in the Prime Rate shall become effective on the day each such change is announced by Administrative Agent at its principal office in San Francisco, California.

“ Property ” — shall have the meaning given to such term in Recital B , as may be modified in accordance with the provisions of Section 2.12 .

“ Proposed Acquisition ” — means a real estate asset that would constitute an Unencumbered Asset at the time of its acquisition.

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

“ Protective Advance ” — shall mean any advances made by Administrative Agent in accordance with the provisions of Section 11.7(e) to protect the Collateral securing the Loan.

“ Real Estate Assets ” — means the fixed and tangible real estate properties consisting of land, buildings and/or other improvements owned in fee simple or as a leasehold estate by the Borrower, Guarantor or by a Subsidiary of Borrower or Guarantor at the relevant time of reference thereto.

“ Redevelopment Property ” means any Real Estate Asset (other than Construction in Process or an Acquisition Property) that is being redeveloped if more than forty percent (40%) of the square footage of the improvements on such Real Estate Asset is undergoing renovation or the expected cost of redevelopment improvements exceeds 25% of the Operating Property Value attributable to such Real Estate Asset immediately prior to such redevelopment. A Redevelopment Property shall cease to be a Redevelopment Property at the beginning of the fiscal quarter immediately following the earliest to occur of (i) twelve (12) months from the date of substantial completion (as evidenced by receipt by Borrower (or Subsidiary) of a certificate of occupancy or other regulatory approval, if any, permitting use of such Real Estate Asset by the general public), (ii) such Real Estate Asset achieving an 80% occupancy rate (determined on the basis of square footage after redevelopment of improvements leased to tenants paying rent) and (iii) the Borrower notifying the Administrative Agent of its election to no longer treat such Real Estate Asset as a Redevelopment Property.

“ Regulatory Costs ” — are, collectively, future, supplemental, emergency or other changes in Reserve Percentages, assessment rates imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or foreign governmental authority and related in any manner to a Fixed Rate.

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

“ Requirements of Law ” – mean, as to any entity, the charter and by-laws, partnership agreement or other organizational or governing documents of such entity, and any law, rule or regulation, Permit, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such entity or any of its property or to which such entity or any of its property is subject, including without limitation, applicable securities laws and any certificate of occupancy, zoning ordinance, building, environmental or land use requirement or Permit or occupational safety or health law, rule or regulation.

“ Requisite Lenders ” — means, as of any date, Lenders (which must include the Lender then acting as Administrative Agent) having at least 66-2/3% of the aggregate amount of the Commitments, or, if the Commitments have been terminated or reduced to zero, Lenders holding at least 66-2/3% of the principal amount outstanding under the Loan, provided that (a) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded and the Pro Rata Shares of the Loan of Lenders shall be redetermined, for voting purposes only, to exclude the Pro Rata Shares of the Loan of such Defaulting Lenders, and (b) at all times when two or more Lenders are party to this Agreement, the term “Requisite Lenders” shall in no event mean less than two Lenders.

“ Reserve Percentage ” — is at any time the percentage announced by Administrative Agent as the reserve percentage under Regulation D for loans and obligations making reference to an Applicable LIBO Rate for a Fixed Rate Period or time remaining in a Fixed Rate Period on a Price Adjustment Date, as appropriate. The Reserve Percentage shall be based on Regulation D or other regulations from time to time in effect concerning reserves for Eurocurrency Liabilities as defined in Regulation D from related institutions as though Administrative Agent were in a net borrowing position, as promulgated by the Board of Governors of the Federal Reserve System, or its successor.

“ Revolving Note ” means a promissory note of the Borrower substantially in the form of Exhibit E-1 , payable to the order of a Lender in a principal amount equal to the amount of such Lender’s Commitment as originally in effect and otherwise duly completed.

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

“ Subdivision Map ” — shall have the meaning given to such term in Section 8.5 .

“ Subsidiary ” — means for any entity, any corporation, 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, partnership or other entity (without regard to the occurrence of any contingency) which is at the time directly or indirectly owned or controlled by such entity or one or more subsidiaries of such entity or by such entity and one or more subsidiaries of such entity.

“ Subsidiary Guaranty ” — shall have the meaning ascribed thereto in Section 8.16 hereof.

“ Swingline Commitment ” — means the Swingline Lender’s obligation to make Swingline Loans to Borrower pursuant to Section 2.5 hereof in an amount up to, but not exceeding the amount set forth in Section 2.5(a) hereof, as such amount may be reduced from time to time in accordance with the terms hereof.

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

“ Swingline Loan ” means a loan made by the Swingline Lender to the Borrower pursuant to Section 2.5 hereof.

“ Swingline Note ” means a promissory note of the Borrower substantially in the form of Exhibit E-2 , payable to the order of the Swingline Lender in a principal amount equal to the amount of the Swingline Commitment as originally in effect and otherwise duly completed.

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

“ Tenant Letter of Credit ” – means any letter of credit provided to Owner, as landlord, by a tenant under a Permitted Lease as security for, or payment of, any tenant obligations under such Permitted Lease.

“ Title Policy ” — means Lender’s Policy of Title Insurance as issued by Commonwealth Land Title Insurance Company or such other title insurance company mutually acceptable to Borrower and Administrative Agent.

“ Total Budgeted Costs ” — shall include all soft and hard costs to complete Construction in Process on a Real Estate Asset, including but not limited to, land, an interest reserve during construction, an operating deficit reserve, tenant improvements, leasing costs, and infrastructure costs. The development budget shall also include the fully budgeted costs of Construction in Process acquired, or to be acquired, pursuant to purchase agreements or Real Estate Assets being developed by third parties under a loan that the Borrower or the Guarantor or their subsidiaries have guaranteed or otherwise have liability.

“ Total Indebtedness ” means, for any period, the sum (without duplication) of (i) the amount of Indebtedness of the Borrower on a consolidated basis set forth or required to be set forth on the then most recent quarterly financial statements of the Borrower (without duplication), (ii) the outstanding amount of Indebtedness of Minority Holdings pro rata allocable to the Borrower as of the date of the financial statements described in clause (i), and (iii) without duplication, the Contingent Obligations of the Borrower on a consolidated basis and, to the extent allocable to Borrower in accordance with GAAP, of the Minority Holdings as of the date of the financial statements described in clause (i); provided , however , that in no event shall Total Indebtedness include (1) for purposes of avoiding double counting relating to the same underlying obligations, Indebtedness with respect to the letters of credit issued to support guaranties of interest or interest and principal, (2) operating income guaranties or other performance guaranty or completion guaranty obligations, or (3) Contingent Obligations relating to the obligations of any Investment Grade Credit Rating co-venturer.

“ Total Liabilities ” shall include all GAAP liabilities of Borrower on a consolidated basis (without duplication), including Total Indebtedness, letters of credit, purchase obligations, repurchase obligations, forward commitments (including, but not limited to, forward equity commitments and commitments to purchase properties that are subject to specific performance contracts), unsecured debt, capitalized lease obligations (including ground leases to the extent required under GAAP to be reported as a liability), guarantees of indebtedness, subordinated debt, and unfunded obligations. Total Liabilities will include (without redundancy): (a) 100% of the recourse liability of the Borrower and its subsidiaries under (i) guarantees of indebtedness or (ii) loans where the Borrower is liable for debt as a general partner or otherwise and (b) the Borrower or any of its subsidiaries’ ownership share of non-recourse debt in unconsolidated affiliates or debt that is not recourse to the Borrower and its other subsidiaries. Total Liabilities will exclude deferred credit for below market leases. For purposes of this definition, unconsolidated joint venture and Minority Holdings are measured at the greater of Borrower’s economic interest in such entity or the percentage of indebtedness guarantied by Borrower or Guarantor relating to such entity.

“ Unencumbered Asset ” — means any Real Estate Asset that on any date of determination: (a) is not subject to any material Liens (including any such Lien imposed by the organizational documents of the owner of such asset), (b) is not the subject of any matter that materially adversely affects the value of such Real Estate Asset, (c) is not the subject of a Disqualifying Environmental Event, (d) has been improved with a building or buildings which (1) have been issued a certificate of occupancy (where available) or is otherwise lawfully occupied for its intended use, and (2) are fully operational, and (e) is wholly-owned in fee simple by the Borrower, Guarantor or a Subsidiary of Borrower or Guarantor.

“ Variable Rate ” — on any day means a floating rate of interest per annum equal to the higher of (a) the Prime Rate then in effect or (b) the Federal Funds Rate then in effect as announced by the Federal Reserve Bank of New York plus one-half percent (0.5%).

“ Wells Fargo ” — shall have the meaning given to such term in the preamble hereto.

1.2 SCHEDULES AND EXHIBITS INCORPORATED . Schedules 1.1 , 6.6 and 7.1 , and Exhibits A-1 through A-4 , B , C , D , E-1 and E-2 , F , G , H and I all attached hereto, are hereby incorporated into this Agreement.

ARTICLE 2. LOAN

2.1 LOAN . By and subject to the terms of this Agreement, Lenders agree to lend to Borrower, and Borrower agrees to borrow from Lenders, the principal sum of SEVENTY-FIVE MILLION AND NO/100THS DOLLARS ($75,000,000.00), said sum to be evidenced by the Notes. Subject to the terms and conditions set forth in this Agreement, each Lender severally and not jointly agrees to make Loans to the Borrower during the period from and including the Effective Date to but excluding the Maturity Date, in an aggregate principal amount at any one time outstanding up to, but not exceeding, such Lender’s Commitment. Notwithstanding anything to the contrary contained herein, the total amount outstanding hereunder shall never exceed the Loan Availability. Within the foregoing limits and subject to the other terms of this Agreement, the Borrower may borrow, repay and reborrow amounts hereunder. The Notes 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 Notes shall be used for such purposes and uses as may be permitted under this Agreement and the other Loan Documents.

2.2 LOAN FEES .

(a)  Unused Fee . During the period from the Effective Date to but excluding the Maturity Date, the Borrower agrees to pay to the Administrative Agent for the account of the Lenders an unused facility fee equal to (x) the sum of the daily amount by which the aggregate amount of the Commitments exceeds the aggregate outstanding principal balance of the Loan and Letter of Credit Liabilities multiplied by (y) the rate per annum equal to fifteen one hundredths of one percent (0.15%). Such fees shall be computed on a daily basis and payable quarterly in arrears, commencing January 1, 2006, on the first day of each April, July, October and January thereafter during the term of this Agreement and on the Maturity Date.

(b)  Extension Fee . If, pursuant to Section 2.6 , the Borrower exercises its right to extend the Initial Maturity Date, the Borrower agrees to pay to the Administrative Agent for the account of each Lender an extension fee equal to twenty one hundredths of one percent (0.20%) of the amount of such Lender’s Commitment at the time of such extension. Such fee shall be paid to the Administrative Agent prior to, and as a condition to, such extension.

(c)  Administrative Agent’s Fees . The Borrower agrees to pay to the Administrative Agent such fees for services rendered by the Administrative Agent and the Commitment Fee as shall be separately agreed upon in the Fee Letter.

(d)  Letter of Credit Fees . While each Letter of Credit is outstanding, the Borrower agrees to pay to the Administrative Agent for account of each Lender and the Administrative Agent a letter of credit fee at a rate per annum equal to the greater of (i) the Applicable Margin multiplied by the Stated Amount of each Letter of Credit, or (ii) $1,000. Such fee shall be payable quarterly in advance in an amount equal to 1/4 of the annual fee payable on the first day of each calendar quarter such Letter of Credit is outstanding, prorated for partial quarters. The fee provided for in the immediately preceding sentence shall be nonrefundable. In addition, if at any time Wells Fargo is not the sole Lender, the Borrower shall also pay to Administrative Agent a fronting fee for each Letter of Credit issued by the Administrative Agent upon the Borrower’s request in the amount equal to one-eighth of one percent (0.125%) multiplied by the Stated Amount of such Letter of Credit, payable in full at the time of the issuance of such Letter of Credit.

(e)  Approved Property Closing Fee . In connection with each Approved Property Closing, Borrower shall pay a review fee of $2,500.00 to Administrative Agent.

2.3 LOAN DOCUMENTS . Borrower, Owner and Guarantor shall execute and deliver to Administrative Agent (or cause to be executed and delivered) concurrently with this Agreement each of the documents, properly executed and in recordable form, as applicable, described in Exhibit B as Loan Documents.

2.4 INCREASE IN COMMITMENT .

At any time on or before ninety (90) days prior to the Initial Maturity Date, Borrower shall have the right to increase, and to request the Administrative Agent to arrange the increase of, the aggregate amount of the Commitments by providing written notice to the Administrative Agent, which notice shall be irrevocable once given; provided , however , that after giving effect to any such increases the aggregate amount of the Commitments shall not exceed $100,000,000.00. Upon such request, and provided no Potential Default or Default shall have occurred and be continuing or would occur after giving effect to such increase, the Administrative Agent shall use its best efforts, in consideration of a mutually agreed upon fee, to arrange the requested increase in the Commitments through the syndication of such increase to existing Lenders or to new Lenders, as more particularly described herein, so as to become effective within ninety (90) days of the date of such request. The Administrative Agent shall promptly notify each Lender of any such request. No Lender shall be obligated in any way whatsoever to increase its Commitment. No increase of the Commitments may be effected under this Section if either (x) a Potential Default or a Default shall be in existence on the effective date of such increase or would occur after giving effect to such increase or (y) any representation or warranty made or deemed made by the Borrower or any other Loan Party in any Loan Document to which such Loan Party is a party is not (or would not be) true or correct on the effective date of such increase (the “ Commitment Increase Date ”). In connection with any increase in the aggregate amount of the Commitments pursuant to this Section 2.4 any Lender becoming a party hereto shall execute such documents and agreements as the Administrative Agent may reasonably request and (b) the Borrower shall make appropriate arrangements so that each new Lender, and any existing Lender increasing its Commitment, receives a new or replacement Note, as appropriate, in the amount of such Lender’s Commitment at the time of the effectiveness of the applicable increase in the aggregate amount of the Commitment.

2.5 SWINGLINE LOANS.

(a)  Swingline Loans . Subject to the terms and conditions hereof, including without limitation Section 2.13 and only if Wells Fargo is not the only Lender under this Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrower, during the period from the Effective Date to but excluding the Swingline Termination Date, in an aggregate principal amount at any one time outstanding up to, but not exceeding, Five Million Dollars ($5,000,000.00) as such amount may be reduced from time to time in accordance with the terms hereof. If at any time the aggregate principal amount of the Swingline Loans outstanding at such time exceeds the Swingline Commitment in effect at such time, the Borrower shall promptly pay the Administrative Agent for the account of the Swingline Lender the amount of such excess. Subject to the terms and conditions of this Agreement, the Borrower may borrow, repay and reborrow Swingline Loans hereunder.

(b)  Procedure for Borrowing Swingline Loans . The Borrower shall give the Administrative Agent and the Swingline Lender notice pursuant to an Application for Payment delivered no later than 9:00 a.m. San Francisco time on the proposed date of such borrowing. Not later than 11:00 a.m. San Francisco time on the date of the requested Swingline Loan and subject to satisfaction of the applicable conditions set forth in Section 3.1 hereof for such borrowing, the Swingline Lender will make the proceeds of such Swingline Loan available to the Borrower in Dollars, in immediately available funds.

(c)  Interest . Swingline Loans shall bear interest at a per annum rate equal to the Variable Rate as in effect from time to time or at such other rate or rates as the Borrower and the Swingline Lender may agree from time to time in writing. All accrued and unpaid interest on Swingline Loans shall be payable on the dates and in the manner provided in Section 2.7 hereof with respect to interest on Variable Rate Loans (except as the Swingline Lender and the Borrower may otherwise agree in writing in connection with any particular Swingline Loan).

(d)  Swingline Loan Amounts, Etc . Each Swingline Loan shall be in the minimum amount of One Million Dollars ($1,000,000.00) and integral multiples of One Hundred Thousand Dollars ($100,000.00) in excess thereof, or such other minimum amounts agreed to by the Swingline Lender and the Borrower. Any voluntary prepayment of a Swingline Loan must be in integral multiples of One Hundred Thousand Dollars ($100,000.00) or the aggregate principal amount of all outstanding Swingline Loans (or such other minimum amounts upon which the Swingline Lender and the Borrower may agree) and in connection with any such prepayment, the Borrower must give the Swingline Lender prior written notice thereof no later than 10:00 a.m. San Francisco time on the day prior to the date of such prepayment. The Swingline Loans shall, in addition to this Agreement, be evidenced by the Swingline Note.

(e)  Repayment and Participations of Swingline Loans . The Borrower agrees to repay each Swingline Loan within one Business Day of demand therefor by the Swingline Lender and, in any event, within seven (7) Business Days after the date such Swingline Loan was made. Notwithstanding the foregoing, the Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Swingline Loans on the Swingline Termination Date (or such earlier date as the Swingline Lender and the Borrower may agree in writing). In lieu of demanding repayment of any outstanding Swingline Loan from the Borrower, the Swingline Lender may, on behalf of the Borrower (which hereby irrevocably directs the Swingline Lender to act on its behalf), request a borrowing from the Lenders in an amount equal to the principal balance of such Swingline Loan, which shall bear interest at the Variable Rate. The amount limitations contained in Section 2.13 shall not apply to any borrowing from the Lenders made pursuant to this subsection. The Swingline Lender shall give notice to the Administrative Agent of any such borrowing from the Lenders not later than 9:00 a.m. San Francisco time at least one Business Day prior to the proposed date of such borrowing. Each Lender will make available to the Administrative Agent at the Principal Office for the account of the Swingline Lender, in immediately available funds, the proceeds of such borrowing. The Administrative Agent shall pay the proceeds of such borrowing to the Swingline Lender, which shall apply such proceeds to repay such Swingline Loan. If the Lenders are prohibited from making Loans required to be made under this subsection for any reason whatsoever, including without limitation, the occurrence of any of the Potential Defaults or Defaults described in Sections 10.1(f) through (h) of this Agreement, each Lender shall purchase from the Swingline Lender, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Pro Rata Share of such Swingline Loan, by directly purchasing a participation in such Swingline Loan in such amount and paying the proceeds thereof to the Administrative Agent for the account of the Swingline Lender in Dollars and in immediately available funds. A Lender’s obligation to purchase such a participation in a Swingline Loan shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including without limitation, (i) any claim of setoff, counterclaim, recoupment, defense or other right which such Lender or any other Person may have or claim against the Administrative Agent, the Swingline Lender or any other Person whatsoever, (ii) the occurrence or continuation of a Potential Default or Default (including without limitation, any of the Potential Defaults or Defaults described in Sections 10.1(f) through (h) of this Agreement or the termination of any Lender’s Commitment, (iii) the existence (or alleged existence) of an event or condition which has had or could have a material adverse effect on any Loan Party, (iv) any breach of any Loan Document by the Administrative Agent, any Lender, Borrower, Owner or Guarantor or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If such amount is not in fact made available to the Swingline Lender by any Lender, the Swingline Lender shall be entitled to recover such amount on demand from such Lender, together with accrued interest thereon for each day from the date of demand thereof, at the Federal Funds Rate. If such Lender does not pay such amount forthwith upon the Swingline Lender’s demand therefor, and until such time as such Lender makes the required payment, the Swingline Lender shall be deemed to continue to have outstanding Swingline Loans in the amount of such unpaid participation obligation for all purposes of the Loan Documents (other than those provisions requiring the other Lenders to purchase a participation therein). Further, such Lender shall be deemed to have assigned any and all payments made of principal and interest on its Loan, and any other amounts due it hereunder, to the Swingline Lender to fund Swingline Loans in the amount of the participation in Swingline Loans that such Lender failed to purchase pursuant to this Section until such amount has been purchased (as a result of such assignment or otherwise).

2.6 MATURITY DATE .

(a)  In General . Subject to the provisions of Section 2.5 hereof relating to Swingline Loans, all sums due and owing under this Agreement and the other Loan Documents shall be repaid in full on or before the Maturity Date. All payments due to Administrative Agent and Lenders under this Agreement, whether at the Maturity Date or otherwise, shall be paid in Dollars in immediately available funds.

(b)  Extension Option . Borrower shall have the option to extend the term of the Loan from the Initial Maturity Date to the Extended Maturity Date (the “ Extension Option ”) upon satisfaction of each of the following conditions precedent with respect thereto:

(i)

Borrower shall provide Administrative Agent with written notice of Borrower’s request to exercise the Extension Option not more than one hundred twenty (120) days but not less than sixty (60) days prior to the Initial Maturity Date;

 

(ii)

As of the date of Borrower’s delivery of notice of its request to exercise the Extension Option, and as of the Initial Maturity Date, all of Borrower, Owner’s and Guarantor’s representations and warranties in the Loan Documents shall be true and correct in all material respects and no Default or Potential Default shall have occurred and be continuing and Borrower, Owner and Guarantor shall so certify in writing;

 

(iii)

Borrower, Owner and Guarantor shall execute or cause the execution of all documents reasonably required by Administrative Agent to exercise the Extension Option and shall deliver to Administrative Agent, at Borrower’s sole cost and expense, such title insurance endorsements as are reasonably required by Administrative Agent;

 

(iv)

On the date of Borrower’s delivery of notice of request to exercise each Extension Option, Borrower shall pay to Administrative Agent an extension fee equal to twenty one-hundredths of one percent (0.20%) of the aggregate Commitment, together with all reasonable costs and expenses incurred by or on behalf of Administrative Agent in connection with the extension; and

 

(v)

If so required by Administrative Agent, Administrative Agent shall have ordered and received, at Borrower’s expense, an Appraisal of the Property for purposes of re-calculating Loan Availability pursuant to Section 2.13 hereof.

(c)  No Obligation to Extend . Notwithstanding Borrower’s right to extend the Initial Maturity Date of the Loan as set forth hereinabove, Borrower hereby agrees that Lenders shall have no commitment or obligation to extend the Initial Maturity Date, unless each of the conditions set forth in Section 2.6(b) above shall have been satisfied.

2.7 INTEREST ON THE LOAN .

(a)  Interest Payments . Interest accrued on the outstanding principal balance of the Loan shall be due and payable, in the manner provided in this Section 2.7 , on the first day of each month commencing with the first month after the Effective Date.

(b)  Default Interest . Notwithstanding the rates of interest specified in Sections 2.7(e) below and the payment dates specified in Section 2.7(a) , at Requisite Lenders’ discretion at any time following the occurrence and during the continuance of any Default, the principal balance of the Loan then outstanding and, to the extent permitted by applicable law, any interest payments on the Loan not paid when due, shall bear interest payable upon demand at the Alternate Rate. All other amounts due Administrative Agent or Lenders (whether directly or for reimbursement) under this Agreement or any of the other Loan Documents if not paid when due, or if no time period is expressed, if not paid within ten (10) days after demand, shall likewise, at the option of Requisite Lenders, bear interest from and after demand at the Alternate Rate.

(c)  Late Fee . Borrower acknowledges that late payment to Administrative Agent will cause Administrative Agent and Lenders to incur costs not contemplated by this Agreement. Such costs include, without limitation, processing and accounting charges. Therefore, if Borrower fails timely to pay any sum due and payable hereunder through the Maturity Date (other than payment of the entire outstanding balance of the Loan on the Maturity Date), unless waived by Administrative Agent, a late charge of four cents ($.04) for each dollar of any such principal payment, interest or other charge due hereon and which is not paid within fifteen (15) days after such payment is due, shall be charged by Administrative Agent (for the benefit of Lenders) and paid by Borrower for the purpose of defraying the expense incident to handling such delinquent payment. Borrower and Administrative Agent agree that this late charge represents a reasonable sum considering all of the circumstances existing on the date hereof and represents a fair and reasonable estimate of the costs that Administrative Agent and Lenders will incur by reason of late payment. Borrower and Administrative Agent further agree that proof of actual damages would be costly and inconvenient. Acceptance of any late charge shall not constitute a waiver of the default with respect to the overdue installment, and shall not prevent Administrative Agent from exercising any of the other rights available hereunder or any other Loan Document. Such late charge shall be paid without prejudice to any other rights of Administrative Agent.

(d)  Computation of Interest . Interest shall be computed on the basis of the actual number of days elapsed in the period during which interest or fees accrue and a year of three hundred sixty (360) days on the principal balance of the Loan outstanding from time to time. In computing interest on the Loan, the date of the making of a disbursement under the Loan shall be included and the date of payment shall be excluded. Notwithstanding any provision in this Section 2.7 , interest in respect of the Loan shall not exceed the maximum rate permitted by applicable law.

(e)  Effective Rate . The “ Effective Rate ” upon which interest shall be calculated for the Loan shall, from and after the Effective Date of this Agreement, be one or more of the following:

(i) Provided no Default exists under this Agreement:

(A) for that portion of the principal balance of the Notes which Borrower has not elected to be a Fixed Rate Portion, the Effective Rate shall be calculated assuming Borrower has elected a Fixed Rate Period of one (1) month therefor, subject to the provision in Section 2.7(e)(i)(B) below.

(B) for those portions of the principal balance of the Notes which are Fixed Rate Portions, the Effective Rate for the Fixed Rate Period thereof shall be the Fixed Rate selected by Borrower and set in accordance with the provisions hereof, provided , however , if any of the transactions necessary for the calculation of interest at any Fixed Rate requested or selected by Borrower should be or become prohibited or unavailable to Administrative Agent, or, if in Administrative Agent ‘s good faith judgment, it is not possible or practical for Administrative Agent to set a Fixed Rate for a Fixed Rate Portion and Fixed Rate Period as requested or selected by Borrower, the Effective Rate for such Fixed Rate Portion shall remain at or revert to the Variable Rate.

(ii) During such time as a Default exists under this Agreement; or from and after the date on which all sums owing under the Notes become due and payable by acceleration or otherwise; or from and after the date on which the Collateral or any portion thereof or interest therein, is sold, transferred, mortgaged, assigned, or encumbered, whether voluntarily or involuntarily, or by operation of law or otherwise, without Administrative Agent’s prior written consent (whether or not the sums owing under the Notes become due and payable by acceleration); or from and after the Maturity Date, then at the option of Requisite Lenders in each case, the interest rate applicable to the then outstanding principal balance of the Loan shall be the Alternate Rate.

(f)  Selection of Fixed Rate . Provided no Default or Potential Default exists under this Agreement, Borrower, at its option and upon satisfaction of the conditions set forth herein, may request a Fixed Rate as the Effective Rate for calculating interest on the portion of the unpaid principal balance and for the period selected in accordance with and subject to the following procedures and conditions, provided , however , that Borrower may not have in effect at any one time more than eight (8) Fixed Rates:

(i) Borrower shall deliver to the Disbursement and Operations Center of Administrative Agent, 2120 East Park Place, Suite 100, El Segundo, California, 90245, with a copy to: Administrative Agent, 1750 H Street, N.W., Washington, D.C. 20006 Attention: Erin P. Peart or such other addresses as Administrative Agent shall designate, an original or facsimile Fixed Rate Notice no later than 9:00 A.M. (California time), and not less than three (3) nor more than five (5) Business Days prior to the proposed Fixed Rate Period for each Fixed Rate Portion. Any Fixed Rate Notice pursuant to this subsection (i) is irrevocable.

Administrative Agent is authorized to rely upon the telephonic request and acceptance of Oliver T. Carr, III, John Schissel or Edward W. Schulze, Jr. as Borrower’s duly authorized agents, or such additional authorized agents as Borrower shall designate in writing to Administrative Agent. Borrower’s telephonic notices, requests and acceptances shall be directed to such officers of Administrative Agent as Administrative Agent may from time to time designate.

(ii) Borrower may elect (A) to convert Variable Rate advances to a Fixed Rate Portion, or (B) to convert a matured Fixed Rate Portion into a new Fixed Rate Portion, provided , however , that the aggregate amount of the advance being converted into or continued as a Fixed Rate Portion shall comply with the definition thereof as to Dollar amount. The conversion of a matured Fixed Rate Portion back to a Variable Rate or to a new Fixed Rate Portion shall occur on the last Business Day of the Fixed Rate Period relating to such Fixed Rate Portion. Each Fixed Rate Notice shall specify (A) the amount of the Fixed Rate Portion, (B) the Fixed Rate Period, and (C) the Fixed Rate Commencement Date.

(iii) Upon receipt of a Fixed Rate Notice in the proper form requesting a Fixed Rate Portion advance under subsections (i) and (ii) above, Administrative Agent shall determine the Fixed Rate applicable to the Fixed Rate Period for such Fixed Rate Portion two (2) Business Days prior to the beginning of such Fixed Rate Period. Each determination by Administrative Agent of the Fixed Rate shall be conclusive and binding upon the parties hereto in the absence of manifest error. Administrative Agent shall deliver to Borrower and each Lender (by facsimile) an acknowledgment of receipt and confirmation of the Fixed Rate Notice; provided , however , that failure to provide such acknowledgment of receipt and confirmation of the Fixed Rate Notice to Borrower or any Lender shall not affect the validity of such rate.

(iv) If Borrower does not make a timely election to convert all or a portion of a matured Fixed Rate Portion into a new Fixed Rate Portion in accordance with this Section 2.7(f) above, such Fixed Rate Portion shall be automatically converted to a Fixed Rate Portion with a Fixed Rate Period of one (1) month upon the expiration of the Fixed Rate Period applicable to such Fixed Rate.

(g)  Fixed Rate Taxes, Regulatory Costs and Reserve Percentages . Upon Administrative Agent’s demand, Borrower shall pay to Administrative Agent for the account of each Lender, in addition to all other amounts which may be, or become, due and payable under this Agreement and the other Loan Documents, any and all Fixed Rate Taxes and Regulatory Costs, to the extent they are not internalized by calculation of a Fixed Rate. Further, at Administrative Agent’s option, the Fixed Rate shall be automatically adjusted by adjusting the Reserve Percentage, as determined by Administrative Agent in its prudent banking judgment, from the date of imposition (or subsequent date selected by Administrative Agent) of any such Regulatory Costs. Administrative Agent shall give Borrower notice of any Fixed Rate Taxes and Regulatory Costs as soon as practicable after their occurrence, but Borrower shall be liable for any Fixed Rate Taxes and Regulatory Costs regardless of whether or when notice is so given.

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(h)  Fixed Rate Price Adjustment . Borrower acknowledges that prepayment or acceleration of a Fixed Rate Portion during a Fixed Rate Period shall result in Lenders’ incurring additional costs, expenses and/or liabilities and that it is extremely difficult and impractical to ascertain the extent of such costs, expenses and/or liabilities. Therefore, on the date a Fixed Rate Portion is prepaid or the date all sums payable hereunder become due and payable, by acceleration or otherwise prior to the expiration of the applicable Fixed Rate Period for such Fixed Rate Portion (“ Price Adjustment Date ”), Borrower will pay Administrative Agent, for the account of each Lender (in addition to all other sums then owing to Lenders) an amount (“ Fixed Rate Price Adjustment ”) equal to the then present value of (i) the amount of interest that would have accrued on the Fixed Rate Portion for the remainder of the Fixed Rate Period at the Fixed Rate set on the Fixed Rate Commencement Date, less (ii) the amount of interest that would accrue on the same Fixed Rate Portion for the same period if the Fixed Rate were set on the Price Adjustment Date at the Applicable LIBO Rate in effect on the Price Adjustment Date. The present value shall be calculated by using as a discount rate the LIBO Rate quoted on the Price Adjustment Date.

By initialing this provision where indicated below, Borrower confirms that Lenders’ agreement to make the Loan at the interest rates and on the other terms set forth herein and in the other Loan Documents constitutes adequate and valuable consideration, given individual weight by Borrower, for this Agreement.

Borrower Initials.      

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(i)

4

Purchase, Sale and Matching of Funds . Borrower understands, agrees and acknowledges the following: (a) Lenders have no obligation to purchase, sell and/or match funds in connection with the use of a LIBO Rate as a basis for calculating a Fixed Rate or Fixed Rate Price Adjustment; (b) a LIBO Rate is used merely as a reference in determining a Fixed Rate and Fixed Rate Price Adjustment; and (c) Borrower has accepted a LIBO Rate as a reasonable and fair basis for calculating a Fixed Rate and a Fixed Rate Price Adjustment. Borrower further agrees to pay the Fixed Rate Price Adjustment, Fixed Rate Taxes and Regulatory Costs, if any, whether or not any Lender elects to purchase, sell and/or match funds.

(j)  Adjustment of Applicable Margin . The Applicable Margin shall be adjusted, if applicable, upon receipt by Administrative Agent of the Compliance Certificate from Borrower pursuant to Section 9.10 hereof or Administrative Agent’s determination of the Leverage Ratio in the event that Borrower fails to provide such Compliance Certificate in a timely manner, but in no event later than forty five (45) days after the end of each of Borrower’s fiscal quarters.

2.8 PAYMENTS .

(a)  Manner and Time of Payment . All payments of principal, interest and fees hereunder payable to Administrative Agent or the Lenders shall be made without condition or reservation of right and free of set-off or counterclaim, in Dollars and by wire transfer (pursuant to Administrative Agent’s written wire transfer instructions) of immediately available funds, to Administrative Agent, for the account of each Lender as applicable, not later than 11:00 A.M. (San Francisco time) on the date due; and funds received by Administrative Agent after that time and date shall be deemed to have been paid on the next succeeding Business Day. The Borrower shall, at the time of making each payment under this Agreement or any other Loan Document, specify to the Administrative Agent the amounts payable by the Borrower hereunder to which such payment is to be applied.

(b)  Payments on Non-Business Days . Whenever any payment to be made by Borrower hereunder shall be stated to be due on a day which is not a Business Day, payments shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder and of any fees due under this Agreement, as the case may be.

(c)  Voluntary Prepayment . Borrower may, upon not less than three (3) Business Days’ prior written notice to Administrative Agent not later than 11:00 A.M. (San Francisco time) on the date given, at any time and from time to time, prepay all or any portion of the Loan without penalty, except as otherwise expressly set forth in this Section 2.8(c) . Any notice of prepayment given to Administrative Agent under this Section 2.8(c) shall specify the date of prepayment and the principal amount of the prepayment. In the event of a prepayment of any Fixed Rate Portion, Borrower shall concurrently pay any Fixed Rate Price Adjustment payable in respect thereof.

2.9 FULL REPAYMENT AND RECONVEYANCE . Upon the request of Borrower and receipt of all sums owing and outstanding under the Loan Documents, Administrative Agent shall issue a full reconveyance of the Property from the lien of the Deed of Trust; provided , however , that all of the following conditions shall be satisfied at the time of, and with respect to, such reconveyance: (a) Administrative Agent, for the benefit of Lenders, shall have received all escrow, closing and recording costs, the costs of preparing and delivering such reconveyance and any sums then due and payable under the Loan Documents; and (b) Administrative Agent shall have received a written release satisfactory to Administrative Agent of any set aside letter, letter of credit or other form of undertaking which Administrative Agent or any Lender has issued to any surety, Governmental Authority or any other party in connection with the Loan. Lenders’ obligations to make further disbursements under the Loan shall terminate as to any portion of the Loan undisbursed as of the date of issuance of such full release or reconveyance, and any commitment of Lenders to lend any undisbursed portion of the Loan shall be canceled.

2.10 LENDERS’ ACCOUNTING . Administrative Agent shall maintain a loan account (the “ Loan Account ”) on its books in which shall be recorded (a) the names and addresses and the Pro Rata Shares of the commitment of each of the Lenders, and principal amount of the Loan owing to each Lender from time to time, and (b) all repayments of principal and payments of accrued interest, as well as payments of fees required to be paid pursuant to this Agreement. All entries in the Loan Account shall be made in accordance with Administrative Agent’s customary accounting practices as in effect from time to time. Monthly or at such other interval as is customary with Administrative Agent’s practice, Administrative Agent will render a statement of the Loan Account to Borrower and will deliver a copy thereof to each Lender. Each such statement shall be deemed final, binding and conclusive upon Borrower in all respects as to all matters reflected therein (absent manifest error).

2.11 LETTERS OF CREDIT.

(a)  Letters of Credit . Subject to the terms and conditions of this Agreement, Administrative Agent, on behalf of Lenders, agrees to issue for the account of the Borrower during the period from and including the Effective Date to ninety (90) days prior to the Maturity Date, one or more letters of credit (each a “ Letter of Credit ”) in such form and containing such terms as may be requested from time to time by the Borrower and acceptable to Administrative Agent, up to a maximum aggregate Stated Amount at any one time outstanding not to exceed $5,000,000 as such amount may be reduced from time to time in accordance with the terms hereof (the “ L/C Commitment Amount ”). The Borrower understands and agrees that Letter of Credit Liabilities are treated as advances under the Commitments of the Lenders for the purpose of reducing the availability of advances under the Revolving Note.

(b)  Terms of Letters of Credit . At the time of issuance, the amount, terms and conditions of each Letter of Credit, and of any drafts or acceptances thereunder, shall be subject to approval by the Administrative Agent. Notwithstanding the foregoing, in no event may (i) the expiration date of any Letter of Credit extend beyond thirty (30) days prior to the Maturity Date, (ii) any Letter of Credit have an initial duration in excess of one year, or (iii) a Letter of Credit be issued within 30 days prior to the Maturity Date. The initial Stated Amount of each Letter of Credit shall be at least $25,000.00.

(c)  Requests for Issuance of Letters of Credit . In connection with the proposed issuance of a Letter of Credit, the Borrower shall give Administrative Agent written notice (or telephonic notice promptly confirmed in writing) at least five (5) Business Days prior to the requested date of issuance of a Letter of Credit, such notice to describe in reasonable detail the proposed terms of such Letter of Credit and the nature of the transactions or obligations proposed to be supported by such Letter of Credit, and in any event shall set forth with respect to such Letter of Credit, (i) the proposed initial Stated Amount, (ii) the beneficiary, (iii) whether such Letter of Credit is a commercial or standby letter of credit, and (iv) the proposed expiration date. The Borrower shall also execute and deliver such customary applications and agreements for standby letters of credit, standby letter of credit agreements, applications for amendment to letter of credit, and other forms as requested from time to time by the Administrative Agent. Borrower shall cause the executed completed application for the issuance of a Letter of Credit to be delivered to the Administrative Agent no later than the date of the delivery of the written notice described in the first sentence of this Section 2.11(c) . Provided the Borrower has given the notice prescribed by the first sentence of this subsection and the Borrower has executed and delivered to the Administrative Agent the agreements, applications and other forms as required by the immediately preceding sentence of this subsection, and subject to the terms and conditions of this Agreement, including the satisfaction of any applicable conditions precedent set forth in Article VI , Administrative Agent agrees to issue the requested Letter of Credit on the requested date of issuance for the benefit of the stipulated beneficiary but in no event prior to the date five (5) Business Days following the date after which Administrative Agent received the items required to be delivered to it under this subsection. Upon the written request of the Borrower, Administrative Agent shall deliver to the Borrower a copy of (i) any Letter of Credit proposed to be issued hereunder prior to the issuance thereof, and (ii) each issued Letter of Credit within a reasonable time after the date of issuance thereof. To the extent any term of a Letter of Credit Document is inconsistent with a term of any Loan Document, the term of the Letter of Credit Document shall control.

(d)  Reimbursement Obligations . Upon receipt by Administrative Agent from the beneficiary of a Letter of Credit of any demand for payment under such Letter of Credit, Administrative Agent shall promptly notify the Borrower of the amount to be paid by Administrative Agent as a result of such demand and the date on which payment is to be made by Administrative Agent to such beneficiary in respect of such demand. The Borrower hereby absolutely, unconditionally and irrevocably agrees to pay and reimburse Administrative Agent for the amount of each demand for payment under each Letter of Credit on the date which is one (1) Business Day after the date on which payment is to be made by the Administrative Agent to the beneficiary thereunder, without presentment, demand, protest or other formalities of any kind. Upon receipt by Administrative Agent of any payment in respect of any Reimbursement Obligation, Administrative Agent shall promptly pay to each Lender that has acquired a participation therein under the second sentence of Section 2.10(f) such Lender’s Pro Rata Share of such payment.

(e)  Manner of Reimbursement . Upon its receipt of a notice referred to in the immediately preceding subsection (d), the Borrower shall advise the Administrative Agent whether or not the Borrower intends to borrow hereunder to finance its obligation to reimburse the Administrative Agent for the amount of the related demand for payment and, if it does, the Borrower shall submit a timely request for such borrowing as provided in the applicable provisions of this Agreement. If the Borrower fails to so advise the Administrative Agent, or if the Borrower fails to reimburse the Administrative Agent for a demand for payment under a Letter of Credit by the date of such payment, the Administrative Agent shall give each Lender prompt notice thereof and of the amount of the demand for payment, specifying such Lender’s Pro Rata Share of the amount of the related demand for payment and the provisions of Section 2.10(g) shall apply, and such advance shall constitute an advance under the Commitment at the Applicable LIBOR Rate with a one (1) month Interest Period.

(f)  Lenders’ Participation in Letters of Credit . Immediately upon the issuance by the Administrative Agent of any Letter of Credit each Lender shall be deemed to have absolutely, irrevocably and unconditionally purchased and received from the Administrative Agent, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Pro Rata Share of the liability of the Administrative Agent with respect to such Letter of Credit and each such Lender thereby shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and shall be unconditionally obligated to the Administrative Agent to pay and discharge when due, such Lender’s Pro Rata Share of the Administrative Agent’s liability under such Letter of Credit. In addition, upon the making of each payment by a Lender to the Administrative Agent in respect of any Letter of Credit pursuant to Section 2.10(g) below, such Lender shall, automatically and without any further action on the part of the Administrative Agent or such Lender, acquire (i) a participation in an amount equal to such payment in the Reimbursement Obligation owing to the Administrative Agent by the Borrower in respect of such Letter of Credit and (ii) a participation in a percentage equal to such Lender’s Pro Rata Share in any interest or other amounts payable by the Borrower in respect of such Reimbursement Obligation (other than fees owing only to the Administrative Agent).

(g)  Payment Obligation of Lenders . Each Lender severally agrees to pay to the Administrative Agent on demand in immediately available funds in Dollars the amount of such Lender’s Pro Rata Share of each drawing paid by the Administrative Agent under each Letter of Credit to the extent such amount is not reimbursed by the Borrower pursuant to Section 2.10(d) ; provided, however, that in respect of any drawing under any Letter of Credit, the maximum amount that any Lender shall be required to fund shall not exceed such Lender’s Pro Rata Share of such drawing. Each Lender’s obligation to make such payments to the Administrative Agent under this subsect