Exhibit 10.2
 
CREDIT AGREEMENT
dated as of
November 30, 2006
among
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED,
The Lenders Party Hereto,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Issuing Bank and Administrative Agent,
PNC BANK, NATIONAL ASSOCIATION,
as Syndication Agent,
Each of
CITIZENS BANK OF RHODE ISLAND,
THE BANK OF NEW YORK,
and
EUROHYPO AG, NEW YORK BRANCH
as a Documentation Agent,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Lead Arranger and Sole Book Runner
 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

              Page
ARTICLE I. Definitions
    1  
SECTION 1.1. Defined Terms
    1  
SECTION 1.2. Classification of Loans and Borrowings
    24  
SECTION 1.3. Terms Generally
    24  
SECTION 1.4. Accounting Terms; GAAP
    24  
ARTICLE II. The Credits
    24  
SECTION 2.1. Commitments
    24  
SECTION 2.2. Loans and Borrowings
    25  
SECTION 2.3. Requests for Borrowings
    25  
SECTION 2.4. [Reserved]
    26  
SECTION 2.5. Extension of Maturity Date
    26  
SECTION 2.6. Letters of Credit
    26  
SECTION 2.7. Funding of Borrowings
    30  
SECTION 2.8. Interest Elections
    31  
SECTION 2.9. Termination and Reduction of Commitments
    32  
SECTION 2.10. Repayment of Loans; Evidence of Debt
    33  
SECTION 2.11. Prepayment of Loans
    33  
SECTION 2.12. Fees
    34  
SECTION 2.13. Interest
    35  
SECTION 2.14. Alternate Rate of Interest
    36  
SECTION 2.15. Increased Costs
    36  
SECTION 2.16. Break Funding Payments
    37  
SECTION 2.17. Taxes
    38  
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs
    39  
SECTION 2.19. Mitigation Obligations; Replacement of Lenders
    41  
SECTION 2.20. Increase in Commitment
    42  
SECTION 2.21. Funds Transfer Disbursements
    42  
ARTICLE III. Representations and Warranties
    44  
SECTION 3.1. Organization; Powers
    44  
SECTION 3.2. Authorization; Enforceability
    44  
SECTION 3.3. Governmental Approvals; No Conflicts
    44  
SECTION 3.4. Financial Condition; No Material Adverse Change
    45  
SECTION 3.5. Properties
    46  
SECTION 3.6. Litigation and Environmental Matters
    46  
SECTION 3.7. Compliance with Laws and Agreements
    46  
SECTION 3.8. Investment Company Status
    47  
SECTION 3.9. Taxes
    47  
SECTION 3.10. ERISA
    47  
SECTION 3.11. Disclosure
    47  
SECTION 3.12. Insurance
    47  
SECTION 3.13. [Reserved]
    47  
SECTION 3.14. SEC Reports
    47  
SECTION 3.15. Representations and Warranties in Loan Documents
    48  

-i-

--------------------------------------------------------------------------------

 

              Page
SECTION 3.16. Organizational Documents
    48  
SECTION 3.17. REIT Status
    48  
SECTION 3.18. OFAC
    48  
ARTICLE IV. Conditions
    48  
SECTION 4.1. Closing Date
    48  
SECTION 4.2. Each Credit Event
    50  
ARTICLE V. Affirmative Covenants
    51  
SECTION 5.1. Financial Statements and Other Information
    51  
SECTION 5.2. Notices of Material Events
    53  
SECTION 5.3. Existence; Conduct of Business
    54  
SECTION 5.4. Payment of Obligations
    55  
SECTION 5.5. Maintenance of Properties; Insurance
    55  
SECTION 5.6. Books and Records; Inspection Rights
    55  
SECTION 5.7. Compliance with Laws
    56  
SECTION 5.8. Use of Proceeds and Letters of Credit
    56  
SECTION 5.9. [Reserved]
    56  
SECTION 5.10. Solvency of Loan Parties
    56  
SECTION 5.11. Further Assurances
    56  
SECTION 5.12. Distributions in the Ordinary Course
    57  
SECTION 5.13. ERISA Compliance
    57  
SECTION 5.14. REIT Status
    57  
SECTION 5.15. New Guarantors
    57  
SECTION 5.16. Distributions of Income to Borrower
    58  
ARTICLE VI. Negative Covenants
    58  
SECTION 6.1. Indebtedness and Other Financial Covenants
    58  
SECTION 6.2. Liens
    60  
SECTION 6.3. Fundamental Changes
    60  
SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions
    60  
SECTION 6.5. Hedging Agreements
    62  
SECTION 6.6. ERISA
    62  
SECTION 6.7. Margin Regulations; Securities Laws
    63  
SECTION 6.8. Transactions with Affiliates
    63  
ARTICLE VII. Events of Default
    63  
SECTION 7.1. Events of Default
    63  
ARTICLE VIII. The Administrative Agent
    66  
SECTION 8.1. Appointment and Authorization
    66  
SECTION 8.2. Wells Fargo as Lender
    67  
SECTION 8.3. Approvals of Lenders
    67  
SECTION 8.4. Notice of Defaults
    67  
SECTION 8.5. Administrative Agent’s Reliance, Etc.
    68  
SECTION 8.6. Indemnification of Administrative Agent
    68  
SECTION 8.7. Lender Credit Decision, Etc.
    69  
SECTION 8.8. Successor Administrative Agent
    70  
SECTION 8.9. Titled Agents
    71  
ARTICLE IX. Miscellaneous
    71  
SECTION 9.1. Notices
    71  
SECTION 9.2. Waivers; Amendments
    72  

-ii-

--------------------------------------------------------------------------------

 

              Page
SECTION 9.3. Expenses; Indemnity; Damage Waiver
    72  
SECTION 9.4. Successors and Assigns
    74  
SECTION 9.5. Survival
    76  
SECTION 9.6. Counterparts; Integration; Effectiveness
    76  
SECTION 9.7. Severability
    77  
SECTION 9.8. Right of Setoff
    77  
SECTION 9.9. Governing Law; Jurisdiction; Consent to Service of Process
    77  
SECTION 9.10. WAIVER OF JURY TRIAL
    78  
SECTION 9.11. Headings
    78  
SECTION 9.12. Confidentiality
    78  
SECTION 9.13. Interest Rate Limitation
    79  
SECTION 9.14. [Reserved]
    79  
SECTION 9.15. Electronic Document Delivery
    79  
SECTION 9.16. USA Patriot Act
    80  

-iii-

--------------------------------------------------------------------------------

 

SCHEDULES:

     
Schedule 1
  Commitments
Schedule 1.1(a)
  CPA REITs
Schedule 1.1(b)
  Loan Parties
Schedule 3.2
  Ownership Structure
Schedule 3.3
  Consents
Schedule 3.4
  Existing Indebtedness
Schedule 3.6
  Disclosed Matters
Schedule 4.1(f)
  Transactions not in the Ordinary Course
 
   
EXHIBITS:
   
 
   
Exhibit A
  Form of Assignment and Acceptance
Exhibit B
  Form of Borrowing Request
Exhibit C
  Form of Guaranty
Exhibit D
  Form of Interest Rate Election
Exhibit E
  Form of Note
Exhibit F-1
  Form of Opinion of Reed Smith LLP
Exhibit F-2
  Form of Opinion of Local Counsel
Exhibit G
  Financial Calculation Schedule Pursuant to Section 5.1
Exhibit H
  Form of Intercompany Note
Exhibit I
  Form of [Quarterly/Annual] Compliance Certificate to Accompany Reports
Exhibit J
  Form of Transfer Authorizer Designation Form

-iv-

--------------------------------------------------------------------------------

 

     THIS CREDIT AGREEMENT (this “Agreement”) dated as of November 30, 2006,
among Corporate Property Associates 14 Incorporated, a corporation formed under
the laws of the State of Maryland (the “Borrower”), the Lenders party hereto,
and Wells Fargo Bank, National Association, as contractual representative of the
Lenders (in such capacity, the “Administrative Agent”) and as issuing bank (in
such capacity, the “Issuing Bank”), PNC Bank, National Association, as
Syndication Agent (each in such capacity, the “Syndication Agent”), each of
Citizens Bank of Rhode Island, The Bank of New York, and Eurohypo AG, New York
Branch, as a Documentation Agent (each in such capacity, a “Documentation
Agent”), and Wells Fargo Bank, National Association, as Lead Arranger and Sole
Book Runner (the “Arranger”).
     WHEREAS, the Borrower has entered into that certain Agreement and Plan of
Merger dated as of June 29, 2006 (as amended, restated, supplemented or
otherwise modified from time to time, the “Merger Agreement”) by and among the
Borrower, Corporate Property Associates 12 Incorporated (“CPA 12”), CPA 14
Acquisition Inc., CPA Holdings Incorporated and CPA 12 Merger Sub Inc., pursuant
to which CPA 12 is to merge with and into the Borrower with the Borrower
continuing as the surviving entity (the “Merger”); and
     WHEREAS, the Borrower has requested the Issuing Bank and the Lenders to
make available to the Borrower a revolving credit facility in the initial amount
of $150,000,000, which will include a $25,000,000 letter of credit subfacility,
on and subject to the terms and conditions contained herein, the proceeds of
which the Borrower may use to satisfy certain of its obligations arising in
connection with the Merger;
     NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto agree as follows:
ARTICLE I.
Definitions
     SECTION 1.1. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
     “ABR,” when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
     “Accession Agreement” means an Accession Agreement substantially in the
form of Annex I to the Guaranty.
     “Adjusted EBITDA” means, for any Person, for any period and without
duplication, (a) EBITDA for such Person, for such period, plus (b) to the extent
deducted when computing such EBITDA, Performance Fees, minus (c) to the extent
not already deducted when computing such EBITDA, the greater of (i) the actual
management fees in respect of Projects owned by such Person and its consolidated
subsidiaries paid during such period and (ii) an imputed management fee equal to
3.0% of (1) rental income (including income from financing leases) for

 

--------------------------------------------------------------------------------

 

all Projects owned by such Person and its consolidated subsidiaries and
(2) rental income (including income from financing leases) of Joint Ventures
allocable to such Person or its subsidiaries based on their ownership interests
in such Joint Ventures.
     “Administrative Agent” means Wells Fargo Bank, National Association, in its
capacity as contractual representative of the Lenders hereunder.
     “Administrative Details Form” means an administrative questionnaire in a
form supplied by the Administrative Agent.
     “Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
     “Alternate Base Rate” means, for any day, a rate per annum equal to the
greater of the Prime Rate in effect on such day and the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.
     “Alternate Merger” has the meaning set forth in the Merger Agreement.
     “Applicable Percentage” means, with respect to any Lender, the percentage
of the total Commitments represented by such Lender’s Commitment. If the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
     “Applicable Rate” means, for any day, with respect to any ABR Loan or
Eurodollar Revolving Loan, as the case may be, the applicable rate per annum set
forth below under the caption “ABR Spread” or “Eurodollar Spread”, as the case
may be, based upon the range into which the Leverage Ratio then falls in
accordance with the following table:

                       Leverage Ratio   Eurodollar Spread   ABR Spread
less than 55%
    1.35 %     0.0 %
55%-less than 60%
    1.45 %     0.0 %
60% or higher
    1.60 %     0.125 %

     Any change in the Applicable Rate determined in accordance with this
definition shall be effective as of the first Business Day of the calendar month
following the month that the Borrower delivers to the Administrative Agent a
Compliance Certificate pursuant to Sections 5.1(a)(ii) and (b)(ii). In the event
the Leverage Ratio in any Compliance Certificate is later determined to have
been inaccurate, the Applicable Rate shall be adjusted retroactively to the date
of delivery of such inaccurate Compliance Certificate to the percentage
corresponding to the correct Leverage Ratio for that date, and such adjusted
Applicable Rate shall be applicable

-2-

--------------------------------------------------------------------------------

 

for the same period as that period during which the Applicable Rate was
incorrectly determined based on the original inaccurate Leverage Ratio.
     “Arranger” has the meaning set forth in the preamble.
     “Assignee” has the meaning set forth in Section 9.4(b).
     “Assignment and Acceptance” means an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.4), and accepted by the Administrative Agent,
substantially in the form of Exhibit A or any other form approved by the
Administrative Agent.
     “Availability Period” means the period from and including the Closing Date
to but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.
     “Average Unused Commitment Percentage” means, for any period, the ratio,
expressed as a percentage, of (a) the average daily aggregate amount of the
Unused Commitments of the Lenders during such period to (b) the average daily
aggregate amount of the Commitments of the Lenders during such period.
     “Board” means the Board of Governors of the Federal Reserve System of the
United States of America.
     “Borrower” has the meaning set forth in the preamble.
     “Borrowing” means Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
     “Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.3, substantially in the form of Exhibit B.
     “Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in San Francisco, California are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term “Business Day” shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market. Unless specifically referenced in this Agreement or any other Loan
Document as a Business Day, all references to “days” in this Agreement and each
other Loan Document shall be to calendar days.
     “Capital Lease Obligations” of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

-3-

--------------------------------------------------------------------------------

 

     “Capital Lease” means any lease by a Person of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
the obligations under which are required to be classified and accounted for as
capital leases on a balance sheet of such Person under GAAP.
     “Cash and Cash Equivalents” means unrestricted (i) cash, (ii) marketable
direct obligations issued or unconditionally guaranteed by the United States
government and backed by the full faith and credit of the United States
government; and (iii) domestic and Eurodollar 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
provided that the maturities of such Cash and Cash Equivalents shall not exceed
one year.
     “Change in Control” means (i) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934, as amended, and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof)
(other than the Borrower, any of its Subsidiaries, any trustee, fiduciary or
other person or entity holding securities under any employee benefit plan of the
Borrower or any of its Subsidiaries and other than any wholly owned direct or
indirect subsidiary of the Borrower), of shares representing more than 10% of
the aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Borrower; or (ii) occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Borrower by Persons
who were neither (A) nominated by the board of directors of the Borrower nor
(B) appointed by directors so nominated; or (iii) the acquisition of direct or
indirect Control of the Borrower by any Person or group (other than any wholly
owned direct or indirect subsidiary of the Borrower).
     “Change in Law” means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
     “Closing Date” means the date on which the conditions set forth in
Section 4.1 are satisfied (or waived in accordance with Section 9.2).
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     “Combined Equity Value” means Total Value less Total Outstanding
Indebtedness.
     “Commitment” means, with respect to each Lender, the commitment of such
Lender to make Revolving Loans and to acquire participations in Letters of
Credit hereunder, expressed as an amount representing the maximum aggregate
amount of such Lender’s Revolving Credit

-4-

--------------------------------------------------------------------------------

 

Exposure hereunder, as such commitment may be (a) increased pursuant to
Section 2.20 or (b) reduced from time to time pursuant to Section 2.9 and
(c) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.4. The initial amount of each Lender’s Commitment
is set forth on Schedule 1, or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Commitment, as applicable. The initial
aggregate amount of the Lenders’ Commitments is $150,000,000.
     “Consolidated Businesses” means the Borrower and its Subsidiaries, on a
consolidated basis (without taking into account any non-wholly owned Person or
entity).
     “Contingent Obligation” as to any Person means, without duplication,
(i) any contingent obligation of such Person required to be shown on such
Person’s balance sheet in accordance with GAAP, and (ii) any obligation required
to be disclosed in the footnotes to such Person’s financial statements in
accordance with GAAP, guaranteeing partially or in whole any non-recourse
Indebtedness, lease, dividend or other obligation, exclusive of contractual
indemnities (including, without limitation, any indemnity or price-adjustment
provision relating to the purchase or sale of securities or other assets) and
guarantees of non-monetary obligations (other than guarantees of completion)
which have not yet been called on or quantified, of such Person or of any other
Person. The amount of any Contingent Obligation described in clause (ii) shall
be deemed to be (a) with respect to a guaranty of interest or interest and
principal, or operating income guaranty, the sum of all payments required to be
made thereunder (which in the case of an operating income guaranty shall be
deemed to be equal to the debt service for the note secured thereby), calculated
at the interest rate applicable to such Indebtedness, through (i) in the case of
an interest or interest and principal guaranty, the stated maturity date of the
obligation (and commencing on the date interest could first be payable
thereunder), or (ii) in the case of an operating income guaranty, the date
through which such guaranty will remain in effect, and (b) with respect to all
guarantees not covered by the preceding clause (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
guaranty is made or, if not stated or determinable, the maximum reasonable
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as recorded on the balance sheet and on the footnotes to the
most recent financial statements of the Borrower required to be delivered
pursuant hereto. Notwithstanding anything contained herein to the contrary,
guarantees of completion and of Nonrecourse Carveouts 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 or of Nonrecourse
Carveouts shall be deemed to be a Contingent Obligation in an amount equal to
any such claim. Subject to the preceding sentence, (i) in the case of a joint
and several guaranty given by such Person and another Person (but only to the
extent such guaranty is recourse, directly or indirectly to the applicable
Person), the amount of the guaranty shall be deemed to be 100% thereof unless
and only to the extent that (X) such other Person has delivered Cash or Cash
Equivalents to secure all or any part of such Person’s guaranteed obligations or
(Y) such other Person holds an Investment Grade Credit Rating from either
Moody’s or S&P, and (ii) in the case of a guaranty (whether or not joint and
several) of an obligation otherwise constituting Indebtedness of such Person,
the amount of such guaranty shall be deemed to be only that amount in excess of
the amount of the obligation constituting Indebtedness of such Person.
Notwithstanding anything contained herein to the contrary, “Contingent
Obligations” shall not be deemed to include guarantees of loan commitments or of
construction loans to the extent the same have not been drawn.

-5-

--------------------------------------------------------------------------------

 

     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “controlled” have meanings correlative thereto.
     “CPA 12” has the meaning set forth in the recitals of this Agreement.
     “CPA REIT” means (a) a REIT managed or advised by W.P. Carey & Co. LLC (or
a wholly-owned Subsidiary thereof) and listed on Schedule 1.1(a) hereto and
(b) any other REIT managed or advised by W.P. Carey & Co. LLC (or a wholly-owned
Subsidiary thereof) which REIT has investment policies, and assets of classes
and qualities, similar in each case to the REITs listed on Schedule 1.1(a).
     “Credit Event” has the meaning set forth in Section 4.2.
     “Default” means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
     “Defaulting Lender” has the meaning set forth in Section 2.18(e).
     “Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.6.
     “dollars” or “$” refers to lawful money of the United States of America.
     “EBITDA” means, for any Person for any period, the Net Income (Loss) of
such Person for such period taken as a single accounting period, plus (a) the
sum of the following amounts of such Person and its subsidiaries for such period
determined on a consolidated basis in conformity with GAAP to the extent
included in the determination of such Net Income (Loss): (i) depreciation
expense, (ii) amortization expense and other non-cash charges, (iii) interest
expense, (iv) income tax expense, (v) extraordinary losses (and other losses on
asset sales not otherwise included in extraordinary losses determined on a
consolidated basis in conformity with GAAP), (vi) minority interests in
Unconsolidated Entities and (vii) in the case of the Borrower, the aggregate of
all dividends paid on the Borrower’s or any of its consolidated Subsidiaries’
preferred equity interests, less (b) the extraordinary gains of such Person and
its subsidiaries determined on a consolidated basis in conformity with GAAP to
the extent included in the determination of such Net Income (Loss) (and in the
case of the Borrower and its consolidated subsidiaries, other gains on asset
sales not otherwise included in extraordinary gains determined on a consolidated
basis in conformity with GAAP); plus (c) the portion allocable to such Person of
EBITDA of such Person’s Unconsolidated Entities (taking into account appropriate
adjustments, if any, for minority interests).
     “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

-6-

--------------------------------------------------------------------------------

 

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.
     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material.
     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

-7-

--------------------------------------------------------------------------------

 

     “Eurodollar”, when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the LIBO Rate.
     “Event of Default” has the meaning set forth in Article VII.
     “Excluded Subsidiary” means:
     (a) a Subsidiary (i) holding title to assets which are or are to become
collateral for any Indebtedness that (A) is (or is to be) secured by a Lien on
property of such Subsidiary (“Secured Indebtedness”) and (B) is permitted to be
incurred pursuant to this Agreement and (ii) which is prohibited from
Guaranteeing the Indebtedness of any other Person pursuant to (x) any document,
instrument or agreement evidencing or securing such Secured Indebtedness or
(y) a provision of such Subsidiary’s organizational documents which provision
was included in such Subsidiary’s organizational documents as a condition to the
extension of such Secured Indebtedness; or
     (b) a Subsidiary that has no assets (or only a nominal amount of assets);
or
     (c) a Subsidiary whose assets consist solely of direct or indirect Joint
Venture Holdings issued by Joint Ventures that own Projects subject to mortgage
Liens; or
     (d) a Subsidiary that is not incorporated or organized under the laws of
any state of the United States or the District of Columbia and that if such
Subsidiary were to become a Guarantor, doing so would reasonably be expected to
have material adverse tax consequences to the Borrower as a result of the
undistributed earnings of such Subsidiary (as determined for United States
federal income tax purposes) being treated as a deemed dividend to such
Subsidiary’s United States parent.
The parties agree that Marie-Invest s.p.r.l and its Subsidiaries shall each be
an “Excluded Subsidiary”.
     “Excluded Taxes” means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender’s failure to comply with Section 2.17(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a).

-8-

--------------------------------------------------------------------------------

 

     “Fair Market Value” means, with respect to any asset or property, the sale
value that would be obtained in an arm’s-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy. Fair Market Value shall be determined by an officer
of the Borrower acting in good faith and shall be evidenced by an Officer’s
Certificate, except in the case of the determination of Fair Market Value of
Permitted REIT Investments which are “restricted securities” (as defined below)
having a Fair Market Value in excess of $5,000,000, in which case the
determination of such Fair Market Value shall be, at the election of the
Borrower, by (i) the board of directors of the Borrower acting in good faith and
shall be evidenced by a resolution of the board of directors, or (ii) an
appraisal of an independent third-party appraiser which shall be a Person
regularly engaged in the valuation of securities of the same type as such
Permitted REIT Investment. The Fair Market Value of any readily marketable
securities shall be the number of such securities multiplied by the average
Market Price per share or per unit of such securities during the five
consecutive trading days immediately preceding the date of determination. The
“Market Price” of any security on any trading day shall mean, with respect to
any security which is listed on a national securities exchange, the last sale
price regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices regular way, in either case on the New York
Stock Exchange, or, if such security is not listed or admitted to trading on
such exchange, on the principal national securities exchange on which such
security is listed or admitted to trading, or, if such security is not listed or
admitted to trading on any national securities exchange but is designated as a
national market system security by the National Association of Securities
Dealers, the last sale price, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, in either case as reported on
the National Association of Securities Dealers Automated Quotation/National
Market System, or if such security is not so designated as a national market
systems security, the average of the highest reported bid and lowest reported
asked prices as furnished by the National Association of Securities Dealers or
similar organization if the National Association of Securities Dealers is no
longer reporting such information. With respect to operating partnership units
of any REIT, such operating partnership units shall in no event have a value
greater than the value of the number of shares of the REIT into which such
operating partnership units are then convertible. For purposes of this
definition, the term “restricted securities” shall mean securities which
constitute “restricted securities” or are held by an “affiliate” of the issuer
of such securities, in each case in accordance with Rule 144 promulgated under
the Securities Act of 1933, as amended, or are otherwise subject to any
agreement, arrangement or other understanding in any way limiting or affecting
the right of the holder of such securities to dispose of such securities.
     “Federal Funds Effective Rate” means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
     “Financial Officer” means, with respect to a Person, the chief financial
officer, principal accounting officer, treasurer or controller of such Person.

-9-

--------------------------------------------------------------------------------

 

     “Financial Statements” means financial statements presenting the
consolidated and consolidating financial position of the Borrower and its
Subsidiaries as at the date indicated and the results of their operations and
cash flow for the period indicated in accordance with GAAP, subject to normal
adjustments.
     “Fixed Charges” means, with respect to any period, the sum of (a) Total
Interest Expense for such period and (b) the aggregate of all scheduled
principal payments on Total Outstanding Indebtedness according to GAAP made or
required to be made during such period by the Borrower and its Subsidiaries
(with appropriate adjustments for minority interests) or allocable to the
Borrower and its Subsidiaries on account of Joint Venture Holdings (but
excluding balloon payments of principal due upon the stated maturity of any
Indebtedness), and (c) the aggregate of all dividends payable on the Borrower’s
or any of its consolidated Subsidiaries’ preferred equity interests (if any).
     “Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than the United States of America, any State thereof or the
District of Columbia.
     “GAAP” means generally accepted accounting principles in the United States
of America.
     “Governmental Authority” means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
     “Ground Lease” means a ground lease containing the following terms and
conditions: (a) a remaining term (exclusive of any unexercised extension
options) of forty (40) years or more from the date hereof; (b) the right of the
lessee to mortgage and encumber its interest in the leased property without the
consent of the lessor; (c) the obligation of the lessor either (i) to give the
holder of any mortgage Lien on such leased property written notice of any
defaults on the part of the lessee and agreement of such lessor that such lease
will not be terminated until such holder has had a reasonable opportunity to
cure or complete foreclosures, and fails to do so or (ii) upon termination of
such ground lease, to enter into a new lease with such lessor containing
substantially the same (or more favorable) terms and conditions as the terms and
conditions of such ground lease; (d) reasonable transferability of the lessee’s
interest under such lease, including ability to sublease; and (e) such other
rights customarily required by mortgagees making a loan secured by the interest
of the holder of the leasehold estate demised pursuant to a ground lease or
master lease. The ground leases currently in effect with respect to the
following properties will not be subject to the requirement of clause (a) of
this definition:

                  Building ID   Tenant   Start Date   Expiration Date   Location
WA0031
  Del Monte Corporation   5/1/1996   4/30/2016   Yakima, WA
TX0671
  McCoy Workplace Solutions, L.P.   11/1/2001   11/30/2011   Houston, TX
TN0081
  Federal Express Corporation   2/1/2000   1/31/2020   Collierville, TN

     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any

-10-

--------------------------------------------------------------------------------

 

Indebtedness or other obligation of any other Person (the “primary obligor”) in
any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or
(d) as an account party or applicant in respect of any letter of credit or
letter of guaranty issued to support such Indebtedness or obligation; provided,
that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.
     “Guarantor” means any Person that is a party to the Guaranty as a
“Guarantor” and in any event shall include all Subsidiaries of the Borrower as
of the Closing Date (including any acquired in connection with the Merger but
excluding any Excluded Subsidiary).
     “Guaranty” means the Guaranty to which the Guarantors are parties
substantially in the form of Exhibit C.
     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
     “Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
     “Improvements” means all buildings, fixtures, structures, parking areas,
landscaping and other improvements whether existing now or hereafter
constructed, together with all machinery and mechanical, electrical, HVAC and
plumbing systems presently located thereon and used in the operation thereof,
excluding (a) any such items owned by utility service providers, (b) any such
items owned by tenants or other third parties unaffiliated with the Borrower and
(c) any items of personal property.
     “Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid (excluding current Taxes, water
and sewer charges and assessments and current trade liabilities incurred in the
ordinary course of business in accordance with customary terms), (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person (other than current
trade liabilities incurred in the ordinary course of business in accordance with
customary terms), (e) all obligations of such Person in respect of the deferred
purchase price of property or services (excluding current accounts payable
incurred in the

-11-

--------------------------------------------------------------------------------

 

ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed,
(g) all Guarantees by such Person of Indebtedness of others and other Contingent
Obligations, (h) all Capital Lease Obligations of such Person, (i) all
obligations, contingent or otherwise, of such Person as an account party or
applicant in respect of letters of credit and letters of guaranty, (j) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances, (k) all obligations of such Person to purchase or redeem any shares
of equity securities issued by such Person, including obligations under
so-called forward equity purchase contracts to the extent such obligations are
not payable solely in equity interests, (l) all obligations of such Person in
respect of any forward contract, futures contract, swap or other agreement, the
value of which is dependent upon interest rates or currency exchange rates, and
(m) all obligations of such Person in respect of any so-called “synthetic lease”
(i.e., a lease of property which is treated as an operating lease under GAAP and
as a loan for U.S. income tax purposes). The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person’s ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness provide that
such Person is not liable therefor.
     “Indemnified Taxes” means Taxes other than Excluded Taxes.
     “Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.8 and substantially in the
form of Exhibit D or other form acceptable to the Administrative Agent.
     “Interest Payment Date” means the first day of each calendar month.
     “Interest Period” means with respect to any Eurodollar Borrowing the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect (or such shorter period as contemplated by
clause (iii) below); provided, that (i) if any Interest Period would end on a
day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period,
(iii) the Interest Period for Eurodollar Borrowings may, if the same is
available to all Lenders, be shorter than one (1) month in order to consolidate
two (2) or more Eurodollar Borrowings and (iv) the Interest Period for all
Eurodollar Borrowings shall be one (1) month until the earlier of ninety
(90) days after the Closing Date or the date on which the Arranger completes the
syndication of the total Commitments, as evidenced by written notice from the
Arranger to the Borrower as to such completion. For purposes hereof, the date of
a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.

-12-

--------------------------------------------------------------------------------

 

     “Investment Grade Credit Rating” means a Debt Rating of BBB- or higher by
S&P or Baa3 or higher by Moody’s.
     “Issuing Bank” means Wells Fargo Bank, National Association, in its
capacity as the issuer of Letters of Credit hereunder, and its successors in
such capacity as provided in Section 2.6(i). The Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates
of the Issuing Bank, in which case the term “Issuing Bank” shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate.
     “Joint Venture” means a partnership, limited liability company, joint
venture (including a tenancy-in-common ownership pursuant to a written agreement
providing for substantially the same rights and obligations relating to such
property that would be in a joint venture agreement), or corporation.
     “Joint Venture Holding” means an interest in a Joint Venture held or owned
by the Borrower (or one of its Subsidiaries) which is not wholly owned by the
Borrower (or one of its Subsidiaries).
     “LC Disbursement” means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.
     “Lease” means a lease, license, concession agreement or other agreement
providing for the use or occupancy of any portion of any Project, including all
amendments, supplements, modifications and assignments thereof and all side
letters or side agreements relating thereto.
     “Lender Affiliate” means, (a) with respect to any Lender, (i) an Affiliate
of such Lender or (ii) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender and (b) with respect to any Lender that is a fund which invests in bank
loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.
     “Lenders” means the Persons listed on Schedule 1 and any other Person that
shall have become a party hereto pursuant to an Assignment and Acceptance, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Acceptance.
     “Letter of Credit” means any letter of credit issued pursuant to this
Agreement.
     “Leverage Ratio” as of any date means the ratio, expressed as a percentage,
of the Total Liabilities as of such date to the Total Value as of such date.

-13-

--------------------------------------------------------------------------------

 

     “LIBO Rate” means, for any Eurodollar Borrowing for any Interest Period,
the rate per annum, rounded upward, if necessary, to the nearest one
one-hundredth of one percent (0.01%) quoted by Wells Fargo Bank, National
Association as the London Interbank Offered Rate for deposits in Dollars (being
the LIBOR Rate quoted by the British Bankers Association for maturities of 1, 2,
3 or 6 months, so long as the same is published and available) at approximately
9:00 a.m. San Francisco, California time, 2 Business Days prior to the
commencement of such Interest Period for purposes of calculating effective rates
of interest for loans or obligations making reference thereto for an amount
approximately equal to such Eurodollar Borrowing and for a period of time
approximately equal to such Interest Period. Each determination of the LIBO Rate
by the Administrative Agent shall, in absence of manifest error, be conclusive
and binding.
     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset (excluding, in the case of assets consisting of Real Property
owned by the Borrower, its Subsidiaries or a Joint Venture, the lien of a
mortgage or deed of trust on the Real Property interest not owned by the
Borrower, its Subsidiaries or the Joint Venture; provided, that the ownership or
estate interest of the Borrower in such Real Property is not subordinate to such
a lien and the Borrower’s interest would not be adversely affected by such lien
either through foreclosure thereof or otherwise (e.g., a mortgage on the
leasehold interest of a Project owned in fee by a Subsidiary does not constitute
a Lien)), (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
     “Loan Parties” means the Borrower and the Guarantors. Schedule 1.1(b) sets
forth all of the Loan Parties as of the date of this Agreement.
     “Loan Documents” means this Agreement, the Notes, the Guaranty and all
other instruments, agreements and written obligations between the Borrower and
any of the Lenders pursuant to or in connection with the transactions
contemplated hereby.
     “Loans” means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
     “Margin Stock” means “margin stock” or “margin securities” as such terms
are defined in Regulation U and Regulation X of the Board as in effect from time
to time.
     “Marketable Securities” means short-term marketable securities, issued by
any entity (other than an Affiliate of the Borrower) organized and existing
under the laws of the United States of America, with a long-term unsecured
indebtedness rating, at the time when any investment therein is made, with
Moody’s or S&P of Baa2/BBB or better, respectively.
     “Material Adverse Effect” means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower to perform any of its material obligations under

-14-

--------------------------------------------------------------------------------

 

the Loan Documents to which it is a party or (c) the rights of or benefits
available to the Lenders under the Loan Documents
     “Material Indebtedness” means (a) Indebtedness (other than the Loans,
Letters of Credit and Nonrecourse Indebtedness), or obligations in respect of
one or more Hedging Agreements, of any one or more of the Borrower, the other
Loan Parties and the other Subsidiaries in an aggregate principal amount
exceeding $10,000,000 and (b) Nonrecourse Indebtedness of any one or more of the
Borrower, the other Loan Parties and the other Subsidiaries in an aggregate
principal amount exceeding $50,000,000. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Borrower, any
other Loan Party or any other Subsidiary in respect of any Hedging Agreement at
any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower, such other Loan Party or such other Subsidiary
would be required to pay if such Hedging Agreement were terminated at such time.
     “Maturity Date” means November 29, 2009, as such date may be extended
pursuant to Section 2.5.
     “Merger” has the meaning set forth in the recitals of this Agreement.
     “Merger Agreement” has the meaning set forth in the recitals of this
Agreement.
     “Merger Transactions” means the transactions contemplated by the Merger
Agreement, including without limitation, (a) the sale of assets by CPA 12 to
W.P. Carey & Co. LLC pursuant to the Sale Agreement (as defined in the Merger
Agreement); (b) the making of the Special Distribution (as defined in the Merger
Agreement) and (c) the Merger.
     “Moody’s” means Moody’s Investors Service, Inc.
     “Mortgage Asset” means Indebtedness owed to the Borrower or a Subsidiary
and secured by a mortgage or deed of trust on a fee interest or a leasehold
interest in Real Property and all collateral security related thereto.
     “Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
     “Net Asset Value” means the value of a security determined on a net asset
value basis by an officer of the Borrower in good faith and evidenced by an
Officer’s Certificate, which determination shall be based on an appraisal of an
independent third-party appraiser regularly engaged in the valuation of
securities of the same type as the securities being valued.
     “Net Income (Loss)” means, for any Person for any period, the aggregate of
net income (or loss) of such Person and its subsidiaries for such period,
determined on a consolidated basis in conformity with GAAP.
     “Net Offering Proceeds” means all cash or other assets received by the
Borrower as a result of the sale of common shares, preferred shares, partnership
interests, limited liability

-15-

--------------------------------------------------------------------------------

 

company interests, convertible securities or other ownership or equity interests
in the Borrower, less customary costs and discounts of issuance paid by the
Borrower.
     “Nonrecourse Carveouts” means the personal liability of an obligor under
Indebtedness for fraud, misrepresentation, misapplication or misappropriation of
cash, waste, environmental liability, bankruptcy filing or any other
circumstances customarily excluded from non-recourse provisions and non-recourse
financing of real estate.
     “Nonrecourse Indebtedness” of any Person means all Indebtedness of such
Person with respect to which recourse for payment is limited to specific assets
encumbered by a Lien securing such Indebtedness; provided, however, that
personal recourse of a holder of Indebtedness against any obligor with respect
thereto for fraud, misrepresentation, misapplication or misappropriation of
cash, waste, environmental liabilities, and other circumstances customarily
excluded from nonrecourse provisions in nonrecourse financing of real estate
shall not, by itself, prevent any Indebtedness from being characterized as
Nonrecourse Indebtedness; provided, further, that if in connection therewith a
personal recourse claim is established by judgment decree or award by any court
of competent jurisdiction or arbitrator of competent jurisdiction and execution
or enforcement thereof shall not be effectively stayed for 30 consecutive days
and such Indebtedness shall not be paid or otherwise satisfied within such
30-day period, then such Indebtedness in an amount equal to the personal
recourse claim established by judgment or award shall not constitute Nonrecourse
Indebtedness for purposes of this Agreement.
     “Note” means a promissory note in the form attached hereto as Exhibit E
payable to a Lender, evidencing certain of the Obligations of the Borrower to
such Lender and executed by the Borrower as set forth in Section 2.10(e), as the
same may be amended, supplemented, modified or restated from time to time.
“Notes” means, collectively, all of such Notes outstanding at any given time.
     “Obligations” means, collectively, the obligations of the Borrower in
respect of principal, interest, fees, indemnities, and all other amounts under
or in connection with this Agreement or any of the other Loan Documents,
including reimbursement obligations in respect of Letters of Credit, in each
case whether such obligation arose before or after the commencement of any
bankruptcy, insolvency, receivership or other similar proceeding and whether or
not the obligation is undersecured or oversecured or deemed allowable, provable
or accruing against the Borrower in any such proceeding, including interest
calculated from the commencement of any such proceeding at the rate provided in
Section 2.13(c).
     “Officer’s Certificate” means a certificate signed by the President, any
Vice President or any Financial Officer of any Person, or such other officer as
may be specified herein, and delivered to the Administrative Agent hereunder.
     “Other Taxes” means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.

-16-

--------------------------------------------------------------------------------

 

     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
     “Performance Fees” means, for any Person and for any period, performance
fees paid by such Person in equity securities of such Person during such period.
     “Permitted Encumbrances” means:
     (a) liens imposed by law for taxes, assessments, governmental charges or
levies that are not yet due or are being contested in compliance with
Section 5.4;
     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.4;
     (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations or to secure the performance of bids, purchases,
contracts (other than for the payment of borrowed money) and surety, appeal and
performance bonds;
     (d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;
     (e) easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business
that do not secure any monetary obligations and do not materially detract from
the value of the affected property or interfere with the ordinary conduct of
business of the Borrower or any Subsidiary; and
     (f) statutory and common law landlord liens;
provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.
     “Permitted Investments” means:
     (a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;
     (b) investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, a rating of not
less than A-2 or P-2 from S&P or from Moody’s, respectively;

-17-

--------------------------------------------------------------------------------

 

     (c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
     (d) shares of so called “money market funds” registered with the SEC under
the Investment Company Act of 1940, as amended, which maintain a level per share
value, invest principally in marketable direct or guaranteed obligations of the
United States of America and agencies and instrumentalities thereof and
investments in commercial paper having, at such date, a rating of not less than
A-1 or P-1 from S&P or from Moody’s, respectively, and have total assets in
excess of $50,000,000 provided that any such shares are moved to a qualifying
money market fund within thirty (30) days after the Borrower or any Subsidiary
has knowledge that any money market fund no longer has total assets in excess of
that amount;
     (e) fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above; and
     (f) short-term investments in cash equivalents issued by, or maintained
with, a Person not formed under the laws of the United States of America or any
State thereof and made in accordance with the Borrower’s customary investment
practices for cash management needs of the Borrower and its Subsidiaries.
     “Permitted REIT Investments” means investments by the Borrower or any
Subsidiary in publicly traded warrants, publicly traded equity securities and
operating partnership units of publicly traded REITS (and excluding in any event
investments in the securities of the CPA REITS). For purposes hereof, “publicly
traded” shall mean that such investments are traded on a nationally-recognized
market with widely distributed standard price quotations.
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
     “Plan” means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
     “Prime Rate” means the rate of interest per annum publicly announced from
time to time by the Lender then acting as Administrative Agent as its prime rate
in effect at its principal office; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
     “Project” means any office, industrial/manufacturing facility, educational
facility, retail facility, distribution/warehouse facility, assembly or
production facility, hotel, day care center,

-18-

--------------------------------------------------------------------------------

 

storage facility, health care/hospital facility, restaurant, radio or TV
station, broadcasting/communication facility (including any transmission
facility), any combination of any of the foregoing, or any land to be developed
into any one or more of the foregoing pursuant to a written agreement with
respect to such land for a transaction involving a Lease, in each case owned,
directly or indirectly, by any of the Consolidated Businesses.
     “Property” means any Real Property or personal property, plant, building,
facility, structure, equipment, general intangible, receivable, or other asset
owned or leased by any Consolidated Business or any Joint Venture in which the
Borrower, directly or indirectly, has a Joint Venture Holding.
     “Real Property” means any present and future right, title and interest
(including, without limitation, any leasehold estate) in (i) any plots, pieces
or parcels of land, (ii) any Improvements of every nature whatsoever (the rights
and interests described in clauses (i) and (ii) above being the “Premises”),
(iii) all easements, rights of way, gores of land or any lands occupied by
streets, ways, alleys, passages, sewer rights, water courses, water rights and
powers, and public places adjoining such land, and any other interests in
property constituting appurtenances to the Premises, or which hereafter shall in
any way belong, relate or be appurtenant thereto, (iv) all hereditaments, gas,
oil, minerals (with the right to extract, sever and remove such gas, oil and
minerals), and easements, of every nature whatsoever, located in, on or
benefiting the Premises and (v) all other rights and privileges thereunto
belonging or appertaining and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to or of any of the rights
and interests described in clauses (iii) and (iv) above.
     “Register” has the meaning set forth in Section 9.4.
     “REIT” means a domestic trust or corporation that qualifies as a real
estate investment trust under the provisions of Sections 856, et seq. of the
Code.
     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.
     “Required Lenders” means, at any time, Lenders having Revolving Credit
Exposures and Unused Commitments representing at least 66-2/3% of the sum of the
total Revolving Credit Exposures and Unused Commitments at such time, and in any
event shall include the Lender then acting as Administrative Agent; provided,
that, in the event any Lender shall have failed to fund its Applicable
Percentage of any Borrowing requested by the Borrower which such Lender is
obligated to fund under the terms of this Agreement and any such failure has not
been cured as provided in Section 2.7, then for so long as such failure
continues, “Required Lenders” means Lenders (excluding all Lenders whose failure
to fund their respective Applicable Percentages of such Borrowings have not been
so cured) having Revolving Credit Exposures and Unused Commitments representing
at least 66-2/3% of the sum of the total Revolving Credit Exposures and Unused
Commitments of such Lenders at such time, and in any event shall include the
Lender then acting as Administrative Agent. At all times during which there are
two (2) or more Lenders party hereto (excluding all Lenders whose failure to
fund their respective Applicable

-19-

--------------------------------------------------------------------------------

 

Percentages of such Borrowings have not been cured), “Required Lenders” must
include at least two (2) Lenders.
     “Restricted Payment” has the meaning set forth in Section 6.1(g).
     “Revolving Credit Exposure” means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender’s Revolving Loans and
its LC Exposure at such time.
     “Revolving Loan” means a Loan made pursuant to Sections 2.2 and 2.3.
     “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc.
     “Secured Indebtedness” means any Indebtedness secured by a Lien (excluding
Indebtedness hereunder).
     “Solvent”, when used with respect to any Person, means that at the time of
determination:
     (i) the fair saleable value of its assets is in excess of the total amount
of its liabilities (including, without limitation, contingent liabilities); and
     (ii) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
     (iii) it is then able and expects to be able to pay its debts (including,
without limitation, contingent debts and other commitments) as they mature; and
     (iv) it has capital sufficient to carry on its business as conducted and as
proposed to be conducted.
     “subsidiary” means, with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
     “Subsidiary” means any direct or indirect subsidiary of the Borrower.
     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

-20-

--------------------------------------------------------------------------------

 

     “Tenant Allowance” means a cash allowance paid to a tenant by the landlord
pursuant to a Lease.
     “TI Work” means any construction or other “build-out” of tenant leasehold
improvements to the space demised to such tenant under Leases (excluding such
tenant’s furniture, fixtures and equipment) performed pursuant to the terms of
such Leases, whether or not such tenant improvement work is performed by or on
behalf of the landlord or as part of a Tenant Allowance.
     “Total Interest Expense” means, for any period, the sum, without
duplication, of (i) interest expense of the Borrower and its Subsidiaries paid
during such period (with appropriate adjustments for minority interests) and
(ii) interest expense of the Borrower and its Subsidiaries accrued and/or
capitalized for such period (with appropriate adjustments for minority
interests) and (iii) the portion of the interest expense of Joint Ventures
allocable to the Borrower and its Subsidiaries in accordance with GAAP on
account of ownership of Joint Venture Holdings and paid during such period and
(iv) the portion of the interest expense of Joint Ventures allocable to the
Borrower and its Subsidiaries in accordance with GAAP on account of ownership of
Joint Venture Holdings and accrued and capitalized for such period, in each case
including participating interest expense but excluding extraordinary interest
expense, and net of amortization of deferred costs associated with new
financings or refinancings of existing Indebtedness.
     “Total Liabilities” means, as of a given date, all liabilities which would,
in conformity with GAAP, be properly classified as a liability on a consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as of such date,
and in any event shall include (without duplication): (a) Total Outstanding
Indebtedness; (b) the amount of preferred equity interests of the Borrower and
its consolidated Subsidiaries; (c) all purchase and repurchase obligations and
forward commitments of such Person to the extent such obligations or commitments
are evidenced by a binding purchase agreement (forward commitments shall include
without limitation (i) forward equity commitments and (ii) commitments to
purchase any real property under development, redevelopment or renovation); and
(d) all liabilities and obligations of the Borrower, its consolidated
Subsidiaries or any other Person in respect of “off-balance sheet arrangements”
(as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the
Securities Act of 1933, as amended) which the Borrower would be required to
disclose in the “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” section of the Borrower’s report on Form 10-Q or Form
10-K (or their equivalents) which the Borrower is required to file with the
Securities and Exchange Commission (or any Governmental Authority substituted
therefor).
     “Total Outstanding Indebtedness” means, as of any date, the sum, without
duplication, of (i) the amount of Indebtedness of the Borrower and its
Subsidiaries set forth on the then most recent quarterly financial statements of
the Borrower, prepared in accordance with GAAP, plus any additional Indebtedness
incurred by the Borrower and its Subsidiaries since the time of such statements
(with appropriate adjustments for minority interests) and (ii) the outstanding
amount of Joint Venture Indebtedness allocable in accordance with GAAP on
account of ownership of Joint Venture Holdings to any of the Borrower and its
Subsidiaries as of the time of determination (with appropriate adjustments for
minority interests) and (iii) the Contingent

-21-

--------------------------------------------------------------------------------

 

Obligations of the Borrower and its Subsidiaries and, to the extent allocable to
the Borrower and its Subsidiaries in accordance with GAAP on account of
ownership of Joint Venture Holdings, of the Joint Ventures (with appropriate
adjustments for minority interests).
     “Total Value” means, as of any date, the sum, without duplication, of
(i) in respect of Projects owned or leased pursuant to a Ground Lease by the
Borrower and its Subsidiaries for at least four (4) fiscal quarters, the
Adjusted EBITDA of the Borrower and its Subsidiaries attributable to such
Projects as of the last day of the fiscal quarter immediately preceding the
fiscal quarter in which such date occurs for the previous four (4) consecutive
fiscal quarters divided by 8.5%; (ii) the investment (at cost without
depreciation) in Projects owned or leased pursuant to a Ground Lease by the
Borrower and its Subsidiaries for fewer than four fiscal quarters (with
appropriate adjustments for minority interests); (iii) the investment (at cost
without depreciation) in Joint Venture Holdings for fewer than four fiscal
quarters which is allocable to the Borrower and its Subsidiaries based on their
ownership interests in the related Joint Ventures in accordance with GAAP (with
appropriate adjustments for minority interests); (iv) unrestricted Cash and Cash
Equivalents which would be included on the Consolidated Businesses’ consolidated
balance sheet as of such date (with appropriate adjustments for minority
interests); (v) Real Property under construction of the Borrower and its
consolidated Subsidiaries valued at cost; (vi) the Fair Market Value of all
Marketable Securities held by the Borrower and its Subsidiaries, and
(vii) investments in notes secured by mortgages on the real property of any
Person valued at the book value stated on the most recent financial statement.
For purposes of this definition, when determining how long the Borrower or one
of its Subsidiaries has owned or leased a Project that was owned or leased by
CPA 12 or one of its subsidiaries at the time of the Merger, the Borrower or its
applicable Subsidiary shall be deemed to have owned or leased such Project from
the date CPA 12 or its applicable Subsidiary first owned or leased such Project.
     “Transactions” means the execution, delivery and performance by the
Borrower of this Agreement, the borrowing of Loans, the use of the proceeds
thereof, the issuance of Letters of Credit hereunder and the execution, delivery
and performance by the Borrower or the Subsidiaries (who may be parties to the
Loan Documents) of the other Loan Documents, and the transactions contemplated
by the Loan Documents.
     “Transfer Authorizer Designation Form” means a form substantially in the
form of Exhibit J to be delivered to the Administrative Agent pursuant to
Section 4.1, as the same may be amended, restated or modified from time to time.
     “Triple Net Lease” means a Lease representing all or substantially all of
the rentable area of a Property where the tenant is responsible for real estate
taxes and assessments, repairs and maintenance, insurance and other expenses
relating to such Property, provided, that adequate insurance is maintained for
such Property either by the tenant, the Borrower, a Subsidiary or a Joint
Venture. Notwithstanding the foregoing, a Triple Net Lease may be subject to the
landlord’s express contractual obligations with respect to the payment of taxes,
assessments, ground rents, utility charges, exterior maintenance and maintenance
of all non-interior areas and any capital expenditures related thereto (such as
roof, structure and parking) (the “Contractual Obligations”) so long as the
capital expenditures have been adequately accounted for in accordance with GAAP;
provided, that the projected average annual Contractual Obligations

-22-

--------------------------------------------------------------------------------

 

shall not exceed 10% of the projected average gross annual rent under such
Lease. For purposes of this definition, (a) the obligation of a landlord to make
capital improvements or repairs as a condition to a tenant’s occupancy (e.g.,
build to suit transactions) shall not be deemed to be an undertaking by such
landlord of any tenant maintenance or repair obligations and (b) the
improvements to be constructed by such landlord described in the immediately
preceding clause (a) shall not be included as a capital expenditure.
     “Type”, when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the LIBO Rate or the Alternate Base Rate.
     “Unconsolidated Entity” means, with respect to any Person, at any date, any
other Person in whom such Person holds an investment, which investment is
accounted for in the financial statements of such Person on an equity basis of
accounting and whose financial results would not be consolidated under GAAP with
the financial results of such Person on the consolidated financial statements of
such Person if such statements were prepared as of such date.
     “Unsecured Indebtedness” means any Indebtedness not secured by a Lien,
including any Indebtedness hereunder but excluding, to the extent otherwise
includable therein, any Indebtedness in respect of Guarantees of Nonrecourse
Carveouts.
     “Unused Commitment” means, as of any date, with respect to each Lender, its
Commitment less its Revolving Credit Exposure.
     “Unused Commitment Fee Rate” means the applicable rate per annum set forth
below under the caption “Unused Commitment Fee Rate” corresponding to the
applicable Average Unused Commitment Percentage in accordance with the following
table:

              Unused Commitment Fee Average Unused Commitment Percentage   Rate
less than or equal to 50%
    0.125 %
greater than 50%
    0.175 %

     “Wells Fargo” means Wells Fargo Bank, National Association and its
successors and assigns.
     “wholly-owned Subsidiary” means, with respect to any Person, at any date,
any subsidiary of such Person of which 100% of the outstanding shares of capital
stock or other equity interests having ordinary voting power is at the time,
directly or indirectly, owned by such Person.
     “Withdrawal Liability” means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part 1 of Subtitle E of Title IV of ERISA.

-23-

--------------------------------------------------------------------------------

 

     “WP Carey Joint Venture” means a Joint Venture between the Borrower and
(a) W.P. Carey & Co. LLC (or one of its wholly-owned subsidiaries) or (b) a CPA
REIT managed by W.P. Carey & Co. LLC or one of its subsidiaries.
     SECTION 1.2. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar
Loan”). Borrowings also may be classified and referred to by Type (e.g., a
“Eurodollar Borrowing”).
     SECTION 1.3. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof’ and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
     SECTION 1.4. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II.
The Credits
     SECTION 2.1. Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Revolving Loans to the Borrower from time to
time during the Availability Period in an aggregate principal amount that will
not result in (a) such Lender’s Revolving Credit Exposure exceeding such
Lender’s Commitment or (b) the sum of the total Revolving Credit Exposures
exceeding the total Commitments at such time. Within the

-24-

--------------------------------------------------------------------------------

 

foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, repay and reborrow Revolving Loans. No Loans may be
borrowed or reborrowed after the end of the Availability Period.
     SECTION 2.2. Loans and Borrowings. (a) Each Revolving Loan shall be made as
part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender’s failure to make Loans
as required.
     (b) Subject to Section 2.14, each Borrowing shall be comprised entirely of
ABR Loans or Eurodollar Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.
     (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $1,000,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $500,000 and not less than $1,000,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.6(e).
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of eight Eurodollar
Borrowings outstanding.
     (d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert to or continue, any
Eurodollar Borrowing if the Interest Period requested with respect thereto would
end after the Maturity Date, or if prohibited by Section 2.8(e).
     SECTION 2.3. Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time,
three Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business
Day before the date of the proposed Borrowing; provided that any such notice of
an ABR Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.6(e) may be given not later than 10:00 a.m., New York
City time, on the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request
substantially in the form set forth in Exhibit B and signed by the Borrower.
Each such request shall be accompanied by an Officer’s Certificate as to pro
forma financial covenant compliance required by Section 6.1(i). Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.2 and shall constitute a representation that the
conditions in Section 4.1 and Section 4.2 have

-25-

--------------------------------------------------------------------------------

 

been satisfied on such date and will be satisfied on the date of such Borrowing
(except, in each case, to the extent waived in accordance with Section 9.2):
     (i) the aggregate amount of the requested Borrowing;
     (ii) the date of such Borrowing, which shall be a Business Day;
     (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
     (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and
     (v) the location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.7.
     If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’s Revolving Loan to be made as part of the requested
Borrowing.
     SECTION 2.4. [Reserved].
     SECTION 2.5. Extension of Maturity Date.
     So long as no Default has occurred and is continuing, the Borrower may
elect, at least 60 days but no more than 120 days prior to the Maturity Date, to
extend the Maturity Date for one (1) year by providing written notice of such
election to the Administrative Agent (which shall promptly notify each of the
Lenders). If (i)(A) on the date of such notice and the effective date of such
extension, no Default exists and is continuing and (B) each of the
representations and warranties made in this Agreement and the other Loan
Documents is true and complete on and as of the date of the date of such notice
and the effective date of such extension with the same force and effect as if
made on and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date), (ii) the Borrower pays to the Administrative Agent, for the pro rata
benefit of the Lenders based on their Applicable Percentages, an extension fee
equal to 0.15% of the then total Commitments, and (iii) the Borrower has given
written notice to the Administrative Agent of such election to extend the
Maturity Date within the time frame set forth in this Section 2.5, the Maturity
Date shall be extended by one year. The Borrower may exercise its rights under
this Section only twice.
     SECTION 2.6. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the period commencing on the Closing Date and ending on the date that is
30 days prior to the Maturity Date, provided that the amount of each Letter of
Credit so requested shall be not less than $300,000 and there may not be more
than 5 Letters of Credit outstanding at any time. In the event of any
inconsistency between the terms and conditions of

-26-

--------------------------------------------------------------------------------

 

this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control.
     (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank and the Administrative Agent) to the
Issuing Bank and the Administrative Agent (at least four (4) Business Days in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the Letter
of Credit to be amended, renewed or extended, the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. Each such notice shall be accompanied by an Officer’s Certificate as
to pro forma financial covenant compliance required by Section 6.1(i). The
Administrative Agent shall provide copies of such notice and Officer’s
Certificate to each Lender promptly after receipt thereof. If requested by the
Issuing Bank, the Borrower also shall submit a letter of credit application on
the Issuing Bank’s standard form in connection with any request for a Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only if
(and upon issuance, amendment, renewal or extension of each Letter of Credit the
Borrower shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension (i) the LC Exposure shall not
exceed $25,000,000 and (ii) the sum of the total Revolving Credit Exposures
shall not exceed the total Commitments at such time.
     (c) Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
30 days prior to the Maturity Date.
     (d) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby
grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the
date due as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Notwithstanding anything to the contrary set forth
herein,

-27-

--------------------------------------------------------------------------------

 

the aggregate amount to be paid by any Lender with respect to any drawing under
a Letter of Credit (whether as a payment pursuant to this Section 2.6(d) or a
Loan pursuant to Section 2.3) shall not exceed its Applicable Percentage of such
drawing.
     (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 12:00 noon, New York City time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 12:00 noon, New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.3 that such payment be financed with an ABR
Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s
obligation to make such payment shall be discharged and replaced by the
resulting ABR Borrowing. If the Borrower fails to (or is not permitted to)
finance such payment with an ABR Borrowing and fails to make such payment when
due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrower in respect thereof and such
Lender’s Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.7 with respect to Loans made by such Lender (and
Section 2.7 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank
the amounts so received by it from the Lenders. Promptly following receipt by
the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear. Any payment made by a Lender pursuant to
this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than
the funding of ABR Loans as contemplated above) shall not constitute a Loan and
shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.
     (f) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower’s obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason

-28-

--------------------------------------------------------------------------------

 

of or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing (and the agreement of the Borrower in
the first sentence of this Section 2.6(f)) shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
     (g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such LC Disbursement nor shall
the Issuing Bank have any liability whatsoever to the Borrower or the Lenders
for any failure to give any such notice.
     (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Loans; provided that, if the Borrower
fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of
this Section, then Section 2.13(c) shall apply. Interest accrued pursuant to
this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraphs (d) or (e) of this Section to reimburse the Issuing Bank shall be for
the account of such Lender to the extent of such payment.
     (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the

-29-

--------------------------------------------------------------------------------

 

Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.12(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
“Issuing Bank” shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of an Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.
     (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing at least 66-2/3% of
the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Issuing Bank and the Lenders, an amount in cash equal to the LC Exposure as of
such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VII. Such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrower’s
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of the Lenders
with LC Exposure representing at least 66-2/3% of the total LC Exposure), be
applied to satisfy other obligations of the Borrower under this Agreement. If
the Borrower has provided an amount of cash collateral hereunder as a result of
the occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived in accordance with the terms of
this Agreement.
     SECTION 2.7. Funding of Borrowings. (a) Each Lender shall make each Loan to
be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account specified by the Borrower in the Transfer Authorizer Designation
Form; provided that ABR Loans made to finance the reimbursement of an LC

-30-

--------------------------------------------------------------------------------

 

Disbursement as provided in Section 2.6(e) shall be remitted by the
Administrative Agent to the Issuing Bank.
     (b) Unless the Administrative Agent shall have received written notice from
a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing as of the date of such Borrowing. If any interest is
paid by the Borrower as described above for any period with respect to any
amount funded by the Administrative Agent pursuant to this paragraph, the
Borrower shall not be required to pay interest on such amount pursuant to
Section 2.13 in respect of such period.
     SECTION 2.8. Interest Elections. (a) Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section; provided, however, that a Eurodollar Borrowing may only be
continued on the last day of the then current Interest Period therefor. The
Borrower may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably
among the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing.
     (b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.3 if the Borrower was
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request.
     (c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.2:
     (i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be

-31-

--------------------------------------------------------------------------------

 

specified pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
     (ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
     (iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
     (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
     (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.
     (e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall automatically be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
     SECTION 2.9. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.
     (b) The Borrower may at any time terminate, or from time to time reduce,
the Commitments; provided that (i) each reduction of the Commitments shall be in
an amount that is an integral multiple of $1,000,000 and not less than
$10,000,000, (ii) the Borrower shall not terminate or reduce the Commitments if,
after giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.11, the sum of the Revolving Credit Exposures would exceed the total
Commitments and (iii) the Borrower shall not reduce the total Commitments to an
amount less than $100,000,000 unless the Commitments are terminated.
     (c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the

-32-

--------------------------------------------------------------------------------

 

Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments shall be permanent. Each reduction of the Commitments shall
be made ratably among the Lenders in accordance with their respective
Commitments.
     SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Revolving Loan not later
than the Maturity Date.
     (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
     (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.
     (d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein, provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
     (e) Any Lender may request that Loans made by it be evidenced by a Note. In
such event, the Borrower shall prepare, execute and deliver to such Lender a
Note payable to the order of such Lender (or, if requested by such Lender, to
such Lender and its registered assigns). Thereafter, the Loans evidenced by such
Note and interest thereon shall at all times (including after assignment
pursuant to Section 9.4) be represented by one or more Notes in such form
payable to the order of the payee named therein.
     SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with paragraph (b) of this Section.
     (b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment and (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment is given in connection with

-33-

--------------------------------------------------------------------------------

 

a conditional notice of termination of the Commitments as contemplated by
Section 2.9, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.9. Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent
shall advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.2. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.13.
     (c) If at any time from and after the Closing Date: (i) the Borrower merges
or consolidates with another Person and the Borrower is not the surviving
entity, or (ii) any Person and the Borrower or a Subsidiary merge into the
Borrower or a Subsidiary in a transaction in which the Borrower or a Subsidiary
is the surviving corporation and an Event of Default has occurred as a result
thereof (the date either such event shall occur being the “Prepayment Date”),
the Borrower shall be required to prepay the Loans in their entireties as if the
Prepayment Date were the Maturity Date and the Commitments thereupon shall be
terminated. The Borrower shall immediately make such prepayment together with
the interest accrued to the date of the prepayment on the principal amount
prepaid and shall return or cause to be returned all Letters of Credit to the
Issuing Bank. In connection with the prepayment of any Loan prior to the
maturity thereof, the Borrower shall also pay any applicable expenses pursuant
to Section 2.16. Each such prepayment shall be applied to prepay ratably the
Loans of the Lenders. Amounts prepaid pursuant to this clause (c) may not be
reborrowed.
     (d) The Borrower shall prepay Loans to the extent required by
Section 5.2(b).
     SECTION 2.12. Fees.
     (a) During the period from and including the Closing Date to but excluding
the date on which the Commitment of each Lender terminates, the Borrower agrees
to pay to the Administrative Agent for the account of each Lender an unused
commitment fee equal to the Unused Commitment Fee Rate on the average daily
amount of the Unused Commitment of such Lender (the “Unused Commitment Fee
Amount”). Accrued Unused Commitment Fee Amounts shall be payable quarterly in
arrears on the last day of March, June, September and December of each year
commencing on the first such date after the Closing Date, and on the date on
which the Commitments terminate. All fees pursuant to this subsection (a) shall
be computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
     (b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit, which shall accrue at the same Applicable Rate as interest on
Eurodollar Loans on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Closing Date to but excluding the later
of the date on which such Lender’s Commitment terminates and the date on which
such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate of 0.125% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and

-34-

--------------------------------------------------------------------------------

 

including the Closing Date to but excluding the later of the date of termination
of the Commitments and the date on which there ceases to be any LC Exposure, as
well as the Issuing Bank’s standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Participation fees and fronting fees accrued from and
including the Closing Date or the last day of the preceding March, June,
September or December, as applicable, to and excluding the last Business Day of
March, June, September and December of each year shall be payable, in the case
of participation fees, on such last Business Day of such month, in the case of
fronting fees, on the third day Business Day following such last Business Day,
and in each case, commencing on the first such date to occur after the Closing
Date; provided that all such fees shall be payable on the date on which the
Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
     (c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
     (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of fees
pursuant to paragraph (a) above and participation fees, to the Lenders. Fees
paid shall not be refundable under any circumstances.
     SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Rate.
     (b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.
     (c) Notwithstanding the foregoing, (i) if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (A) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (B) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section and
(ii) for so long as an Event of Default has occurred and is continuing, the
principal balance of all Loans and other Obligations shall bear interest at a
rate per annum equal to 2% plus the rate otherwise applicable to such Loans and
other Obligations (which for any amounts other than principal of and interest on
Loans shall be the rate applicable to ABR Loans).
     (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Commitments; provided that (i) interest accrued pursuant to
paragraph (c) of this Section shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Loan (other than a

-35-

--------------------------------------------------------------------------------

 

prepayment of an ABR Loan prior to the end of the Availability Period), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
     (e) All interest hereunder shall be computed on the basis of a year of
360 days, and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). The applicable
Alternate Base Rate or LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error
     SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
     (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the LIBO Rate for such Interest Period; or
     (b) the Administrative Agent is advised by the Required Lenders that the
LIBO Rate for such Interest Period will not adequately and fairly reflect the
cost to such Lenders of making or maintaining their Loans included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
     SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (including without limitation, Regulation D of
the Board or other similar reserve requirement applicable to any other category
of liabilities or category of extensions of credit or other assets by reference
to which the interest rate on Eurodollar Borrowings is determined) or the
Issuing Bank; or
     (ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans made by
such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will

-36-

--------------------------------------------------------------------------------

 

pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.
     (b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or the Issuing Bank’s capital or on the capital of
such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s or the Issuing Bank’s policies and the policies
of such Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company for any such reduction suffered.
     (c) A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
     (d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender’s or the Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
     SECTION 2.16. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, continue
or prepay any Revolving Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under
Section 2.11(b) and is revoked in accordance therewith), or (d) the assignment
of any Eurodollar Loan other than on the last day of the Interest Period
applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall pay to the
Administrative Agent for the account of each Lender, upon request of the
Administrative Agent, such amount or amounts as the Administrative Agent shall
determine in its sole discretion to be sufficient to compensate each Lender for
the loss, cost and expense attributable to such event. In the case of a
Eurodollar

-37-

--------------------------------------------------------------------------------

 

Loan, such loss, cost or expense to any Lender shall include an amount
determined by the Administrative Agent to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the Eurodollar market. The
Borrower shall pay to the Administrative Agent such amount as determined by the
Administrative Agent within 10 days after the request for payment from the
Administrative Agent.
     SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, each
Lender or the Issuing Bank (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
     (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
     (c) The Borrower shall indemnify the Administrative Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or the Issuing Bank,
or by the Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Bank, shall be conclusive absent manifest error.
     (d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
     (e) Prior to the date that any Foreign Lender becomes a party hereto, such
Foreign Lender shall furnish the Administrative Agent and the Borrower with a
properly executed copy

-38-

--------------------------------------------------------------------------------

 

of either Internal Revenue Service Form W-8ECI or Internal Revenue Service Form
W-8BEN and either Internal Revenue Service Form W-8 or Internal Revenue Service
Form W-9 and any additional form (or such other form) as is necessary to claim
complete exemption from United States withholding taxes on all payments
hereunder. At all times each Foreign Lender shall own or beneficially own a
Note, such Foreign Lender shall (i) promptly provide to the Administrative Agent
and Borrower a new Internal Revenue Service Form W-8ECI or Internal Revenue
Service Form W-8BEN and Internal Revenue Service Form W-8 or Internal Revenue
Service Form W-9 and any additional form (or such other form) (or any successor
form or forms) upon the expiration or obsolescence of any previously delivered
form and comparable statements in accordance with applicable United States laws
and regulations and amendments duly executed and completed by such Lender, and
(ii) comply at all times with all applicable United States laws and regulations,
including all provisions of any applicable tax treaty, with regard to any
withholding tax exemption claimed with respect to any payments hereunder. If any
Foreign Lender cannot deliver the forms referred to in the preceding sentence,
then Borrower may withhold from payments due under the Loan Documents such
amounts as Borrower is able to determine from accurate information provided by
such Foreign Lender are required by the Internal Revenue Code.
     SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to
12:00 noon, New York City time, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at 2120 E. Park Place, Suite 100, El Segundo, California (or such
other location for payment as the Administrative Agent may notify the Borrower),
except payments to be made directly to the Issuing Bank as expressly provided
herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.3
shall be made directly to the Persons entitled thereto. The Administrative Agent
shall distribute any such payments received by it for the account of any other
Person to the appropriate recipient promptly following receipt thereof. If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.
     (b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

-39-

--------------------------------------------------------------------------------

 

     (c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, except pursuant to Section 2.19, obtain payment in respect of any
principal of or interest on any of its Revolving Loans or participations in LC
Disbursements resulting to such Lender receiving payment of a greater proportion
of the aggregate amount of its Revolving Loans and participations in LC
Disbursements than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans and participations in LC Disbursements of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans and
participations in LC Disbursements; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
     (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
     (e) If for any reason any Lender (a “Defaulting Lender”) shall fail or
refuse to perform any of its obligations under this Agreement or any other Loan
Document to which it is a party within the time period specified for performance
of such obligation or, if no time period is specified, if such failure or
refusal continues for a period of 2 Business Days after notice from the
Administrative Agent, then, in addition to the rights and remedies that may be
available to the Administrative Agent or the Borrower under this Agreement or
Applicable Law, such Defaulting Lender’s right to participate in the
administration of the Loans, this Agreement and the other Loan Documents,
including without limitation, any right to vote in respect of, to consent to or
to direct any action or inaction of the Administrative Agent or to be taken into
account in the calculation of Required Lenders, shall be suspended during the
pendency of such failure or refusal. If for any reason a Lender fails to make
timely payment to the Administrative

-40-

--------------------------------------------------------------------------------

 

Agent of any amount required to be paid to the Administrative Agent hereunder
(without giving effect to any notice or cure periods), in addition to other
rights and remedies which the Administrative Agent or the Borrower may have
under the immediately preceding provisions or otherwise, the Administrative
Agent shall be entitled (i) to collect interest from such Defaulting Lender on
such delinquent payment for the period from the date on which the payment was
due until the date on which the payment is made at the greater of Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation, (ii) to withhold or
setoff and to apply in satisfaction of the defaulted payment and any related
interest, any amounts otherwise payable to such Defaulting Lender under this
Agreement or any other Loan Document and (iii) to bring an action or suit
against such Defaulting Lender in a court of competent jurisdiction to recover
the defaulted amount and any related interest. Any amounts received by the
Administrative Agent in respect of a Defaulting Lender’s Loans shall not be paid
to such Defaulting Lender and shall be held by the Administrative Agent and paid
to such Defaulting Lender upon the Defaulting Lender’s curing of its default.
     SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.15, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, then such Lender shall, upon the
request of the Borrower, use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
     (b) If any Lender requests compensation under Section 2.15 (and the
Required Lenders are not also doing the same) or if the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, or if any Lender defaults in its
obligation to fund Loans hereunder, then the Borrower may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 9.4), all its interests, rights
and obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent (and, if a Commitment is being
assigned, the Issuing Bank), which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.15 or payments required to be made pursuant to
Section 2.17, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and

-41-

--------------------------------------------------------------------------------

 

delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.
     SECTION 2.20. Increase in Commitment. (a) Unless a Default has occurred and
is continuing, and subject to the satisfaction of the conditions in
Section 2.20(b), the Borrower, by written notice to the Administrative Agent
(the “Additional Commitment Notice”), may request on up to two (2) occasions
during the Availability Period that the total Commitments be increased by an
amount not less than $20,000,000 per request and not more than $75,000,000 in
the aggregate (such that the total Commitments after such increase shall never
exceed $225,000,000); provided that for any such request any Lender which is a
party to this Agreement prior to such request for increase, at its sole
discretion, may elect to increase its Commitment, but shall not have any
obligation to so increase its Commitment. In the event that lenders commit to
any such increase, (i) the Commitments of the committed Lenders shall be
increased accordingly, (ii) the Applicable Percentages of each of the Lenders
shall be adjusted accordingly (or, in the case of a new lender not previously
party hereto, added to Schedule 1) and the Borrower shall make such borrowings
and repayments as shall be necessary to effect such reallocation of the
Commitments, (iii) if requested by any Lender making an additional or new
commitment, new Notes shall be issued, and (iv) other changes shall be made by
way of supplement, amendment or restatement of any Loan Document as may be
necessary or desirable to reflect the aggregate amount, if any, by which Lenders
have agreed to increase their respective Commitments or any other lenders have
agreed to make new commitments pursuant to this Section 2.20 without the consent
of any Lender other than those Lenders increasing their Commitments. The fees
payable by the Borrower upon any such increase in Commitments shall be agreed
upon by the Arranger and the Borrower at the time of such increase. In the event
of any such increase of the Commitments pursuant to this Section 2.20, the
aggregate LC Exposure of the Lenders shall remain $25,000,000. Notwithstanding
the foregoing, nothing in this Section 2.20 shall constitute or be deemed to
constitute an agreement by any Lender to increase its Commitment hereunder.
     (b) Notwithstanding the foregoing, an increase in the aggregate amount of
the Commitments shall be effective only if (i) no Default shall have occurred
and be continuing on the date of the Additional Commitment Notice and the date
such increase is to become effective; (ii) each of the representations and
warranties made in this Agreement and the other Loan Documents shall be true and
complete on and as of the date of the Additional Commitment Notice and the date
such increase is to become effective with the same force and effect as if made
on and as of such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific date);
(iii) the Administrative Agent shall have received (x) such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the authorization of such increase and (y) a favorable written
opinion (addressed to the Administrative Agent and the Lenders) of counsel for
the Borrower and the other Loan Parties substantially in the form of Exhibit F-1
or F-2, as applicable, after giving effect to such increase; (iv) the Borrower
and its Subsidiaries shall be in compliance with Article VI; and (v) the Lenders
shall have received all amounts, if any, payable pursuant to Section 2.16 as a
result of the repayment described in clause (ii) of Section 2.20(a).
     SECTION 2.21. Funds Transfer Disbursements.

-42-

--------------------------------------------------------------------------------

 

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

-43-

--------------------------------------------------------------------------------

 

ARTICLE III.
Representations and Warranties
     The Borrower represents and warrants to the Lenders, the Administrative
Agent and the Issuing Bank that:
     SECTION 3.1. Organization; Powers. Each of the Borrower, the other Loan
Parties and the Borrower’s other Affiliates is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, has
all requisite power and authority to own or lease its property and to carry on
its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
     SECTION 3.2. Authorization; Enforceability. (a) The Transactions have been
duly authorized by all necessary corporate action of the Borrower and by all
necessary partnership, limited liability company or corporate action of the
other Loan Parties. Each of the Loan Parties has the requisite power and
authority to perform this Agreement and the other Loan Documents. This Agreement
has been duly authorized, executed and delivered by the Borrower and constitutes
a legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
     (b) Schedule 3.2 contains a diagram indicating the ownership structure of
the Borrower, and any other Person in which the Borrower holds a direct or
indirect partnership, joint venture or other equity interest, indicating the
nature of such interest with respect to each Person included in such diagram and
accurately sets forth (1) the correct legal name of such Person, the
jurisdiction of its incorporation or organization and, for each Loan Party, the
jurisdictions in which it is qualified to transact business as a foreign
corporation, or otherwise, (2) the authorized, issued and outstanding shares or
interests of each class of securities of the Borrower and (3) in the case of a
Subsidiary, whether such Subsidiary is an Excluded Subsidiary. None of such
issued and outstanding securities is subject to any vesting, redemption, or
repurchase agreement, and there are no warrants or options outstanding with
respect to such securities, except as noted on such Schedule. The outstanding
capital stock of the Borrower is duly authorized, validly issued, fully paid and
nonassessable.
     SECTION 3.3. Governmental Approvals; No Conflicts. Except as specified on
Schedule 3.3, the Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except such as have been obtained or made and are in full force and effect,
(b) will not violate, and will not require any consent or approval under, any
applicable law or regulation or the certificate of formation, limited liability
company agreement, certificate of limited partnership, limited partnership
agreement or other organizational documents of the Borrower, any other Loan
Party or any of the other Subsidiaries or any order, judgment or decree of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the

-44-

--------------------------------------------------------------------------------

 

Borrower, any other Loan Party or any of the other Subsidiaries or any of their
respective assets, or give rise to a right thereunder to require any payment to
be made by the Borrower, any other Loan Party or any of the other Subsidiaries,
and (d) will not result in the creation or imposition of any Lien on any asset
of the Borrower, any other Loan Party or any of the other Subsidiaries.
     SECTION 3.4. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders (i) its audited financial
statements as of December 31, 2005, reported on by PricewaterhouseCoopers LLP,
independent public accountants and (ii) its pro forma unaudited balance sheets
and statements of income as of September 30, 2006, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations of the Borrower and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to (y) normal and recurring year-end audit
adjustments and the absence of footnotes in the case of the statements referred
to in clause (ii) above and (z) any pro forma financial statements contained in
such consolidated financial statements are not necessarily indicative of the
consolidated financial position of the Borrower and its Subsidiaries, as of the
respective dates thereof and the consolidated results of operations for the
periods indicated.
     (b) Neither the Borrower nor any of its Subsidiaries has any Contingent
Obligation or liability for any taxes, long-term leases or commitments, not
reflected in its audited financial statements delivered to the Administrative
Agent on or prior to the Closing Date (including immediately after giving effect
to the Merger) or otherwise disclosed to the Administrative Agent and the
Lenders in writing prior to the Closing Date, which will have or is reasonably
likely to have a Material Adverse Effect.
     (c) The Borrower has heretofore furnished to the Lenders (i) the audited
financial statements of CPA 12 as of December 31, 2005, reported on by
PricewaterhouseCoopers LLP, independent public accountants and (ii) the pro
forma unaudited balance sheets and statements of income of CPA 12 as of
September 30, 2006, certified by the chief financial officer of CPA 12. Such
financial statements present fairly, in all material respects, the financial
position and results of operations of CPA 12 and its consolidated subsidiaries
as of such dates and for such periods in accordance with GAAP, subject to
(y) normal and recurring year-end audit adjustments and the absence of footnotes
in the case of the statements referred to in clause (ii) above and (z) any pro
forma financial statements contained in such consolidated financial statements
are not necessarily indicative of the consolidated financial position of CPA 12
and its subsidiaries, as of the respective dates thereof and the consolidated
results of operations for the periods indicated.
     (d) The Borrower has heretofore furnished to the Lenders (i) the pro forma
consolidated balance sheet of the Borrower as of December 31, 2005 and March 31,
2006 and the pro forma consolidated statements of income of the Borrower for the
year ended December 31, 2005 and the three months ended March 31, 2006, in each
case giving pro forma effect to the Merger Transactions. Such financial
statements have been prepared by the Borrower and CPA 12 based on their
respective financial statements for such periods and as of such dates together
with available information and certain assumptions which the Borrower believes
to be reasonable, and give pro forma effect to the Merger Transactions.

-45-

--------------------------------------------------------------------------------

 

     (e) Schedule 3.4 sets forth, as of the date hereof (and after giving effect
to the Merger), all Indebtedness of the Borrower and its Subsidiaries and,
except as set forth on Schedule 3.4, there are no defaults in the payment of
principal or interest on any such Indebtedness and no payments thereunder have
been deferred or extended beyond their stated maturity and there has been no
material change in the type or amount of such Indebtedness.
     (f) Since December 31, 2005, there has been no material adverse change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
     SECTION 3.5. Properties. (a) Each of the Borrower, the other Loan Parties
and the other Subsidiaries has good title to, or valid leasehold interests in,
all its real and personal property material to its business, except for minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties for their intended
purposes.
     (b) Each of the Borrower, the other Loan Parties and the other Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and
other intellectual property material to its business, and the use thereof by the
Borrower, the other Loan Parties and the other Subsidiaries does not infringe
upon the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
     SECTION 3.6. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower, the other Loan Parties or any of the other
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve this Agreement, the
Transactions or the Merger Transactions.
     (b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, none of the Borrower, the other Loan
Parties or any of the other Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
     SECTION 3.7. Compliance with Laws and Agreements. Each of the Borrower, the
other Loan Parties and the other Subsidiaries is in compliance with all laws,
regulations and orders, judgments or decrees of any Governmental Authority
applicable to it or its property and all indentures, agreements and other
instruments binding upon it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. No Default has occurred and is continuing.

-46-

--------------------------------------------------------------------------------

 

     SECTION 3.8. Investment Company Status. None of the Borrower, the other
Loan Parties or any of the other Subsidiaries is an “investment company” as
defined in, or subject to regulation under, the Investment Company Act of 1940.
     SECTION 3.9. Taxes. Each of the Borrower, the other Loan Parties and the
other Subsidiaries has timely filed or caused to be filed all Tax returns and
reports required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which the Borrower, such other
Loan Party or such other Subsidiary, as applicable, has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (b) to the
extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
     SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $250,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $250,000 the fair market value of
the assets of all such underfunded Plans.
     SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it, any of
the other Loan Parties or any of the other Subsidiaries is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. None of the SEC
Reports (as defined hereafter) and none of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower, the
other Loan Parties and the other Subsidiaries to the Administrative Agent or any
Lender in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary, in the aggregate, to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
     SECTION 3.12. Insurance. The insurance policies and programs in effect as
of the Closing Date and thereafter with respect to the Property, assets and
business of the Borrower, the other Loan Parties and the other Subsidiaries are
in compliance with Section 5.5.
     SECTION 3.13. [Reserved].
     SECTION 3.14. SEC Reports. As of the Closing Date, the Borrower has filed
all forms, reports, statements (including proxy statements) and other documents
(such filings by the Borrower are collectively referred to as the “SEC
Reports”), required to be filed by it with the

-47-

--------------------------------------------------------------------------------

 

Securities and Exchange Commission. The SEC Reports, including all SEC Reports
filed on or prior to the date of this Agreement and filed after the Closing
Date, (i) were or will be prepared in all material respects in accordance with
the requirements of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, as the case may be, and the rules and
regulations of the Securities and Exchange Commission thereunder applicable to
such SEC Reports at the time of filing thereof and (ii) did not at the time they
were filed, or will not at the time they are filed, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
     SECTION 3.15. Representations and Warranties in Loan Documents. All
representations and warranties made by the Borrower and each other Loan Party in
the Loan Documents are true and correct in all material respects as of the date
of this Agreement (and after giving effect to the Merger) and as of any date
that the Borrower is expressly obligated to confirm the same under this
Agreement.
     SECTION 3.16. Organizational Documents. The documents delivered pursuant to
Section 4.1 constitute, as of the Closing Date (and after giving effect to the
Merger), true and correct copies of all of the organizational documents of the
Borrower and the other Loan Parties.
     SECTION 3.17. REIT Status. The Borrower qualifies as a REIT and is in
compliance with all requirements and conditions imposed under the Code to allow
the Borrower to maintain its status as a REIT.
     SECTION 3.18. OFAC. None of the Borrower, any of the other Loan Parties,
any of the other Subsidiaries, or any other Affiliate of the Borrower: (i) is a
person named on the list of Specially Designated Nationals or Blocked Persons
maintained by the U.S. Department of the Treasury’s Office of Foreign Assets
Control (“OFAC”) available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise
published from time to time; (ii) is (A) an agency of the government of a
country, (B) an organization controlled by a country, or (C) a person resident
in a country that is subject to a sanctions program identified on the list
maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time, as such program may be applicable to such agency,
organization or person; or (iii) derives any of its assets or operating income
from investments in or transactions with any such country, agency, organization
or person; and none of the Letters of Credit and none of the proceeds from the
Loans will be used to finance any operations, investments or activities in, or
make any payments to, any such country, agency, organization, or person.
ARTICLE IV.
Conditions
     SECTION 4.1. Closing Date. The obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.2):

-48-

--------------------------------------------------------------------------------

 

     (a) The Administrative Agent (or its counsel) shall have received from each
Loan Party hereto either (i) a counterpart of all Loan Documents to which such
Loan Party is a party, signed on behalf of such Loan Party or (ii) written
evidence satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of each such Loan Document) that such
Loan Party has signed a counterpart of all Loan Documents required to be
delivered to the Administrative Agent.
     (b) The Administrative Agent shall have received (i) a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Closing Date) of Reed Smith LLP, counsel for the Borrower and certain of the
other Loan Parties, and (ii) a favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated the Closing Date) of local
counsel to certain of the Loan Parties (which counsel must be reasonably
acceptable to the Administrative Agent), substantially in the forms of Exhibit
F-1, and Exhibit F-2, respectively, and covering such other matters relating to
the Borrower, the other Loan Parties, this Agreement or the Transactions as the
Required Lenders shall reasonably request. The Borrower hereby requests such
counsel to deliver such opinions.
     (c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the Loan Parties
and the Borrower’s other Affiliates, the authorization of the Transactions and
any other legal matters relating to the Loan Parties and the Borrower’s other
Affiliates, this Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
     (d) The Administrative Agent shall have received a certificate, dated the
Closing Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.2.
     (e) No change in the business, assets, management, operations, financial
condition or prospects of the Borrower, the other Loan Parties or any of their
respective Properties shall have occurred since December 31, 2005 which change,
in the judgment of the Administrative Agent, will have or is reasonably likely
to have a Material Adverse Effect.
     (f) Except as disclosed on Schedule 4.1(f), since December 31, 2005, the
Borrower has not and shall not have (i) entered into any (as determined in good
faith by the Administrative Agent) commitment or transaction, including, without
limitation, transactions for borrowings and capital expenditures, which are not
in the ordinary course of the Borrower’s business, (ii) declared or paid any
dividends or other distributions, (iii) established compensation or employee
benefit plans, or (iv) redeemed or issued any equity securities.
     (g) Since December 31, 2005, no agreement or license relating to the
business, operations or employee relations of the Borrower or any of its
Properties shall

-49-

--------------------------------------------------------------------------------

 

have been terminated, modified, revoked, breached or declared to be in default,
the termination, modification, revocation, breach or default under which, in the
reasonable judgment of the Administrative Agent, would result in a Material
Adverse Effect.
     (h) The Administrative Agent shall have received evidence satisfactory to
it in its sole discretion that the waivers or consents specified in Schedule 3.3
have been duly obtained.
     (i) The Administrative Agent shall have received all fees and other amounts
due and payable on or prior to the Closing Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.
     (j) The Administrative Agent shall have received an Officer’s Certificate
duly executed by the President, a Vice President or a Financial Officer of the
Borrower certifying as to pro forma compliance with the financial covenants in
Section 6.1 as of the Closing Date (taking into account any Credit Event to
occur on such date and giving pro forma effect to the Merger).
     (k) [Reserved]
     (l) The Administrative Agent shall have received current certificates of
insurance as to all of the insurance maintained by the Borrower and its
Subsidiaries on the Properties from the insurer or an independent insurance
broker or a schedule of insurance from the Borrower, identifying insurers, types
of insurance, insurance limits, and policy terms, and such further information
and certificates from the Borrower, its insurers and insurance brokers as the
Administrative Agent may reasonably request.
     (m) The Administrative Agent shall have received: (i) a certificate of the
chief executive officer, chief financial officer or other senior officer of the
Borrower stating that all conditions precedent to the consummation of the Merger
Transactions as set forth in the Merger Agreement have been satisfied (or waived
with the consent of the Required Lenders) and that the Alternate Merger did not
occur, (ii) file-stamped copies of the articles of merger of the Borrower and
CPA 12 filed with the Secretary of State of the State of Maryland and (iii) such
other documents, agreement and certificates relating to the Merger Transactions
as the Administrative Agent may reasonably request.
     (n) The Administrative Agent shall have received the Transfer Authorizer
Designation Form effective as of the date hereof.
     The Administrative Agent shall notify the Borrower and the Lenders of the
Closing Date, and such notice shall be conclusive and binding.
     SECTION 4.2. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit (such Borrowing, issuance, amendment,
renewal or extension referred to herein as a “Credit Event”), is subject to the
satisfaction of the following conditions:

-50-

--------------------------------------------------------------------------------

 

     (a) The representations and warranties set forth in this Agreement and the
other Loan Documents shall be true and correct on and as of the date of such
Credit Event.
     (b) At the time of and immediately after giving effect to such Credit
Event, no Default shall have occurred and be continuing.
     (c) The Borrower shall not have received written notice from the Required
Lenders that an event has occurred since the date of this Agreement which has
had, and continues to have, or is reasonable likely to have, a Material Adverse
Effect.
     (d) The Administrative Agent shall have received an Officer’s Certificate
duly executed by the President, a Vice President or a Financial Officer of the
Borrower as to the pro forma financial covenant compliance required by
Section 6.1(i).
     (e) No law, regulation or order of any Governmental Authority shall
prohibit, enjoin or restrain any Lender from making such Borrowing or
participating in the issuance, amendment, renewal or extension of such Letter of
Credit, as reasonably determined by such Lender.
     Each Credit Event shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.
ARTICLE V.
Affirmative Covenants
     Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated or been
cancelled by the beneficiaries thereof and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
     SECTION 5.1. Financial Statements and Other Information. The Borrower will
furnish to the Administrative Agent and each Lender:
     (a) Quarterly Reports.
     (i) Borrower Quarterly Financial Reports. As soon as practicable, and in
any event within forty-five (45) days after the end of each fiscal quarter in
each fiscal year (other than the last fiscal quarter in each fiscal year), the
Financial Statements of the Borrower and its Subsidiaries on Form 10-Q as at the
end of such period and a report setting forth in comparative form the
corresponding figures as of the end of and for the corresponding period of the
previous fiscal year, certified by a Financial Officer of the Borrower as fairly
presenting the consolidated and, for so long as such statements are prepared in
the ordinary course of business, consolidating, financial position of the
Borrower and its Subsidiaries as at the date indicated and the results of their
operations and cash flow for the period indicated in accordance with GAAP,
subject to normal quarterly adjustments.

-51-

--------------------------------------------------------------------------------

 

     (ii) Quarterly Compliance Certificates. Together with each delivery of any
quarterly report pursuant to paragraph (a)(i) of this Section 5.1, an Officer’s
Certificate of the Borrower (the “Quarterly Compliance Certificates”), signed by
a Financial Officer of the Borrower, substantially in the form of Exhibit I
hereto, representing and certifying (1) that the Financial Officer of the
Borrower signatory thereto has reviewed the terms of the Loan Documents, and has
made, or caused to be made, under his/her supervision, a review in reasonable
detail of the Transactions and consolidated, and for so long as such statements
are prepared in the ordinary course of business, consolidating, financial
condition of the Borrower and its Subsidiaries during the fiscal quarter covered
by such reports, that such review has not disclosed the existence during or at
the end of such fiscal quarter, and that such officer does not have knowledge of
the existence as at the date of such Officer’s Certificate, of any condition or
event which constitutes a Default or mandatory prepayment event, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action the Borrower or any of its Subsidiaries has
taken, is taking and proposes to take with respect thereto, (2) the
calculations, in the form of Exhibit G attached hereto, for the period then
ended which demonstrate whether there has been compliance with the covenants and
financial ratios set forth in Article VI, (3) a schedule of the Borrower’s
outstanding Indebtedness, including the amount, maturity, interest rate and
amortization requirements, as well as such other information regarding such
Indebtedness as may be reasonably requested by the Administrative Agent, and
(4) a schedule of Adjusted EBITDA of the Borrower and its Subsidiaries for the
fiscal quarter most recently ended and for the period of the four immediately
preceding fiscal quarters then ended.
     (b) Annual Reports.
     (i) Borrower Financial Statements. As soon as practicable, and in any event
within ninety (90) days after the end of each fiscal year, (i) the Financial
Statements of the Borrower and its Subsidiaries on Form 10-K as at the end of
such fiscal year and a report setting forth in comparative form the
corresponding figures from the consolidated Financial Statements of the Borrower
and its Subsidiaries as of the end of and for the prior fiscal year; (ii) a
report with respect thereto of PricewaterhouseCoopers LLP or other independent
certified public accountants acceptable to the Administrative Agent, which
report shall be unqualified and shall state that such financial statements
fairly present the consolidated and, for so long as such statements are prepared
in the ordinary course of business, consolidating financial position of each of
the Borrower and its Subsidiaries as at the dates indicated and the results of
their operations and cash flow for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except for changes with which
PricewaterhouseCoopers LLP or any such other independent certified public
accountants, if applicable, shall concur and which shall have been disclosed in
the notes to such financial statements) (which report shall be subject to the
confidentiality limitations set forth herein); and (iii) in the event that the
report referred to in clause (ii) above is qualified, a copy of the management
letter or any similar report delivered to the Borrower or to any officer or
employee thereof by such independent certified public accountants in connection
with such financial statements. The Administrative Agent and each Lender
(through the Administrative Agent) may, with the consent of the Borrower (which
consent shall not be unreasonably withheld), communicate directly with such
accountants, with any such communication to occur together with a representative
of the Borrower, at the expense of the Administrative Agent (or the Lender
requesting such communication), upon reasonable notice and at reasonable times
during normal business hours.

-52-

--------------------------------------------------------------------------------

 

     (ii) Annual Compliance Certificates. Together with each delivery of any
annual report pursuant to clause (i) of this Section 5.1(b), an Officer’s
Certificate of the Borrower (the “Annual Compliance Certificate” and,
collectively with the Quarterly Compliance Certificate, the “Compliance
Certificates”), signed by a Financial Officer of the Borrower, substantially in
the form of Exhibit I hereto, representing and certifying (1) that the officer
signatory thereto has reviewed the terms of the Loan Documents, and has made, or
caused to be made under his/her supervision, a review in reasonable detail of
the Transactions and consolidated and, for so long as such statements are
prepared in the ordinary course of business, consolidating financial condition
of the Borrower and its Subsidiaries, during the accounting period covered by
such reports, that such review has not disclosed the existence during or at the
end of such accounting period, and that such officer does not have knowledge of
the existence as at the date of such Officer’s Certificate, of any condition or
event which constitutes a Default or mandatory prepayment event, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action the Borrower or any of its Subsidiaries has
taken, is taking and proposes to take with respect thereto, (2) the
calculations, in the form of Exhibit G attached hereto, for the period then
ended which demonstrate whether there has been compliance with the covenants and
financial ratios set forth in Article VI, (3) a schedule of the Borrower’s
outstanding Indebtedness including the amount, maturity, interest rate and
amortization requirements, as well as such other information regarding such
Indebtedness as may be reasonably requested by the Administrative Agent, and
(4) a schedule of Adjusted EBITDA of the Borrower and its Subsidiaries for the
fiscal quarter most recently ended and for the period of the four immediately
preceding fiscal quarters then ended.
     (c) Tenant Bankruptcy Reports. As soon as practicable, and in any event
within ninety (90) days after the end of each fiscal year, a written report, in
form reasonably satisfactory to the Administrative Agent, of all bankruptcy
proceedings filed by or against any tenants of any of the Projects, if such
tenants occupy five percent (5%) or more of the gross leasable area in the
Projects in the aggregate. The Borrower shall deliver to the Administrative
Agent and the Lenders, promptly upon the Borrower’s learning thereof, notice of
any bankruptcy proceedings filed by or against, or the cessation of business or
operations of, any tenant of any of the Projects which tenant occupies five
percent (5%) or more of the gross leasable area in the Projects in the
aggregate.
     (d) Concurrently with any delivery of financial statements under clause
(b) above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines).
     (e) Promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower, any other Loan Party or any other Subsidiary, or compliance with the
terms of this Agreement, as the Administrative Agent may reasonably request
including without limitation, tax returns, title reports, insurance certificates
and environmental site assessments.
     SECTION 5.2. Notices of Material Events. (a) The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the following:

-53-

--------------------------------------------------------------------------------

 

     (i) the occurrence of any Default;
     (ii) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower, any other Loan Party or any other Affiliate of the Borrower that, if
adversely determined, could reasonably be expected to result to a Material
Adverse Effect;
     (iii) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$250,000;
     (iv) the receipt of any notice or the occurrence of any event that could
reasonably be expected to result in an Environmental Liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding the greater of (A)
$1,000,000 and (B) one percent (1%) of the Total Value; and
     (v) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect.
     (b) The Borrower shall deliver to the Administrative Agent and the Lenders
written notice of each of the following events affecting the Borrower, any other
Loan Party or any other Subsidiary not less than five (5) Business Days prior to
the occurrence thereof: (i) [reserved], (ii) a sale, transfer or other
disposition of assets, in a single transaction or series of related
transactions, for consideration in excess of $50,000,000, (iii) an acquisition
of assets, in a single transaction or series of related transactions, for
consideration in excess of $50,000,000, (iv) [reserved], and (v) the grant of a
Lien with respect to assets, in a single transaction or series of related
transactions, in connection with Indebtedness aggregating an amount in excess of
$50,000,000. In addition, simultaneously with delivery of any such notice, the
Borrower shall deliver to the Administrative Agent and the Lenders a certificate
of a Financial Officer of the Borrower certifying that the Borrower is in
compliance with this Agreement and the other Loan Documents both on a historical
basis and on a pro forma basis, exclusive of the property sold, transferred or
encumbered and inclusive of the property to be acquired or the indebtedness to
be incurred. To the extent such proposed transaction would result in a failure
to comply with the financial covenants set forth herein, proceeds of such
transaction (together with such additional amounts as may be required), in an
amount, as determined by the Administrative Agent, equal to that which would be
required to reduce the Obligations so that Borrower will be in compliance with
the covenants set forth herein upon the consummation of the contemplated
transaction, shall be paid by the Borrower and applied to prepay the
Obligations.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
     SECTION 5.3. Existence; Conduct of Business. The Borrower will, and will
cause each other Loan Party and each of the other Subsidiaries to, do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights,

-54-

--------------------------------------------------------------------------------

 

licenses, permits, privileges and franchises material to the conduct of its
business. The Borrower will not, and will not permit any other Loan Party to, at
any time cause or permit its certificate of formation, limited liability company
agreement, certificate of limited partnership, partnership agreement, articles
of incorporation, by-laws, or other charter documents, as the case may be, to be
modified, amended or supplemented in any respect whatsoever, without, in each
case, the express prior written consent or approval of the Administrative Agent,
if such changes would materially adversely affect the rights of the
Administrative Agent or the Lenders hereunder or under any of the other Loan
Documents; provided that if such prior consent or approval is not required, the
Borrower shall nonetheless notify the Administrative Agent in writing promptly
after such event.
     SECTION 5.4. Payment of Obligations. The Borrower will, and will cause each
other Loan Party and each of the other Subsidiaries to, pay its respective
obligations, including Tax liabilities, that, if not paid, could result in a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Borrower, such other Loan Parties or such
other Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.
     SECTION 5.5. Maintenance of Properties; Insurance. (a) The Borrower will,
and will cause each other Loan Party and each of the other Subsidiaries to, keep
and maintain (or cause to be kept and maintained) all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted.
     (b) The Borrower, the other Loan Parties and the other Subsidiaries will
maintain, or will cause tenants of Projects to maintain, with financially sound
and reputable insurers, insurance with respect to its properties and its
business against general liability, property casualty and such casualties and
contingencies as shall be commercially reasonable and in accordance with the
customary and general practices of businesses having similar operations and real
estate portfolios in similar geographic areas and in amounts, containing such
terms, in such forms and for such periods as may be reasonable and prudent for
such businesses, including without limitation, insurance policies and programs
sufficient to cover (i) the replacement value of the improvements at Projects
owned by the Borrower, the other Loan Parties and the other Subsidiaries (less
commercially reasonable deductible amounts) and (ii) liability risks associated
with such ownership (less commercially reasonable deductible amounts).
     SECTION 5.6. Books and Records; Inspection Rights. The Borrower will, and
will cause each other Loan Party and each of the other Subsidiaries to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each other Loan Party and each of
the other Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested.

-55-

--------------------------------------------------------------------------------

 

     SECTION 5.7. Compliance with Laws. The Borrower will, and will cause each
other Loan Party and each of the other Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its respective property, including all Environmental Laws, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
     SECTION 5.8. Use of Proceeds and Letters of Credit. No Letters of Credit
and no part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations U and X. The proceeds of the Loans will be
used only for the purposes of:
     (a) acquisition of Projects or Joint Venture Holdings;
     (b) renovation of Properties owned by the Borrower or its consolidated
Subsidiaries;
     (c) funding of TI Work and Tenant Allowances;
     (d) financing expansions, renovations and new construction related to
Properties owned by the Borrower or its consolidated Subsidiaries;
     (e) refinancing or repayment of existing or future Indebtedness for
borrowed money;
     (f) working capital needs of the Borrower and other general corporate
purposes;
     (g) investments in Mortgage Assets;
     (h) redemptions or purchases by the Borrower of its common stock; and
     (i) payment of any sums required to be paid by the Borrower in connection
with the Merger Transactions plus fees and expenses incurred by the Borrower in
connection with the Merger Transactions.
     SECTION 5.9. [Reserved].
     SECTION 5.10. Solvency of Loan Parties. The Borrower and the other Loan
Parties are Solvent. The Borrower and the other Loan Parties each acknowledges
that, subject to the indefeasible payment and performance in full of the
Obligations, the rights of contribution among each of them are in accordance
with applicable laws and in accordance with each such Person’s benefits in
respect of the Credit Events and under this Agreement.
     SECTION 5.11. Further Assurances. The Borrower will cooperate with, and
will cause each of the other Loan Parties and each of the other Subsidiaries to
cooperate with, the Administrative Agent and the Lenders and execute such
further instruments and documents as the Lenders or the Administrative Agent
shall reasonably request to carry out to their reasonable satisfaction the
transactions contemplated by this Agreement and the other Loan Documents.

-56-

--------------------------------------------------------------------------------

 

     SECTION 5.12. Distributions in the Ordinary Course. In the ordinary course
of business the Borrower causes all of its Subsidiaries to make transfers of net
cash and cash equivalents upstream to the Borrower, and the Borrower shall
continue to follow such ordinary course of business. The Borrower shall not make
net transfers of cash and cash equivalents downstream to its Subsidiaries except
in the ordinary course of business consistent with past practice.
     SECTION 5.13. ERISA Compliance. The Borrower shall, and shall cause each of
the other Loan Parties and each of the other Subsidiaries and ERISA Affiliates
to, establish, maintain and operate all Plans to comply in all material respects
with the provisions of ERISA, the Code, all other applicable laws, and the
regulations and interpretations thereunder and the respective requirements of
the governing documents for such Plans.
     SECTION 5.14. REIT Status. The Borrower shall at all times maintain its
status as a REIT.
     SECTION 5.15. New Guarantors. (a) Requirement to Become Guarantor. Within
10 days of any Person (other than an Excluded Subsidiary) becoming a Subsidiary
after the Closing Date, the Borrower shall deliver to the Administrative Agent
each of the following items, each in form and substance satisfactory to the
Administrative Agent: (i) an Accession Agreement executed by such Subsidiary and
(ii) the items that would have been delivered under Sections 4.1(a) through (c)
if such Subsidiary had been a Subsidiary on the Closing Date; provided, however,
promptly (and in any event within 10 days) upon any Excluded Subsidiary ceasing
to be subject to the restriction which prevented it from becoming a Guarantor on
the Closing Date or delivering an Accession Agreement pursuant to this Section,
as the case may be, such Subsidiary shall comply with the provisions of this
Section.
     (b) Release of a Guarantor. The Borrower may request in writing that the
Administrative Agent release, and upon receipt of such request the
Administrative Agent shall release, a Guarantor from the Guaranty so long as:
(i) such Guarantor (x) has ceased to be, or simultaneously with its release from
the Guaranty will cease to be, a Subsidiary or (y) qualifies, or will qualify
simultaneously with its release from the Guaranty, as an Excluded Subsidiary;
(ii) no Default shall then be in existence or would occur as a result of such
release; (iii) the representations and warranties made or deemed made by the
Borrower and each other Loan Party in the Loan Documents to which any of them is
a party, shall be true and correct in all material respects on and as of the
date of such release with the same force and effect as if made on and as of such
date except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties shall have been true and correct in all material respects on and as
of such earlier date) and except for changes in factual circumstances not
prohibited under the Loan Documents; and (iv) the Administrative Agent shall
have received such written request at least 10 Business Days prior to the
requested date of release. Delivery by the Borrower to the Administrative Agent
of any such request shall constitute a representation by the Borrower that the
matters set forth in the preceding sentence (both as of the date of the giving
of such request and as of the date of the effectiveness of such request) are
true and correct with respect to such request.

-57-

--------------------------------------------------------------------------------

 

     SECTION 5.16. Distributions of Income to Borrower. The Borrower shall cause
all of its Subsidiaries to distribute promptly to the Borrower, whether in the
form of dividends, distributions or otherwise, all profits, proceeds or other
income relating to or arising from its Subsidiaries’ use, operation, financing,
refinancing, sale or other disposition of their respective assets and properties
after (a) the payment by each Subsidiary of its applicable operating expenses
and debt service and (b) the establishment of reasonable reserves for the
payment of operating expenses and debt service not paid on at least a quarterly
basis and capital improvements to be made to such Subsidiary’s assets and
properties approved by such Subsidiary in the ordinary course of business.
ARTICLE VI.
Negative Covenants
     Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that:
     SECTION 6.1. Indebtedness and Other Financial Covenants
     (a) Total Liabilities. As of the last day of each fiscal quarter, Total
Liabilities shall not exceed sixty-five percent (65%) of Total Value.
     (b) Minimum Combined Equity Value. The Combined Equity Value as of the
Closing Date and as of the last day of each fiscal quarter thereafter shall be
not less than $625,000,000, plus an amount equal to eighty-five percent (85%) of
the Fair Market Value of all Net Offering Proceeds received by the Borrower
after the Closing Date.
     (c) Minimum Consolidated Interest Coverage Ratio. As of the last day of
each fiscal quarter, the ratio of (i) the sum of Adjusted EBITDA of the Borrower
and its Subsidiaries determined on a consolidated basis for such fiscal quarter,
to (ii) Total Interest Expense for such fiscal quarter shall not be less than
1.65 to 1.0.
     (d) Minimum Yield on Debt. As of the last day of each fiscal quarter, the
ratio of (i) Adjusted EBITDA of the Borrower and its Subsidiaries determined on
a consolidated basis for such fiscal quarter, to (ii) Total Liabilities shall
not be less than 12.5%.
     (e) Minimum Fixed Charge Coverage Ratio. As of the last day of each fiscal
quarter, the ratio of (i) Adjusted EBITDA of the Borrower and its Subsidiaries
determined in a consolidated basis for such fiscal quarter, to (ii) Fixed
Charges for the preceding fiscal quarter shall not be less than 1.5 to 1.0
     (f) Maximum Dividend Payout Ratio. The Borrower shall not make any
Restricted Payment during any fiscal quarter, which, when added to all
Restricted Payments made during such fiscal quarter and the three immediately
preceding fiscal quarters, exceeds ninety percent (90%) of Adjusted EBITDA of
the Borrower and its

-58-

--------------------------------------------------------------------------------

 

Subsidiaries determined on a consolidated basis for the four preceding fiscal
quarters. Notwithstanding the foregoing, but subject to the following sentence,
if an Event of Default exists, the Borrower may only declare or make cash
distributions to its shareholders during any fiscal year in an aggregate amount
not to exceed the minimum amount necessary for the Borrower to maintain its
status as a REIT. If a Default specified in Section 7.1(a), Section 7.1(h) or
Section 7.1(i) shall exist, or if as a result of the occurrence of any other
Event of Default any of the Loans have been accelerated pursuant to Article VII,
the Borrower shall not, and shall not permit any Subsidiary to, make any
Restricted Payments to any Person other than to the Borrower or any Subsidiary.
For purposes of this provision, “Restricted Payment” means (i) any dividend or
other distribution on any equity securities of the Borrower or any Subsidiary
(except dividends payable solely in equity securities of the Borrower or any
Subsidiary or in rights to subscribe for or purchase equity securities of the
Borrower or any Subsidiary) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any equity securities of the
Borrower or any Subsidiary or (b) any option, warrant or other right to acquire
equity securities of the Borrower or any Subsidiary.
     (g) Other Indebtedness. The Borrower will not create, incur, assume or
permit to exist any Indebtedness other than (i) Indebtedness under the Loan
Documents, (ii) Nonrecourse Indebtedness and (iii) Indebtedness that is recourse
to the Borrower in an aggregate amount not to exceed 5% of Total Value
outstanding at any time. The Borrower will not permit any other Loan Party or
any other Subsidiary to, and no other Loan Party or any other Subsidiary shall,
create, incur, assume or permit to exist any Indebtedness other than
(i) Indebtedness of any Loan Party or other Subsidiary to the Borrower evidenced
by a promissory note (an “Intercompany Note”) in the form of Exhibit H hereto,
(ii) Nonrecourse Indebtedness, (iii) Indebtedness of a Subsidiary to a
Subsidiary (other than Indebtedness of a Subsidiary that is a Guarantor to a
Subsidiary that is not a Guarantor) and (iv) Indebtedness that is recourse to an
Excluded Subsidiary, but only if such Subsidiary was formed solely to own, and
only owns, a particular Project, and does not engage in any business other than
the ownership of such Project.
     (h) Negative Pledge. From and after the date hereof, the Borrower shall
not, and shall not permit any other Loan Party or any other Subsidiary to, enter
into or permit to exist any agreement, other than this Agreement (i) containing
any provision prohibiting the creation or assumption of any Lien upon its
properties (other than mechanics liens or judgment liens more than 30 days past
due and other than with respect to prohibitions on liens set forth in a mortgage
on a particular property (or set forth in the documents evidencing or securing
Secured Indebtedness so long as the incurrence of such Secured Indebtedness is
not otherwise prohibited by this Agreement)), revenues or assets, whether now
owned or hereafter acquired, or (ii) restricting the ability of the Borrower or
any other Loan Party to amend or modify this Agreement or any other Loan
Document, or (iii) restricting the ability of any other Loan Party or any other
Subsidiary (other than an Excluded Subsidiary) to make or pay dividends or
distributions to the Borrower.
     (i) Pro Forma Calculations. The Borrower shall comply with the financial
ratio set forth in Section 6.1(a) as of the date of each Credit Event. The
Borrower shall recalculate such financial ratio by adding an amount equal to the
Indebtedness associated

-59-

--------------------------------------------------------------------------------

 

with such Credit Event to the Total Liabilities reflected on the most recently
available financial statements, and adding thereto any Total Liabilities
incurred since the date of such financial statement and adding to Total Value
the value of such assets (determined at cost) acquired with any such Total
Liabilities to Total Value. The Borrower shall deliver an Officer’s Certificate,
signed by a Financial Officer of the Borrower, certifying that the pro forma
calculations as of the date of such Credit Event demonstrate the Borrower’s
compliance with the financial ratio set forth in Section 6.1(a).
     SECTION 6.2. Liens. The Borrower will not, and will not permit any other
Loan Party or any other Subsidiary to, create, incur, assume or permit to exist
any Lien on any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues (including accounts receivable) or rights
in respect of any thereof, except:
     (a) Permitted Encumbrances;
     (b) Liens with respect to Capital Leases of equipment entered into in the
ordinary course of business of the Borrower pursuant to which the aggregate
Indebtedness under such Capital Leases does not exceed $50,000 for any Project;
and
     (c) Liens securing Secured Indebtedness, the incurrence of which is not
prohibited by Article VI.
     SECTION 6.3. Fundamental Changes. (a) The Borrower will not, and will not
permit any other Loan Party or any other Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets, or all or substantially all of the stock of any of its Subsidiaries (in
each case, whether now owned or hereafter acquired), or liquidate or dissolve,
except (i) if at the time thereof and immediately after giving effect thereto no
Default shall have occurred and be continuing, any Person may merge into the
Borrower, any other Loan Party or any other Subsidiary in a transaction in which
the Borrower, another Loan Party or a Subsidiary is the surviving corporation,
(ii) any Subsidiary may merge with any other Subsidiary; provided, that if any
Subsidiary shall be merged with a Loan Party, the surviving Subsidiary shall be
the Loan Party or shall become a Guarantor under this Agreement, and (iii) the
sale of stock of a Subsidiary (other than a Guarantor), subject to the
requirements set forth in Section 5.2(b).
     (b) The Borrower will not, and will not permit any other Loan Party or any
other Subsidiary to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.
     SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrower will not, and will not permit any other Loan Party or any other
Subsidiary to, purchase, hold or acquire (including pursuant to any merger with
any Person that was not a wholly owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any

-60-

--------------------------------------------------------------------------------

 

investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:

  (a)   Permitted Investments;     (b)   investments in Real Property (except as
otherwise limited in this Section 6.4);     (c)   investments (including loans
and advances) in or to the Subsidiaries;     (d)   investments in Joint Ventures
which are not Subsidiaries; provided that the aggregate amount of investments in
(i) WP Carey Joint Ventures shall not exceed 35% of Total Value and (ii) other
Joint Ventures shall not exceed 5% of Total Value;     (e)   investments in Real
Property located outside the United States; provided that the aggregate amount
of investments in Real Estate located outside of the United States shall not
exceed 15% of Total Value;     (f)   investments in notes secured by mortgages
on any Real Property of any Person;     (g)   investments in Real Property under
construction; provided that the aggregate amount of investments in Real Property
under construction shall not exceed 5% of Total Value;     (h)   investments in
Real Property consisting of undeveloped land; provided that the aggregate amount
of investments in Real Property consisting of undeveloped land shall not exceed
5% of Total Value;     (i)   investments in Permitted REIT Investments; provided
that the aggregate amount of investments in Permitted REIT Investments shall not
exceed $25,000,000 (valued at historical cost);     (j)   investments in
Marketable Securities; provided that the aggregate amount of investments in
Marketable Securities shall not exceed $25,000,000;     (k)   investments in
securities of tenants under Leases, including any capital stock, warrants, stock
options or other equity securities of such tenants and any underlying security
thereof, acquired in connection with or arising out of a leasing transaction
with such tenant and any subsequent exercise of such warrant or stock options
and the ownership of such underlying security thereof;     (l)   Guarantees by
the Borrower of the Indebtedness or other obligations of a wholly-owned
Subsidiary or of a Joint Venture in which the Borrower owns, directly or
indirectly, a Joint Venture Holding, so long as the

-61-

--------------------------------------------------------------------------------

 

      Indebtedness under such Guarantees is not otherwise prohibited by Section
6.1(g)(iii) or any other provisions of this Article VI (excluding this
Section 6.4); and     (m)   Guarantees by the Borrower or a wholly-owned
Subsidiary of obligations in respect of Nonrecourse Carveouts of a wholly-owned
Subsidiary or of a Joint Venture in which the Borrower owns, directly or
indirectly, a Joint Venture Holding.

Notwithstanding the foregoing, the amount of the investments of the types set
forth in clauses (d)(ii) through (k) shall not exceed 18% of Total Value in the
aggregate. In no event shall the Borrower or any Subsidiary engage in
speculative development. Speculative development shall not include the
ownership, renovating, repair or rehabilitation of a Property previously leased
but which is being renovated, repaired, or rehabilitated to position the
Property for re-leasing following a tenant default, lease expiration or lease
termination.
     SECTION 6.5. Hedging Agreements. The Borrower will not, and will not permit
any other Loan Party or any other Subsidiary to, enter into any Hedging
Agreement, other than Hedging Agreements entered into in the ordinary course of
business to hedge or mitigate risks to which the Borrower, such other Loan Party
or such other Subsidiary is exposed in the conduct of its business or the
management of its liabilities.
     SECTION 6.6. ERISA. The Borrower will not, and will not permit any other
Loan Party or any other Subsidiary or ERISA Affiliates to:
     (a) engage in any prohibited transaction described in Sections 406 of ERISA
or 4975 of the Code for which a statutory or class exemption is not available or
a private exemption has not been previously obtained from the United States
Department of Labor, except to the extent engaging in such transaction would not
have a Material Adverse Effect;
     (b) permit to exist any accumulated funding deficiency (as defined in
Sections 302 of ERISA and 412 of the Code), with respect to any Plan, whether or
not waived;
     (c) fail to pay timely required contributions or annual installments due
with respect to any waived funding deficiency to any Plan;
     (d) terminate any Plan which would result in any liability of the Borrower
or any ERISA Affiliate under Title IV of ERISA;
     (e) fail to make any contribution or payment to any Multiemployer Plan
which the Borrower or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto,
except to the extent such failure would not have a Material Adverse Effect;
     (f) fail to pay any required installment or any other payment required
under Section 412 of the Code on or before the due date for such installment or
other payment; or

-62-

--------------------------------------------------------------------------------

 

     (g) amend a Plan resulting in an increase in current liability for the plan
year such that the Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Code.
     SECTION 6.7. Margin Regulations; Securities Laws. The Borrower will not,
and will not permit any other Loan Party or any other Subsidiary to, use all or
any portion of the proceeds of any credit extended under this Agreement to
purchase or carry Margin Stock.
     SECTION 6.8. Transactions with Affiliates. The Borrower will not, and will
not permit any other Loan Party or any other Subsidiary to, directly or
indirectly enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder or holders of more than five percent
(5%) of any class of equity securities of the Borrower, or with any Affiliate of
the Borrower which is not its Subsidiary, on terms that are determined by the
board of directors of the Borrower to be less favorable to the Borrower or any
of its Subsidiaries, as applicable, than those that might be obtained in an
arm’s length transaction at the time from Persons who are not such a holder or
Affiliate. Nothing contained in this Section 6.8 shall prohibit (a) increases to
compensation and benefits for officers and employees of the Borrower or any of
its Subsidiaries which are customary in the industry or consistent with the past
business practice of the Borrower or such Subsidiary, provided that no Default
has occurred and is continuing or would result therefrom; (b) payment of
customary partners’ indemnities; (c) performance of any obligations arising
under the Loan Documents; and (d) any Restricted Payment permitted by
Section 6.1(f).
ARTICLE VII.
Events of Default
     SECTION 7.1. Events of Default. If any of the following events (“Events of
Default”) shall occur:
     (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
     (b) the Borrower shall fail to pay any interest on any Loan or any fee or
any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable, or any other Loan Party shall fail to pay when due any obligation owing
by such Loan Party under any Loan Document to which it is a party, and such
failure shall continue unremedied for a period of three Business Days;
     (c) any representation or warranty made or deemed made by or on behalf of
the Borrower, any other Loan Party or any other Subsidiary in or in connection
with this Agreement or any other Loan Document or any amendment or modification
hereof or thereof or waiver hereunder or thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement

-63-

--------------------------------------------------------------------------------

 

or any other Loan Document or any amendment or modification hereof or thereof or
waiver hereunder or thereunder, shall prove to have been incorrect when made or
deemed made or furnished;
     (d) the Borrower, any other Loan Party or any other Subsidiary shall fail
to observe or perform any covenant, condition or agreement contained in
Article V or in Article VI or any covenant, condition or agreement in any Loan
Document that becomes effective upon an Event of Default;
     (e) the Borrower, any other Loan Party or any other Subsidiary shall fail
to observe or perform any covenant, condition or agreement contained in this
Agreement or any other Loan Document (other than those specified in clause (a),
(b) or (d) of this Article), and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent to the
Borrower (which notice will be given at the request of the Required Lenders);
     (f) the Borrower, any other Loan Party or any other Subsidiary shall fail
to make any payment (whether of principal or interest and regardless of amount)
in respect of any Material Indebtedness, when and as the same shall become due
and payable;
     (g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to Secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness unless prohibited by this Agreement;
     (h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower, any other Loan Party or any other Subsidiary or any of
their debts, or of a substantial part of any of their assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower, any other Loan
Party or any other Subsidiary or for a substantial part of any of their assets,
and, in any such case, such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the foregoing
shall be entered;
     (i) the Borrower, any other Loan Party or any other Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver,

-64-

--------------------------------------------------------------------------------

 

trustee, custodian, sequestrator, conservator or similar official for the
Borrower, any other Loan Party or any other Subsidiary or for a substantial part
of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
     (j) the Borrower, any other Loan Party or any other Subsidiary shall become
unable, admit in writing its inability or fail generally to pay its debts as
they become due;
     (k) one or more judgments for the payment of money in an aggregate amount
in excess of $10,000,000 (excluding judgments entered in respect of Nonrecourse
Indebtedness and judgments entered in respect of Indebtedness permitted under
clause (iv) of the second sentence of Section 6.1(g)) shall be rendered against
the Borrower, any other Loan Party or any other Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets of the
Borrower or any Subsidiary to enforce any such judgment;
     (l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Borrower or any
Subsidiary in an aggregate amount exceeding (i) $250,000 in any year or (ii)
$500,000 for all periods;
     (m) a Change in Control shall occur;
     (n) an event shall occur which has a Material Adverse Effect; or
     (o) the Borrower shall merge or liquidate with or into any other Person
and, as a result thereof and after giving effect thereto, (i) the Borrower is
not the surviving Person or (ii) such merger or liquidation would effect an
acquisition of or investment in any Person not otherwise permitted under the
terms of this Agreement;
then, and in every such event (other than an event described in clause (h) or
(i) of this Article), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of the Required Lenders
shall, by notice to the Borrower, take one or more of the following actions, at
the same or different times: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower, (iii) require cash collateral as
contemplated by Section 2.6(j), and (iv) enforce any rights and exercise any
rights and remedies available under any Loan Document or otherwise; and in the
case of any event described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then

-65-

--------------------------------------------------------------------------------

 

outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.
ARTICLE VIII.
The Administrative Agent
     SECTION 8.1. Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes the Administrative Agent to take such action as
contractual representative on such Lender’s behalf and to exercise such powers
under this Agreement and the other Loan Documents as are specifically delegated
to the Administrative Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. Not in limitation of the foregoing,
each Lender authorizes and directs the Administrative Agent to enter into the
Loan Documents for the benefit of the Lenders. Each Lender hereby agrees that,
except as otherwise set forth herein, any action taken by the Required Lenders
in accordance with the provisions of this Agreement or the other Loan Documents,
and the exercise by the Required Lenders of the powers set forth herein or
therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all of the Lenders. Nothing herein shall be
construed to deem the Administrative Agent a trustee or fiduciary for any Lender
or to impose on the Administrative Agent duties or obligations other than those
expressly provided for herein. Without limiting the generality of the foregoing,
the use of the terms “Administrative Agent”, “Agent”, “agent” and similar terms
in the Loan Documents with reference to the Administrative Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any Applicable Law. Instead, use of such terms is merely a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties. The
Administrative Agent will furnish to any Lender, upon the request of such
Lender, a copy (or, where appropriate, an original) of any document, instrument,
agreement, certificate or notice furnished to the Administrative Agent by the
Borrower, any other Loan Party or any other Affiliate of the Borrower, pursuant
to this Agreement or any other Loan Document not already delivered to such
Lender pursuant to the terms of this Agreement or any such other Loan Document.
As to any matters not expressly provided for by the Loan Documents (including,
without limitation, enforcement or collection of any of the Loans), the
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders (or all of the Lenders if explicitly required under any
other provision of this Agreement), and such instructions shall be binding upon
all Lenders; provided, however, that, notwithstanding anything in this Agreement
to the contrary, the Administrative Agent shall not be required to take any
action which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement or any other Loan Document or Applicable Law. Not in
limitation of the foregoing, the Administrative Agent shall exercise any right
or remedy it or the Lenders may have under any Loan Document upon the occurrence
of a Default unless the Required Lenders (or all of the Lenders if explicitly
required under this Agreement) have directed the Administrative Agent otherwise.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Administrative Agent as a result of the Administrative
Agent acting or refraining from acting under this Agreement or any of the other

-66-

--------------------------------------------------------------------------------

 

Loan Documents in accordance with the instructions of the Required Lenders, or
where applicable, all the Lenders.
     SECTION 8.2. Wells Fargo as Lender. Wells Fargo, as a Lender, shall have
the same rights and powers under this Agreement and any other Loan Document as
any other Lender and may exercise the same as though it were not the
Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated, include Wells Fargo in each case in its individual
capacity. Wells Fargo and its affiliates may each accept deposits from, maintain
deposits or credit balances for, invest in, lend money to, act as trustee under
indentures of, serve as financial advisor to, and generally engage in any kind
of business with, the Borrower, any other Loan Party or any other Affiliate
thereof as if it were any other bank and without any duty to account therefor to
the other Lenders. Further, the Administrative Agent and any Affiliate thereof
may accept fees and other consideration from the Borrower for services in
connection with this Agreement and otherwise without having to account for the
same to the Lenders. The Lenders acknowledge that, pursuant to such activities,
Wells Fargo or its Affiliates may receive information regarding the Borrower,
other Loan Parties, other Subsidiaries and other Affiliates of the Borrower
(including information that may be subject to confidentiality obligations in
favor of such Person) and acknowledge that the Administrative Agent shall be
under no obligation to provide such information to them.
     SECTION 8.3. Approvals of Lenders. All communications from the
Administrative Agent to any Lender requesting such Lender’s determination,
consent, approval or disapproval (a) shall be given in the form of a written
notice to such Lender, (b) shall be accompanied by a description of the matter
or issue as to which such determination, approval, consent or disapproval is
requested, or shall advise such Lender where information, if any, regarding such
matter or issue may be inspected, or shall otherwise describe the matter or
issue to be resolved, (c) shall include, if reasonably requested by such Lender
and to the extent not previously provided to such Lender, written materials and
a brief summary of all oral information provided to the Administrative Agent by
the Borrower relevant to the matter or issue to be resolved, and (d) shall
include the Administrative Agent’s recommended course of action or determination
in respect thereof. Unless a Lender shall give written notice to the
Administrative Agent that it specifically objects to the recommendation or
determination of the Administrative Agent (together with a reasonable written
explanation of the reasons behind such objection) within 10 Business Days (or
such lesser or greater period as may be specifically required under the express
terms of the Loan Documents) of receipt of such communication, such Lender shall
be deemed to have conclusively approved of or consented to such recommendation
or determination.
     SECTION 8.4. Notice of Defaults. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of a Default unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to this Agreement, describing with reasonable specificity such Default and
stating that such notice is a “notice of default”. If any Lender (excluding the
Lender which is also serving as the Administrative Agent) becomes aware of any
Default, it shall promptly send to the Administrative Agent such a “notice of
default”. Further, if the Administrative Agent receives such a “notice of
default,” the Administrative Agent shall give prompt notice thereof to the
Lenders.

-67-

--------------------------------------------------------------------------------

 

     SECTION 8.5. Administrative Agent’s Reliance, Etc. Notwithstanding any
other provisions of this Agreement or any other Loan Documents, neither the
Administrative Agent nor any of its directors, officers, agents, employees or
counsel shall be liable for any action taken or not taken by it under or in
connection with this Agreement or any other Loan Document, except for its or
their own gross negligence or willful misconduct in connection with its duties
expressly set forth herein or therein. Without limiting the generality of the
foregoing, the Administrative Agent: may consult with legal counsel (including
its own counsel or counsel for the Borrower or any other Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts. Neither the
Administrative Agent nor any of its directors, officers, agents, employees or
counsel: (a) makes any warranty or representation to any Lender or any other
Person or shall be responsible to any Lender or any other Person for any
statement, warranty or representation made or deemed made by the Borrower, any
other Loan Party or any other Person in or in connection with this Agreement or
any other Loan Document; (b) shall have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement or any other Loan Document or the satisfaction of any conditions
precedent under this Agreement or any other Loan Document on the part of the
Borrower or other Persons or inspect the property, books or records of the
Borrower or any other Person; (c) shall be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Loan Document, any other instrument or document
furnished pursuant thereto or any collateral covered thereby or the perfection
or priority of any Lien in favor of the Administrative Agent on behalf of the
Lenders in any such collateral; (d) shall have any liability in respect of any
recitals, statements, certifications, representations or warranties contained in
any of the Loan Documents or any other document, instrument, agreement,
certificate or statement delivered in connection therewith; or (e) shall incur
any liability under or in respect of this Agreement or any other Loan Document
by acting upon any notice, consent, certificate or other instrument or writing
(which may be by telephone, telecopy or electronic mail) believed by it to be
genuine and signed, sent or given by the proper party or parties. The
Administrative Agent may execute any of its duties under the Loan Documents by
or through agents, employees or attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects in the absence of gross negligence or willful misconduct.
     SECTION 8.6. Indemnification of Administrative Agent. Regardless of whether
the transactions contemplated by this Agreement and the other Loan Documents are
consummated, each Lender agrees to indemnify the Administrative Agent (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so) pro rata in accordance with such Lender’s respective
Applicable Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time be imposed
on, incurred by, or asserted against the Administrative Agent (in its capacity
as Administrative Agent but not as a “Lender”) in any way relating to or arising
out of the Loan Documents, any transaction contemplated thereby or any action
taken or omitted by the Administrative Agent under the Loan Documents
(collectively, “Indemnifiable Amounts”); provided, however, that no Lender shall
be liable for any portion of such Indemnifiable Amounts to the extent resulting
from the Administrative Agent’s gross negligence or willful misconduct as
determined by a court of competent jurisdiction in a final, non-appealable
judgment provided, however, that no action

-68-

--------------------------------------------------------------------------------

 

taken in accordance with the directions of the Required Lenders (or all of the
Lenders if expressly required under this Agreement) shall be deemed to
constitute gross negligence or willful misconduct for purposes of this Section.
Without limiting the generality of the foregoing, each Lender agrees to
reimburse the Administrative Agent (to the extent not reimbursed by the Borrower
and without limiting the obligation of the Borrower to do so) promptly upon
demand for its ratable share of any reasonable out-of-pocket expenses (including
the reasonable fees and expenses of the counsel to the Administrative Agent)
incurred by the Administrative Agent in connection with the preparation,
negotiation, execution, administration, or enforcement (whether through
negotiations, legal proceedings, or otherwise) of, or legal advice with respect
to the rights or responsibilities of the parties under, the Loan Documents, any
suit or action brought by the Administrative Agent to enforce the terms of the
Loan Documents and/or collect any Loans, any “lender liability” suit or claim
brought against the Administrative Agent and/or the Lenders, and any claim or
suit brought against the Administrative Agent and/or the Lenders arising under
any Environmental Laws; provided, however, that no Lender shall be liable for
any portion of such expenses to the extent resulting from the Administrative
Agent’s gross negligence or willful misconduct as determined by a court of
competent jurisdiction in a final, non-appealable judgment; provided further,
however, that no action taken in accordance with the directions of the Required
Lenders (or all of the Lenders if expressly required under this Agreement) shall
be deemed to constitute gross negligence or willful misconduct for purposes of
this Section. Such out-of-pocket expenses (including counsel fees) shall be
advanced by the Lenders on the request of the Administrative Agent
notwithstanding any claim or assertion that the Administrative Agent is not
entitled to indemnification hereunder upon receipt of an undertaking by the
Administrative Agent that the Administrative Agent will reimburse the Lenders if
it is actually and finally determined by a court of competent jurisdiction that
the Administrative Agent is not so entitled to indemnification. The agreements
in this Section shall survive the payment of the Loans and all other amounts
payable hereunder or under the other Loan Documents and the termination of this
Agreement. If the Borrower shall reimburse the Administrative Agent for any
Indemnifiable Amount following payment by any Lender to the Administrative Agent
in respect of such Indemnifiable Amount pursuant to this Section, the
Administrative Agent shall share such reimbursement on a ratable basis with each
Lender making any such payment.
     SECTION 8.7. Lender Credit Decision, Etc. Each Lender expressly
acknowledges and agrees that neither the Administrative Agent nor any of its
officers, directors, employees, agents, counsel, attorneys-in-fact or other
affiliates has made any representations or warranties to such Lender and that no
act by the Administrative Agent hereafter taken, including any review of the
affairs of the Borrower, any other Loan Party or any other Subsidiary or
Affiliate of the Borrower, shall be deemed to constitute any such representation
or warranty by the Administrative Agent to any Lender. Each Lender acknowledges
that it has made its own credit and legal analysis and decision to enter into
this Agreement and the transactions contemplated hereby, independently and
without reliance upon the Administrative Agent, any other Lender or counsel to
the Administrative Agent, or any of their respective officers, directors,
employees, agents or counsel, and based on the financial statements of the
Borrower, the other Loan Parties, the other Subsidiaries and other Affiliates of
the Borrower, and inquiries of such Persons, its independent due diligence of
the business and affairs of the Borrower, the other Loan Parties, the other
Subsidiaries and other Persons, its review of the Loan Documents, the legal
opinions required to be delivered to it hereunder, the advice of its own counsel
and such other documents and information as it has deemed appropriate. Each
Lender also acknowledges that it will,

-69-

--------------------------------------------------------------------------------

 

independently and without reliance upon the Administrative Agent, any other
Lender or counsel to the Administrative Agent or any of their respective
officers, directors, employees and agents, and based on such review, advice,
documents and information as it shall deem appropriate at the time, continue to
make its own decisions in taking or not taking action under the Loan Documents.
The Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any other Loan Party of the Loan
Documents or any other document referred to or provided for therein or to
inspect the properties or books of, or make any other investigation of, the
Borrower, any other Loan Party or any other Subsidiary. Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders by the Administrative Agent under this Agreement or any of the
other Loan Documents, the Administrative Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrower, any other Loan Party or any other Affiliate
thereof which may come into possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or other Affiliates.
Each Lender acknowledges that the Administrative Agent’s legal counsel in
connection with the transactions contemplated by this Agreement is only acting
as counsel to the Administrative Agent and is not acting as counsel to such
Lender.
     SECTION 8.8. Successor Administrative Agent. The Administrative Agent may
resign at any time as Administrative Agent under the Loan Documents by giving
written notice thereof to the Lenders and the Borrower. The Administrative Agent
may be removed for cause in the case of its gross negligence or willful
misconduct as Administrative Agent under the Loan Documents by all Lenders
(other than the Lender then acting as Administrative Agent) and the Borrower
upon 30 day’s prior notice. Upon any such resignation or removal, the Required
Lenders (which, in the case of the removal of the Administrative Agent as
provided in the immediately preceding sentence, shall be determined without
regard to the Commitment of the Lender than acting as Administrative Agent)
shall have the right to appoint a successor Administrative Agent which
appointment shall, provided no Default exists, be subject to the Borrower’s
approval, which approval shall not be unreasonably withheld or delayed. If no
successor Administrative Agent shall have been so appointed in accordance with
the immediately preceding sentence, and shall have accepted such appointment,
within 30 days after the current Administrative Agent’s giving of notice of
resignation or the Lenders’ removal of the current Administrative Agent, then
the current Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent, which shall be a Lender, if any Lender shall be
willing to serve, and otherwise shall be an Eligible Assignee. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the current Administrative Agent, and the current Administrative Agent shall
be discharged from its duties and obligations under the Loan Documents. After
any Administrative Agent’s resignation or removal hereunder as Administrative
Agent, the provisions of this Article VIII. shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under the Loan Documents. Notwithstanding anything
contained herein to the contrary, the Administrative Agent may assign its rights
and duties under the Loan Documents to any of its affiliates by giving the
Borrower and each Lender prior written notice.

-70-

--------------------------------------------------------------------------------

 

     SECTION 8.9. Titled Agents. Each of the Arranger, the Syndication Agents
and the Documentation Agents, (each a “Titled Agent”) in each such respective
capacity, assumes no responsibility or obligation hereunder, including, without
limitation, for servicing, enforcement or collection of any of the Loans, nor
any duties as an agent hereunder for the Lenders. The titles given to the Titled
Agents are solely honorific and imply no fiduciary responsibility on the part of
the Titled Agents to the Administrative Agent, any Lender, the Borrower or any
other Loan Party and the use of such titles does not impose on the Titled Agents
any duties or obligations greater than those of any other Lender or entitle the
Titled Agents to any rights other than those to which any other Lender is
entitled.
ARTICLE IX.
Miscellaneous
     SECTION 9.1. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be, in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
     (a) if to the Borrower, to it at c/o W.P. Carey & Co. LLC, 50 Rockefeller
Plaza, New York, New York 10020, Attention of Mark DeCesaris, Chief Financial
Officer (Telecopy No. 212-492-8922);
     (b) if to the Administrative Agent, to Wells Fargo Bank, National
Association, as Administrative Agent, 40 West 57th Street, New York, New York
10019, Attention of Jan LaChapelle and Loan Administration (Telecopy
No. 212-581-0979), and to Wells Fargo Bank National Association, as
Administrative Agent, 2120 East Park Place, Suite 100, El Segundo, California
90245 (Telecopy No. 310-615-1014), Attention of Disbursement Administrator, with
copies to Wells Fargo Bank, National Association, as Administrative Agent, Real
Estate Group, 420 Montgomery Street, 6th Floor, San Francisco, California 94111,
Attention of Chief Credit Officer – Real Estate Group (Telecopy
No. 415-781-8324);
     (c) if to the Issuing Bank, to Wells Fargo Bank, National Association, as
Issuing Bank, 40 West 57th Street, New York, New York 10019, Attention of Jan
LaChapelle and Loan Administration, and to Wells Fargo Bank National
Association, as Issuing Bank, 2120 East Park Place, Suite 100, El Segundo,
California 90245, Attention of Disbursement Administrator, with copies to Wells
Fargo Bank, National Association, as Issuing Bank, Real Estate Group, 420
Montgomery Street, 6th Floor, San Francisco, California 94111, Attention of
Chief Credit Officer – Real Estate Group ; and
     (d) if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Details Form.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other

-71-

--------------------------------------------------------------------------------

 

communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt.
     SECTION 9.2. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Bank and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower or any Loan Party therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
     (b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the Required
Lenders or by the Borrower and the Administrative Agent with the consent of the
Required Lenders; provided that no such agreement shall (i) change the
Commitment of any Lender without the written consent of such Lender (other than
a reduction of Commitments under Section 2.9), (ii) reduce the principal amount
of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, or permit the
expiration date of any Letter of Credit to be after the date specified in
Section 2.6(c)(ii), without the written consent of each Lender affected thereby
(other than extensions of the Maturity Date in accordance with Section 2.5),
(iv) change Section 2.18(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each
Lender, (v) change any of the provisions of this Section or the definition of
“Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender, or (vi) except as permitted pursuant to Section 5.15(b),
release any Guarantor without the consent of each Lender; provided further that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent or the Issuing Bank hereunder without, in addition,
the prior written consent of the Administrative Agent or the Issuing Bank, as
the case may be; provided, further, Schedules 3.2 and 4.1(f) may be amended by
the Borrower without the consent of the Required Lenders solely to update the
information contained therein.
     SECTION 9.3. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative

-72-

--------------------------------------------------------------------------------

 

Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with this Agreement, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
     (b) The Borrower shall indemnify the Administrative Agent, the Issuing Bank
and each Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or Letter of Credit or the use of the proceeds therefrom (including any refusal
by the Issuing Bank to honor a demand for payment under a Letter of Credit if
the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property owned, leased or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or
(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses resulted from
the gross negligence or willful misconduct of such Indemnitee.
     (c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent or the Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent or the Issuing Bank in its capacity as such.
     (d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

-73-

--------------------------------------------------------------------------------

 

     (e) All amounts due under this Section shall be payable promptly after
written demand therefor.
     SECTION 9.4. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that a Loan Party may
not assign or otherwise transfer any of its rights or obligations hereunder or
under any other Loan Document without the prior written consent of each Lender
(and any attempted assignment or transfer by the Borrower without such consent
shall be null and void). Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
     (b) Any Lender may assign to one or more Eligible Assignees (each an
“Assignee”) all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that (i) except in the case of an assignment to an existing
Lender, the Borrower (so long as no Event of Default has occurred and is
continuing), the Administrative Agent and the Issuing Bank must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld), (ii) except in the case of an assignment to an existing Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment,
the amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $10,000,000 unless each of the Borrower (so long as no Event of Default has
occurred and is continuing) and the Administrative Agent otherwise consent and
after giving effect to such partial assignment, the assigning Lender shall have
retained a Commitment in an amount equal to at least $10,000,000, (iii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender’s rights and obligations under this Agreement, (iv) the
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Acceptance, and the Assignee shall pay the Administrative
Agent a processing and recordation fee of $4,500, and (v) the Assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Details Form. Subject to acceptance and recording thereof
pursuant to paragraph (d) of this Section, from and after the effective date
specified in each Assignment and Acceptance the Assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement arising from and after the date of such assignment (and, in
the case of an Assignment and Acceptance covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.15,
2.16, 2.17 and 9.3). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section. If the consent of the

-74-

--------------------------------------------------------------------------------

 

Borrower is required pursuant to this Section 9.4, and the Borrower does not
respond to the Administrative Agent’s request for consent within five Business
Days of such request, such consent shall be deemed given. Upon consummation of
any assignment pursuant to this subsection (b), the assigning Lender, the
Administrative Agent and the Borrower shall arrange to issue new Notes to the
assigning Lender and Assignee as appropriate.
     (c) The Administrative Agent shall maintain at one of its offices a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, and the LC Exposure of, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
     (d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an Assignee, the Assignee’s completed Administrative
Details Form (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
     (e) Any Lender may, without the consent of or notice to the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement and the other Loan Documents
(including all or a portion of its Commitment and the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.2(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.8 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(c) as though it were a Foreign Lender.

-75-

--------------------------------------------------------------------------------

 

     (f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as
though it were a Foreign Lender.
     (g) Any Lender may at any time pledge or assign, or grant a security
interest in, all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment or grant to
secure obligations to a Federal Reserve Bank, and this Section shall not apply
to any such pledge or assignment or grant of a security interest; provided that
no such pledge or assignment or grant of a security interest shall release a
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee or grantee for such Lender as a party hereto.
     SECTION 9.5. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.3 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
     SECTION 9.6. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof. This Agreement shall become effective when it shall have been executed
by the Administrative Agent and when the Administrative Agent shall have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
in accordance with Section 9.4. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.

-76-

--------------------------------------------------------------------------------

 

     SECTION 9.7. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
     SECTION 9.8. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, but
in the case of a Lender or a Participant subject to receipt of the prior written
consent of the Administrative Agent exercised in its sole discretion, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower against
any of and all the obligations of the Borrower now or hereafter existing under
this Agreement held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement and although such obligations
may be unmatured. The rights of each Lender under this Section are in addition
to other rights and remedies (including other rights of setoff) which such
Lender may have.
     SECTION 9.9. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.
     (b) The Borrower hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Administrative Agent, the Issuing Bank or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement against the Borrower
or its properties in the courts of any jurisdiction.
     (c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

-77-

--------------------------------------------------------------------------------

 

     (d) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.1. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
     SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
     SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
     SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested or required by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or any
other Loan Document or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivatives transaction relating to the Borrower and
its obligations, (g) with the consent of the Borrower, (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, the Issuing
Bank or any Lender on a non-confidential basis from a source other than the
Borrower, or (i) to the extent provided in Section 9.16. For the purposes of
this Section, “Information” means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Administrative Agent, the Issuing Bank or any Lender on a
non-confidential basis prior to disclosure by the Borrower. Any Person required
to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to

-78-

--------------------------------------------------------------------------------

 

maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
     SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
     SECTION 9.14. [Reserved]
     SECTION 9.15. Electronic Document Delivery.
     Documents required to be delivered pursuant to the Loan Documents shall be
delivered by electronic communication and delivery, including, the Internet,
e-mail or intranet websites to which the Administrative Agent and each Lender
have access (including a commercial, third-party website such as www.Edgar.com
<http://www.Edgar.com> or a website sponsored or hosted by the Administrative
Agent or the Borrower) provided that (A) the foregoing shall not apply to
notices to any Lender pursuant to Article II and (B) a Lender has not notified
the Administrative Agent or the Borrower that it cannot or does not want to
receive electronic communications. The Administrative Agent or the Borrower may,
in its discretion, agree to accept notices and other communications to it
hereunder by electronic delivery pursuant to procedures approved by it for all
or particular notices or communications. Documents or notices delivered
electronically shall be deemed to have been delivered twenty-four (24) hours
after the date and time on which the Administrative Agent or the Borrower posts
such documents or the documents become available on a commercial website and the
Administrative Agent or the Borrower notifies each Lender of said posting and
provides a link thereto provided if such notice or other communication is not
sent or posted during the normal business hours of the recipient, said posting
date and time shall be deemed to have commenced as of 9:00 a.m., New York time,
on the opening of business on the next business day for the recipient.
Notwithstanding anything contained herein, in every instance the Borrower shall
be required to provide paper copies of the certificate required by
Sections 5.1(a)(ii) and (b)(ii) to the Administrative Agent and shall deliver
paper copies of any documents to the Administrative Agent or to any Lender that
requests such paper copies until a written request to cease delivering paper
copies is given by the Administrative Agent or such Lender. Except for the
certificates required by Sections 5.1(a)(ii) and (b)(ii), the Administrative
Agent shall have no obligation to request the delivery of or to maintain paper
copies of the documents delivered electronically, and in any event shall have no
responsibility to monitor compliance by the Borrower with any such request for
delivery. Each

-79-

--------------------------------------------------------------------------------

 

Lender shall be solely responsible for requesting delivery to it of paper copies
and maintaining its paper or electronic documents.
     SECTION 9.16. USA Patriot Act. The USA Patriot Act of 2001 (Public Law
107-56) and federal regulations issued with respect thereto require all
financial institutions to obtain, verify and record certain information that
identifies individuals or business entities which open an “account” with such
financial institution. Consequently, the Administrative Agent for all Lenders
hereunder may from time to time request, and the Borrower shall provide to the
Administrative Agent and the Lenders, the Borrower’s name, address, tax
identification number and/or such other identification information as shall be
necessary for Administrative Agent and the Lenders to comply with federal law.
An “account” for this purpose may include, without limitation, a deposit
account, cash management service, a transaction or asset account, a credit
account, a loan or other extension of credit, and/or other financial services
product.
[Remainder of Page Intentionally Left Blank]

-80-

--------------------------------------------------------------------------------

 

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

                  BORROWER:    
 
                CORPORATE PROPERTY ASSOCIATES 14    
 
      INCORPORATED    
 
                By:   /s/ Mark J. DeCesaris
 
           
 
      Name: Mark J. DeCesaris    
 
      Title: Managing Director    

[Signatures Continued on Next Page]
Signature Page to Credit Agreement

 

--------------------------------------------------------------------------------

 

                      WELLS FARGO BANK, NATIONAL         ASSOCIATION,
individually, as Issuing         Bank and as Administrative Agent    
 
                    By:   /s/ Jan LaChapelle                  
 
      Name:   Jan LaChapelle    
 
      Title:   Relationship Manager    

[Signatures Continued on Next Page]
Signature Page to Credit Agreement

 

--------------------------------------------------------------------------------

 

                      PNC BANK, NATIONAL         ASSOCIATION    
 
                    By:   /s/ Brian P. Kelly                  
 
      Name:   Brian P. Kelly    
 
      Title:   Vice President    

[Signatures Continued on Next Page]
Signature Page to Credit Agreement

 

--------------------------------------------------------------------------------

 

                      CITIZENS BANK OF RHODE         ISLAND    
 
                    By:   /s/ Craig E. Schermerhorn                  
 
      Name:   Craig E. Schermerhorn    
 
      Title:   Senior Vice President    

[Signatures Continued on Next Page]
Signature Page to Credit Agreement

 

--------------------------------------------------------------------------------

 

                  THE BANK OF NEW YORK    
 
           
 
  By:   /s/ David Applebaum
 
Name: David Applebaum
Title: Vice President    

[Signatures Continued on Next Page]
Signature Page to Credit Agreement

 

--------------------------------------------------------------------------------

 

                      EUROHYPO AG, NEW YORK
BRANCH    
 
                    By:   /s/ Alfred Koch
                 
 
      Name:   Alfred Koch
 
   
 
      Title:   Managing Director    
 
         
 
   
 
                    By:   /s/ Jeff Page
                 
 
      Name:   Jeff Page
 
   
 
      Title:   Executive Director
 
   

[Signatures Continued on Next Page]
Signature Page to Credit Agreement

 

--------------------------------------------------------------------------------

 

                      KBC BANK NV    
 
                    By:   /s/ Francis X. Payne
                 
 
      Name:   FRANCIS X. PAYNE
 
   
 
      Title:   Vice President
 
   
 
                    By:   /s/ Robart Snauffer
                 
 
      Name:   Robart Snauffer
 
   
 
      Title:   First Vice President
 
   

Signature Page to Credit Agreement

 

--------------------------------------------------------------------------------

 

Schedule 1
Commitments

          Lender   Commitment    
Wells Fargo Bank, National Association
  $ 40,000,000  
PNC Bank, National Association
  $ 25,000,000  
Citizens Bank of Rhode Island
  $ 25,000,000  
The Bank of New York
  $ 22,500,000  
Eurohypo AG, New York Branch
  $ 22,500,000  
KBC Bank NV
  $ 15,000,000  

--------------------------------------------------------------------------------

 

SCHEDULE 1.1(a)
CPA REITS

1.   Corporate Property Associates 14 Incorporated   2.   Corporate Property
Associates 15 Incorporated   3.   Corporate Property Associates 16 Incorporated

 

--------------------------------------------------------------------------------

 

SCHEDULE 1.1(b)
LOAN PARTIES
Corporate Property Associates 14 Incorporated
Best (CA) QRS 14-4, Inc.
Truck (IN) QRS 14-3, Inc.
DELMO (PA) QRS 12-10
NUTRA (TX) QRS 12-39, Inc.
META (CA) QRS 14-6, Inc.
Film (FL) QRS 14-44, Inc.
Projector (FL) QRS 14-45, Inc.
Tel (VA) QRS 12-15, Inc.
Bandwidth (UT) QRS 14-58, Inc.

 

--------------------------------------------------------------------------------

 

Schedule 3.2
Ownership Structure
(Chart)

 

--------------------------------------------------------------------------------

 

SCHEDULE 3.3
CONSENTS
None.

 

--------------------------------------------------------------------------------

 

Portfolio Overview Schedule 3.4
Pro forma Mortgage Debt Summary
CPA: 14 (Pro-Rata)

                                                      Interest   Fixed/      
9-30-06     Balloon   Maturity Tenant/Lease Guarantor   Rate   Variable  
Original Balance   Balance   Payment   Date  
Earle M. Jorgensen Company
    7.82 %   Fixed   $ 3,800,000     $ 3,615,883     $ 3,556,956     Feb-08
Gibson Guitar Corporation (82.5%)
    7.57 %   Fixed     1,712,322       1,525,461       1,455,135     May-08
Pacific Logistics (Texas Freezer)
    5.15 %   Fixed     4,500,000       3,749,539       3,504,001     Jul-08
Perry Graphic Communications, Inc.
    7.01 %   Fixed     11,000,000       9,350,390       8,824,493     Aug-08
The Bon-Ton Stores, Inc.
    6.50 %   Fixed     6,900,000       5,181,372       4,530,499     Dec-08
Advanced Micro Devices (66.66%)
    7.78 %   Fixed     45,500,000       41,571,182       39,893,995     Jan-09
Gensia (50%)
    8.13 %   Fixed     6,500,000       1,616,412       —     Jan-09
Brashear, L.P.
    7.50 %   Fixed     4,225,000       3,698,780       3,442,126     Apr-09
Compucom Systems, Inc. (66.66%)
    7.22 %   Fixed     15,333,333       13,342,640       12,351,558     May-09
Production Resource Group (NV)
    8.31 %   Fixed     5,475,000       4,898,607       4,566,197     Jul-09
Intesys Technologies, Inc.
    8.08 %   Fixed     13,130,000       12,161,461       11,583,578     Aug-09
Moonlight Molds (fka Scott)
    8.21 %   Fixed     3,000,000       2,783,526       2,653,543     Aug-09
McLane Foodservice, Inc. (Ameriserve)
    8.51 %   Fixed     32,000,000       23,466,322       24,885,885     Sep-09
Galyan’s Trading Company (2),(3)
    8.79 %   Fixed     14,748,889       13,870,378       13,258,846     Sep-09
Galyan’s Trading (Fairfax & Lombard) (2)
    8.75 %   Fixed     16,588,659       15,593,642       14,902,267     Sep-09
Atrium Companies (TX)
    8.70 %   Fixed     13,123,000       12,561,533       12,093,827     Jan-10
Production Resource Group (CA)
    7.50 %   Fixed     2,176,623       2,038,234       1,882,416     Mar-10
Amerix Corporation
    8.66 %   Fixed     14,500,000       13,249,559       12,237,419     Apr-10
RockIsland Corporation (West Union)
    8.31 %   Fixed     3,300,000       3,172,187       3,010,388     Jul-10
ShopRite Supermarkets, Inc. (45%)
    7.50 %   Fixed     4,900,500       4,588,928       4,198,845     Jul-10
Randall International
    7.50 %   Fixed     5,549,909       5,197,049       4,732,615     Sep-10
Amtech Systems Corporation
    8.09 %   Fixed     3,500,000       3,321,219       3,140,889     Oct-10
Garden Ridge Corporation
    7.50 %   Fixed     5,510,978       5,160,592       4,688,062     Oct-10
Institutional Jobbers Company
    8.60 %   Fixed     13,416,187       12,259,075       11,026,809     Nov-10
Barjan Products
    7.50 %   Fixed     7,151,053       6,855,044       6,446,194     Nov-10
Buffets Holdings, Inc.
    8.11 %   Fixed     11,785,000       9,129,467       8,151,860     Dec-10
Advance Paradigm, Inc. (PCS)
    8.00 %   Fixed     24,700,000       22,665,785       20,399,141     Jan-11
Federal Express Corporation (60%)
    7.50 %   Fixed     27,000,000       25,308,579       23,476,705     Jan-11

 

--------------------------------------------------------------------------------

 

                                                      Interest   Fixed/      
9-30-06     Balloon   Maturity Tenant/Lease Guarantor   Rate   Variable  
Original Balance   Balance   Payment   Date  
Towne Holdings, Inc.
    7.70 %   Fixed     4,800,000       4,545,308       4,265,830     Jan-11
Westell
    7.40 %   Fixed     12,000,000       10,235,441       8,325,084     Jan-11
McCoy, Inc. (90%)
    8.25 %   Fixed     3,780,000       31450,611       3,080,695     Jan-11
Upper Deck Company, The (50%)
    8.43 %   Fixed     7,500,000       6,000,646       4,882,776     Feb-11
Bon-Ton Department Stores, Inc., The
    7.50 %   Fixed     3,241,555       3,232,040       3,021,286     Mar-11
Nexpak Corporation (GA)
    7.33 %   Fixed     7,900,000       7,473,481       6,959,433     Apr-11
24 Hour Fitness (Houston)
    7.50 %   Fixed     4,330,319       4,054,999       3,628,989     Apr-11
Celadon
    7.50 %   Fixed     2,100,683       1,967,122       1,755,939     May-11
Nexpak B. V. (Helmond, NT)
    6.41 %   Fixed     4,813,400       5,927,666       4,956,869     Jun-11
Lennar Corporation (U. S. Home Corporation)
    7.42 %   Fixed     5,000,000       4,750,508       4,416,000     Jul-11
Metaldyne Company LLC
    7.48 %   Fixed     16,700,000       15,877,554       14,766,439     Jul-11
Special Devices, Inc.
    7.87 %   Fixed     17,500,000       16,710,790       15;627,595     Jul-11
Gibson Guitar Corporation (82.5%)
    7.49 %   Fixed     8,250,000       7,851,135       7,296,470     Aug-11
Collins & Aikman Corporation
    7.35 %   Fixed     17,000,000       15,722,179       13,778,139     Oct-11
DCI Holdings, Inc (New Creative Enterprises)
    7.35 %   Fixed     10,000,000       9,520,640       8,814,694     Oct-11
Del Monte Corporation (50%)
    7.35 %   Fixed     6,062,500       5,606,737       4,927,386     Oct-11
Jen-Coat
    7.30 %   Fixed     7,150,000       6,803,511       6,294,530     Oct-11
Applied Power, Inc.
    7.10 %   Fixed     17,500,000       16,131,974       14,076,622     Nov-11
24 Hour Fitness Worldwide (UT)
    7.50 %   Fixed     3,293,647       3,084,239       2,709,656     Nov-11
Atrium Companies (NC, PA)
    7.25 %   Fixed     14,000,000       13,341,199       12,308,814     Dec-11
PETsMART, Inc. (70%)
    7.70 %   Fixed     30,187,500       28,901,573       26,840,151     Dec-11
Orbseal
    7.25 %   Fixed     6,175,000       5,884,421       5,429,066     Dec-11
Sunland Distribution
    7.50 %   Fixed     5,426,070       5,081,083       4,451,784     Dec-11
Perkin Elmer Inc. 1
    6.09 %   Fixed     18,148,874       21,740,790       15,712,984     Dec-11
Lincoln Technical Institute, Inc.
    7.58 %   Fixed     6,300;000       5,832,850       5,063,675     Jan-12
Gerber Scientific
    7.54 %   Fixed     12,500,000       11,957,463       11,066,232     Jan-12
Nortel Networks Limited
    7.35 %   Fixed     30,000,000       28,642,452       26,433,481     Jan-12
Best Buy (37%)
    7.49 %   Fixed     10,545,000       9,815,020       8,580,131     Feb-12
Sandwich Bancorp/Compass Bank
    7.50 %   Fixed     1,626.518       1,523,104       1,327,084     Feb-12
24 Hour Fitness Worldwide (MO)
    7.53 %   Fixed     3,800,000       3,643,740       3,367,245     Mar-12
PW Eagle, Inc.
    7.60 %   Fixed     8,200,000       7,868,154       7,278,802     Mar-12
Stellex Paragon / Stellex Monitor
    7.50 %   Fixed     10,939,074       10,243,572       8,900,190     Mar-12
Childtime Childcare, Inc.
    7.50 %   Fixed     6,871,863       6,434,952       5,591,046     Mar-12
Heainer Tire Group
    8.09 %   Fixed     8,750,000       8,439,901       7,854,353     Apr-12
Newpark Resources, Inc.
    7.50 %   Fixed     2,530,572       2,369,680       2,053,078     Apr-12

 

--------------------------------------------------------------------------------

 

                                                      Interest   Fixed/      
9-30-06     Balloon   Maturity Tenant/Lease Guarantor   Rate   Variable  
Original Balance   Balance   Payment   Date  
R.J. Tower Corporation (Tower Automotive)
    7.89 %   Fixed     19,878,130       19,173,913       17,803,805     May-12
Rave Reviews
    7.50 %   Fixed     4,399,119       4,119,425       3,558,846     May-12
Meridian Automotive Systems
    7.50 %   Fixed     7,316,265       6,851,100       5,901,714     Jun-12
Katun Corporation (IA, MN)
    7.15 %   Fixed     19,000,000       18,236,949       16,664,292     Aug-12
Sitgan Containers Corporation
    7.50 %   Fixed     7,236,811       6,776,698       5,803,527     Aug-12
International Garden Products, Inc.
    7.50 %   Fixed     6,660,000       6,384,317       5,790,920     Sep-12
Vermont Teddy Bear Co., Inc.
    6.75 %   Fixed     2,909,940       2,402,810       1,348,051     Sep-12
Career Education Corporation (Allentown Bus. School) (4)
    6.29 %   Variable     12,500,000       11,503,395       10,049,929    
Oct-12
TruServ Corporation (50%)
    5.83 %   Fixed     13,675,708       13,033,167       11,561,872     Jan-13
TruServ Corporation (50%)
    5.83 %   Fixed     10,553,156       10,357,071       9,187,877     Jan-13
TruServ Corporation (50%)
    5.83 %   Fixed     13,775,024       13,142,558       11,644,637     Feb-13
U-Haul International/Mercury Partners, LP (U-Haul) (11.54%)
    6.45 %   Fixed     21,118,200       20,313,855       16,652,089     May-14
CheckFree Corporation (50°’0)
    6.18 %   Fixed     15,000,000       15,000,000       13,367,848     Jun-16
Consolidated Theater
    6.20 %   Fixed     12,000,000       11,970,475       9,3881039     Jul-16
Builder’s FirstSource, Inc. (GA, O1-I, VA) (60%)
    7.57 %   Fixed     4,560,000       4,248,360       2,968,790     Mar-17
Carrefour France SAS (1) (2) (6)
    6.28 %   Fixed     84,655,360       94,787,173       39,728,521     Apr-17
BLP Group PLC (5) lp Group PLC (5)
    6.48 %   Variable     5,548,000       6,649,603       4,078,523     Jan-21
Katun Corporation (Gorinchem, NT) (1)
    6.50 %   Fixed     5,486,000       6,510,213       3,024,185     Jun-22
Universal Technical Institute, Inc. (NASCAR)
    6.23 %   Fixed     6,700,000       6,126,054       —     Aug-23
Waddington North America (expansion)
    8.01 %   Fixed     11,125,000       10,314,777       927,518     Jul-26
Builders FirstSource, Inc. (NQ
    6.21 %   Fixed     6,500,000       6,043,944       305,863     Oct-27
Total Limited Recourse Mortgage Debt.
                  $ 946,545,740     $ 896,545,237     $ 740,493,645-            
                   

 

(1)   Current balance based on an exchange rate of 1.2688 USD/EUR at
September 30, 2006
  (2)   Interest rate reflects weighted average for tranches with common,
maturity date   (3)   Dick’s Sporting Goods announced its completed acquisition
of Galyan’s Trading Co. on July 29, 2004   (4)   Indicated balloon payment is an
estimate
  (5)   Current balance based on an exchange rate of 1.8726 USD/GBP at
September 30, 2006   (6)   Represents original mortgage and expansion

 

--------------------------------------------------------------------------------

 

SCHEDULE 3.6
DISCLOSED MATTERS
None.

 

--------------------------------------------------------------------------------

 

Schedule 4.1(f)
Transactions not in the Ordinary Clause

1.   The Company paid a dividend of $0.1919 per share, for a. total of
approximately $13,106,805, on January 15, 2006.

2.   The Company paid a dividend of $0.1924 per share, for a total of
approximately $13,167,117, on April 15, 2006.

3.   The Company paid a dividend of $0.1929 per share and a special dividend of
$0.45 per share, for a total of approximately $44,054,373; on July 15, 2006.

4.   The Company paid a dividend of $0.1929 per share, for a total of
approximately $13,304,127, on October 15, 2006.

5.   The Company will pay a special dividend of $0.04 per share, for a total of
approximately $2,759,000, on or about December 15, 2006.

J-9

--------------------------------------------------------------------------------

 

Exhibit C
FORM OF GUARANTY*
     THIS GUARANTY dated as of                      ___, 2006 executed and
delivered by each of the undersigned and the other Persons from time to time
party hereto pursuant to the execution and delivery of an Accession Agreement in
the form of Annex I hereto (all of the undersigned, together with such other
Persons each a “Guarantor” and collectively, the “Guarantors”) in favor of
(a) WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as Administrative
Agent (the “Administrative Agent”) for the Lenders under that certain Credit
Agreement dated as of November 30, 2006 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), by and among
CORPORATE PROPERTY ASSOCIATES 14 INCORPORATED (the “Borrower”), the financial
institutions party thereto (the “Lenders”), the Administrative Agent, and the
other parties thereto, and (b) the LENDERS.
     WHEREAS, pursuant to the Credit Agreement, the Administrative Agent and the
Lenders have agreed to make available to the Borrower certain financial
accommodations on the terms and conditions set forth in the Credit Agreement;
     WHEREAS, each Guarantor is owned or controlled by the Borrower, or is
otherwise an Affiliate of the Borrower;
     WHEREAS, the Borrower, each Guarantor and the other Subsidiaries, though
separate legal entities, are mutually dependent on each other in the conduct of
their respective businesses as an integrated operation and have determined it to
be in their mutual best interests to obtain financing from the Agent and the
Lenders through their collective efforts;
     WHEREAS, each Guarantor acknowledges that it will receive direct and
indirect benefits from the Administrative Agent and the Lenders making such
financial accommodations available to the Borrower under the Credit Agreement
and, accordingly, each Guarantor is willing to guarantee the Borrower’s
obligations to the Administrative Agent and the Lenders on the terms and
conditions contained herein; and
     WHEREAS, each Guarantor’s execution and delivery of this Guaranty is a
condition to the Administrative Agent and the Lenders making, and continuing to
make, such financial accommodations to the Borrower.
 

*   As of the date of filing of this 10-K, a guaranty in substantially the same
form as this Form of Guaranty has been executed and entered into on behalf of
Wells Fargo Bank, National Association and the lenders by Best (CA) QRS 14-4,
Inc., Truck (IN) QRS 14-3, Inc., DELMO (PA) QRS 12-10, NUTRA (TX) QRS 12-39,
Inc., Meta (CA) QRS 14-6, Inc., Film (FL) QRS 14-44, Inc., Projector (FL) QRS
14-45, Inc., Tel (VA) QRS 12-15, Inc. and Bandwidth (UT) QRS 14-58, Inc.

C-1

--------------------------------------------------------------------------------

 

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor
agrees as follows:
     Section 1. Guaranty. Each Guarantor, jointly and severally with each other
Guarantor, hereby absolutely, irrevocably and unconditionally guaranties the due
and punctual payment and performance when due, whether at stated maturity, by
acceleration or otherwise, of all of the following (collectively referred to as
the “Guarantied Obligations”): (a) all indebtedness and obligations owing by the
Borrower to any Lender or the Administrative Agent under or in connection with
the Credit Agreement and any other Loan Document to which the Borrower is a
party, including without limitation, the repayment of all principal of the
Revolving Loans, the reimbursement of the LC Disbursements and the payment of
all interest, fees, charges, reasonable attorneys’ fees and other amounts
payable to any Lender or the Administrative Agent thereunder or in connection
therewith; (b) any and all extensions, renewals, modifications, amendments or
substitutions of the foregoing; (c) all expenses, including, without limitation,
reasonable attorneys’ fees and disbursements, that are incurred by the Lenders
and the Administrative Agent in the enforcement of any of the foregoing or any
obligation of such Guarantor hereunder and (d) all other Obligations.
     Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a
guaranty of payment, and not of collection, and a debt of each Guarantor for its
own account. Accordingly, the Lenders and the Agent shall not be obligated or
required before enforcing this Guaranty against any Guarantor: (a) to pursue any
right or remedy the Lenders or the Administrative Agent may have against the
Borrower, any other Loan Party or any other Person or commence any suit or other
proceeding against the Borrower, any other Loan Party or any other Person in any
court or other tribunal; (b) to make any claim in a liquidation or bankruptcy of
the Borrower, any other Loan Party or any other Person; or (c) to make demand of
the Borrower, any other Loan Party or any other Person or to enforce or seek to
enforce or realize upon any collateral security held by the Lenders or the
Administrative Agent which may secure any of the Guarantied Obligations.
     Section 3. Guaranty Absolute. Each Guarantor guarantees that the Guarantied
Obligations will be paid strictly in accordance with the terms of the documents
evidencing the same, regardless of any applicable law now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or the Lenders with respect thereto. The liability of each
Guarantor under this Guaranty shall be absolute, irrevocable and unconditional
in accordance with its terms and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever, including
without limitation, the following (whether or not such Guarantor consents
thereto or has notice thereof):

C-2

--------------------------------------------------------------------------------

 

     (a)(i) any change in the amount, interest rate or due date or other term of
any of the Guarantied Obligations, (ii) any change in the time, place or manner
of payment of all or any portion of the Guarantied Obligations, (iii) any
amendment or waiver of, or consent to the departure from or other indulgence
with respect to, the Credit Agreement, any other Loan Document, or any other
document or instrument evidencing or relating to any Guarantied Obligations, or
(iv) any waiver, renewal, extension, addition, or supplement to, or deletion
from, or any other action or inaction under or in respect of, the Credit
Agreement, any of the other Loan Documents, or any other documents, instruments
or agreements relating to the Guarantied Obligations or any other instrument or
agreement referred to therein or evidencing any Guarantied Obligations or any
assignment or transfer of any of the foregoing;
     (b) any lack of validity or enforceability of the Credit Agreement, any of
the other Loan Documents, or any other document, instrument or agreement
referred to therein or evidencing any Guarantied Obligations or any assignment
or transfer of any of the foregoing;
     (c) any furnishing to the Administrative Agent or the Lenders of any
security for the Guarantied Obligations, or any sale, exchange, release or
surrender of, or realization on, any collateral securing any of the Obligations;
     (d) any settlement or compromise of any of the Guarantied Obligations, any
security therefor, or any liability of any other party with respect to the
Guarantied Obligations, or any subordination of the payment of the Guarantied
Obligations to the payment of any other liability of the Borrower or any other
Loan Party;
     (e) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to such Guarantor,
the Borrower, any other Loan Party or any other Person, or any action taken with
respect to this Guaranty by any trustee or receiver, or by any court, in any
such proceeding;
     (f) any act or failure to act by the Borrower, any other Loan Party or any
other Person which may adversely affect such Guarantor’s subrogation rights, if
any, against the Borrower to recover payments made under this Guaranty;
     (g) any nonperfection or impairment of any security interest in, or other
Lien on, any collateral, if any, securing in any way any of the Obligations;
     (h) any application of sums paid by the Borrower, any Guarantor or any
other Person with respect to the liabilities of the Borrower to the
Administrative Agent and the Lenders, regardless of what liabilities of the
Borrower remain unpaid;
     (i) any defect, limitation or insufficiency in the borrowing powers of the
Borrower or in the exercise thereof; or

C-3

--------------------------------------------------------------------------------

 

     (j) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, a Guarantor hereunder (other than indefeasible
payment in full).
     Section 4. Action with Respect to Guarantied Obligations. The Lenders and
the Administrative Agent may, at any time and from time to time, without the
consent of, or notice to, any Guarantor, and without discharging any Guarantor
from its obligations hereunder, take any and all actions described in Section 3.
and may otherwise: (a) amend, modify, alter or supplement the terms of any of
the Guarantied Obligations, including, but not limited to, extending or
shortening the time of payment of any of the Guarantied Obligations or changing
the interest rate that may accrue on any of the Guarantied Obligations;
(b) amend, modify, alter or supplement the Credit Agreement or any other Loan
Document; (c) sell, exchange, release or otherwise deal with all, or any part,
of any collateral securing any of the Obligations; (d) release any Loan Party or
other Person liable in any manner for the payment or collection of the
Guarantied Obligations; (e) exercise, or refrain from exercising, any rights
against the Borrower, any other Loan Party or any other Person; and (f) apply
any sum, by whomsoever paid or however realized, to the Guarantied Obligations
in such order as the Lenders shall elect.
     Section 5. Representations and Warranties. Each Guarantor hereby makes to
the Administrative Agent and the Lenders all of the representations and
warranties made by the Borrower with respect to or in any way relating to such
Guarantor in the Credit Agreement and the other Loan Documents, as if the same
were set forth herein in full.
     Section 6. Covenants. Each Guarantor will comply with all covenants which
the Borrower is to cause such Guarantor to comply with under the terms of the
Credit Agreement or any of the other Loan Documents.
     Section 7. Waiver. Each Guarantor, to the fullest extent permitted by
applicable law, hereby waives notice of acceptance hereof or any presentment,
demand, protest or notice of any kind, and any other act or thing, or omission
or delay to do any other act or thing, which in any manner or to any extent
might vary the risk of such Guarantor or which otherwise might operate to
discharge such Guarantor from its obligations hereunder.
     Section 8. Inability to Accelerate Loan. If the Administrative Agent and/or
the Lenders are prevented under applicable law or otherwise from demanding or
accelerating payment of any of the Guarantied Obligations by reason of any
automatic stay or otherwise, the Administrative Agent and/or the Lenders shall
be entitled to receive from each Guarantor, upon demand therefor, the sums which
otherwise would have been due had such demand or acceleration occurred.
     Section 9. Reinstatement of Guarantied Obligations. If claim is ever made
on the Administrative Agent or any Lender for repayment or recovery of any
amount or amounts received in payment or on account of any of the Guarantied
Obligations, and the Administrative Agent or such Lender repays all or part of
said amount by reason of (a)

C-4

--------------------------------------------------------------------------------

 

any judgment, decree or order of any court or administrative body of competent
jurisdiction, or (b) any settlement or compromise of any such claim effected by
the Administrative Agent or such Lender with any such claimant (including the
Borrower or a trustee in bankruptcy for the Borrower), then and in such event
each Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding on it, notwithstanding any revocation hereof or the
cancellation of the Credit Agreement, any of the other Loan Documents, or any
other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the Administrative Agent or such Lender for the
amounts so repaid or recovered to the same extent as if such amount had never
originally been paid to the Administrative Agent or such Lender.
     Section 10. Subrogation. Upon the making by any Guarantor of any payment
hereunder for the account of the Borrower, such Guarantor shall be subrogated to
the rights of the payee against the Borrower; provided, however, that such
Guarantor shall not enforce any right or receive any payment by way of
subrogation or otherwise take any action in respect of any other claim or cause
of action such Guarantor may have against the Borrower arising by reason of any
payment or performance by such Guarantor pursuant to this Guaranty, unless and
until all of the Guarantied Obligations have been indefeasibly paid and
performed in full. If any amount shall be paid to such Guarantor on account of
or in respect of such subrogation rights or other claims or causes of action,
such Guarantor shall hold such amount in trust for the benefit of the
Administrative Agent and the Lenders and shall forthwith pay such amount to the
Administrative Agent to be credited and applied against the Guarantied
Obligations, whether matured or unmatured, in accordance with the terms of the
Credit Agreement or to be held by the Administrative Agent as collateral
security for any Guarantied Obligations existing.
     Section 11. Payments Free and Clear. All sums payable by each Guarantor
hereunder, whether of principal, interest, fees, expenses, premiums or
otherwise, shall be paid in full, without set-off or counterclaim or any
deduction or withholding whatsoever (including any Taxes), and if such Guarantor
is required by applicable law or by any Governmental Authority to make any such
deduction or withholding such Guarantor shall pay to the Administrative Agent
and the Lenders such additional amount as will result in the receipt by the
Administrative Agent and the Lenders of the full amount payable hereunder had
such deduction or withholding not occurred or been required.
     Section 12. Set-off. In addition to any rights now or hereafter granted
under any of the other Loan Documents or applicable law and not by way of
limitation of any such rights, each Guarantor hereby authorizes the
Administrative Agent and each Lender, at any time while an Event of Default
exists, without any prior notice to such Guarantor or to any other Person, any
such notice being hereby expressly waived, but in the case of a Lender subject
to receipt of the prior written consent of the Administrative Agent exercised in
its sole discretion, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness at any time held or owing by the Administrative Agent, such
Lender or any affiliate of the Administrative Agent or such Lender, to or for
the credit or the account of such

C-5

--------------------------------------------------------------------------------

 

Guarantor against and on account of any of the Guarantied Obligations, although
such obligations shall be contingent or unmatured. Each Guarantor agrees, to the
fullest extent permitted by applicable law, that any Participant may exercise
rights of setoff or counterclaim and other rights with respect to its
participation as fully as if such Participant were a direct creditor of such
Guarantor in the amount of such participation.
     Section 13. Subordination. Each Guarantor hereby expressly covenants and
agrees for the benefit of the Administrative Agent and the Lenders that all
obligations and liabilities of the Borrower to such Guarantor of whatever
description, including without limitation, all intercompany receivables of such
Guarantor from the Borrower (collectively, the “Junior Claims”) shall be
subordinate and junior in right of payment to all Guarantied Obligations. If an
Event of Default shall exist, then no Guarantor shall accept any direct or
indirect payment (in cash, property or securities, by setoff or otherwise) from
the Borrower on account of or in any manner in respect of any Junior Claim until
all of the Guarantied Obligations have been indefeasibly paid in full.
     Section 14. Avoidance Provisions. It is the intent of each Guarantor, the
Administrative Agent and the Lenders that in any Proceeding (as defined in
Section 29(a)), such Guarantor’s maximum obligation hereunder shall equal, but
not exceed, the maximum amount which would not otherwise cause the obligations
of such Guarantor hereunder (or any other obligations of such Guarantor to the
Administrative Agent and the Lenders) to be avoidable or unenforceable against
such Guarantor in such Proceeding as a result of applicable law, including
without limitation, (a) Section 548 of the Bankruptcy Code of 1978, as amended
(the “Bankruptcy Code”) and (b) any state fraudulent transfer or fraudulent
conveyance act or statute applied in such Proceeding, whether by virtue of
Section 544 of the Bankruptcy Code or otherwise. The applicable laws under which
the possible avoidance or unenforceability of the obligations of such Guarantor
hereunder (or any other obligations of such Guarantor to the Administrative
Agent and the Lenders) shall be determined in any such Proceeding are referred
to as the “Avoidance Provisions”. Accordingly, to the extent that the
obligations of any Guarantor hereunder would otherwise be subject to avoidance
under the Avoidance Provisions, the maximum Guarantied Obligations for which
such Guarantor shall be liable hereunder shall be reduced to that amount which,
as of the time any of the Guarantied Obligations is deemed to have been incurred
under the Avoidance Provisions, would not cause the obligations of any Guarantor
hereunder (or any other obligations of such Guarantor to the Administrative
Agent and the Lenders), to be subject to avoidance under the Avoidance
Provisions. This Section is intended solely to preserve the rights of the
Administrative Agent and the Lenders hereunder to the maximum extent that would
not cause the obligations of any Guarantor hereunder to be subject to avoidance
under the Avoidance Provisions, and no Guarantor or any other Person shall have
any right or claim under this Section as against the Administrative Agent and
the Lenders that would not otherwise be available to such Person under the
Avoidance Provisions.
     Section 15. Information. Each Guarantor assumes all responsibility for
being and keeping itself informed of the financial condition of the Borrower and
the other Loan Parties, and of all other circumstances bearing upon the risk of
nonpayment of any of the

C-6

--------------------------------------------------------------------------------

 

Guarantied Obligations and the nature, scope and extent of the risks that such
Guarantor assumes and incurs hereunder, and agrees that neither the
Administrative Agent nor any Lender shall have any duty whatsoever to advise any
Guarantor of information regarding such circumstances or risks.
     Section 16. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
     SECTION 17. WAIVER OF JURY TRIAL.
     (a) EACH GUARANTOR, AND EACH OF THE ADMINISTRATIVE AGENT AND THE LENDERS BY
ACCEPTING THE BENEFITS HEREOF, ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY
BETWEEN SUCH GUARANTOR, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS WOULD BE
BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY
AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE GUARANTORS, THE LENDERS AND THE ADMINISTRATIVE AGENT HEREBY
WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR
NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR
AGAINST ANY PARTY HERETO ARISING OUT OF THIS GUARANTY, ANY OTHER LOAN DOCUMENT
OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR
AMONG EACH OF THE GUARANTORS, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS OF
ANY KIND OR NATURE.
     (b) EACH GUARANTOR, AND EACH OF THE ADMINISTRATIVE AGENT AND THE LENDERS BY
ACCEPTING THE BENEFITS HEREOF, HEREBY AGREES THAT THE SUPREME COURT OF THE STATE
OF NEW YORK SITTING IN NEW YORK COUNTY AND THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF,
SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR
AMONG THE GUARANTORS, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS, PERTAINING
DIRECTLY OR INDIRECTLY TO THIS GUARANTY, OR ANY OTHER LOAN DOCUMENT OR TO ANY
MATTER ARISING HEREFROM OR THEREFROM. EACH GUARANTOR AND EACH OF THE LENDERS
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN SUCH COURTS. EACH GUARANTOR HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN,
AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR
PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL

C-7

--------------------------------------------------------------------------------

 

ADDRESSED TO SUCH GUARANTOR AT ITS ADDRESS FOR NOTICES PROVIDED FOR HEREIN.
SHOULD A GUARANTOR FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR
PAPERS SO SERVED WITHIN THIRTY DAYS AFTER THE MAILING THEREOF, SUCH GUARANTOR
SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED AGAINST
IT AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. EACH
PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR
CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE
DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE ADMINISTRATIVE AGENT OR ANY
LENDER OR THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT OR ANY LENDER OF ANY
JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.
     (c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH
THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES
THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE TERMINATION OR
EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS GUARANTY.
     Section 18. Loan Accounts. The Administrative Agent and each Lender may
maintain books and accounts setting forth the amounts of principal, interest and
other sums paid and payable with respect to the Guarantied Obligations, and in
the case of any dispute relating to any of the outstanding amount, payment or
receipt of any of the Guarantied Obligations or otherwise, the entries in such
books and accounts shall constitute prima facie evidence of amounts and other
matters set forth therein. The failure of the Administrative Agent or any Lender
to maintain such books and accounts shall not in any way relieve or discharge
any Guarantor of any of its obligations hereunder.
     Section 19. Waiver of Remedies. No delay or failure on the part of the
Administrative Agent or any Lender in the exercise of any right or remedy it may
have against any Guarantor hereunder or otherwise shall operate as a waiver
thereof, and no single or partial exercise by the Administrative Agent or any
Lender of any such right or remedy shall preclude any other or further exercise
thereof or the exercise of any other such right or remedy.
     Section 20. Termination. This Guaranty, subject to Section 9, shall remain
in full force and effect with respect to each Guarantor until indefeasible
payment in full of the Guarantied Obligations and the other Obligations and the
termination or cancellation of the Credit Agreement in accordance with its
terms.

C-8

--------------------------------------------------------------------------------

 

     Section 21. Successors and Assigns. Each reference herein to the
Administrative Agent or any Lender shall be deemed to include such Person’s
respective successors and assigns (including, but not limited to, any holder of
the Guarantied Obligations) in whose favor the provisions of this Guaranty also
shall inure, and each reference herein to each Guarantor shall be deemed to
include such Guarantor’s successors and assigns, upon whom this Guaranty also
shall be binding. The Lenders may, in accordance with the applicable provisions
of the Credit Agreement, assign, transfer or sell any Guarantied Obligation, or
grant or sell participations in any Guarantied Obligations, to any Person
without the consent of, or notice to, any Guarantor and without releasing,
discharging or modifying any Guarantor’s obligations hereunder. Each Guarantor
hereby consents to the delivery by the Administrative Agent and any Lender to
any Assignee or Participant (or any prospective Assignee or Participant) of any
financial or other information regarding the Borrower or any Guarantor. No
Guarantor may assign or transfer its obligations hereunder to any Person without
the prior written consent of all Lenders and any such assignment or other
transfer to which all of the Lenders have not so consented shall be null and
void.
     Section 22. JOINT AND SEVERAL OBLIGATIONS. THE OBLIGATIONS OF THE
GUARANTORS HEREUNDER SHALL BE JOINT AND SEVERAL, AND ACCORDINGLY, EACH GUARANTOR
CONFIRMS THAT IT IS LIABLE FOR THE FULL AMOUNT OF THE GUARANTIED OBLIGATIONS AND
ALL OF THE OBLIGATIONS AND LIABILITIES OF EACH OF THE OTHER GUARANTORS
HEREUNDER.
     Section 23. Amendments. This Guaranty may not be amended except in writing
signed by the Administrative Agent (acting with the requisite consent of the
Lenders as provided in the Credit Agreement) and each Guarantor.
     Section 24. Payments. All payments to be made by any Guarantor pursuant to
this Guaranty shall be made in Dollars, in immediately available funds to the
Administrative Agent at such location for payment as Administrative Agent may
notify such Guarantor, not later than 11:00 a.m. New York time, on the date one
Business Day after demand therefor.
     Section 25. Notices. All notices, requests and other communications
hereunder shall be in writing (including facsimile transmission or similar
writing) and shall be given (a) to each Guarantor at its address set forth below
its signature hereto, (b) to the Administrative Agent or any Lender at its
address for notices provided for in the Credit Agreement, or (c) as to each such
party at such other address as such party shall designate in a written notice to
the other parties. Each such notice, request or other communication shall be
effective (i) if mailed, when received; (ii) if telecopied, when transmitted; or
(iii) if hand delivered, when delivered; provided, however, that any notice of a
change of address for notices shall not be effective until received.

C-9

--------------------------------------------------------------------------------

 

     Section 26. Severability. In case any provision of this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
     Section 27. Headings. Section headings used in this Guaranty are for
convenience only and shall not affect the construction of this Guaranty.
     Section 28. Limitation of Liability. Neither the Administrative Agent nor
any Lender, nor any affiliate, officer, director, employee, attorney, or agent
of the Administrative Agent or any Lender, shall have any liability with respect
to, and each Guarantor hereby waives, releases, and agrees not to sue any of
them upon, any claim for any special, indirect, incidental, or consequential
damages suffered or incurred by a Guarantor in connection with, arising out of,
or in any way related to, this Guaranty or any of the other Loan Documents, or
any of the transactions contemplated by this Guaranty, the Credit Agreement or
any of the other Loan Documents. Each Guarantor hereby waives, releases, and
agrees not to sue the Administrative Agent or any Lender or any of the
Administrative Agent’s or any Lender’s affiliates, officers, directors,
employees, attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Guaranty, the
Credit Agreement or any of the other Loan Documents, or any of the transactions
contemplated by the Credit Agreement or financed thereby.
     Section 29. Definitions. (a) For the purposes of this Guaranty:
     “Proceeding” means any of the following: (i) a voluntary or involuntary
case concerning any Guarantor shall be commenced under the Bankruptcy Code of
1978, as amended; (ii) a custodian (as defined in such Bankruptcy Code or any
other applicable bankruptcy laws) is appointed for, or takes charge of, all or
any substantial part of the property of any Guarantor; (iii) any other
proceeding under any applicable law, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding-up or composition for adjustment
of debts, whether now or hereafter in effect, is commenced relating to any
Guarantor; (iv) any Guarantor is adjudicated insolvent or bankrupt; (v) any
order of relief or other order approving any such case or proceeding is entered
by a court of competent jurisdiction; (vi) any Guarantor makes a general
assignment for the benefit of creditors; (vii) any Guarantor shall fail to pay,
or shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; (viii) any Guarantor shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts;
(ix) any Guarantor shall by any act or failure to act indicate its consent to,
approval of or acquiescence in any of the foregoing; or (x) any corporate action
shall be taken by any Guarantor for the purpose of effecting any of the
foregoing.
     (b) Terms not otherwise defined herein are used herein with the respective
meanings given them in the Credit Agreement.

C-10

--------------------------------------------------------------------------------

 

[Signatures on next page]

C-11

--------------------------------------------------------------------------------

 

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

                  [GUARANTOR]    
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
     
 
   
 
  Title:        
 
     
 
   
 
                Address for Notices for all Guarantors:    
 
                c/o W.P. Carey & Co. LLC
50 Rockerfeller Plaza, New York
New York, New York 10020
Attention: Mark DeCesaris
Telecopier: 212-492-8922
Telephone: 212-492-1140    

C-12

--------------------------------------------------------------------------------

 

ANNEX I
FORM OF ACCESSION AGREEMENT
     THIS ACCESSION AGREEMENT dated as of                     , ___, executed
and delivered by                                                             , a
                                          (the “New Guarantor”), in favor of
(a) WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as Administrative
Agent (the “Administrative Agent”) for the Lenders under that certain Credit
Agreement dated as of                     , 2006 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among Corporate Property Associates 14 Incorporated (the “Borrower”), the
financial institutions party thereto as the Lenders, the Administrative Agent,
and the other parties thereto, and (b) the Lenders.
     WHEREAS, pursuant to the Credit Agreement, the Administrative Agent and the
Lenders have agreed to make available to the Borrower certain financial
accommodations on the terms and conditions set forth in the Credit Agreement;
     WHEREAS, the New Guarantor is owned or controlled by the Borrower or is
otherwise an Affiliate of the Borrower;
     WHEREAS, the Borrower, the New Guarantor and the other Subsidiaries, though
separate legal entities, are mutually dependent on each other in the conduct of
their respective businesses as an integrated operation and have determined it to
be in their mutual best interests to obtain financing from the Administrative
Agent and the Lenders through their collective efforts;
     WHEREAS, the New Guarantor acknowledges that it will receive direct and
indirect benefits from the Administrative Agent and the Lenders making such
financial accommodations available to the Borrower under the Credit Agreement
and, accordingly, the New Guarantor is willing to guarantee the Borrower’s
obligations to the Administrative Agent and the Lenders on the terms and
conditions contained herein; and
     WHEREAS, the New Guarantor’s execution and delivery of this Agreement is a
condition to the Administrative Agent and the Lenders continuing to make such
financial accommodations to the Borrower.
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the New Guarantor, the New
Guarantor agrees as follows:
     Section 1. Accession to Guaranty. The New Guarantor hereby agrees that it
is a “Guarantor” under the Guaranty and assumes all obligations of a “Guarantor”
thereunder, all as if the New Guarantor had been an original signatory to the
Guaranty. Without limiting the generality of the foregoing, the New Guarantor
hereby:

C-13

--------------------------------------------------------------------------------

 

     (a) irrevocably and unconditionally guarantees the due and punctual payment
and performance when due, whether at stated maturity, by acceleration or
otherwise, of all Guarantied Obligations (as defined in the Guaranty);
     (b) makes to the Administrative Agent and the Lenders as of the date hereof
each of the representations and warranties contained in Section 5 of the
Guaranty and agrees to be bound by each of the covenants contained in Section 6
of the Guaranty; and
     (c) consents and agrees to each provision set forth in the Guaranty.
     SECTION 2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
     Section 3. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have their respective defined meanings given them in the
Credit Agreement.
[Signatures on Next Page]

C-14

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the New Guarantor has caused this Accession Agreement
to be duly executed and delivered under seal by its duly authorized officers as
of the date first written above.

                  [NEW GUARANTOR]    
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
     
 
   
 
  Title:        
 
     
 
   
 
           
 
      (CORPORATE SEAL)    
 
                Address for Notices:    
 
                c/o W.P. Carey & Co. LLC
50 Rockerfeller Plaza, New York
New York, New York
Attention: Mark DeCesaris
Telecopier: 212-492-8922
Telephone: 212-492-1140    

Accepted:
     WELLS FARGO BANK, NATIONAL
     ASSOCIATION, as Administrative Agent

         
By:
       
 
 
 
   
Name:
       
 
 
 
   
Title:
       
 
 
 
   

C-15