CREDIT AGREEMENT
dated as of
August 31, 2012
among
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.,
as Borrower,
PREFERRED APARTMENT COMMUNITIES, INC.,
as a Credit Party,

THE LENDING INSTITUTIONS NAMED HEREIN,
as Lenders,

and

KEYBANK NATIONAL ASSOCIATION,
as the Administrative Agent

$15,000,000 Senior Secured Revolving Credit Facility
    
    

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ARTICLE I.
DEFINITIONS AND TERMS    1

Section 1.01
Certain Defined Terms    1

Section 1.02
Computation of Time Periods    30

Section 1.03
Accounting Terms    31

Section 1.04
Terms Generally    31

ARTICLE II.
THE TERMS OF THE CREDIT FACILITY    31

Section 2.01
Establishment of the Credit Facility    31

Section 2.02
Revolving Facility    31

Section 2.03
Notice of Borrowing    32

Section 2.04
Funding Obligations; Disbursement of Funds    32

Section 2.05
Evidence of Obligations    33

Section 2.06
Interest; Default Rate    34

Section 2.07
Conversion and Continuation of Loans    35

Section 2.08
Fees    35

Section 2.09
Termination and Reduction of Revolving Commitments    36

Section 2.10
Voluntary and Mandatory Prepayments of Loans    36

Section 2.11
Method and Place of Payment    38

Section 2.12
Defaulting Lenders    39

ARTICLE III.
INCREASED COSTS, ILLEGALITY AND TAXES    40

Section 3.01
Increased Costs, Illegality, etc    40

Section 3.02
Breakage Compensation    42

Section 3.03
Net Payments    42

Section 3.04
Change of Lending Office; Replacement of Lenders    45

ARTICLE IV.
CONDITIONS PRECEDENT    46

Section 4.01
Conditions Precedent at Closing Date    46

Section 4.02
Conditions Precedent to All Credit Events    50

ARTICLE V.
REPRESENTATIONS AND WARRANTIES    50

Section 5.01
Corporate Status    50

Section 5.02
Corporate Power and Authority    50

Section 5.03
No Violation    51

Section 5.04
Governmental Approvals    51

Section 5.05
Litigation    51

Section 5.06
Use of Proceeds; Margin Regulations    51

Section 5.07
Financial Statements    52

        

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Section 5.08
Solvency    52

Section 5.09
No Material Adverse Change    53

Section 5.10
Tax Returns and Payments    53

Section 5.11
Title to Properties, etc    53

Section 5.12
Lawful Operations, etc    53

Section 5.13
Environmental Matters    53

Section 5.14
Compliance with ERISA    54

Section 5.15
Intellectual Property, etc    54

Section 5.16
Investment Company Act, etc    55

Section 5.17
Insurance    55

Section 5.18
Burdensome Contracts; Labor Relations    55

Section 5.19
Security Interests    55

Section 5.20
True and Complete Disclosure    55

Section 5.21
Defaults    56

Section 5.22
Capitalization    56

Section 5.23
Anti-Terrorism Law Compliance    56

Section 5.24
Location of Bank Accounts    56

Section 5.25
Material Contracts    56

Section 5.26
Affiliate Transactions    56

Section 5.27
Common Enterprise    57

Section 5.28
REIT Status    57

Section 5.29
Conduct of Business    57

ARTICLE VI.
AFFIRMATIVE COVENANTS    57

Section 6.01
Reporting Requirements    57

Section 6.02
Books, Records and Inspections    61

Section 6.03
Insurance    61

Section 6.04
Payment of Taxes and Claims    62

Section 6.05
Corporate Franchises    62

Section 6.06
Good Repair    62

Section 6.07
Compliance with Statutes, etc    62

Section 6.08
Compliance with Environmental Laws    62

Section 6.09
Certain Subsidiaries to Join in Guaranty    63

Section 6.10
Additional Security; Real Property Matters; Further Assurances    64

Section 6.11
Control Agreements    67

        

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Section 6.12
Material Contracts    67

Section 6.13
Senior Debt    67

Section 6.14
Subordination    67

Section 6.15
Lender Meetings    67

Section 6.16
REIT Status    67

Section 6.17
Post Closing Covenants    67

ARTICLE VII.
NEGATIVE COVENANTS    68

Section 7.01
Changes in Business    68

Section 7.02
Consolidation, Merger, Acquisitions, Asset Sales, etc    68

Section 7.03
Liens    69

Section 7.04
Indebtedness    69

Section 7.05
Investments and Guaranty Obligations    70

Section 7.06
Restricted Payments    71

Section 7.07
Financial Covenants    72

Section 7.08
Limitation on Certain Restrictive Agreements    72

Section 7.09
Transactions with Affiliates    73

Section 7.10
Plan Terminations, Minimum Funding, etc    73

Section 7.11
PAC REIT Covenant    73

Section 7.12
New Mezzanine Loan Documentation; Modification of Certain Agreements    73

Section 7.13
Bank Accounts    74

Section 7.14
Anti-Terrorism Laws    74

Section 7.15
Fiscal Year    74

Section 7.16
Issuance of Disqualified Equity Interests    74

ARTICLE VIII.
EVENTS OF DEFAULT    75

Section 8.01
Events of Default    75

Section 8.02
Remedies    77

Section 8.03
Application of Certain Payments and Proceeds    77

ARTICLE IX.
THE ADMINISTRATIVE AGENT    78

Section 9.01
Appointment    78

Section 9.02
Delegation of Duties    79

Section 9.03
Exculpatory Provisions    79

Section 9.04
Reliance by Administrative Agent    80

Section 9.05
Notice of Default    80

        

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Section 9.06
Non-Reliance    81

Section 9.07
No Reliance on Administrative Agent’s Customer Identification Program    81

Section 9.08
USA Patriot Act    81

Section 9.09
Indemnification    81

Section 9.10
The Administrative Agent in Individual Capacity    82

Section 9.11
Successor Administrative Agent    82

Section 9.12
Other Agents    82

Section 9.13
Collateral Matters    83

Section 9.14
Agency for Perfection    83

Section 9.15
Proof of Claim    83

Section 9.16
Posting of Approved Electronic Communications    84

Section 9.17
Credit Bidding    85

ARTICLE X.
GUARANTY    85

Section 10.01
Guaranty by the Borrower    85

Section 10.02
Additional Undertaking    86

Section 10.03
Guaranty Unconditional    86

Section 10.04
Borrower Obligations to Remain in Effect; Restoration    87

Section 10.05
Waiver of Acceptance, etc    87

Section 10.06
Subrogation    87

Section 10.07
Effect of Stay    87

ARTICLE XI.
MISCELLANEOUS    87

Section 11.01
Payment of Expenses etc    87

Section 11.02
Indemnification    88

Section 11.03
Right of Setoff    88

Section 11.04
Equalization    89

Section 11.05
Notices    89

Section 11.06
Successors and Assigns    90

Section 11.07
No Waiver; Remedies Cumulative    94

Section 11.08
Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial    94

Section 11.09
Counterparts    95

Section 11.10
Integration    96

Section 11.11
Headings Descriptive    96

        

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Section 11.12
Amendment or Waiver; Acceleration by Required Lenders    96

Section 11.13
Survival of Indemnities    98

Section 11.14
Domicile of Loans    98

Section 11.15
Confidentiality    99

Section 11.16
General Limitation of Liability    99

Section 11.17
No Duty    99

Section 11.18
Lenders and Agent Not Fiduciary to Borrower, etc    100

Section 11.19
Survival of Representations and Warranties    100

Section 11.20
Severability    100

Section 11.21
Independence of Covenants    100

Section 11.22
Interest Rate Limitation    100

Section 11.23
USA Patriot Act    101

Section 11.24
Advertising and Publicity    101

Section 11.25
Release of Guarantees and Liens    101

Section 11.26
Payments Set Aside    101

EXHIBITS

Exhibit A    Form of Revolving Facility Note
Exhibit B-1    Form of Notice of Borrowing
Exhibit B-2    Form of Notice of Continuation or Conversion
Exhibit C-1    Form of Guaranty
Exhibit C-2    Pledge and Security Agreement
Exhibit D    Form of Solvency Certificate
Exhibit E    Form of Compliance Certificate
Exhibit F    Form of Closing Certificate
Exhibit G    Form of Assignment Agreement
Exhibit H    Form of Management Subordination Agreement

        

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EXECUTION VERSION

This CREDIT AGREEMENT is entered into as of August 31, 2012 among the following:
(i) PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership (the “Borrower”); (ii) PREFERRED APARTMENT COMMUNITIES,
INC., a Maryland corporation (the “PAC REIT”), as a Credit Party (as hereinafter
defined); (iii) the lenders from time to time party hereto (each a “Lender” and
collectively, the “Lenders”); and (iv) KEYBANK NATIONAL ASSOCIATION, as the
administrative agent (the “Administrative Agent”).
PRELIMINARY STATEMENTS:

(1)    The Borrower has requested that the Lenders extend credit to the Borrower
to (a) finance Capital Expenditures, Acquisitions, Mezzanine Loan Investments,
and subject to the consent of the Administrative Agent, make Cash Dividends, and
(b) provide working capital and funds for other general corporate purposes, in
each case to the extent permitted herein.
(2)    Subject to and upon the terms and conditions set forth herein, the
Lenders are willing to extend credit and make available to the Borrower the
credit facilities provided for herein for the foregoing purposes.
AGREEMENT:
In consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:

DEFINITIONS AND TERMS
Section 1.01    Certain Defined Terms. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires:
“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (i) the acquisition of all
or substantially all of the assets of any Person, or any business or division of
any Person, (ii) the acquisition or ownership of in excess of 50% of the Equity
Interests of any Person, or (iii) the acquisition of another Person by a merger,
consolidation, amalgamation or any other combination with such Person.
“Additional Security Documents” has the meaning provided in Section 6.10(a).
“Adjusted EBITDA” means, for any given period, (a) EBITDA, minus (b) Capital
Reserves.

“Adjusted Eurodollar Rate” means with respect to each Interest Period for a
Eurodollar Loan, (i) the rate per annum equal to the offered rate appearing on
Reuters Screen LIBOR01 Page (or on the appropriate page of any successor to or
substitute for such service, or, if such rate is not available, on the
appropriate page of any generally recognized financial information service, as
selected by the Administrative Agent from time to time) that displays an average
British Bankers Association Interest Settlement Rate at approximately 11:00 A.M.
(London time) two Business Days prior to the commencement of such Interest
Period, for deposits in Dollars with a maturity comparable to such Interest
Period, divided (and rounded to the nearest 1/16th of 1%) by (ii) a percentage
equal to 100% minus the then stated maximum rate of all reserve requirements

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(including, without limitation, any marginal, emergency, supplemental, special
or other reserves and without benefit of credits for proration, exceptions or
offsets that may be available from time to time) applicable to any member bank
of the Federal Reserve System in respect of Eurocurrency liabilities as defined
in Regulation D (or any successor category of liabilities under Regulation D);
provided, however, that if the rate referred to in clause (i) above is not
available at any such time for any reason, then the rate referred to in clause
(i) shall instead be the interest rate per annum, as determined by the
Administrative Agent, to be the average (rounded to the nearest 1/16th of 1%) of
the rates per annum at which deposits in Dollars in an amount equal to the
amount of such Eurodollar Loan are offered to major banks in the London
interbank market at approximately 11:00 A.M. (London time), two Business Days
prior to the commencement of such Interest Period, for contracts that would be
entered into at the commencement of such Interest Period for the same duration
as such Interest Period.
“Adjusted Funds From Operations” means, with respect to a Person and for a given
period, (a) net income (loss) of such Person, plus (b) (i) depreciation with
respect to such Person’s real estate assets, (ii) amortization of acquired
intangible assets, (iii) acquisition costs, (iv) organization costs, (v)
non-cash equity compensation to directors and executives, (vi) amortization of
any loan closing costs, (vii) REIT establishment costs, (viii) depreciation and
amortization of non-real estate assets, and (ix) fees received in connection
with Mezzanine Loan Investments, minus (c) (i) non-cash interest income on
Mezzanine Loan Investments, and (ii) normally recurring capital expenditures,
and (d) plus or minus, as applicable, similar adjustments related to
Unconsolidated Entities.
“Adjusted Net Operating Income” means, with respect to any Real Property and for
any given period, (a) the Net Operating Income for such Real Property, minus
(b) Capital Reserves for such Real Property.

“Administrative Agent” has the meaning provided in the first paragraph of this
Agreement and includes any successor to the Administrative Agent appointed
pursuant to Section 9.11.
“Advisor” means Preferred Apartment Advisors, LLC, a Delaware limited liability
company.
“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such Person, or, in the case of any Lender that is an investment
fund, the investment advisor thereof and any investment fund having the same
investment advisor. A Person shall be deemed to control a second Person if such
first Person possesses, directly or indirectly, the power (i) to vote 10% or
more of the securities having ordinary voting power for the election of
directors or managers of such second Person or (ii) to direct or cause the
direction of the management and policies of such second Person, whether through
the ownership of voting securities, by contract or otherwise. Notwithstanding
the foregoing, neither the Administrative Agent nor any Lender shall in any
event be considered an Affiliate of the PAC REIT or any of its Subsidiaries.
“Agent Advances” has the meaning provided in Section 9.13.
“Aggregate Credit Facility Exposure” means, at any time, the aggregate principal
amount of all Revolving Loans made by all Lenders and outstanding at such time.
“Agreement” means this Credit Agreement, including any exhibits or schedules, as
the same may from time to time be amended, restated, amended and restated,
supplemented or otherwise modified.
“Anti-Terrorism Law” means the USA Patriot Act or any other law pertaining to
the prevention of future acts of terrorism, in each case as such law may be
amended from time to time.

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“Applicable Lending Office” means, with respect to each Lender, the office
designated by such Lender to the Administrative Agent as such Lender’s lending
office for all purposes of this Agreement. A Lender may have a different
Applicable Lending Office for Base Rate Loans and Eurodollar Loans.
“Applicable Revolving Loan Margin” means (A) 300 basis points for Revolving
Loans that are Base Rate Loans, and (B) 500 basis points for Revolving Loans
that are Eurodollar Loans.
“Applicable Unused Fee Rate” means 50.00 basis points.
“Approved Bank” has the meaning provided in subpart (ii) of the definition of
“Cash Equivalents.”
“Approved Fund” means a fund that is engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit and
that is administered or managed by a Lender or an Affiliate of a Lender or its
investment advisor. With respect to any Lender, an Approved Fund shall also
include any swap, special purpose vehicle purchasing or acquiring security
interests in collateralized loan obligations or any other vehicle through which
such Lender may leverage its investments from time to time.
“Asset Sale” means, with respect to any Person, the sale, lease, transfer or
other disposition (including by means of Sale and Lease-Back Transactions, and
by means of mergers, consolidations, amalgamations and liquidations of a
corporation, partnership or limited liability company of the interests therein
of such Person) by such Person to any other Person of any of such Person’s
assets, provided that the term Asset Sale specifically excludes (i) any sales,
transfers or other dispositions of inventory, or obsolete, worn-out or excess
furniture, fixtures, equipment or other property, real or personal, tangible or
intangible, in each case in the ordinary course of business, and (ii) the actual
or constructive total loss of any property or the use thereof resulting from any
Event of Loss.
“Assignment Agreement” means an Assignment Agreement substantially in the form
of Exhibit G hereto.
“Authorized Officer” means, with respect to any Person, any of the following
officers: the President, the Chief Executive Officer, the Chief Financial
Officer, the Treasurer, the Assistant Treasurer or the Controller, or such other
Person as is authorized in writing to act on behalf of such Person and is
acceptable to the Administrative Agent. Unless otherwise qualified, all
references herein to an Authorized Officer shall refer to an Authorized Officer
of the PAC REIT or to an Authorized Officer of the Advisor in its capacity as
manager of the Borrower or the PAC REIT, as applicable.
“Banking Services Obligations” means all obligations of the Credit Parties,
whether absolute or contingent, and howsoever and whensoever created, arising,
evidenced or acquired in connection with the provision of commercial credit
cards, stored value cards, or treasury management services (including controlled
disbursement automated clearinghouse transactions, return items, overdrafts,
netting and interstate depository network services) by any Lender to any Credit
Party.
“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy,” as now or hereafter in effect, or any successor thereto, as
hereafter amended.
“Base Rate” means, for any day, a fluctuating interest rate per annum as shall
be in effect from time to time, which rate per annum shall at all times be equal
to the greatest of: (i) the rate of interest established by KeyBank National
Association, from time to time, as its “prime rate,” whether or not publicly
announced, which interest rate may or may not be the lowest rate charged by it
for commercial loans or other extensions of credit; (ii) the Federal Funds
Effective Rate in effect from time to time, determined one Business Day in

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arrears, plus 1/2 of 1% per annum; and (iii) the Adjusted Eurodollar Rate for a
one-month Interest Period on such day plus 1.00%.
“Base Rate Loan” means any Loan bearing interest at a rate based upon the Base
Rate in effect from time to time.
“Benefited Creditors” means, with respect to the Borrower Guaranteed Obligations
pursuant to Article X, each of the Administrative Agent, the Lenders, and each
Designated Hedge Creditor, and the respective successors and assigns of each of
the foregoing.
“Borrower” has the meaning provided in the first paragraph of this Agreement.
“Borrower Guaranteed Obligations” has the meaning provided in Section 10.01.
“Borrowing” means a Revolving Borrowing.
“Business Day” means (i) any day other than Saturday, Sunday or any other day on
which commercial banks in New York, New York are authorized or required by law
to close and (ii) with respect to any matters relating to Eurodollar Loans, any
day on which dealings in U.S. Dollars are carried on in the London interbank
market.
“Buy-Sell Agreements” means, collectively, each Buy-Sell Agreement among the
Borrower, the Administrative Agent, and each Real Estate Subsidiary with respect
to the membership interests of any Real Estate Subsidiary, each in form and
substance satisfactory to the Administrative Agent.
“Capital Distribution” means, with respect to any Person, a payment made,
liability incurred or other consideration given for the purchase, acquisition,
repurchase, redemption or retirement of any Equity Interest of such Person or as
a dividend, return of capital or other distribution in respect of any of such
Person’s Equity Interests.
“Capital Expenditures” means, without duplication, (a) any expenditure or
commitment to expend money for any purchase or other acquisition of any asset
including capitalized leasehold improvements, which would be classified as a
fixed or capital asset on a consolidated balance sheet of the PAC REIT and its
Subsidiaries prepared in accordance with GAAP, and (b) Capitalized Lease
Obligations and Synthetic Lease Obligations, but excluding the purchase price of
equipment that is purchased substantially contemporaneously with the trade-in of
existing equipment to the extent that the gross amount of such purchase price is
reduced by the credit granted by the seller of such equipment for the equipment
being traded in at such time and (iii) Permitted Acquisitions.
“Capital Lease” as applied to any Person means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, should be accounted for as a capital lease on the balance sheet of
that Person.
“Capital Reserves” means $275 per unit per Real Property on an annual basis.

“Capitalization Rate” means 7.00%.

“Capitalized Lease Obligations” means, with respect to any Person, all
obligations under Capital Leases of such Person, without duplication, in each
case taken at the amount thereof accounted for as liabilities identified as
“capital lease obligations” (or any similar words) on a consolidated balance
sheet of such Person

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prepared in accordance with GAAP.
“Capitalized Value” means, for any owned Real Property as of any date of
determination, an amount equal to (a) the Adjusted Net Operating Income for such
owned Real Property divided by (b) the Capitalization Rate.

“Cash Dividend” means a Capital Distribution by a Person payable in cash to the
holders of Equity Interests of such Person with respect to any class or series
of Equity Interest of such Person.
“Cash Equivalents” means any of the following:
(i)    securities issued or directly and fully guaranteed or insured by the
United States or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than one year from the date of acquisition;
(ii)    U.S. dollar denominated time deposits, certificates of deposit and
bankers’ acceptances of (x) any Lender, (y) any commercial bank of recognized
standing organized under the laws of the United States (or any state thereof or
the District of Columbia) and having capital and surplus in excess of
$500,000,000 or (z) any commercial bank (or the parent company of such bank) of
recognized standing organized under the laws of the United States (or any state
thereof or the District of Columbia) and whose short-term commercial paper
rating from S&P is at least A-1, A-2 or the equivalent thereof or from Moody’s
is at least P-1, P-2 or the equivalent thereof (any such bank, an “Approved
Bank”), in each case with maturities of not more than 180 days from the date of
acquisition;
(iii)    commercial paper issued by any Lender or Approved Bank or by the parent
company of any Lender or Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody’s, or guaranteed by any industrial company with
a long-term unsecured debt rating of at least A or A2, or the equivalent of each
thereof, from S&P or Moody’s, as the case may be, and in each case maturing
within 180 days after the date of acquisition;
(iv)    fully collateralized repurchase agreements entered into with any Lender
or Approved Bank having a term of not more than 30 days and covering securities
described in clause (i) above;
(v)    investments in money market funds substantially all the assets of which
are comprised of securities of the types described in clauses (i) through (iv)
above;
(vi)    investments in money market funds access to which is provided as part of
“sweep” accounts maintained with a Lender or an Approved Bank;
(vii)    investments in industrial development revenue bonds that (A) “re-set”
interest rates not less frequently than quarterly, (B) are entitled to the
benefit of a remarketing arrangement with an established broker dealer, and (C)
are supported by a direct pay letter of credit covering principal and accrued
interest that is issued by an Approved Bank; and
(viii)    investments in pooled funds or investment accounts consisting of
investments of the nature described in the foregoing clause (vii).

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“Cash Proceeds” means, with respect to (i) any Asset Sale, the aggregate cash
payments (including any cash received by way of deferred payment pursuant to a
note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, but only as and when so
received) received by the PAC REIT or any Subsidiary from such Asset Sale, (ii)
any Event of Loss with respect to property of the PAC REIT or any Subsidiary,
the aggregate cash payments, including all insurance proceeds and proceeds of
any award for condemnation or taking, received in connection with such Event of
Loss and (iii) the issuance or incurrence of any Indebtedness, the aggregate
cash proceeds received by the PAC REIT or any Subsidiary in connection with the
issuance or incurrence of such Indebtedness.
“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as the same may be amended from time to time, 42 U.S.C. §
9601 et seq.
“Change of Control” means:
(i)    the acquisition of, or, if earlier, the shareholder or director approval
of the acquisition of, ownership or voting control, directly or indirectly,
beneficially or of record, on or after the Closing Date, by any Person or group
(within the meaning of Rule 13d-3 of the SEC under the 1934 Act, as then in
effect), of more than 33% of the Equity Interests of the PAC REIT;
(ii)    (a) the PAC REIT shall fail to own and control directly 100% of the
general partnership Equity Interests of the Borrower and 67% of the Class A
limited partnership Equity Interests of the Borrower; (b) the Advisor shall fail
to own or control directly 0.000002% Class A limited partnership Equity
Interests of the Borrower and act as the special limited partner of the
Borrower; or (c) the Borrower shall fail to own and control, directly or
indirectly, 100% of the Equity Interests of each Subsidiary (or, in the case of
any Subsidiary that is a non-wholly owned Subsidiary as of the Closing Date, not
less than the percentage of the Equity Interests of such Subsidiary owned and
controlled, directly or indirectly, by the Borrower as of the Closing Date),
except pursuant to a transaction not otherwise prohibited by this Agreement;
(iii)    (a) The Advisor shall fail to be engaged as advisor to, as to actively
advise, the PAC REIT and the Borrower; (b) the percentage of the Equity
Interests of the Advisor owned and controlled, directly or indirectly, by the
equityholders of the Advisor as of the Closing Date shall change, or (c) Messrs.
John A. Williams and Mr. Leonard A. Silverstein, collectively, shall fail to own
and/or control, on a fully diluted basis, directly or indirectly, 100% of the
economic and voting interest in the Equity Interests of the Advisor, free and
clear of all Liens;
(iv)    the occupation of a majority of the seats (other than vacant seats) on
the board of directors (or similar governing body) of the PAC REIT by Persons
who were neither (A) nominated by the Board of Directors of the PAC REIT, as
applicable, nor (B) appointed by directors so nominated; or
(vi)    the occurrence of a change in control, or other similar provision, under
or with respect to any Material Indebtedness Agreement or Equity Interests of
the PAC REIT or any of its Subsidiaries.
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking

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Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.
“Charges” has the meaning provided in Section 11.22.
“CIP Regulations” has the meaning provided in Section 9.07.
“Claims” has the meaning set forth in the definition of “Environmental Claims.”
“Closing Certificate” means a certificate substantially in the form of Exhibit F
attached hereto.
“Closing Date” means August 31, 2012.
“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated and the rulings issued thereunder. Section
references to the Code are to the Code as in effect at the Closing Date and any
subsequent provisions of the Code, amendatory thereof, supplemental thereto or
substituted therefor.
“Collateral” means the “Collateral” as defined in the Security Agreement,
together with any other collateral (whether Real Property or personal property)
covered by any Security Document.
“Collateral Assignment of Acquisition Documents” means a Collateral Assignment
of Acquisition Documents in form and substance satisfactory to the
Administrative Agent, pursuant to which in connection with any Permitted
Acquisition, the applicable Credit Party, among other things, collaterally
assigns its rights and benefits under the applicable Permitted Acquisition
Documentation to the Administrative Agent.
“Collateral Assignment of Loan Documents” means collectively, each Collateral
Assignment of Loan Documents and each Allonge to Note (executed in blank), each
in form and substance satisfactory to the Administrative Agent, pursuant to
which the applicable Credit Party, among other things, collaterally assigns its
rights and benefits under the applicable Mezzanine Loan Documentation or Note
Receivable Documentation to the Administrative Agent.
“Collateral Assignment Agreement” has the meaning specified in the Security
Agreement.
“Combined Outstanding Indebtedness” means, as of any date of determination, the
sum of (i) the combined aggregate principal amount of all Indebtedness of the
Real Estate Subsidiaries which is outstanding under the Property Senior Loan
Documentation on such date, and (ii) the Aggregate Credit Facility Exposure on
such date.
“Commitment” means, with respect to each Lender, its Revolving Commitment or, in
the case of such Lender, all of such Commitments.
“Communications” has the meaning provided in Section 9.16(a).
“Compliance Certificate” has the meaning provided in Section 6.01(c).
“Confidential Information” has the meaning provided in Section 11.15(b).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net

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income (however denominated) or that are franchise Taxes or branch profits
Taxes.
“Consideration” means, in connection with an Acquisition, the aggregate
consideration paid, including borrowed funds, cash, the issuance of securities
or notes, the assumption or incurring of liabilities (direct or contingent), the
payment of consulting fees (excluding any fees payable to any investment banker
in connection with such Acquisition) or fees for a covenant not to compete and
any other consideration paid.
“Consolidated Entities” means the PAC REIT and all of its Subsidiaries that are
consolidated in accordance with GAAP.

“Consolidated Income Tax Expense” means, for any period, all provisions for
taxes based on the net income of the Consolidated Entities (including, without
limitation, any additions to such taxes, and any penalties and interest with
respect thereto), all as determined for the Consolidated Entities on a
consolidated basis in accordance with GAAP.
“Consolidated Interest Expense” means, for any period, total interest expense
(including, without limitation, that which is capitalized and that which is
attributable to Capital Leases or Synthetic Leases) of the Consolidated Entities
on a consolidated basis with respect to all outstanding Indebtedness of the
Consolidated Entities.
“Consolidated Net Worth” means at any date of determination, the all amounts
that, in conformity with GAAP, would be included under the caption “total
stockholders’ equity” (or any like caption) on a consolidated balance sheet of
the PAC REIT and its Subsidiaries on that date.
“Consolidated Senior Debt” means, as of any date of determination, the
Consolidated Total Debt on such date minus the Aggregate Credit Facility
Exposure on such date.
“Consolidated Total Debt” means, as of any date of determination, the sum
(without duplication) of all Indebtedness of the Consolidated Entities on such
date, all as determined on a consolidated basis.
“Continue,” “Continuation” and “Continued” each refers to a continuation of a
Eurodollar Loan for an additional Interest Period as provided in Section 2.07.
“Control Agreements” has the meaning set forth in the Security Agreement.
“Convert,” “Conversion” and “Converted” each refers to a conversion of Loans of
one Type into Loans of another Type.
“Credit Event” means the making of any Borrowing or any Conversion or
Continuation.
“Credit Facility” means the credit facility established under this Agreement
pursuant to which the Lenders shall make Revolving Loans to the Borrower under
the Revolving Facility pursuant to the Revolving Commitment of each such Lender.
“Credit Party” means the PAC REIT, the Borrower or any Subsidiary Guarantor.
“Debt Service Coverage Ratio” means, for any Testing Period, the ratio of (a)
Adjusted EBITDA for such period to (b) the sum of (i) Consolidated Interest
Expense for such period and (ii) all amounts paid or payable by the Consolidated
Entities during such period on account of principal of Indebtedness for money
borrowed (including, without limitation, the Loans, loans, bond indebtedness
required to be optionally

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redeemed, tender advances and the principal components of Capitalized Lease
Obligations), but only to the extent that such amounts constituted current
maturities of long-term debt on the date when paid or required to be paid.
“Default” means any event, act or condition that with notice or lapse of time,
or both, would constitute an Event of Default.
“Defaulting Lender” means, subject to Section 2.12(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within two Business Days of
the date such Loans were required to be funded hereunder unless such Lender
notifies the Administrative Agent and the Borrower in writing that such failure
is the result of such Lender’s determination that one or more conditions
precedent to funding (each of which conditions precedent, together with any
applicable default, shall be specifically identified in such writing) has not
been satisfied, or (ii) pay to the Administrative Agent or any other Lender any
other amount required to be paid by it hereunder within two Business Days of the
date when due, (b) has notified the Borrower or the Administrative Agent in
writing that it does not intend to comply with its funding obligations
hereunder, or has made a public statement to that effect (unless such writing or
public statement relates to such Lender’s obligation to fund a Loan hereunder
and states that such position is based on such Lender’s determination that a
condition precedent to funding (which condition precedent, together with any
applicable default, shall be specifically identified in such writing or public
statement) cannot be satisfied), (c) has failed, within three Business Days
after written request by the Administrative Agent or the Borrower, to confirm in
writing to the Administrative Agent and the Borrower that it will comply with
its prospective funding obligations hereunder (provided that such Lender shall
cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such
written confirmation by the Administrative Agent and the Borrower), or (d) has,
or has a direct or indirect parent company that has, (i) become the subject of a
proceeding under the Bankruptcy Code or any other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time in effect, or
(ii) had appointed for it a receiver, custodian, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged
with reorganization or liquidation of its business or assets, including the
Federal Deposit Insurance Corporation or any other state or federal regulatory
authority acting in such a capacity; provided that a Lender shall not be a
Defaulting Lender solely by virtue of the ownership or acquisition of any equity
interest in that Lender or any direct or indirect parent company thereof by a
Governmental Authority so long as such ownership interest does not result in or
provide such Lender with immunity from the jurisdiction of courts within the
United States or from the enforcement of judgments or writs of attachment on its
assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made with such
Lender. Any determination by the Administrative Agent that a Lender is a
Defaulting Lender under any one or more of clauses (a) through (d) above shall
be conclusive and binding absent manifest error, and such Lender shall be deemed
to be a Defaulting Lender (subject to Section 2.12(b)) upon delivery of written
notice of such determination to the Borrower and each Lender.
“Default Rate” means, for any day, (i) with respect to any Loan, a rate per
annum equal to 4% per annum above the interest rate that is or would be
applicable from time to time to such Loan pursuant to Section 2.06(a) or Section
2.06(b), as applicable and (ii) with respect to any other amount, a rate per
annum equal to 4% per annum above the rate that would be applicable to Revolving
Loans that are Base Rate Loans pursuant to Section 2.06(a).
“Deposit Account” has the meaning set forth in the Security Agreement.
“Designated Hedge Agreement” means any Hedge Agreement to which the PAC REIT or
any of its

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Subsidiaries is a party and as to which a Lender or any of its Affiliates is a
counterparty that, pursuant to a written instrument signed by the Administrative
Agent, has been designated as a Designated Hedge Agreement so that the
Borrower’s or such Subsidiary’s counterparty’s credit exposure thereunder will
be entitled to share in the benefits of the Guaranty and the Security Documents
to the extent the Guaranty and such Security Documents provide guarantees or
security for creditors of the PAC REIT or any Subsidiary under Designated Hedge
Agreements.
“Designated Hedge Creditor” means each Lender or Affiliate of a Lender that
participates as a counterparty to any Credit Party pursuant to any Designated
Hedge Agreement with such Lender or Affiliate of such Lender.
“Development Property” means a Real Property currently under development that
has not achieved an Occupancy Rate of 85% or more or, subject to the last
sentence of this definition, on which the improvements (other than tenant
improvements on unoccupied space) related to the development have not been
completed. The term “Development Property” shall include real property of the
type described in the immediately preceding sentence that satisfies both of the
following conditions: (i) it is to be (but has not yet been) acquired by the PAC
REIT or any of its Subsidiaries upon completion of construction pursuant to a
contract in which the seller of such real property is required to develop or
renovate prior to, and as a condition precedent to, such acquisition and (ii) a
third party is developing such property using the proceeds of a loan that is
guaranteed by, or is otherwise recourse to, the PAC REIT or any of its
Subsidiaries. A Development Property on which all improvements (other than
tenant improvements on unoccupied space) related to the development of such
property have been completed for at least 12 months shall cease to constitute a
Development Property notwithstanding the fact that such property has not
achieved an Occupancy Rate of at least 85%.

“Disqualified Equity Interests” means any Equity Interest that (a) by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary of the Revolving Facility Termination Date, (b)
is convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (i) debt securities or other Indebtedness or (ii) any Equity
Interest referred to in clause (a) above, in each case at any time on or prior
to the first anniversary of the Revolving Facility Termination Date, (c)
contains any repurchase obligation that may come into effect prior to payment in
full of all Obligations, (d) requires cash dividend payments prior to one year
after the Revolving Facility Termination Date, (e) does not provide that any
claims of any holder of such Equity Interest may have against any Credit Party
(including any claims as judgment creditor or other creditor in respect of
claims for the breach of any covenant contained therein) shall be fully
subordinated (including a full remedy bar) to the Obligations in a manner
reasonably satisfactory to the Administrative Agent, (f) provides the holders of
such Equity Interests with any rights to receive any cash upon the occurrence of
a change of control prior to the first anniversary date on which the Obligations
have been irrevocably paid in full, unless the rights to receive such cash are
contingent upon the Obligations being irrevocably paid in full, or (g) is
otherwise prohibited by the terms of this Agreement; provided that any Equity
Interest that may by its terms be put upon the death of the holder thereof shall
not constitute a “Disqualified Equity Interest” for the purposes of this
definition.
“Dollars,” “U.S. Dollars” and the sign “$” each means lawful money of the United
States.
“EBITDA” means, for any period, without duplication, the consolidated net income
or loss of the Consolidated Entities for such period (before deduction for
minority interests in any of the Consolidated

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Entities and excluding any adjustments for “straight-line rent accounting”);
plus (A) the following items to the extent deducted in computing such
consolidated net income for such period: (i) Consolidated Interest Expense of
the Consolidated Entities for such period, (ii) Consolidated Income Tax Expense
of the Consolidated Entities for such period, (iii) consolidated expenses
associated with the upfront costs of acquisitions and not otherwise capitalized,
and (iv) consolidated real estate depreciation, amortization, and other
extraordinary and non-cash items (including, without limitation, any accruals on
Mezzanine Loan Investments) of the Consolidated Entities for such period
(except, in the case of such other non-cash items, to the extent that a cash
payment will be required to be made in respect thereof in a future period);
minus (B) the following items to the extent included in computing such
consolidated net income for such period: (i) all consolidated gains (or plus all
consolidated losses) attributable to any sales or other dispositions of assets,
debt restructurings or early retirement of debt of the Consolidated Entities in
such period, and (ii) all income (or plus all losses) from all Unconsolidated
Entities; plus (or minus, as applicable) (C) the Unconsolidated Allocation
Percentage of any of the items described above in this definition that are
attributable to any Unconsolidated Entity for such period.

“Eligible Assignee” means (i) a Lender, (ii) an Affiliate of a Lender, (iii) an
Approved Fund, and (iv) any other Person (other than a natural Person) approved
by (A) the Administrative Agent, and (B) unless an Event of Default has occurred
and is continuing, the Borrower (each such approval not to be unreasonably
withheld or delayed (and the Borrower shall be deemed to have consented if it
fails to object to any assignment within five Business Days after it received
written notice thereof)); provided, however, that notwithstanding the foregoing,
“Eligible Assignee” shall not include (w) the Advisor, the PAC REIT, the
Borrower or any of their respective Affiliates or Subsidiaries, (x) any holder
of any Subordinated Indebtedness or any of such holder’s Affiliates, (y) any
Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a
Lender hereunder, would constitute any of the foregoing Persons described in
this clause (y), or (z) prior to the occurrence and during the continuance of an
Event of Default, any competitor of the PAC REIT, the Borrower or any of their
Subsidiaries or Affiliates.
“Environmental Claims” means any and all global, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of non-compliance or
violation, investigations or proceedings relating in any way to any
Environmental Law or any permit issued under any such law (hereafter “Claims”),
including, without limitation, (i) any and all Claims by any Governmental
Authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any applicable Environmental Law, and (ii) any and all
Claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the storage,
treatment or Release (as defined in CERCLA) of any Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or the
environment.
“Environmental Law” means any applicable Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy and rule of common law now or
hereafter in effect and in each case as amended, and any binding and enforceable
judicial or global interpretation thereof, including any judicial or global
order, consent, decree or judgment issued to or rendered against the PAC REIT or
any of its Subsidiaries relating to the environment, employee health and safety
or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42
U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.;
the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning
and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq., the
Hazardous Material Transportation Act, 49 U.S.C. § 5101 et seq. and the
Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); and any state and local
or foreign counterparts or equivalents, in each case as amended from time to
time.

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“Environmental Liabilities and Costs” means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs of
investigations and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any Environmental Claim which relate to any
environmental condition or a release, use, handling, storage or treatment of
Hazardous Materials by any Credit Party or any of its Subsidiaries or a
predecessor in interest from or on to (i) any property presently or formerly
owned by any Credit Party or any of its Subsidiaries or (ii) any facility which
received Hazardous Materials generated by any Credit Party or any of its
Subsidiaries.
“Equity Interest” means with respect to any Person, any and all shares,
interests, participations or other equivalents, including membership interests
(however designated, whether voting or non-voting) of equity of such Person,
including, if such Person is a partnership, partnership interests (whether
general or limited) or any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership, but in no event will Equity
Interest include any debt securities convertible or exchangeable into equity
unless and until actually converted or exchanged.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the
Closing Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
“ERISA Affiliate” means each Person (as defined in Section 3(9) of ERISA), which
together with the PAC REIT or any of its Subsidiaries, would be deemed to be a
“single employer” (i) within the meaning of Section 414(b), (c), (m) or (o) of
the Code or Section 4001(a)(14) or 4001(b)(i) of ERISA or (ii) as a result of
the PAC REIT or any Subsidiary being or having been a general partner of such
Person.
“ERISA Event” means: (i) that a Reportable Event has occurred with respect to
any Plan; (ii) the institution of any steps by the PAC REIT or any Subsidiary,
any ERISA Affiliate, the PBGC or any other Person to terminate any Plan or the
occurrence of any event or condition described in Section 4042 of ERISA that
constitutes grounds for the termination of, or the appointment of a trustee to
administer, a Plan; (iii) the institution of any steps by the PAC REIT or any
Subsidiary or any ERISA Affiliate to withdraw from any Multi-Employer Plan or
Multiple Employer Plan, if such withdrawal could result in withdrawal liability
(as described in Part 1 of Subtitle E of Title IV of ERISA or in Section 4063 of
ERISA) in excess of $500,000; (iv) a non-exempt “prohibited transaction” within
the meaning of Section 406 of ERISA in connection with any Plan; (v) that a Plan
has Unfunded Benefit Liabilities exceeding $500,000; (vi) the cessation of
operations at a facility of the PAC REIT or any Subsidiary or any ERISA
Affiliate in the circumstances described in Section 4062(e) of ERISA; (vii) the
conditions for imposition of a Lien under Section 303(a) of ERISA shall have
been met with respect to a Plan; (viii) the adoption of an amendment to a Plan
requiring the provision of security to such Plan pursuant to Section 206(g) of
ERISA; (ix) the insolvency of or commencement of reorganization proceedings with
respect to a Multi-Employer Plan; (x) any material increase in the contingent
liability of the PAC REIT or any Subsidiary with respect to any post-retirement
welfare liability; or (xi) the taking of any action by, or the threatening of
the taking of any action by, the Internal Revenue Service, the Department of
Labor or the PBGC with respect to any of the foregoing.
“Eurodollar Loan” means each Loan bearing interest at a rate based upon the
Adjusted Eurodollar Rate.
“Event of Default” has the meaning provided in Section 8.01.
“Event of Loss” means, with respect to any property, (i) the actual or
constructive total loss of such

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property or the use thereof resulting from destruction, damage beyond repair, or
the rendition of such property permanently unfit for normal use from any
casualty or similar occurrence whatsoever, (ii) the destruction or damage of a
portion of such property from any casualty or similar occurrence whatsoever,
(iii) the condemnation, confiscation or seizure of, or requisition of title to
or use of, any property, or (iv) in the case of any property located upon a
leasehold, the termination or expiration of such leasehold.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its Applicable Lending Office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Commitment pursuant
to a law in effect on the date on which (i) such Lender acquires such interest
in the Loan or Commitment (other than pursuant to an assignment request by the
Borrower under Section 3.04) or (ii) such Lender changes its Applicable Lending
Office, except in each case to the extent that, pursuant to Section 3.03,
amounts with respect to such Taxes were payable either to such Lender's assignor
immediately before such Lender became a party hereto or to such Lender
immediately before it changed its Applicable Lending Office, (c) Taxes
attributable to such Recipient’s failure to comply with Section 3.03(g) and (d)
any U.S. federal withholding Taxes imposed under FATCA.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to entered into pursuant to Section 1471(b)(1) of the Code.
“Federal Funds Effective Rate” means, for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
“Fee Letter” means the Fee Letter dated as of August 31, 2012 among the
Borrower, the PAC REIT and the Administrative Agent.
“Fees” means all amounts payable pursuant to, or referred to in, Section 2.08.
“Financial Officer” means the chief executive officer or the chief financial
officer of the PAC REIT.
“Financial Projections” has the meaning provided in Section 5.07(b).
“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is
not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that
is resident or organized under the laws of a jurisdiction other than that in
which the Borrower is resident for tax purposes.
“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time.

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“Governmental Authority” means the government of the United States of America or
any other nation, or of 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 (including any supra-national bodies such as the European Union or
the European Central Bank).
“Granting Lender” has the meaning provided in Section 11.06(f).
“Guarantors” shall mean, collectively, the PAC REIT and the Subsidiary
Guarantors.
“Guaranty” has the meaning provided in Section 4.01(iii).
“Guaranty Obligations” means as to any Person (without duplication) any
obligation of such Person guaranteeing any Indebtedness (“primary Indebtedness”)
of any other Person (the “primary obligor”) in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent: (i) to purchase any such primary Indebtedness or any
property constituting direct or indirect security therefore; (ii) to advance or
supply funds for the purchase or payment of any such primary Indebtedness or to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor; (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary Indebtedness of the ability of the primary obligor to make
payment of such primary Indebtedness; or (iv) otherwise to assure or hold
harmless the owner of such primary Indebtedness against loss in respect thereof,
provided, however, that the definition of Guaranty Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary Indebtedness in
respect of which such Guaranty Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder).
“Hazardous Materials” means (i) any petrochemical or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
and (ii) any chemicals, materials or substances defined as or included in the
definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,”
“restricted hazardous materials,” “extremely hazardous wastes,” “restrictive
hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants” or
“pollutants,” or words of similar meaning and regulatory effect, under any
applicable Environmental Law.
“Hedge Agreement” means (i) any interest rate swap agreement, any interest rate
cap agreement, any interest rate collar agreement or other similar interest rate
management agreement or arrangement, or (ii) any currency swap or option
agreement, foreign exchange contract, forward currency purchase agreement or
similar currency management agreement or arrangement.
“Hedging Obligations” means all obligations of any Credit Party under and in
respect of (i) any Hedge Agreements entered into with any Secured Hedge Provider
or (ii) any Designated Hedge Agreement.
“Indebtedness” of any Person means without duplication:
(i)     all indebtedness of such Person for borrowed money;
(ii)     all obligations of such Person, whether or not for money borrowed (a)
represented by notes payable, or drafts accepted, in each case representing
extensions of credit; (b) evidenced by bonds, notes,

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debentures and similar debt securities of such Person; or (c) constituting
purchase money indebtedness, conditional sales contracts, title retention debt
instruments or other similar instruments, upon which interest charges are
customarily paid or that are issued or assumed as full or partial payment for
property or services rendered;
(iii)     all Capitalized Lease Obligations of such Person;
(iv)    all reimbursement obligations of such Person under any outstanding
letters of credit or acceptances (whether or not the same have been presented
for payment);
(v)     all obligations of such Person in respect of any purchase obligation,
repurchase obligation, takeout commitment or forward equity commitment, in each
case evidenced by a binding agreement (excluding any such obligation to the
extent the obligation can be solely satisfied by the issuance of Equity
Interests);
(vi)     all obligations of such Person in respect of accrued but unpaid
dividends in respect of Equity Interests of such Person;
(vii)     all Guaranty Obligations of such Person and, without duplication of
the foregoing, all indebtedness of such Person guaranteed or otherwise recourse
(except for guaranties of customary exceptions for fraud, misapplication of
funds, environmental indemnities, violation of “special purpose entity” and
other similar exceptions to recourse liability until a claim is made with
respect thereto and then shall be included only to the extent of the amount of
such claim), all obligation to supply funds to or in any manner to invest
directly or indirectly in a Person, to maintain working capital or equity
capital of a Person or otherwise to maintain net worth, solvency or other
financial condition of a Person, to purchase indebtedness, or to assure the
owner of indebtedness against loss, including without limitation, through an
agreement to purchase property, securities, goods, supplies, or services for the
purpose of enabling the debtor to make payment of the indebtedness held by such
owner or otherwise;
(viii)     the deferred purchase price of capital assets or services that in
accordance with GAAP would be shown on the liability side of the balance sheet
of such Person;
(ix)     the face amount of all letters of credit issued for the account of such
Person and, without duplication, all drafts drawn thereunder;
(x)     all indebtedness of a second Person secured by any Lien on any property
owned by such first Person, whether or not such indebtedness has been assumed;
(xi)     the present value, determined on the basis of the implicit interest
rate, of all basic rental obligations under all Synthetic Leases of such Person;
(xii)     all obligations of such Person with respect to asset securitization
financing;
(xiii)     all net obligations of such Person under Hedge Agreements;
(xiv)     all Disqualified Equity Interests of such Person; and
(xv)     the full outstanding balance of trade receivables, notes or other
instruments sold with full recourse (and the portion thereof subject to
potential recourse, if sold with limited recourse), other than in any such case
any thereof sold solely for purposes of collection of delinquent accounts;

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provided, however, that (y) neither trade payables (other than trade payables
outstanding for more than 180 days after the date such trade payables were
created), deferred revenue, taxes nor other similar accrued expenses, in each
case arising in the ordinary course of business, shall constitute Indebtedness;
and (z) the Indebtedness of any Person shall in any event include (without
duplication) the Indebtedness of any other entity (including any general
partnership in which such Person is a general partner) to the extent such Person
is liable thereon 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 expressly that such Person is not liable thereon.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any
Credit Party under any Loan Document and (b) to the extent not otherwise
described in (a), Other Taxes.
“Indemnitees” has the meaning provided in Section 11.02.
“Insolvency Event” means, with respect to any Person:
(i)     the commencement of a voluntary case by such Person under the Bankruptcy
Code or the seeking of relief by such Person under any bankruptcy or insolvency
or analogous law in any jurisdiction outside of the United States;
(ii)     the commencement of an involuntary case against such Person under the
Bankruptcy Code or any bankruptcy or insolvency or analogous law in any
jurisdiction outside of the United States and the petition is not controverted
within 10 days, or is not dismissed within 45 days, after commencement of the
case;
(iii)     a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of such Person;
(iv)     such Person commences (including by way of applying for or consenting
to the appointment of, or the taking of possession by, a rehabilitator,
receiver, custodian, trustee, conservator or liquidator (collectively, a
“conservator”) of such Person or all or any substantial portion of its property)
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency, liquidation, rehabilitation,
conservatorship or similar law of any jurisdiction whether now or hereafter in
effect relating to such Person;
(v)     any such proceeding of the type set forth in clause (iv) above is
commenced against such Person to the extent such proceeding is consented to by
such Person or remains undismissed for a period of 45 days;
(vi)     such Person is adjudicated insolvent or bankrupt;
(vii)     any order of relief or other order approving any such case or
proceeding is entered;
(viii)     such Person suffers any appointment of any conservator or the like
for it or any substantial part of its property that continues undischarged or
unstayed for a period of 45 days;
(ix)     such Person makes a general assignment for the benefit of creditors or
generally does not pay its debts as such debts become due; or

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(x)     any corporate (or similar organizational) action is taken by such Person
for the purpose of effecting any of the foregoing.
“Intellectual Property” has the meaning provided in the Security Agreement.
“Interest Period” means, with respect to each Eurodollar Loan, a period of one,
two, three or six months as selected by the Borrower; provided, however, that
(i) the initial Interest Period for any Borrowing of such Eurodollar Loan shall
commence on the date of such Borrowing (the date of a Borrowing resulting from a
Conversion or Continuation shall be the date of such Conversion or Continuation)
and each Interest Period occurring thereafter in respect of such Borrowing shall
commence on the day on which the next preceding Interest Period expires; (ii) if
any Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period, such
Interest Period shall end on the last Business Day of such calendar month; (iii)
if any Interest Period would otherwise expire on a day that is not a Business
Day, such Interest Period shall expire on the next succeeding Business Day;
provided, however, that if any Interest Period would otherwise expire on a day
that is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day; (iv) no Interest Period for any Eurodollar Loan may be
selected that would end after the Revolving Facility Termination Date; and (v)
if, upon the expiration of any Interest Period, the Borrower has failed to (or
may not) elect a new Interest Period to be applicable to the respective
Borrowing of Eurodollar Loans as provided above, the Borrower shall be deemed to
have elected to Convert such Borrowing to Base Rate Loans effective as of the
expiration date of such current Interest Period.
“Investment” means: (i) any direct or indirect purchase or other acquisition by
a Person of any Equity Interest of any other Person; (ii) any loan, advance
(other than deposits with financial institutions available for withdrawal on
demand), capital contribution or extension of credit to, guarantee or assumption
of debt or purchase or other acquisition of any other Indebtedness of, any
Person by any other Person, including without limitation any Mezzanine Loan
Investment or Note Receivable Investment; or (iii) the purchase, acquisition or
investment of or in any stocks, bonds, mutual funds, notes, debentures or other
securities, or any deposit account, certificate of deposit or other investment
of any kind.
“IRS” means the United States Internal Revenue Service.
“Leaseholds” of any Person means all the right, title and interest of such
Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
“Lender” and “Lenders” have the meaning provided in the first paragraph of this
Agreement and includes any other Person that becomes a party hereto pursuant to
an Assignment Agreement, other than any such Person that ceases to be a party
hereto pursuant to an Assignment Agreement.
“Lender Register” has the meaning provided in Section 2.05(b).
“Lien” means any mortgage, pledge, security interest, hypothecation,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
“Loan” means any Revolving Loan.
“Loan Documents” means this Agreement, the Notes, the Guaranty, the Security
Documents, the Management Subordination Agreement and the Fee Letter.

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“Management Agreement” means the Third Amended and Restated Management Agreement
dated as of May 13, 2011 by and among the Advisor, the PAC REIT and the
Borrower, as in effect on the Closing Date.
“Management Subordination Agreement” means the Management Subordination
Agreement, dated as of the Closing Date, between the Advisor and the
Administrative Agent and substantially in the form of Exhibit H hereto.
“Margin Stock” has the meaning provided in Regulation U.
“Material Adverse Effect” means any or all of the following: (i) any material
adverse effect on the business, operations, property, assets, liabilities,
financial or other condition or prospects of the Borrower, of the PAC REIT, or
of the PAC REIT and its Subsidiaries, taken as a whole; (ii) any material
adverse effect on the ability of the Borrower or any other Credit Party to
perform its obligations under any of the Loan Documents to which it is a party,
or any material adverse effect on the ability of the Borrower and the other
Credit Parties, taken as a whole, to perform their obligations under any of the
Loan Documents to which they are party; (iii) any material adverse effect on the
validity, effectiveness or enforceability, as against any Credit Party, of any
of the Loan Documents to which it is a party; (iv) any material adverse effect
on the rights and remedies of the Administrative Agent or any Lender under any
Loan Document; or (v) any material adverse effect on the validity, perfection or
priority of any Lien in favor of the Administrative Agent on any of the
Collateral.
“Material Contract” means (i) each contract or agreement to which the PAC REIT
or any of its Subsidiaries is a party involving aggregate consideration payable
to or by the PAC REIT or such Subsidiary of $500,000 or more per annum (other
than purchase orders in the ordinary course of business of the PAC REIT or such
Subsidiary and other than contracts that by their terms may be terminated by the
PAC REIT or such Subsidiary in the ordinary course of its business upon less
than 60 days’ notice without penalty or premium), (ii) all Mezzanine Loan
Documentation, and (iii) all Note Receivable Documentation.
“Material Indebtedness” means, as to the PAC REIT or any of its Subsidiaries,
any particular Indebtedness of the PAC REIT or such Subsidiary (including any
Guaranty Obligations) in excess of the aggregate principal amount of $500,000.
“Material Indebtedness Agreement” means any agreement governing or evidencing
any Material Indebtedness.
“Maximum Rate” has the meaning provided in Section 11.22.
“Mezzanine Loan Documentation” means, collectively, each agreement, document, or
instrument executed and delivered in connection with, or evidencing, a Mezzanine
Loan Investment by a Mezzanine Loan Subsidiary, including without limitation,
each loan or credit agreement, note, security or pledge agreement, guarantee,
and each agreement or document evidencing or constituting any supporting
obligation in respect of such Mezzanine Loan Investment, together with all
schedules, exhibits and annexes thereto and all side letters and agreements
affecting the terms thereof or entered into in connection therewith, in each
case as amended, supplemented or otherwise modified from time to time.
“Mezzanine Loan Investment” means any mezzanine loan or advance made by a
Mezzanine Loan Subsidiary to a Person other than a Credit Party for the
acquisition, construction, development and/or operation of Real Property.

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“Mezzanine Loan Subsidiary” means each now and hereafter formed, acquired or
existing Credit Party which (a) is a special purpose entity, (b) is a Subsidiary
of the Borrower organized under the laws of the United States, any State
thereof, or the District of Columbia, and (c) was formed or acquired for the
sole purposes of, and conducts no substantive business other than, the financing
of Real Property.
“Minimum Borrowing Amount” means (i) with respect to any Base Rate Loan,
$100,000, with minimum increments thereafter of $100,000, and (ii) with respect
to any Eurodollar Loan, $100,000, with minimum increments thereafter of
$100,000.
“Moody’s” means Moody’s Investors Service, Inc. and its successors.
“Mortgage” means a Mortgage, Deed of Trust or other instrument in form and
substance reasonably satisfactory to the Administrative Agent, executed by a
Credit Party with respect to a Mortgaged Real Property, as the same may from
time to time be amended, restated or otherwise modified.
“Mortgaged Real Property” means any parcel of Real Property that shall become
subject to a Mortgage after the Closing Date, in each case together with all of
such Credit Party’s right, title and interest in the improvements and buildings
thereon and all appurtenances, easements or other rights belonging thereto.
“Multi-Employer Plan” means a multi-employer plan, as defined in Section
4001(a)(3) of ERISA to which the PAC REIT or any Subsidiary of the PAC REIT or
any ERISA Affiliate is making or accruing an obligation to make contributions or
has within any of the preceding five plan years made or accrued an obligation to
make contributions.
“Multiple Employer Plan” means an employee benefit plan, other than a
Multi-Employer Plan, to which the PAC REIT or any Subsidiary of the PAC REIT or
any ERISA Affiliate, and one or more employers other than the Borrower or a
Subsidiary of the Borrower or an ERISA Affiliate, is making or accruing an
obligation to make contributions or, in the event that any such plan has been
terminated, to which the Borrower or a Subsidiary of the Borrower or an ERISA
Affiliate made or accrued an obligation to make contributions during any of the
five plan years preceding the date of termination of such plan.
“Net Cash Proceeds” means, with respect to (i) any Asset Sale, the Cash Proceeds
resulting therefrom net of (A) reasonable and customary expenses of sale
incurred in connection with such Asset Sale, and other reasonable and customary
fees and expenses incurred, and all state and local taxes paid or reasonably
estimated to be payable by such person as a consequence of such Asset Sale, and
the payment of principal, premium and interest of Indebtedness (other than the
Obligations) secured by the asset that is the subject of such Asset Sale, and
required to be, and that is, repaid under the terms thereof as a result of such
Asset Sale, and (B) incremental federal, state and local income taxes paid or
payable as a result thereof; (ii) any Event of Loss, the Cash Proceeds resulting
therefrom net of (A) reasonable and customary expenses incurred in connection
with such Event of Loss, and local taxes paid or reasonably estimated to be
payable by such person as a consequence of such Event of Loss and the payment of
principal, premium and interest of Indebtedness (other than the Obligations)
secured by the asset that is the subject of the Event of Loss and required to
be, and that is, repaid under the terms thereof as a result of such Event of
Loss, and (B) incremental federal, state and local income taxes paid or payable
as a result thereof; and (iii) the incurrence or issuance of any Indebtedness,
the Cash Proceeds resulting therefrom net of reasonable and customary fees and
expenses incurred in connection therewith and net of the repayment or payment of
any Indebtedness or obligation intended to be repaid or paid with the proceeds
of such Indebtedness; in the case of each of clauses (i), (ii) and (iii), to the
extent, but only to the extent, that the amounts so deducted are (x) actually
paid to a Person that, except in the case of reasonable out-of-pocket expenses,
is not an Affiliate of such Person or any of its Subsidiaries (other than fees
paid to the Advisor pursuant to the Management Agreement prior to an Event

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of Default) and (y) properly attributable to such transaction or to the asset
that is the subject thereof.
“Net Operating Income” means, for any Real Property and for a given period, the
sum of the following (without duplication): (a) gross revenues (including
interest income) received in the ordinary course from such Real Property minus
(b) all expenses paid or accrued related to the ownership, operation or
maintenance of such Real Property, including but not limited to taxes,
assessments and the like, insurance, utilities, payroll costs, maintenance,
repair and landscaping expenses, marketing expenses, and general and
administrative expenses (including an appropriate allocation for legal,
accounting, advertising, marketing and other expenses incurred in connection
with such Real Property, but specifically excluding general overhead expenses of
the PAC REIT, the Borrower or any Subsidiary, any property management fees, debt
service charges, income taxes, depreciation, amortization, other non cash
expenses, and any extraordinary, non-recurring expense associated with any
financing, merger, acquisition, divestiture or other capital transaction) minus
(c) a management fee of the greater of actual or three percent (3.0%) of the
gross revenues for such Real Property for such period.

“1934 Act” means the Securities Exchange Act of 1934, as amended.
“Non-Consenting Lender” has the meaning provided in Section 11.12(e).
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.
“Note” means a Revolving Facility Note.
“Note Receivable Documentation” means, collectively, each agreement, document,
or instrument executed and delivered in connection with, or evidencing, a Note
Receivable Investment, including without limitation each loan or credit
agreement, note, security or pledge agreement, guarantee, and each agreement or
document evidencing or constituting any supporting obligation in respect of such
Note Receivable Investment, together with all schedules, exhibits and annexes
thereto and all side letters and agreements affecting the terms thereof or
entered into in connection therewith, in each case as amended, supplemented or
otherwise modified from time to time.
“Note Receivable Investment” means any loan or advance made by a Credit Party
(other than the PAC REIT) to any Person other than a Credit Party for the
acquisition, construction, development and/or operation of Real Property.
“Notice of Borrowing” has the meaning provided in Section 2.03(b).
“Notice of Continuation or Conversion” has the meaning provided in Section
2.07(b).
“Notice Office” means the office of the Administrative Agent at 1200 Abernathy
Road NE, Suite 1550, Atlanta, Georgia 30328, Attention: Kevin P. Murray
(facsimile: 770-510-2195), or such other office as the Administrative Agent may
designate in writing to the Borrower from time to time.
“Obligations” means all amounts, indemnities and reimbursement obligations,
direct or indirect, contingent or absolute, of every type or description, and at
any time existing, owing by the Borrower or any other Credit Party to the
Administrative Agent, any Lender, any Affiliate of an Lender, or any Secured
Hedge Provider pursuant to the terms of this Agreement, any other Loan Document
or any Designated Hedge Agreement (including, but not limited to, interest and
fees that accrue after the commencement by or against any Credit Party of any
insolvency proceeding, regardless of whether allowed or allowable in such
proceeding

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or subject to an automatic stay under Section 362(a) of the Bankruptcy Code).
Without limiting the generality of the foregoing description of Obligations, the
Obligations include (a) the obligation to pay principal, interest, charges,
expenses, fees, reasonable attorneys’ fees and disbursements, indemnities and
other amounts payable by the Credit Parties under any Loan Document, (b) Banking
Services Obligations, (c) Hedging Obligations and (d) the obligation to
reimburse any amount in respect of any of the foregoing that any Agent, any
Lender or any Affiliate or any Secured Hedge Provider of any of them, in
connection with the terms of any Loan Document, may elect to pay or advance on
behalf of the Credit Parties.
“Occupancy Rate” means, with respect to a Real Property at any time, the ratio,
expressed as a percentage, of (a) the net rentable square footage of such Real
Property actually occupied by non-Affiliate tenants paying rent at rates not
materially less than rates generally prevailing at the time the applicable lease
was entered into, pursuant to binding leases as to which no monetary default has
occurred and has continued unremedied for 30 or more days to (b) the aggregate
net rentable square footage of such Real Property. For the purposes of the
definition of “Occupancy Rate”, a tenant shall be deemed to actually occupy a
Real Property notwithstanding a temporary cessation of operations for
renovation, repairs or other temporary reason.

“Operating Lease” as applied to any Person means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is not accounted for as a Capital Lease on the balance sheet of that
Person.
“Organizational Documents” means, with respect to any Person (other than an
individual), such Person’s Articles (Certificate) of Incorporation, or
equivalent formation documents, and Regulations (Bylaws), or equivalent
governing documents, and, in the case of any partnership, includes any
partnership agreement and any amendments to any of the foregoing.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 3.04).
“Oxford Properties Note” means that certain Promissory Note, dated as of March
26, 2012, made by Oxford Properties, LLC and payable to the order of the
Borrower in the original principal amount of $650,000.
“PAC REIT” has the meaning provided in the first paragraph of this Agreement.
“Participant Register” has the meaning provided in Section 11.06(b).
“Payment Office” means the office of the Administrative Agent at 1200 Abernathy
Road NE, Suite 1550, Atlanta, Georgia 30328, Attention: Shelly West (facsimile:
770-510-2197), or such other office(s), as the Administrative Agent may
designate to the Borrower in writing from time to time.

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“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to
Section 4002 of ERISA, or any successor thereto.
“Perfection Certificate” has the meaning provided in the Security Agreement.
“Permitted Acquisition” means any Acquisition as to which all of the following
conditions are satisfied:
(i)    such Acquisition is for (A) the ownership or, or investment in, assets
constituting Real Property for multi-family use or the Equity Interests of
entities owning such Real Properties for multi-family use, or (B) the Shopping
Center Asset;
(ii)    the Borrower shall have furnished to the Administrative Agent at least
10 Business Days prior to the consummation of such Acquisition (or such shorter
period of time as the Administrative Agent agrees) (A) an executed term sheet
and/or commitment letter (setting forth in reasonable detail the terms and
conditions of such Acquisition) and, at the request of the Administrative Agent,
such other information and documents that the Administrative Agent may request,
including, without limitation, executed counterparts of the respective
agreements, instruments or other documents pursuant to which such Acquisition is
to be consummated (including, without limitation, any material agreements and
any environmental reports), any schedules to such agreements, instruments or
other documents and all other material ancillary agreements, instruments or
other documents to be executed or delivered in connection therewith, (B) pro
forma financial statements of the Consolidated Entities (including, if
applicable, any Person acquired or formed in connection with such Acquisition)
giving effect to the consummation of such Acquisition to the extent that the
Consideration for such Acquisition exceeds $1,000,000, and (C) copies of such
other agreements, instruments or other documents (other than the Loan Documents
required by Section 6.10) as the Administrative Agent shall reasonably request;
(iii)    the agreements, instruments and other documents referred to in
paragraph (ii) above shall provide that (A) neither the Credit Parties nor any
of their Subsidiaries shall, in connection with such Acquisition, assume or
remain liable in respect of any Indebtedness of the seller or sellers, except
for Indebtedness permitted hereunder, and (B) all property to be so acquired in
connection with such Acquisition shall be free and clear of any and all Liens,
except for Permitted Liens (and if any such property is subject to any Lien not
permitted by this clause (B), then concurrently with such Acquisition such Lien
shall be released);
(iv)    such Acquisition shall be effected in such a manner so that the acquired
Equity Interests or assets are owned either by a Credit Party that will become a
Credit Party in accordance with Section 6.09 and, if effected by merger or
consolidation involving a Credit Party, such Credit Party shall be the
continuing or surviving Person or the continuing or surviving Person shall
become a Credit Party upon the effectiveness of such merger or consolidation;
(v)    no Default or Event of Default shall exist prior to or immediately after
giving effect to such Acquisition;
(vi)    the PAC REIT would, after giving effect to such Acquisition, on a pro
forma basis (as determined in accordance with subpart (vii) below whether or not
a certificate is required pursuant to such subpart (vii)), be in compliance with
the financial covenants contained in Section 7.07;
(vii)    at least five Business Days prior to the consummation of any such
Acquisition in

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which the Consideration exceeds $1,000,000, the PAC REIT shall have delivered to
the Administrative Agent and the Lenders (A) a certificate of an Authorized
Officer demonstrating, in reasonable detail, the computation of the financial
covenants referred to in Section 7.07 on a pro forma basis, such pro forma
ratios being determined as if (y) such Acquisition had been completed at the
beginning of the most recent Testing Period for which financial information for
the PAC REIT and the business or Person to be acquired, is available, and (z)
any such Indebtedness, or other Indebtedness incurred to finance such
Acquisition, had been outstanding for such entire Testing Period, and (B)
historical financial statements relating to the business or Person to be
acquired evidencing positive Target EBITDA on a pro forma basis (with such
adjustments as the Administrative Agent agrees to) for the four fiscal quarter
period most recently ended prior to the date of the Acquisition and such other
information as the Administrative Agent may reasonably request,
(viii)    all transactions in connection with such Acquisition shall be
consummated, in all material respects, in accordance with all applicable laws;
(ix)    the Acquisition shall have been approved by the board of directors or
other governing body or controlling Person of the Person from whom such Equity
Interests or assets are proposed to be acquired;
(x)    as of the date of the Acquisition, (A) the Borrower shall have delivered,
or caused the applicable Credit Parties party to such Acquisition to have
delivered, to the Administrative Agent and the Lenders a fully-executed
Collateral Assignment of Acquisition Documents; and (B) a Financial Officer
shall provide a certificate to the Administrative Agent and the Lenders
certifying as to the matters set forth in the foregoing clauses and further
certifying that the Acquisition could not reasonably be expected to have a
Material Adverse Effect; and
(xi)    immediately after giving effect to such Acquisition, any acquired or
newly formed Subsidiary shall (i) be a wholly owned Subsidiary of the Borrower
which is organized under the laws of the United States, any State thereof, or
the District of Columbia, and (ii) take all actions required to be taken
pursuant to Section 6.09 and Section 6.10 (or within 30 days of such Acquisition
in the case of Section 6.10(b)).
“Permitted Acquisition Agreement” means each stock purchase agreement, asset
purchase agreement or other agreement entered into by the PAC REIT or any of its
Subsidiaries in connection with any Permitted Acquisition, in each case as
amended, supplemented or otherwise modified from time to time.
“Permitted Acquisition Documentation” means, collectively, each Permitted
Acquisition Agreement and all schedules, exhibits and annexes thereto and all
side letters and agreements (including without limitation all non competition
agreements) affecting the terms thereof or entered into in connection therewith,
in each case as amended, supplemented or otherwise modified from time to time.
“Permitted Creditor Investment” means any securities (whether debt or equity)
received by the PAC REIT or any of its Subsidiaries in connection with the
bankruptcy or reorganization of any customer or supplier of the PAC REIT or any
such Subsidiary and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business.
“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured lender) business judgment.

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“Permitted Lien” means any Lien permitted by Section 7.03.
“Person” means any individual, partnership, joint venture, firm, corporation,
limited liability company, association, central bank, trust or other enterprise
or any governmental or political subdivision or any agency, department or
instrumentality thereof.
“Plan” means any Multi-Employer Plan, Multiple Employer Plan or Single-Employer
Plan.
“Platform” has the meaning provided in Section 9.16(b).
“primary Indebtedness” has the meaning provided in the definition of “Guaranty
Obligations.”
“primary obligor” has the meaning provided in the definition of “Guaranty
Obligations.”
“Prohibited Transaction” means a transaction with respect to a Plan that is
prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt
under Section 4975 of the Code or Section 408 of ERISA.
“Property Debt Yield” means (i) the Stabilized Property NOI for any Testing
Period, divided by (ii) the Combined Outstanding Indebtedness on the last day of
such Testing Period.
“Property Senior Loan Documentation” means, collectively, each agreement,
document or instrument executed and delivered in connection with any
non-recourse mortgage financing to a Real Estate Subsidiary, including without
limitation, each loan or credit agreement, note, security or pledge agreement,
together with all schedules, exhibits and annexes thereto and all side letters
and agreements affecting the terms thereof or entered into in connection
therewith, in each case as amended, supplemented or otherwise modified from time
to time.
“RCRA” means the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et
seq.
“Real Estate Subsidiary” means each of Stone Rise, Trail Creek, Summit Crossing
or any hereafter formed, acquired or existing Subsidiary of the Borrower which
(a) is a special purpose entity, (b) is a Subsidiary organized under the laws of
the United States, any State thereof, or the District of Columbia, (c) owns, or
is intended to own, Real Property, and (d) was formed or acquired for the sole
purposes of, and conducts no substantive business other than, the ownership,
construction, development and operation, but specifically excluding the
financing, of such Real Property.
“Real Property” of any Person shall mean all of the right, title and interest of
such Person in and to land, improvements and fixtures, including Leaseholds.
“Recipient” means (a) the Administrative Agent, and (b) any Lender, as
applicable.
“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.
“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.
“REIT” means a Person qualifying for treatment as a “real estate investment
trust” under the Code.

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“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the directors, officers, employees, agents and advisors of such Person and
of such Person’s Affiliates.
“Remedial Action” means all actions any Environmental Law requires any Credit
Party or any of its Subsidiaries to: (i) clean up, remove, remediate, contain,
treat, monitor, assess, evaluate or in any other way address Hazardous Materials
in the environment; (ii) prevent or minimize a release or threatened release of
Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the environment; (iii) perform pre-remedial studies
and investigations and post-remedial operation and maintenance activities; or
(iv) perform any other actions authorized by 42 U.S.C. § 9601.
“Reportable Event” means an event described in Section 4043 of ERISA or the
regulations thereunder with respect to a Plan, other than those events as to
which the notice requirement is waived under subsection .22, .23, .25, .27, .28,
.29, .30, .31, .32, .34, .35, .62, .63, .64, .65 or .67 of PBGC Regulation
Section 4043.
“Required Lenders” means Lenders whose Revolving Credit Facility Exposure and
Unused Revolving Commitments constitute more than 50% of the sum of the
Aggregate Credit Facility Exposure and the Unused Total Revolving Commitment.
The Revolving Credit Facility Exposure and Unused Revolving Commitments of any
Defaulting Lender shall be disregarded in determining Required Lenders at any
time.
“Restricted Payment” means (i) any Capital Distribution, (ii) any amount paid by
the PAC REIT or any of its Subsidiaries in repayment, redemption, retirement,
repurchase, direct or indirect, of any Subordinated Indebtedness, or (iii) any
payment by the PAC REIT or any of its Subsidiaries of any management fees,
advisory fees, consulting fees or any similar fees, whether pursuant to a
management agreement or otherwise.
“Revolving Availability” means, at the time of determination, (a) the sum of all
Revolving Commitments at such time less (b) the principal amount of Revolving
Loans made and outstanding at such time.
“Revolving Borrowing” means the incurrence of Revolving Loans consisting of one
Type of Revolving Loan by the Borrower from all of the Lenders having Revolving
Commitments in respect thereof on a pro rata basis on a given date (or resulting
from Conversions or Continuations on a given date) in the same currency, having
in the case of any Eurodollar Loans, the same Interest Period.
“Revolving Commitment” means, with respect to each Lender, the amount set forth
opposite such Lender’s name in Schedule 1 hereto as its “Revolving Commitment”
or in the case of any Lender that becomes a party hereto pursuant to an
Assignment Agreement, the amount set forth in such Assignment Agreement, as such
commitment may be reduced from time to time pursuant to Section 2.09 or adjusted
from time to time as a result of assignments to or from such Lender pursuant to
Section 11.06.
“Revolving Facility” means the credit facility established under Section 2.02
pursuant to the Revolving Commitment of each Lender.
“Revolving Facility Availability Period” means the period from the Closing Date
until the Revolving Facility Termination Date.
“Revolving Facility Exposure” means, for any Lender at any time, the principal
amount of Revolving Loans made by such Lender and outstanding at such time.

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“Revolving Facility Note” means a promissory note substantially in the form of
Exhibit A hereto.
“Revolving Facility Percentage” means, at any time for any Lender, the
percentage obtained by dividing such Lender’s Revolving Commitment by the Total
Revolving Commitment, provided, however, that if the Total Revolving Commitment
has been terminated, the Revolving Facility Percentage for each Lender shall be
determined by dividing such Lender’s Revolving Commitment immediately prior to
such termination by the Total Revolving Commitment immediately prior to such
termination. The Revolving Facility Percentage of each Lender as of the Closing
Date is set forth on Schedule 1 hereto.
“Revolving Facility Termination Date” means the earlier of (i) August 31, 2013,
or (ii) the date that the Commitments have been terminated pursuant to Section
8.02.
“Revolving Loan” means, with respect to each Lender, any loan made by such
Lender pursuant to Section 2.02.
“Sale” has the meaning provided in Section 11.06(c)(vi).
“Sale and Lease-Back Transaction” means any arrangement with any Person
providing for the leasing by the PAC REIT or any Subsidiary of any property
(except for temporary leases for a term, including any renewal thereof, of not
more than one year and except for leases between the PAC REIT and a Subsidiary
or between Subsidiaries), which property has been or is to be sold or
transferred by the PAC REIT or such Subsidiary to such Person.
“S&P” means Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc.,
and its successors.
“SEC” means the United States Securities and Exchange Commission.
“SEC Regulation D” means Regulation D as promulgated under the Securities Act of
1933, as amended, as the same may be in effect from time to time.
“Secured Creditors” has the meaning provided in the Security Agreement.
“Secured Hedge Provider” means a Lender or an Affiliate of a Lender (or a Person
who was a Lender or an Affiliate of a Lender at the time of execution and
delivery of a Hedge Agreement) who has entered into a Hedge Agreement with the
PAC REIT or any of its Subsidiaries.
“Security Agreement” has the meaning provided in Section 4.01(iv).
“Security Documents” means the Security Agreement, any Mortgage, each Buy-Sell
Agreement, each Additional Security Document, any UCC financing statement, any
Control Agreement, any Collateral Assignment of Acquisition Documents, each
Collateral Assignment of Loan Documents, any Collateral Assignment, any
Perfection Certificate and any document pursuant to which any Lien is granted or
perfected by any Credit Party to the Administrative Agent as security for any of
the Obligations.
“Senior Leverage Ratio” means the ratio of (i) Consolidated Senior Debt to
(ii) Total Asset Value.
“Shopping Center Asset” means the Real Property located in Rome, Georgia used or
to be used as a retail shopping center, Investments related thereto, and the
Equity Interests of entities owning such Real Property.

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“Single Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, to which the PAC REIT or any Subsidiary or any ERISA
Affiliate is making or accruing an obligation to make contributions or, in the
event that any such plan has been terminated, to which the PAC REIT or any
Subsidiary or any ERISA Affiliate made or accrued an obligation to make
contributions during any of the five plan years preceding the date of
termination of such plan.
“SPC” has the meaning provided in Section 11.06(f).
“Stabilized Property NOI” means, for any Testing Period, the aggregate Adjusted
Net Operating Income for the Real Properties owned by the Real Estate
Subsidiaries.
“Standard Permitted Lien” means any of the following:
(i)     Liens for taxes not yet delinquent or Liens for taxes, assessments or
governmental charges being contested in good faith and by appropriate
proceedings for which adequate reserves in accordance with GAAP have been
established;
(ii)     Liens in respect of property or assets imposed by law that were
incurred in the ordinary course of business, such as carriers’, suppliers’,
warehousemen’s, materialmen’s and mechanics’ Liens and other similar Liens
arising in the ordinary course of business, that do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the PAC REIT or any
of its Subsidiaries and do not secure any Indebtedness;
(iii)     Liens created by this Agreement or the other Loan Documents;
(iv)     Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default under Section 8.01(h);
(v)     Liens (other than any Lien imposed by ERISA) incurred or deposits made
in the ordinary course of business in connection with workers compensation,
unemployment insurance and other types of social security, and mechanic’s Liens,
carrier’s Liens, and other Liens to secure the performance of tenders, statutory
obligations, contract bids, government contracts, surety, appeal, customs,
performance and return-of-money bonds and other similar obligations, incurred in
the ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money), whether pursuant to statutory requirements, common
law or consensual arrangements;
(vi)     leases or subleases granted in the ordinary course of business to
others not interfering in any material respect with the business of the PAC REIT
or any of its Subsidiaries and any interest or title of a lessor under any lease
not in violation of this Agreement;
(vii)     easements, rights-of-way, zoning or other restrictions, charges,
encumbrances, defects in title, prior rights of other persons, and obligations
contained in similar instruments, in each case that do not secure Indebtedness
and do not involve, and are not likely to involve at any future time, either
individually or in the aggregate, (A) a substantial and prolonged interruption
or disruption of the business activities of the PAC REIT and its Subsidiaries
considered as an entirety, or (B) a Material Adverse Effect;
(viii)     Liens arising from the rights of lessors under leases (including
financing statements regarding property subject to lease) not in violation of
the requirements of this Agreement, provided that such Liens are only in respect
of the property subject to, and secure only, the respective lease (and any other
lease with the same or an affiliated lessor); and

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(ix)     rights of consignors of goods, whether or not perfected by the filing
of a financing statement under the UCC.
“Stone Rise” means Stone Rise Apartments, LLC, a Delaware limited liability
company.
“Subordinated Indebtedness” means any Indebtedness that has been subordinated to
the prior payment in full of all of the Obligations pursuant to a written
agreement or written terms acceptable to the Administrative Agent.
“Subsidiary” of any Person means (i) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary Voting Power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have Voting Power by reason of the happening of any
contingency) is at the time owned by such Person directly or indirectly through
Subsidiaries, and (ii) any partnership, limited liability company, association,
joint venture or other entity in which such Person directly or indirectly
through Subsidiaries, owns more than 50% of the Equity Interests of such Person
at the time or in which such Person, one or more other Subsidiaries of such
Person or such Person and one or more Subsidiaries of such Person, directly or
indirectly, has the power to direct the policies, management and affairs
thereof. Unless otherwise expressly provided, all references herein to
“Subsidiary” shall mean a Subsidiary of the PAC REIT.
“Subsidiary Guarantor” means any Subsidiary that is or hereafter becomes a party
to the Guaranty. Schedule 2 hereto lists the Subsidiary Guarantors as of the
Closing Date.
“Summit Crossing” means PAC Summit Crossing LLC, a Georgia limited liability
company.
“Synthetic Lease” means any lease (i) that is accounted for by the lessee as an
Operating Lease, and (ii) under which the lessee is intended to be the “owner”
of the leased property for federal income tax purposes.
“Synthetic Lease Obligations” means, as to any person, an amount equal to the
capitalized amount of the remaining lease payments under any Synthetic Lease
that would appear on a balance sheet of such person in accordance with GAAP if
such obligations were accounted for as Capitalized Lease Obligations.
“Target EBITDA” means, with respect to any Person for any period, the net income
for such Person for such period plus the sum of the amounts for such period
included in determining such net income in respect of (i) interest expense, (ii)
income tax expense, and (iii) depreciation and amortization expense, in each
case as determined in accordance with GAAP.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
“Testing Period” means a single period consisting of the two consecutive fiscal
quarters of the PAC REIT then last ended (whether or not such quarters are all
within the same fiscal year); provided that for purposes determining an amount
of any item included in the calculation of a financial ratio or financial
covenant, such amount for the Testing Period then ended shall equal such item
for the two (2) fiscal quarters then ended multiplied by two; and provided
further that if a particular provision of this Agreement indicates that a
Testing Period shall be of a different specified duration, such Testing Period
shall consist of the particular fiscal quarter or quarters then last ended that
are so indicated in such provision, without annualization.
“Title Company” has the meaning specified in Section 6.10(b)(i)(A).

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“Title Policy” has the meaning specified in Section 6.10(b)(i)(A).
“Total Asset Value” means, as of any date of determination date, the sum of the
following amounts, all as determined on a consolidated basis in accordance with
GAAP: (i) unrestricted cash and Cash Equivalents of the Consolidated Entities as
of such date, (ii) the Capitalized Value of all Real Properties (other than
unimproved land and Development Properties) owned by any Consolidated Entity for
more than four full fiscal quarters as of such date, (iii) without duplication,
the undepreciated book value of (a) all Real Properties owned or in operation by
any Consolidated Entity for less than four full fiscal quarters as of such date,
(b) all unimproved land owned by any Consolidated Entity as of such date, and
(c) all Development Properties owned by any Consolidated Entity as of such date,
(iv) the amount, determined in accordance with GAAP, of notes receivable owing
pursuant to any Mezzanine Loan Documentation or Note Receivable Documentation as
of such date; provided that the value of such notes receivable shall not exceed
25% of Total Asset Value, and (v) the Unconsolidated Allocation Percentage of
any of the items described above in this definition that are attributable to any
Unconsolidated Entity as of such date.

“Total Credit Facility Amount” means the Total Revolving Commitment. As of the
Closing Date, the Total Credit Facility Amount is $15,000,000.
“Total Leverage Ratio” means the ratio of (i) Consolidated Total Debt to
(ii) Total Asset Value.
“Total Revolving Commitment” means the sum of the Revolving Commitments of the
Lenders as the same may be decreased pursuant to Section 2.09(b) hereof. As of
the Closing Date, the amount of the Total Revolving Commitment is $15,000,000.
“Trail Creek” means Trail Creek Apartments, LLC, a Delaware limited liability
company.
“Type” means any type of Loan determined with respect to the interest option and
currency denomination applicable thereto, which in each case shall be a Base
Rate Loan or a Eurodollar Loan.
“UCC” means the Uniform Commercial Code as in effect from time to time. Unless
otherwise specified, the UCC shall refer to the UCC as in effect in the State of
New York.
“Unconsolidated Allocation Percentage” means, as of any date of determination
with respect to any Unconsolidated Entity, the aggregate percentage ownership
interest of the Consolidated Entities in such Unconsolidated Entity as of such
date.
“Unconsolidated Entity” means, with respect to any Person, 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.

“Unfunded Benefit Liabilities” of any Plan means the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
“United States” and “U.S.” each means United States of America.
“Unused Fees” has the meaning provided in Section 2.08(a).
“Unused Revolving Commitment” means, for any Lender at any time, the excess of
(i) such Lender’s Revolving Commitment at such time over (ii) such Lender’s
Revolving Facility Exposure at such time.

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“Unused Total Revolving Commitment” means, at any time, the excess of (i) the
Total Revolving Commitment at such time over (ii) the Aggregate Credit Facility
Exposure at such time.
“U.S. Borrower” means any Borrower that is a U.S. Person.

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
Section 3.03(g)(ii)(B)(iii).

“USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act)
Act of 2001.
“Voting Power” means, with respect to any Person, the exclusive ability to
control, through the ownership of shares of capital stock, partnership
interests, membership interests or otherwise, the election of members of the
board of directors or other similar governing body of such Person, and the
holding of a designated percentage of Voting Power of a Person means the
ownership of shares of capital stock, partnership interests, membership
interests or other interests of such Person sufficient to control exclusively
the election of that percentage of the members of the board of directors or
other similar governing body of such Person.
“Withholding Agent” means any Credit Party and the Administrative Agent.
Section 1.02    Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including,” the words “to” and “until” each
means “to but excluding” and the word “through” means “through and including.”
Section 1.03    Accounting Terms. Except as otherwise specifically 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 PAC
REIT notifies the Administrative Agent and the Lenders that it wishes to amend
any covenant in Article VII to eliminate the effect of any change in GAAP that
occurs after the Closing Date on the operation of such covenant (or if the
Administrative Agent notifies the PAC REIT that the Required Lenders wish to
amend Article VII for such purpose), then compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to the PAC REIT, the Borrower, the
Administrative Agent and the Required Lenders; the PAC REIT, the Borrower, the
Administrative Agent and the Lenders agreeing to enter into negotiations to
amend any such covenant immediately upon receipt from any party entitled to send
such notice. Notwithstanding the foregoing, all financial statements delivered
hereunder shall be prepared, and all financial covenants contained herein shall
be calculated, without giving effect to any election under Statement of
Financial Accounting Standards 159 (or any similar accounting principle)
permitting a Person to value its financial liabilities at the fair value
thereof.
Section 1.04    Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include,” “includes” and “including” shall
be deemed to be followed by the phrase “without limitation.” The word “will”
shall be construed to have the same meaning and effect as the word “shall.”
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such

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agreement, instrument or other document as from time to time amended, restated,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (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 Sections, Schedules and Exhibits shall be construed to
refer to Sections of, and Schedules and Exhibits to, this Agreement, (e) the
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all Real Property, tangible and intangible assets
and properties, including cash, securities, accounts and contract rights, and
interests in any of the foregoing, and (f) any reference to a statute, rule or
regulation is to that statute, rule or regulation as now enacted or as the same
may from time to time be amended, re-enacted or expressly replaced.

THE TERMS OF THE CREDIT FACILITY
Section 1.05    Establishment of the Credit Facility. On the Closing Date, and
subject to and upon the terms and conditions set forth in this Agreement and the
other Loan Documents, the Administrative Agent and the Lenders agree to
establish the Credit Facility for the benefit of the Borrower; provided,
however, that at no time will (i) the Aggregate Credit Facility Exposure exceed
the Total Credit Facility Amount, or (ii) the Revolving Credit Facility Exposure
of any Lender exceed the aggregate amount of such Lender’s Commitment.
Section 1.06    Revolving Facility. During the Revolving Facility Availability
Period, each Lender severally, and not jointly, agrees, on the terms and
conditions set forth in this Agreement, to make a Revolving Loan or Revolving
Loans to the Borrower from time to time pursuant to such Lender’s Revolving
Commitment, which Revolving Loans: (i) may, except as set forth herein, at the
option of the Borrower, be incurred and maintained as, or Converted into,
Revolving Loans that are Base Rate Loans or Eurodollar Loans, in each case
denominated in Dollars, provided that all Revolving Loans made as part of the
same Revolving Borrowing shall consist of Revolving Loans of the same Type; (ii)
may be repaid or prepaid and reborrowed in accordance with the provisions
hereof; and (iii) shall not be made if, after giving effect to any such
Revolving Loan, (A) the Revolving Facility Exposure of any Lender would exceed
such Lender’s Revolving Commitment, or (B) the Aggregate Credit Facility
Exposure would exceed the Total Revolving Commitment. The Revolving Loans to be
made by each Lender will be made by such Lender on a pro rata basis based upon
such Lender’s Revolving Facility Percentage of each Revolving Borrowing, in each
case in accordance with Section 2.04 hereof.
Section 1.07    Notice of Borrowing.
(a)    Time of Notice. Each Borrowing of a Loan (other than a Continuation or
Conversion) shall be made upon notice in the form provided for below which shall
be provided by the Borrower to the Administrative Agent at its Notice Office not
later than (i) in the case of each Borrowing of a Eurodollar Loan, 11:00 A.M.
(local time at its Notice Office) at least three Business Days’ prior to the
date of such Borrowing, and (ii) in the case of each Borrowing of a Base Rate
Loan, prior to 11:00 A.M. (local time at its Notice Office) on the proposed date
of such Borrowing.
(b)    Notice of Borrowing. Each request for a Borrowing (other than a
Continuation or Conversion) shall be made by an Authorized Officer of the
Borrower by delivering written notice of such request substantially in the form
of Exhibit B-1 hereto (each such notice, a “Notice of Borrowing”) or by
telephone (to be confirmed immediately in writing by delivery by an Authorized
Officer of the Borrower of

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a Notice of Borrowing), and in any event each such request shall be irrevocable
and shall specify (i) the aggregate principal amount of the Loans to be made
pursuant to such Borrowing, (ii) the date of the Borrowing (which shall be a
Business Day), (iii) the Type of Loans such Borrowing will consist of, (iv) if
applicable, the initial Interest Period, and (v) the intended use of proceeds of
such Borrowing consistent with the uses specified in Section 5.06 hereof.
Without in any way limiting the obligation of the Borrower to confirm in writing
any telephonic notice permitted to be given hereunder, the Administrative Agent
may act prior to receipt of written confirmation without liability upon the
basis of such telephonic notice believed by the Administrative Agent in good
faith to be from an Authorized Officer of the Borrower entitled to give
telephonic notices under this Agreement on behalf of the Borrower. In each such
case, the Administrative Agent’s record of the terms of such telephonic notice
shall be conclusive absent manifest error.
(c)    Minimum Borrowing Amount. The aggregate principal amount of each
Borrowing by the Borrower shall not be less than the Minimum Borrowing Amount.
(d)    Maximum Borrowings. More than one Borrowing may be incurred by the
Borrower on any day; provided, however, that (i) if there are two or more
Borrowings on a single day by the Borrower that consist of Eurodollar Loans,
each such Borrowing shall have a different initial Interest Period, and (ii) at
no time shall there be more than four (4) Borrowings of Eurodollar Loans
outstanding hereunder.
Section 1.08    Funding Obligations; Disbursement of Funds.
(a)    Several Nature of Funding Obligations. The Commitments of each Lender
hereunder and the obligation of each Lender to make Loans are several and not
joint obligations. No Lender shall be responsible for any default by any other
Lender in its obligation to make Loans or fund any participation hereunder and
each Lender shall be obligated to make the Loans provided to be made by it and
fund its participations required to be funded by it hereunder, regardless of the
failure of any other Lender to fulfill any of its Commitments hereunder. Nothing
herein and no subsequent termination of the Commitments pursuant to Section 2.09
shall be deemed to relieve any Lender from its obligation to fulfill its
commitments hereunder and in existence from time to time or to prejudice any
rights that the Borrower may have against any Lender as a result of any default
by such Lender hereunder.
(b)    Borrowings Pro Rata. All Revolving Loans made by each Lender shall be
made on a pro rata basis based upon each Lender’s Revolving Facility Percentage
of the amount of such Revolving Borrowing on the date the applicable Revolving
Borrowing is to be made.
(c)    Notice to Lenders. The Administrative Agent shall promptly give each
Lender, as applicable, written notice (or telephonic notice promptly confirmed
in writing) of each proposed Borrowing, or Conversion or Continuation thereof,
and of such Lender’s proportionate share thereof and of the other matters
covered by the Notice of Borrowing or Notice of Continuation or Conversion
relating thereto.
(d)    Funding of Loans. No later than 2:00 P.M. (local time at the Payment
Office) on the date specified in each Notice of Borrowing, each Lender will make
available its amount, if any, of each Borrowing requested to be made on such
date to the Administrative Agent at the Payment Office in Dollars and in
immediately available funds and the Administrative Agent promptly will make
available to the Borrower by depositing to its account at the Payment Office (or
such other account as the Borrower shall specify) the aggregate of the amounts
so made available in the type of funds received.
(e)    Advance Funding. Unless the Administrative Agent shall have been notified
by any Lender prior to the date of Borrowing that such Lender does not intend to
make available to the Administrative Agent its portion of the Borrowing or
Borrowings to be made on such date, the Administrative Agent may

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assume that such Lender has made such amount available to the Administrative
Agent on such date of Borrowing, and the Administrative Agent, in reliance upon
such assumption, may (in its sole discretion and without any obligation to do
so) make available to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Administrative Agent by such Lender
and the Administrative Agent has made the same available to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount from
such Lender. If such Lender does not pay such corresponding amount forthwith
upon the Administrative Agent’s demand therefor, the Administrative Agent shall
promptly notify the Borrower, and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent shall
also be entitled to recover from such Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent at a rate per annum equal to (i) if paid by such Lender,
the overnight Federal Funds Effective Rate or (ii) if paid by the Borrower, the
then applicable rate of interest, calculated in accordance with Section 2.06,
for the respective Loans (but without any requirement to pay any amounts in
respect thereof pursuant to Section 3.02).
Section 1.09    Evidence of Obligations.
(a)    Loan Accounts of Lenders. Each Lender shall maintain in accordance with
its usual practice an account or accounts evidencing the Obligations 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.
(b)    Loan Accounts of Administrative Agent; Lender Register. The
Administrative Agent shall maintain accounts in which it shall record: (i) the
amount of each Loan and Borrowing made hereunder, the Type thereof, the currency
in which such Loan is denominated, the Interest Period and applicable interest
rate; (ii) the amount of any principal due and payable or to become due and
payable from the Borrower to each Lender hereunder; (iii) the amount of any sum
received by the Administrative Agent hereunder for the account of the Lenders
and each Lender’s share thereof; and (iv) the other details relating to the
Loans and other Obligations. In addition, the Administrative Agent shall
maintain a register (the “Lender Register”) on or in which it will record the
names and addresses of the Lenders, and the Commitments from time to time of
each of the Lenders. The Administrative Agent will make the Lender Register
available to any Lender or the Borrower upon its request.
(c)    Effect of Loan Accounts, etc. The entries made in the accounts maintained
pursuant to Section 2.05(b) shall be prima facie evidence of the existence and
amounts of the Obligations recorded therein; provided, that the failure of the
Administrative Agent to maintain such accounts or any error (other than manifest
error) therein shall not in any manner affect the obligation of any Credit Party
to repay or prepay the Loans or the other Obligations in accordance with the
terms of this Agreement.
(d)    Notes. Upon request of any Lender, the Borrower will execute and deliver
to such Lender a Revolving Facility Note with blanks appropriately completed in
conformity herewith to evidence the Borrower’s obligation to pay the principal
of, and interest on, the Revolving Loans made to it by such Lender; provided,
however, that the decision of any Lender to not request a Note shall in no way
detract from the Borrower’s obligation to repay the Loans and other amounts
owing by the Borrower to such Lender.
Section 1.10    Interest; Default Rate.
(a)    Interest on Revolving Loans. The outstanding principal amount of each
Revolving Loan made by each Lender shall bear interest at a fluctuating rate per
annum that shall at all times be equal to (i)

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during such periods as such Revolving Loan is a Base Rate Loan, the Base Rate
plus the Applicable Revolving Loan Margin and (ii) during such periods as such
Revolving Loan is a Eurodollar Loan, the relevant Adjusted Eurodollar Rate for
such Eurodollar Loan for the applicable Interest Period plus the Applicable
Revolving Loan Margin.
(b)    Default Interest. Notwithstanding the above provisions, if an Event of
Default has occurred and is continuing, upon written notice by the
Administrative Agent (which notice the Administrative Agent may give in its
discretion and shall give at the direction of the Required Lenders), the
principal amount of all Loans outstanding and, to the extent permitted by
applicable law, all overdue interest in respect of each Loan and all fees or
other amounts owed hereunder, shall thereafter bear interest (including post
petition interest in any proceeding under the Bankruptcy Code or other
applicable bankruptcy laws) payable on demand, at a rate per annum equal to the
Default Rate. In addition, if any amount (other than amounts as to which the
foregoing sentence is applicable) payable by the Borrower under the Loan
Documents is not paid when due, upon written notice by the Administrative Agent
(which notice the Administrative Agent may give in its discretion and shall give
at the direction of the Required Lenders), such amount shall bear interest,
payable on demand, at a rate per annum equal to the Default Rate.
(c)    Accrual and Payment of Interest. Interest shall accrue from and including
the date of any Borrowing to but excluding the date of any prepayment or
repayment thereof and shall be payable by the Borrower: (i) in respect of each
Base Rate Loan, monthly in arrears on the first Business Day of each calendar
month; (ii) in respect of each Eurodollar Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on the dates that are successively three months after the
commencement of such Interest Period; and (iii) in respect of all Loans, on any
repayment, prepayment or Conversion (on the amount repaid, prepaid or
Converted), at maturity (whether by acceleration or otherwise), and, after such
maturity.
(d)    Computations of Interest. All computations of interest on Eurodollar Rate
Loans hereunder shall be made on the actual number of days elapsed over a year
of 360 days. All computations of interest on Base Rate Loans hereunder shall be
made on the actual number of days elapsed over a year of 365 or 366 days, as
applicable.
(e)    Information as to Interest Rates. The Administrative Agent, upon
determining the interest rate for any Borrowing, shall promptly notify the
Borrower and the Lenders thereof. Any such determination by the Administrative
Agent shall be conclusive and binding absent manifest error.
Section 1.11    Conversion and Continuation of Loans.
(a)    Conversion and Continuation of Revolving Loans. The Borrower shall have
the right, subject to the terms and conditions of this Agreement, to (i) Convert
all or a portion of the outstanding principal amount of Loans of one Type made
to it into a Borrowing or Borrowings of another Type of Loans that can be made
to it pursuant to this Agreement and (ii) Continue a Borrowing of Eurodollar
Loans at the end of the applicable Interest Period as a new Borrowing of
Eurodollar Loans with a new Interest Period; provided, however, that any
Conversion of Eurodollar Loans into Base Rate Loans shall be made on, and only
on, the last day of an Interest Period for such Eurodollar Loans.
(b)    Notice of Continuation and Conversion. Each Continuation or Conversion of
a Loan shall be made upon notice in the form provided for below provided by the
Borrower to the Administrative Agent at its Notice Office not later than (i) in
the case of each Continuation of or Conversion into a Eurodollar Loan, prior to
11:00 A.M. (local time at its Notice Office) at least three Business Days’ prior
to the date of such Continuation or Conversion, and (ii) in the case of each
Conversion to a Base Rate Loan, prior to 11:00

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A.M. (local time at its Notice Office) on the proposed date of such Conversion.
Each such request shall be made by an Authorized Officer of the Borrower
delivering written notice of such request substantially in the form of Exhibit
B-2 hereto (each such notice, a “Notice of Continuation or Conversion”) or by
telephone (to be confirmed immediately in writing by delivery by an Authorized
Officer of the Borrower of a Notice of Continuation or Conversion), and in any
event each such request shall be irrevocable and shall specify (A) the
Borrowings to be Continued or Converted, (B) the date of the Continuation or
Conversion (which shall be a Business Day), and (C) the Interest Period or, in
the case of a Continuation, the new Interest Period. Without in any way limiting
the obligation of the Borrower to confirm in writing any telephonic notice
permitted to be given hereunder, the Administrative Agent may act prior to
receipt of written confirmation without liability upon the basis of such
telephonic notice believed by the Administrative Agent in good faith to be from
an Authorized Officer of the Borrower entitled to give telephonic notices under
this Agreement on behalf of the Borrower. In each such case, the Administrative
Agent’s record of the terms of such telephonic notice shall be conclusive absent
manifest error.
Section 1.12    Fees.
(a)    Unused Fees. The Borrower agrees to pay to the Administrative Agent, for
the ratable benefit of each Lender based upon each such Lender’s Revolving
Facility Percentage, as consideration for the Revolving Commitments of the
Lenders, unused commitment fees (the “Unused Fees”) for the period from the
Closing Date to, but not including, the Revolving Facility Termination Date,
computed for each day at a rate per annum equal to (i) the Applicable Unused Fee
Rate times (ii) the Unused Total Revolving Commitment in effect on such day.
Accrued Unused Fees shall be due and payable in arrears on the last Business Day
of each March, June, September and December and on the Revolving Facility
Termination Date.
(b)    Administrative Agent Fees. The Borrower shall pay to the Administrative
Agent, on the Closing Date and thereafter, for its own account, the fees set
forth in the Fee Letter.
(c)    Computations and Determination of Fees. All computations of Unused Fees
and other Fees hereunder shall be made on the actual number of days elapsed over
a year of 360 days.
Section 1.13    Termination and Reduction of Revolving Commitments.
(a)    Mandatory Termination of Revolving Commitments. All of the Revolving
Commitments shall terminate on the Revolving Facility Termination Date.
(b)    Voluntary Termination of the Total Revolving Commitment. Upon at least
three Business Days’ prior irrevocable written notice (or telephonic notice
confirmed in writing) to the Administrative Agent at its Notice Office (which
notice the Administrative Agent shall promptly transmit to each of the Lenders),
the Borrower shall have the right to terminate in whole the Total Revolving
Commitment, provided that all outstanding Revolving Loans are contemporaneously
prepaid in accordance with Section 2.10.
(c)    Partial Reduction of Total Revolving Commitment. Upon at least three
Business Days’ prior irrevocable written notice (or telephonic notice confirmed
in writing) to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right to partially and permanently reduce the Unused
Total Revolving Commitment; provided, however, that (i) any such reduction shall
apply to proportionately (based on each Lender’s Revolving Facility Percentage)
and permanently reduce the Revolving Commitment of each Lender, (ii) no such
reduction shall be permitted if the Borrower would be required to make a
mandatory prepayment of Loans pursuant to Section 2.10(b)(ii), and (iii) any
partial reduction shall be in the amount of at least

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$1,000,000 (or, if greater, in integral multiples of $500,000).
Section 1.14    Voluntary and Mandatory Prepayments of Loans.
(a)    Voluntary Prepayments. The Borrower shall have the right to prepay any of
the Loans owing by it, in whole or in part, without premium or penalty, except
as specified in subparts (d) and (e) below, from time to time. The Borrower
shall give the Administrative Agent at the Notice Office written or telephonic
notice (in the case of telephonic notice, promptly confirmed in writing if so
requested by the Administrative Agent) of its intent to prepay the Loans, the
amount of such prepayment and (in the case of Eurodollar Loans) the specific
Borrowing(s) pursuant to which the prepayment is to be made, which notice shall
be received by the Administrative Agent by (y) 11:00 A.M. (local time at the
Notice Office) three Business Days prior to the date of such prepayment, in the
case of any prepayment of Eurodollar Loans, or (z) 11:00 A.M. (local time at the
Notice Office) one Business Day prior to the date of such prepayment, in the
case of any prepayment of Base Rate Loans, and which notice shall promptly be
transmitted by the Administrative Agent to each of the affected Lenders,
provided that:
(i)    each partial prepayment shall be in an aggregate principal amount of at
least (A) in the case of any prepayment of a Eurodollar Loan, $100,000 (or, if
less, the full amount of such Borrowing), or an integral multiple of $100,000,
and (B) in the case of any prepayment of a Base Rate Loan, $500,000 (or, if
less, the full amount of such Borrowing), or an integral multiple of $100,000;
and
(ii)    no partial prepayment of any Loans made pursuant to a Borrowing shall
reduce the aggregate principal amount of such Loans outstanding pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto.
(b)    Mandatory Payments. The Loans shall be subject to mandatory repayment or
prepayment (in the case of any partial prepayment conforming to the requirements
as to the amounts of partial prepayments set forth in Section 2.10(a) above), in
accordance with the following provisions:
(i)    Revolving Facility Termination Date. The entire principal amount of all
outstanding Revolving Loans shall be repaid in full on the Revolving Facility
Termination Date.
(ii)    Loans Exceed the Commitments. If on any date (after giving effect to any
other payments on such date) (A) the Aggregate Credit Facility Exposure exceeds
the Total Credit Facility Amount, (B) the Revolving Facility Exposure of any
Lender exceeds such Lender’s Revolving Commitment, or (C) the Aggregate Credit
Facility Exposure exceeds the Total Revolving Commitment, then, in the case of
each of the foregoing, the Borrower shall, on such day, prepay on such date the
principal amount of Loans in an aggregate amount at least equal to such excess.
(iii)    Certain Proceeds of Repayment of Loans. Not later than the Business Day
following the date of the receipt by any Credit Party or any of its Subsidiaries
of cash constituting the payment of principal of any note receivable owing
pursuant to any Mezzanine Loan Documentation or Note Receivable Documentation
(other than the Oxford Properties Note), the Borrower will make a prepayment of
the Loans in an amount equal to 100% of such cash receipts accordance with
Section 2.10(c) below.
(iv)    Certain Proceeds of Asset Sales. Not later than the Business Day
following the date of the receipt by any Credit Party or any of its Subsidiaries
of the Cash Proceeds from any Asset Sale occurring after the Closing Date, an
amount equal to 100% of the Net Cash Proceeds received

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from such Asset Sale shall be applied as a mandatory prepayment of the Loans in
accordance with Section 2.10(c) below.
(v)    Certain Proceeds of Equity Sales. As soon as is possible without the
incurrence of fees pursuant to Section 3.02 hereof, but in any event not later
than five (5) Business Days following the last day of each calendar month (each
a “Monthly Prepayment Date”), cash proceeds (net of underwriting discounts and
commissions, placement agent fees and other customary fees and costs associated
therewith) received by any Credit Party or any of its Subsidiaries after the
Closing Date from any sale or issuance by the PAC REIT or any of its
Subsidiaries of its own equity securities, as the case may be (other than (A)
any sale or issuance to management, employees (or key employees) or directors
pursuant to stock option or similar plans approved by the Board of Directors for
the benefit of management, employees (or key employees) or directors generally
or (B) the issuance or sale of any Equity Interests by any Subsidiary of the PAC
REIT to the PAC REIT or any other Subsidiary of the PAC REIT), shall be used by
the Borrower to make a prepayment of the Loans in an amount equal to 100% of
such net proceeds in accordance with Section 2.10(c) below. Upon receipt of
thereof by the applicable Credit Party or Subsidiary and during the period from
such receipt until the next occurring Monthly Prepayment Date, such cash
proceeds shall be deposited into and maintained in a deposit account of the
Borrower maintained with KeyBank National Association, which shall constitute
part of the Collateral under the Security Documents and may be applied as
provided in Section 8.03 if an Event of Default occurs and is continuing.
(vi)    Certain Proceeds of Indebtedness. Not later than the Business Day
following the date of the receipt by any Credit Party or any of its Subsidiaries
of the cash proceeds (net of underwriting discounts and commissions, placement
agent fees and other customary fees and costs associated therewith) from any
sale or issuance of any Indebtedness (including any refinancing of Indebtedness
of any Real Estate Subsidiary permitted pursuant to Section 7.04(f), but
excluding Indebtedness incurred pursuant to each other provision of Section 7.04
after the Closing Date), the Borrower will make a prepayment of the Loans in an
amount equal to 100% of such Net Cash Proceeds in accordance with Section
2.10(c) below.
(vii)    Certain Proceeds of an Event of Loss. If during any fiscal year of the
Borrower, any Credit Party or any of its Subsidiaries has received cumulative
aggregate Cash Proceeds during such fiscal year from one or more Events of Loss
of at least $100,000, not later than the Business Day following the date of
receipt of any Net Cash Proceeds in excess of such amount, the Borrower will
make a prepayment of the Loans with an amount equal to 100% of the Net Cash
Proceeds then received in excess of such amount from any Event of Loss in
accordance with Section 2.10(c) below.
(c)    Applications of Certain Prepayment Proceeds. Each prepayment required to
be made pursuant to Section 2.10(b)(iii), (iv), (iv), (vi), or (vii) above shall
be applied as a mandatory prepayment of principal of the outstanding Revolving
Loans.
(d)    Particular Loans to be Prepaid. With respect to each repayment or
prepayment of Loans made or required by this Section, the Borrower shall
designate the Types of Loans that are to be repaid or prepaid and the specific
Borrowing(s) pursuant to which such repayment or prepayment is to be made;
provided, however, that (i) the Borrower shall first so designate all Loans that
are Base Rate Loans and Eurodollar Loans with Interest Periods ending on the
date of repayment or prepayment prior to designating any other Eurodollar Loans
for repayment or prepayment, and (ii) if the outstanding principal amount of
Eurodollar Loans made pursuant to a Borrowing is reduced below the applicable
Minimum Borrowing Amount as a result of any such repayment or prepayment, then
all the Loans outstanding pursuant to such

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Borrowing shall, in the case of Eurodollar Loans, be Converted into Base Rate
Loans. In the absence of a designation by the Borrower as described in the
preceding sentence, the Administrative Agent shall, subject to the above, make
such designation in its sole discretion with a view, but no obligation, to
minimize breakage costs owing under Article III.
(e)    Breakage and Other Compensation. Any prepayment made pursuant to this
Section 2.10 shall be accompanied by any amounts payable in respect thereof
under Article III hereof.
Section 1.15    Method and Place of Payment.
(a)    Generally. All payments made by the Borrower hereunder (including any
payments made with respect to the Borrower Guaranteed Obligations under
Article X) under any Note or any other Loan Document shall be made without
setoff, counterclaim or other defense.
(b)    Application of Payments. Except as specifically set forth elsewhere in
this Agreement and subject to Section 8.03, all payments and prepayments of
Revolving Loans shall be applied by the Administrative Agent on a pro rata basis
based upon each Lender’s Revolving Facility Percentage of the amount of such
prepayment.
(c)    Payment of Obligations. Except as specifically set forth elsewhere in
this Agreement, all payments under this Agreement with respect to any of the
Obligations shall be made to the Administrative Agent on the date when due and
shall be made at the Payment Office in immediately available funds and, except
as set forth in the next sentence, shall be made in Dollars.
(d)    Timing of Payments. Any payments under this Agreement that are made later
than 11:00 A.M. (local time at the Payment Office) shall be deemed to have been
made on the next succeeding Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.
(e)    Distribution to Lenders. Upon the Administrative Agent’s receipt of
payments hereunder, the Administrative Agent shall immediately distribute to
each Lender, its ratable share, if any, of the amount of principal, interest,
and Fees received by it for the account of such Lender. Payments received by the
Administrative Agent in Dollars shall be delivered to the Lenders in Dollars in
immediately available funds; provided, however, that if at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, interest and Fees then due hereunder then, except as
specifically set forth elsewhere in this Agreement and subject to Section 8.03,
such funds shall be applied, 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 second, towards
payment of principal then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal then due to such parties.
Section 1.16    Defaulting Lenders.
(a)    Defaulting Lender Adjustments. Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then,
until such time as such Lender is no longer a Defaulting Lender, to the extent
permitted by applicable law:
(i)    Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove

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any amendment, waiver or consent with respect to this Agreement shall be
restricted as set forth in the definition of Required Lenders.

(ii)    Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article VIII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 11.03 shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, as the Borrower may request (so long as no Default or
Event of Default exists), to the funding of any Loan in respect of which such
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by the Administrative Agent; third, if so determined by
the Administrative Agent and the Borrower, to be held in a deposit account and
released pro rata in order to satisfy such Defaulting Lender’s potential future
funding obligations with respect to Loans under this Agreement; fourth, to the
payment of any amounts owing to the Lenders as a result of any judgment of a
court of competent jurisdiction obtained by any Lender against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under
this Agreement; fifth, so long as no Default or Event of Default exists, to the
payment of any amounts owing to the Borrower as a result of any judgment of a
court of competent jurisdiction obtained by the Borrower against such Defaulting
Lender as a result of such Defaulting Lender's breach of its obligations under
this Agreement; and sixth, to such Defaulting Lender or as otherwise directed by
a court of competent jurisdiction; provided that if (x) such payment is a
payment of the principal amount of any Loans in respect of which such Defaulting
Lender has not fully funded its appropriate share, and (y) such Loans were made
at a time when the conditions set forth in Section 4.02 were satisfied or
waived, such payment shall be applied solely to pay the Loans of all
Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment
of any Loans of such Defaulting Lender until such time as all Loans are held by
the Lenders pro rata in accordance with the Commitments under the applicable
Credit Facilities. Any payments, prepayments or other amounts paid or payable to
a Defaulting Lender that are applied (or held) to pay amounts owed by a
Defaulting Lender pursuant to this Section 2.12(a)(ii) shall be deemed paid to
and redirected by such Defaulting Lender, and each Lender irrevocably consents
hereto.

(iii)    Certain Fees. No Defaulting Lender shall be entitled to receive any
Unused Fee for any period during which that Lender is a Defaulting Lender (and
the Borrower shall not be required to pay any such fee that otherwise would have
been required to have been paid to that Defaulting Lender).

(b)    Defaulting Lender Cure. If the Borrower and the Administrative Agent
agree in writing that a Lender is no longer a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any cash collateral),
that Lender will, to the extent applicable, purchase at par that portion of
outstanding Loans of the other Lenders or take such other actions as the
Administrative Agent may determine to be necessary to cause the Loans to be held
pro rata by the Lenders in accordance with the Commitments under the applicable
Credit Facility, whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrower while that Lender was a
Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from that Lender’s having been a Defaulting Lender.

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INCREASED COSTS, ILLEGALITY AND TAXES
Section 1.17    Increased Costs, Illegality, etc.
(a)    In the event that (y) in the case of clause (i) below, the Administrative
Agent or (z) in the case of clauses (ii) and (iii) below, any Lender, shall have
determined on a reasonable basis (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto):
(i)    on any date for determining the interest rate applicable to any
Eurodollar Loan for any Interest Period that, by reason of any changes arising
after the Closing Date, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in this Agreement for
such Eurodollar Loan; or
(ii)    at any time, that such Lender shall incur increased costs or reductions
in the amounts received or receivable by it hereunder in an amount that such
Lender deems material with respect to any Eurodollar Loans (other than any
increased cost or reduction in the amount received or receivable resulting from
the imposition of or a change in the rate of any Connection Income Taxes)
because of (x) any Change in Law since the Closing Date (such as, for example,
but not limited to, a change in official reserve requirements, but, in all
events, excluding reserves already includable in the interest rate applicable to
such Eurodollar Loan pursuant to this Agreement) or (y) other circumstances
adversely affecting the London interbank market or the position of such Lender
in any such market; or
(iii)    at any time, that the making or continuance of any Eurodollar Loan has
become unlawful by compliance by such Lender in good faith with any Change in
Law since the Closing Date, or would conflict with any thereof not having the
force of law but with which such Lender customarily complies, or has become
impracticable as a result of a contingency occurring after the Closing Date that
materially adversely affects the London interbank market;
then, and in each such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (1) on or promptly following such date or time
and (2) within 10 Business Days of the date on which such event no longer exists
give notice (by telephone confirmed in writing) to the Borrower and to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in
the case of clause (i) above, the affected Type of Eurodollar Loans shall no
longer be available until such time as the Administrative Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such notice by
the Administrative Agent no longer exist, and any Notice of Borrowing or Notice
of Continuation or Conversion given by the Borrower with respect to such Type of
Eurodollar Loans that have not yet been incurred, Converted or Continued shall
be deemed rescinded by the Borrower or, in the case of a Notice of Borrowing,
shall, at the option of the Borrower, be deemed converted into a Notice of
Borrowing for Base Rate Loans to be made on the date of Borrowing contained in
such Notice of Borrowing, (y) in the case of clause (ii) above, the Borrower
shall pay to such Lender, upon written demand therefor, such additional amounts
(in the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Lender shall determine) as shall be required to
compensate such Lender for such increased costs or reductions in amounts
receivable hereunder (a written notice as to the additional amounts owed to such
Lender, showing the basis for the calculation thereof, which basis must be
reasonable, submitted to the Borrower by such Lender shall, absent manifest
error, be final and conclusive and binding upon all parties hereto) and (z) in
the case of clause (iii) above, the Borrower shall take one of the actions
specified in Section 3.01(b) as promptly as possible and, in any event, within

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the time period required by law.
(b)    At any time that any Eurodollar Loan is affected by the circumstances
described in Section 3.01(a)(ii) or (iii), the Borrower may (and in the case of
a Eurodollar Loan affected pursuant to Section 3.01(a)(iii) the Borrower shall)
either (i) if the affected Eurodollar Loan is then being made pursuant to a
Borrowing, by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was notified by
a Lender pursuant to Section 3.01(a)(ii) or (iii), cancel said Borrowing, or, in
the case of any Borrowing, convert the related Notice of Borrowing into one
requesting a Borrowing of Base Rate Loans or require the affected Lender to make
its requested Loan as a Base Rate Loan, or (ii) if the affected Eurodollar Loan
is then outstanding, upon at least one Business Day’s notice to the
Administrative Agent, require the affected Lender to Convert each such
Eurodollar Loan into a Base Rate Loan; provided, however, that if more than one
Lender is affected at any time, then all affected Lenders must be treated the
same pursuant to this Section 3.01(b).
(c)    If any Lender shall have determined that after the Closing Date, any
Change in Law regarding capital adequacy by any Governmental Authority, central
bank or comparable agency charged by law with the interpretation or
administration thereof, or compliance by such Lender or its parent corporation
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank, or comparable agency, in
each case made subsequent to the Closing Date, has or would have the effect of
reducing by an amount reasonably deemed by such Lender to be material to the
rate of return on such Lender’s or its parent corporation’s capital or assets as
a consequence of such Lender’s commitments or obligations hereunder to a level
below that which such Lender or its parent corporation could have achieved but
for such adoption, effectiveness, change or compliance (taking into
consideration such Lender’s or its parent corporation’s policies with respect to
capital adequacy), then from time to time, within 15 days after demand by such
Lender (with a copy to the Administrative Agent), the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or its
parent corporation for such reduction. Each Lender, upon determining in good
faith that any additional amounts will be payable pursuant to this Section
3.01(c), will give prompt written notice thereof to the Borrower, which notice
shall set forth, in reasonable detail, the basis of the calculation of such
additional amounts, which basis must be reasonable, although the failure to give
any such notice shall not release or diminish any of the Borrower’s obligations
to pay additional amounts pursuant to this Section 3.01(c) upon the subsequent
receipt of such notice.
Section 1.18    Breakage Compensation. The Borrower shall compensate each
Lender, upon its written request (which request shall set forth the detailed
basis for requesting and the method of calculating such compensation), for all
reasonable losses, costs, expenses and liabilities (including, without
limitation, any loss, cost, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Lender
to fund its Eurodollar Loans) which such Lender may sustain in connection with
any of the following: (i) if for any reason (other than a default by such Lender
or the Administrative Agent) a Borrowing of Eurodollar Loans does not occur on a
date specified therefor in a Notice of Borrowing or a Notice of Continuation or
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 3.01(a)); (ii) if any repayment, prepayment, Conversion or
Continuation of any Eurodollar Loan occurs on a date that is not the last day of
an Interest Period applicable thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; (iv) as a result of an assignment by a Lender of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto pursuant to a request by the Borrower pursuant to Section 3.04(b); or
(v) as a consequence of (y) any other default by the Borrower to repay or prepay
any Eurodollar Loans when required by the terms of this Agreement or (z) an
election made pursuant to Section 3.04(b). The written request of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error.

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The Borrower shall pay such Lender the amount shown as due on any such request
within 10 days after receipt thereof.
Section 1.19    Net Payments.
(a)     Defined Terms. For purposes of this Section 3.03, the term “applicable
law” includes FATCA.

(b)     Payments Free of Taxes. Any and all payments by or on account of any
obligation of any Credit Party under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable law. If
any applicable law (as determined in the good faith discretion of an applicable
Withholding Agent) requires the deduction or withholding of any Tax from any
such payment by a Withholding Agent, then the applicable Withholding Agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law and, if such Tax is an Indemnified Tax, then the sum payable
by the applicable Credit Party shall be increased as necessary so that after
such deduction or withholding has been made (including such deductions and
withholdings applicable to additional sums payable under this Section) the
applicable Recipient receives an amount equal to the sum it would have received
had no such deduction or withholding been made.

(c)     Payment of Other Taxes by the Borrower. The Credit Parties shall timely
pay to the relevant Governmental Authority in accordance with applicable law, or
at the option of the Administrative Agent timely reimburse it for the payment
of, any Other Taxes.

(d)     Indemnification by the Borrower. The Credit Parties shall jointly and
severally indemnify each Recipient, within 10 days after demand therefor, for
the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or
asserted on or attributable to amounts payable under this Section) payable or
paid by such Recipient or required to be withheld or deducted from a payment to
such Recipient and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified 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 (with
a copy to the Administrative Agent), or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e)     Indemnification by the Lenders. Each Lender shall severally indemnify
the Administrative Agent, within 10 days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that any
Credit Party has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Credit Parties to
do so), (ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 11.06(b) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by the Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such 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 any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (e).

(f)     Evidence of Payments. As soon as practicable after any payment of Taxes
by any Credit

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Party to a Governmental Authority pursuant to this Section 3.03, such Credit
Party 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.

(g)     Status of Lenders. (i) Any Lender that is entitled to an exemption from
or reduction of withholding Tax with respect to payments made under any Loan
Document shall deliver to the Borrower and the Administrative Agent, at the time
or times reasonably requested by the Borrower or the Administrative Agent, such
properly completed and executed documentation reasonably requested by the
Borrower or the Administrative Agent as will permit such payments to be made
without withholding or at a reduced rate of withholding. In addition, any
Lender, if reasonably requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in Section 3.03(g)(ii)(A), (ii)(B) and (ii)(D) below)
shall not be required if in the Lender’s reasonable judgment such completion,
execution or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender.

(ii)     Without limiting the generality of the foregoing, in the event that the
Borrower is a U.S. Borrower,

(A)     any Lender that is a U.S. Person shall deliver to the Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent), executed
originals of IRS Form W-9 certifying that such Lender is exempt from U.S.
federal backup withholding Tax;

(B)     any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), whichever of the following is applicable:

(i)     in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “business profits” or “other income” article of such tax treaty;

(ii)     executed originals of IRS Form W-8ECI;

(iii)     in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code, (x) a certificate to
the effect that such Foreign Lender is not a “bank” within the meaning of
Section

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881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the
meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign
corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN; or

(iv) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN,
an applicable form of U.S. Tax Compliance Certificate, IRS Form W-9, and/or
other certification documents from each beneficial owner, as applicable;
provided that if the Foreign Lender is a partnership and one or more direct or
indirect partners of such Foreign Lender are claiming the portfolio interest
exemption, such Foreign Lender may provide an applicable form of U.S. Tax
Compliance Certificate on behalf of each such direct and indirect partner;

(C)     any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed originals of any other form prescribed by applicable law as a
basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower or the Administrative Agent
to determine the withholding or deduction required to be made; and

(D)     if a payment made to a Lender under any Loan Document would be subject
to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
clause (D), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower and the Administrative
Agent in writing of its legal inability to do so.

(h)     Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 3.03 (including by
the payment of additional amounts pursuant to this Section 3.03), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section with respect to the Taxes giving
rise to such refund), net of all out-of-pocket expenses (including Taxes) of
such indemnified party and without interest (other than any interest paid by the
relevant

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Governmental Authority with respect to such refund). Such indemnifying party,
upon the request of such indemnified party, shall repay to such indemnified
party the amount paid over pursuant to this paragraph (h) (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) in the
event that such indemnified party is required to repay such refund to such
Governmental Authority. Notwithstanding anything to the contrary in this
paragraph (h), in no event will the indemnified party be required to pay any
amount to an indemnifying party pursuant to this paragraph (h) the payment of
which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

(i)     Survival. Each party’s obligations under this Section 3.03 shall survive
the resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Loan
Document.

Section 1.20    Change of Lending Office; Replacement of Lenders.
(a)    Each Lender agrees that, upon the occurrence of any event giving rise to
the operation of Section 3.01(a)(ii) or (iii), 3.01(c), or 3.03 requiring the
payment of additional amounts to the Lender, such Lender will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Lender) to designate another Applicable Lending Office for any Loans or
Commitments affected by such event; provided, however, that such designation is
made on such terms that such Lender and its Applicable Lending Office suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of any such Section.
(b)    If (i) any Lender requests any compensation, reimbursement or other
payment under Section 3.01(a)(ii) or (iii), or 3.01(c) with respect to such
Lender, (ii) the Borrower is, or because of a matter in existence as of the date
that the Borrower is seeking to exercise its rights under this Section will be,
required to pay any additional amount to any Lender or Governmental Authority
pursuant to Section 3.03, or (iii) or if any Lender is a Defaulting Lender, 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 the restrictions contained in Section 11.06(c)),
all its interests, rights and obligations under this Agreement to an Eligible
Assignee that shall assume such obligations; provided, however, that (1) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall be made the exercise of its Permitted Discretion and
shall not be unreasonably withheld or delayed, (2) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans,
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,
including any breakage compensation under Section 3.02 hereof), and (3) in the
case of any such assignment resulting from a claim for compensation,
reimbursement or other payments required to be made under Section 3.01(a)(ii) or
(iii), or Section 3.01(c) with respect to such Lender, or resulting from any
required payments to any Lender or Governmental Authority pursuant to Section
3.03, such assignment will result in a reduction in such compensation,
reimbursement or payments. A Lender shall not be required to make any such
assignment and 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.

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(c)    Nothing in this Section 3.04 shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in Sections 3.01
or 3.03.

CONDITIONS PRECEDENT
Section 1.21    Conditions Precedent at Closing Date. The obligation of the
Lenders to make Loans is subject to the satisfaction of each of the following
conditions on or prior to the Closing Date:
(i)    Credit Agreement. This Agreement shall have been executed by the
Borrower, the PAC REIT, the Administrative Agent, and each of the Lenders.
(ii)    Notes. The Borrower shall have executed and delivered to the
Administrative Agent the appropriate Note or Notes for the account of each
Lender that has requested the same.
(iii)    Guaranty. The Guarantors shall have duly executed and delivered a
Guaranty of Payment (the “Guaranty”), substantially in the form attached hereto
as Exhibit C-1.
(iv)    Security Agreement. The Borrower and each Subsidiary Guarantor shall
have duly executed and delivered the Security Agreement, in the form attached
hereto as Exhibit C-2 (the “Security Agreement”), and such Credit Parties, as
applicable, shall have executed and delivered all of the following in connection
therewith, each of which shall be in form and substance satisfactory to the
Administrative Agent: (A) the Control Agreements required pursuant to the terms
of the Security Agreement, duly executed by the appropriate depositary
institution, securities intermediary or issuer as the case may be, (B) any
Collateral Assignment Agreements required pursuant to the terms of the Security
Agreement, (C) a Perfection Certificate, and (D) each other Security Document
that is required by this Agreement or the Security Agreement.
(v)    Real Estate Matters. Each Credit Party shall have (A) executed and
delivered to the Administrative Agent an Environmental and Hazardous Material
Indemnity Agreement with respect to all Real Property, in form and substance
reasonably satisfactory to the Administrative Agent, and (B) provided to the
Administrative Agent (i) an updated title report issued by the Title Company
(and copies of all recorded documents listed as exceptions to title or otherwise
referred to in such title report) with respect to each Real Property owned by a
Credit Party or Subsidiary as of the Closing Date or which constitutes
collateral security for a Mezzanine Loan Investment as of the Closing Date, and
(ii) all such other real estate-related diligence items set forth on the closing
checklist provided by the Administrative Agent to the Borrower prior to the date
hereof; all of which shall be in form and substance reasonably satisfactory to
the Administrative Agent.
(vi)    Fees and Fee Letters. The Borrower shall have (A) executed and delivered
to the Administrative Agent the Fee Letter and shall have paid to the
Administrative Agent, for its own account, the fees required to be paid by it on
the Closing Date, and (B) paid or caused to be paid all reasonable fees and
expenses of the Administrative Agent and of special counsel to the
Administrative Agent that have been invoiced on or prior to the Closing Date in
connection with the preparation, execution and delivery of this Agreement and
the other Loan Documents and the consummation of the transactions contemplated
hereby and thereby.
(vii)    Corporate Resolutions and Approvals. The Administrative Agent shall
have received certified copies of the resolutions of the Board of Directors (or
similar governing body) of

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each Credit Party approving the Loan Documents to which such Credit Party is or
may become a party, and of all documents evidencing other necessary corporate or
other organizational action, as the case may be, and governmental approvals, if
any, with respect to the execution, delivery and performance by such Credit
Party of the Loan Documents to which it is or may become a party and the
expiration of all applicable waiting periods, all of which documents to be in
form and substance reasonably satisfactory to the Administrative Agent.
(viii)    Incumbency Certificates. The Administrative Agent shall have received
a certificate of the Secretary or an Assistant Secretary of each Credit Party
certifying the names and true signatures of the officers of such Credit Party
authorized to sign the Loan Documents to which such Credit Party is a party and
any other documents to which such Credit Party is a party that may be executed
and delivered in connection herewith.
(ix)    Opinions of Counsel. The Administrative Agent shall have received such
opinions of counsel from counsel to the Credit Parties, each of which opinion or
reliance letter, as applicable, shall be addressed to the Administrative Agent
and the Lenders and dated the Closing Date and in form and substance reasonably
satisfactory to the Administrative Agent.
(x)    Recordation of Security Documents, Delivery of Collateral, Taxes, etc.
The Security Documents (or proper notices or UCC financing statements in respect
thereof) shall have been duly recorded, published and filed in such manner and
in such places as is required by law to establish, perfect, preserve and protect
the rights, Liens and security interests of the parties thereto and their
respective successors and assigns, all Collateral items required to be
physically delivered to the Administrative Agent thereunder shall have been so
delivered, accompanied by any appropriate instruments of transfer, and all
taxes, fees and other charges then due and payable in connection with the
execution, delivery, recording, publishing and filing of such instruments and
the issuance of the Obligations and the delivery of the Notes shall have been
paid in full.
(xi)    Evidence of Insurance. The Administrative Agent shall have received
certificates of insurance and other evidence reasonably satisfactory to it of
(1) compliance with the insurance requirements of this Agreement and the
Security Documents, and (2) adequate insurance covering each Real Estate
Subsidiary.
(xii)    Search Reports. The Administrative Agent shall have received the
results of UCC and other search reports from one or more commercial search firms
acceptable to the Administrative Agent, listing all of the effective financing
statements filed against any Credit Party, each of their respective
Subsidiaries, and Oxford Summit Development II LLC, a Georgia limited liability
company, Oxford Hampton Holdings LLC, a Georgia limited liability company, and
Iris Crosstown Apartments LLC, a Florida limited liability company, together
with copies of such financing statements.
(xiii)    Corporate Charter and Good Standing Certificates. The Administrative
Agent shall have received: (A) an original certified copy of the Certificate or
Articles of Incorporation or equivalent formation document of each Credit Party
and each of its Subsidiaries and of the Advisor and any and all amendments and
restatements thereof, certified as of a recent date by the relevant Secretary of
State; (B) an original “long-form” good standing certificate or certificate of
existence from the Secretary of State of the state of incorporation, dated as of
a recent date, listing all charter documents affecting such Credit Party or such
Subsidiary or the Advisor, as applicable, and certifying as to the good standing
of such Credit Party or such Subsidiary or the Advisor, as applicable; and

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(C) original certificates of good standing or foreign qualification from each
other jurisdiction in which each Credit Party and each of its Subsidiaries and
the Advisor is authorized or qualified to do business.
(xiv)    Closing Certificate. The Administrative Agent shall have received a
Closing Certificate, dated the Closing Date, of an Authorized Officer, to the
effect that, at and as of the Closing Date, both before and after giving effect
to the initial Borrowings hereunder and the application of the proceeds thereof:
(i)  no Default or Event of Default has occurred or is continuing; (ii) all
representations and warranties of each Credit Party set forth in each Loan
Document to which any Credit Party is a party are true and correct, and (ii) on
a pro forma basis as of the Closing Date, the Credit Parties are compliance with
the financial covenants contained in Section 7.07 (together with a computation
of the financial covenants supporting same in detail satisfactory to the
Administrative Agent).
(xv)    Solvency Certificate. The Administrative Agent shall have received a
solvency certificate in the form attached hereto as Exhibit D, dated as of the
Closing Date, and executed by a Financial Officer of the PAC REIT.
(xvi)    Proceedings and Documents. All corporate and other proceedings and all
documents incidental to the transactions contemplated hereby shall be reasonably
satisfactory in substance and form to the Administrative Agent and the
Administrative Agent and its special counsel shall have received all such
counterpart originals or certified or other copies of such documents as the
Administrative Agent or its special counsel may reasonably request.
(xvii)    Payment of Outstanding Indebtedness, etc. The Administrative Agent
shall have received evidence that immediately after the making of the Loans on
the Closing Date, all Indebtedness not permitted by Section 7.04, together with
all interest, all payment premiums and all other amounts due and payable with
respect thereto, shall be paid in full from the proceeds of the initial Credit
Event, and the commitments in respect of such Indebtedness shall be permanently
terminated, and all Liens securing payment of any such Indebtedness shall be
released and the Administrative Agent shall have received all payoff and release
letters, Uniform Commercial Code Form UCC‑3 termination statements or other
instruments or agreements as may be suitable or appropriate in connection with
the release of any such Liens.
(xviii)    Litigation. There shall not exist any litigation that could
reasonably be expected to cause a material adverse change, in the judgment of
the Administrative Agent, in or affecting the business, operations, property or
condition (financial or otherwise) of the Advisor, or of the Credit Parties and
their Subsidiaries taken as a whole.
(xix)    No Material Adverse Change. As of the Closing Date, no condition or
event shall have occurred since December 31, 2011 that has resulted in, or could
reasonably be expected to result in, a material adverse change, in the
reasonable judgment of the Administrative Agent, in or affecting the business,
operations, property or condition (financial or otherwise) of the Borrower, of
the PAC REIT, or of the PAC REIT and its Subsidiaries taken as a whole.
(xx)    Mezzanine Loan Documents. The Administrative Agent shall have received a
copy of all of the Mezzanine Loan Documentation existing as of the Closing Date,
certified by an officer of the Borrower as being true, correct and complete, and
the applicable Credit Party shall have duly executed and delivered each
Collateral Assignment of Loan Documents in connection with all such Mezzanine
Loan Documentation.

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(xxi)    Note Receivable Documents. The Administrative Agent shall have received
a copy of all of the Note Receivable Documentation existing as of the Closing
Date, certified by an officer of the Borrower as being true, correct and
complete, and the applicable Credit Party shall have duly executed and delivered
each Collateral Assignment of Loan Documents in connection with all such Note
Receivable Documentation.
(xxii)    Property Senior Loan Documents. The Administrative Agent shall have
received a copy of all of the Property Senior Loan Documentation existing as of
the Closing Date, certified by an officer of the Borrower as being true, correct
and complete.
(xxiii)    Consents. The Administrative Agent shall have received evidence that
all boards of directors, governmental, equity holder and material third party
consents and approvals (including without limitation, but subject to the terms
of Section 6.17 hereof, any consents required under the terms of any Mezzanine
Loan Documentation or Property Senior Loan Documentation), in connection with
the entering into of this Agreement and the other Loan Documents have been
obtained.
(xxiv)    Patriot Act. The Administrative Agent shall have received, at least
five Business Days prior to the Closing Date, all documentation and other
information required by regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including the USA
Patriot Act.
(xxv)    Management Subordination Agreement. The Administrative Agent shall have
received an executed copy of the Management Subordination Agreement.
(xxvi)    Ownership; Intercompany Debt. The Administrative Agent, in its sole
discretion, shall be satisfied with (i) the pro forma capital and ownership
structure and the equity holder arrangements of the Credit Parties, and (ii) the
amount, terms, conditions and holders of all intercompany indebtedness of the
PAC REIT and its Affiliates.
(xxvii)    Miscellaneous. The Credit Parties shall have provided to the
Administrative Agent and the Lenders such other items and shall have satisfied
such other conditions as may be reasonably required by the Administrative Agent
or the Lenders.
Section 1.22    Conditions Precedent to All Credit Events. The obligations of
the Lenders to make each Credit Event is subject, at the time thereof, to the
satisfaction of the following conditions:
(a)    Notice. The Administrative Agent shall have received, as applicable, (i)
a Notice of Borrowing meeting the requirements of Section 2.03(b) with respect
to any Borrowing (other than a Continuation or Conversion), or (ii) a Notice of
Continuation or Conversion meeting the requirements of Section 2.07(b) with
respect to a Continuation or Conversion.
(b)    No Default; Representations and Warranties. At the time of each Credit
Event and also after giving effect thereto, (i) there shall exist no Default or
Event of Default and (ii) all representations and warranties of the Credit
Parties contained herein or in the other Loan Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, except to the extent that such representations and warranties
expressly relate to an earlier specified date, in which case such
representations and warranties shall have been true and correct in all material
respects as of the date when made.

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The acceptance of the benefits of (i) the Credit Events on the Closing Date
shall constitute a representation and warranty by the Borrower to the
Administrative Agent and each of the Lenders that all of the applicable
conditions specified in Section 4.01 have been satisfied as of the times
referred to in such Section and (ii) each Credit Event thereafter shall
constitute a representation and warranty by the Borrower to the Administrative
Agent and each of the Lenders that all of the applicable conditions specified in
Section 4.02 have been satisfied as of the times referred to in such Section.

REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans provided for herein, each of the Borrower and
the PAC REIT makes the following representations and warranties to, and
agreements with, the Administrative Agent and the Lenders, all of which shall
survive the execution and delivery of this Agreement and each Credit Event:
Section 1.23    Corporate Status. Each Credit Party (i) is a duly organized or
formed and validly existing corporation, partnership or limited liability
company, as the case may be, in good standing or in full force and effect under
the laws of the jurisdiction of its formation and has the corporate, partnership
or limited liability company power and authority, as applicable, to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage, and (ii) has duly qualified and is authorized to
do business in all jurisdictions where it is required to be so qualified or
authorized except where the failure to be so qualified would not have a Material
Adverse Effect.
Section 1.24    Corporate Power and Authority. Each Credit Party has the
corporate or other organizational power and authority to execute, deliver and
carry out the terms and provisions of the Loan Documents to which it is party
and has taken all necessary corporate or other organizational action to
authorize the execution, delivery and performance of the Loan Documents to which
it is party. Each Credit Party has duly executed and delivered each Loan
Document to which it is party and each Loan Document to which it is party
constitutes the legal, valid and binding agreement and obligation of such Credit
Party enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors’
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
Section 1.25    No Violation. Neither the execution, delivery and performance by
any Credit Party of the Loan Documents to which it is party nor compliance with
the terms and provisions thereof (i) will contravene any provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any Governmental
Authority applicable to such Credit Party or its properties and assets, except
in each case where such non-contravention could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (ii) will
conflict with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
(other than the Liens created pursuant to the Security Documents) upon any of
the property or assets of such Credit Party pursuant to the terms of (A) any
Material Contract, or (B) any other promissory note, bond, debenture, indenture,
mortgage, deed of trust, credit or loan agreement, or any other agreement or
other instrument, to which such Credit Party is a party or by which it or any of
its property or assets are bound or to which it may be subject, except in each
case where such conflict could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, or (iii) will violate any
provision of the Organizational Documents of such Credit Party.
Section 1.26    Governmental Approvals. No order, consent, approval, license,
authorization,

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or validation of, or filing, recording or registration with, or exemption by,
any Governmental Authority is required to authorize or is required as a
condition to (i) the execution, delivery and performance by any Credit Party of
any Loan Document to which it is a party or any of its obligations thereunder,
or (ii) the legality, validity, binding effect or enforceability of any Loan
Document to which any Credit Party is a party, except the filing and recording
of financing statements and other documents necessary in order to perfect the
Liens created by the Security Documents.
Section 1.27    Litigation. Except as set forth on Schedule 5.05, there are no
actions, suits or proceedings pending or, to the knowledge of the Borrower or
the PAC REIT, threatened with respect to any Credit Party or any of their
respective Subsidiaries or the Advisor or against any of their respective
properties.
Section 1.28    Use of Proceeds; Margin Regulations.
(a)    The proceeds of all Loans shall be utilized to (a) finance Capital
Expenditures, Acquisitions and Mezzanine Loan Investments, and with the consent
of the Administrative Agent in the exercise of its Permitted Discretion, for the
making of Cash Dividends, and (b) provide working capital and funds for other
general corporate purposes, in each case, not inconsistent with the terms of
this Agreement.
(b)    No part of the proceeds of any Credit Event will be used directly or
indirectly to purchase or carry Margin Stock, or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock, in violation of any of
the provisions of Regulations T, U or X of the Board of Governors of the Federal
Reserve System. No Credit Party is engaged in the business of extending credit
for the purpose of purchasing or carrying any Margin Stock. At no time would
more than 25% of the value of the assets of the Borrower or of the Borrower and
its consolidated Subsidiaries that are subject to any “arrangement” (as such
term is used in Section 221.2(g) of such Regulation U) hereunder be represented
by Margin Stock.
Section 1.29    Financial Statements.
(a)    The Borrower has furnished to the Administrative Agent and the Lenders
complete and correct copies of: (i) the audited consolidated balance sheets of
the PAC REIT and its consolidated Subsidiaries for the fiscal year ended
December 31, 2011 and the related audited consolidated statements of income,
shareholders’ equity, and cash flows of the PAC REIT and its consolidated
Subsidiaries for the fiscal year of the PAC REIT then ended, accompanied by the
report thereon of PricewaterhouseCoopers LLC; and (ii) the interim consolidated
balance sheet, and the related statements of income and of cash flows, of the
PAC REIT and its Subsidiaries for the fiscal quarters ending March 31, 2012 and
June 30, 2012. All such financial statements have been prepared in accordance
with GAAP, consistently applied (except as stated therein), and fairly present
in all material respect the financial position of the PAC REIT and its
Subsidiaries as of the respective dates indicated and the consolidated results
of their operations and cash flows for the respective periods indicated, subject
in the case of any such financial statements that are unaudited, to normal audit
adjustments. The PAC REIT and its Subsidiaries did not have, as of the date of
the latest financial statements referred to above, and will not have as of the
Closing Date after giving effect to the incurrence of Loans hereunder, any
material or significant contingent liability or liability for taxes, long-term
lease or unusual forward or long-term commitment that is not reflected in the
foregoing financial statements or the notes thereto in accordance with GAAP and
that in any such case is material in relation to the business, operations,
properties, assets, financial or other condition or prospects of the PAC REIT
and its Subsidiaries.
(b)    The financial projections of the PAC REIT and its Subsidiaries for the
fiscal years 2012 through 2013 prepared by the PAC REIT and delivered to the
Administrative Agent and the Lenders (the “Financial Projections”) were prepared
on behalf of the Borrower in good faith after taking into account historical
levels of business activity of the PAC REIT and its Subsidiaries, known trends,
including general

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economic trends, and all other information, assumptions and estimates considered
by management of the PAC REIT and its Subsidiaries to be pertinent thereto;
provided, however, that no representation or warranty is made as to the impact
of future general economic conditions or as to whether the PAC REIT’s projected
consolidated results as set forth in the Financial Projections will actually be
realized, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results for the periods
covered by the Financial Projections may differ materially from the Financial
Projections. No facts are known to the Borrower or the PAC REIT as of the
Closing Date which, if reflected in the Financial Projections, would result in a
Material Adverse Effect.
Section 1.30    Solvency. The Borrower has received consideration that is the
reasonable equivalent value of the obligations and liabilities that the Borrower
has incurred to the Administrative Agent and the Lenders under the Loan
Documents. The Borrower now has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage
and is now solvent and able to pay its debts as they mature, and the Borrower
owns property having a value, both at fair valuation and at present fair salable
value, greater than the amount required to pay the Borrower’s debts; and the
Borrower is not entering into the Loan Documents with the intent to hinder,
delay or defraud its creditors. The Credit Parties, taken as a whole, now have
capital sufficient to carry on their business and transactions and all business
and transactions in which they are about to engage and are now solvent and able
to pay their debts as they mature, and the Credit Parties, taken as a whole, own
property having a value, both at fair valuation and at present fair salable
value, greater than the amount required to pay the Credit Parties’ debts; and
the Credit Parties are not entering into the Loan Documents with the intent to
hinder, delay or defraud their creditors. For purposes of this Section 5.08,
“debt” means any liability on a claim, and “claim” means (y) right to payment
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured; or (z) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
Section 1.31    No Material Adverse Change. Since December 31, 2011, there has
been no change in the condition, business, affairs or prospects of the PAC REIT,
of the Borrower, or of the PAC REIT and its Subsidiaries taken as a whole, or
their properties and assets considered as an entirety, except for changes none
of which, individually or in the aggregate, has had or could reasonably be
expected to have, a Material Adverse Effect.
Section 1.32    Tax Returns and Payments. Each Credit Party has filed all
federal income tax returns and all other material tax returns, domestic and
foreign, required to be filed by it and has paid all taxes and assessments
payable by it that have become due, other than those not yet delinquent and
except for those contested in good faith. Each Credit Party has established on
its books such charges, accruals and reserves in respect of taxes, assessments,
fees and other governmental charges for all fiscal periods as are required by
GAAP. No Credit Party knows of any proposed assessment for additional federal,
foreign or state taxes for any period, or of any basis therefor, which,
individually or in the aggregate, taking into account such charges, accruals and
reserves in respect thereof as the PAC REIT and its Subsidiaries have made,
could reasonably be expected to have a Material Adverse Effect.
Section 1.33    Title to Properties, etc. Each Credit Party and each of its
Subsidiaries has good and marketable title, in the case of Real Property, and
good title (or valid Leaseholds, in the case of any leased property), in the
case of all other property, to all of its properties and assets free and clear
of Liens other than Permitted Liens. The interests of the Credit Parties and
their Subsidiaries in the properties reflected in the most recent balance sheet
referred to in Section 5.07(a), taken as a whole, were sufficient, in the

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judgment of the Credit Parties, as of the date of such balance sheet for
purposes of the ownership and operation of the businesses conducted by the
Credit Parties and their Subsidiaries. Schedule 5.11 sets forth a complete list
of Real Property owned and/or leased or subleased (as lessor or sublessor,
lessee or sublessee) by the Credit Parties and their Subsidiaries on the Closing
Date.
Section 1.34    Lawful Operations, etc. Each Credit Party and each of its
Subsidiaries: (i) holds all necessary foreign, federal, state, local and other
governmental licenses, registrations, certifications, permits and authorizations
necessary to conduct its business and own its properties; and (ii) is in full
compliance with all requirements imposed by law, regulation or rule, whether
foreign, federal, state or local, that are applicable to it, its operations, or
its properties and assets, including, without limitation, applicable
requirements of Environmental Laws, except in the cases of clause (i) and (ii)
above, for any failure to obtain and maintain in effect, or noncompliance that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
Section 1.35    Environmental Matters.
(a)    Each Credit Party and each of their Subsidiaries is in compliance with
all applicable Environmental Laws, except to the extent that any such failure to
comply (together with any resulting penalties, fines or forfeitures) would not
reasonably be expected to have a Material Adverse Effect. All licenses, permits,
registrations or approvals required for the conduct of the business of each
Credit Party and each of their Subsidiaries under any Environmental Law have
been secured and each Credit Party and each of their Subsidiaries is in
substantial compliance therewith, except for such licenses, permits,
registrations or approvals the failure to secure or to comply therewith is not
reasonably likely to have a Material Adverse Effect. No Credit Party nor any of
their Subsidiaries has received written notice, or otherwise knows, that it is
in any respect in noncompliance with, breach of or default under any applicable
writ, order, judgment, injunction, or decree to which such Credit Party or such
Subsidiary is a party or that would affect the ability of such Credit Party or
such Subsidiary to operate any Real Property and no event has occurred and is
continuing that, with the passage of time or the giving of notice or both, would
constitute noncompliance, breach of or default thereunder, except in each such
case, such noncompliance, breaches or defaults as would not reasonably be
expected to, in the aggregate, have a Material Adverse Effect. There are no
Environmental Claims pending or, to the best knowledge of any Credit Party,
threatened wherein an unfavorable decision, ruling or finding would reasonably
be expected to have a Material Adverse Effect. There are no facts,
circumstances, conditions or occurrences on any Real Property now or at any time
owned, leased or operated by the Credit Parties or their Subsidiaries or on any
property adjacent to any such Real Property, that are known by the Credit
Parties or as to which any Credit Party or any such Subsidiary has received
written notice, that could reasonably be expected: (i) to form the basis of an
Environmental Claim against any Credit Party or any of their Subsidiaries or any
Real Property of a Credit Party or any of their Subsidiaries; or (ii) to cause
such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such Real Property under any Environmental
Law, except in each such case, such Environmental Claims or restrictions that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
(b)    Hazardous Materials have not at any time been (i) generated, used,
treated or stored on, or transported to or from, any Real Property of the Credit
Parties or any of their Subsidiaries or (ii) released on or about any such Real
Property, in each case where such occurrence or event is not in compliance with
or could give rise to liability under Environmental Laws and is reasonably
likely to have a Material Adverse Effect.
Section 1.36    Compliance with ERISA. Compliance by the Credit Parties with the
provisions

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hereof and Credit Events contemplated hereby will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of the Code. The Credit
Parties, their Subsidiaries and each ERISA Affiliate (i) has fulfilled all
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan that is not a Multi-Employer Plan or a Multiple Employer
Plan, (ii) has satisfied all contribution obligations in respect of each
Multi-Employer Plan and each Multiple Employer Plan, (iii) is in compliance in
all material respects with all other applicable provisions of ERISA and the Code
with respect to each Plan, each Multi-Employer Plan and each Multiple Employer
Plan, and (iv) has not incurred any liability under Title IV of ERISA to the
PBGC with respect to any Plan, any Multi-Employer Plan, any Multiple Employer
Plan, or any trust established thereunder. No Plan or trust created thereunder
has been terminated, and there have been no Reportable Events, with respect to
any Plan or trust created thereunder or with respect to any Multi-Employer Plan
or Multiple Employer Plan, which termination or Reportable Event will or could
give rise to a material liability of the Credit Parties or any ERISA Affiliate
in respect thereof. No Credit Party nor any Subsidiary of a Credit Party nor any
ERISA Affiliate is at the date hereof, or has been at any time within the five
years preceding the date hereof, an employer required to contribute to any
Multi-Employer Plan or Multiple Employer Plan, or a “contributing sponsor” (as
such term is defined in Section 4001 of ERISA) in any Multi-Employer Plan or
Multiple Employer Plan. No Credit Party nor any Subsidiary of a Credit Party nor
any ERISA Affiliate has any contingent liability with respect to any
post-retirement “welfare benefit plan” (as such term is defined in ERISA) except
as has been disclosed to the Administrative Agent and the Lenders in writing.
Section 1.37    Intellectual Property, etc. Each Credit Party and each of its
Subsidiaries has obtained or has the right to use all patents, trademarks,
service marks, trade names, copyrights, licenses and other rights with respect
to the foregoing necessary for the present and planned future conduct of its
business, without any known conflict with the rights of others, except for such
patents, trademarks, service marks, trade names, copyrights, licenses and
rights, the loss of which, and such conflicts that, in any such case
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. As of the Closing Date, Schedule 5.15 sets forth a
complete list of all material licenses, trade names and service marks and all
registered patents, trademarks and copyrights, in each case with respect to
Intellectual Property.
Section 1.38    Investment Company Act, etc. No Credit Party nor any of its
Subsidiaries is subject to regulation with respect to the creation or incurrence
of Indebtedness under the Investment Company Act of 1940, as amended, the
Federal Power Act, as amended or any applicable Federal or state public utility
law.
Section 1.39    Insurance. The Credit Parties and their Subsidiaries maintain
insurance coverage by such insurers and in such forms and amounts and against
such risks as are generally consistent with industry standards and in each case
in compliance with the terms of Section 6.03. Schedule 5.17 sets forth a
complete list of all insurance maintained by the Credit Parties on the Closing
Date.
Section 1.40    Burdensome Contracts; Labor Relations. No Credit Party nor any
of its Subsidiaries (a) is subject to any burdensome contract, agreement,
corporate restriction, judgment, decree or order, (b) is a party to any labor
dispute affecting any bargaining unit or other group of employees generally, (c)
is subject to any strike, slowdown, workout or other concerted interruptions of
operations by employees of a Credit Party or any Subsidiary, whether or not
relating to any labor contracts, (d) is subject to any pending or, to the
knowledge of any Credit Party, threatened, unfair labor practice complaint,
before the National Labor Relations Board, (e) is subject to any pending or, to
the knowledge of any Credit Party, threatened grievance or arbitration
proceeding arising out of or under any collective bargaining agreement, (f) is
subject to any pending or, to the knowledge of any Credit Party, threatened
significant strike, labor dispute, slowdown or stoppage, or (g) is, to the
knowledge of the Credit Parties, involved or subject to any union representation

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organizing or certification matter with respect to the employees of the Credit
Parties or any of their Subsidiaries, except (with respect to any matter
specified in any of the above clauses) for such matters as, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any of its Subsidiaries has suffered any
strikes, walkouts or work stoppages in the five years preceding the Closing
Date.
Section 1.41    Security Interests. Once executed and delivered, each of the
Security Documents creates, as security for the Obligations (as defined herein
or any corresponding term in any Security Documents), a valid and enforceable,
and upon making the filings and recordings referenced in the next sentence,
perfected security interest in and Lien on all of the Collateral subject thereto
from time to time, in favor of the Administrative Agent for the benefit of the
Secured Creditors, superior to and prior to the rights of all third persons and
subject to no other Liens, except that the Collateral under the Security
Documents may be subject to Permitted Liens. No filings or recordings are
required in order to perfect the security interests created under any Security
Document except for filings or recordings required in connection with any such
Security Document that shall have been made, or for which satisfactory
arrangements have been made, upon or prior to the execution and delivery
thereof. All recording, stamp, intangible or other similar taxes required to be
paid by any Person under applicable legal requirements or other laws applicable
to the property encumbered by the Security Documents in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement thereof have been paid.
Section 1.42    True and Complete Disclosure. The factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of any Credit
Party to the Administrative Agent or any Lender for purposes of or in connection
with this Agreement or any transaction contemplated herein, other than the
Financial Projections (as to which representations are made only as provided in
Section 5.07(b)), is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of such Person in writing to the
Administrative Agent or any Lender will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided, except that all
information consisting of financial projections prepared by any Credit Party or
any Subsidiary is only represented herein as being based on good faith estimates
and assumptions believed by such persons to be reasonable at the time made.
Section 1.43    Defaults. No Default or Event of Default exists as of the
Closing Date hereunder, nor will any Default or Event of Default begin to exist
immediately after the execution and delivery hereof.
Section 1.44    Capitalization. As of the Closing Date, Schedule 5.22 sets forth
a true, complete and accurate description of the equity capital structure of the
PAC REIT and each of its Subsidiaries showing accurate ownership percentages of
the equityholders of record of each such Person (other than the PAC REIT) and
accompanied by a statement of authorized and issued Equity Interests for each
such Person. Except as set forth on Schedule 5.22, as of the Closing Date
(a) there are no preemptive rights, outstanding subscriptions, warrants or
options to purchase any Equity Interests of any Credit Party or any of its
Subsidiaries, (b) there are no obligations of any Credit Party or any of its
Subsidiaries to redeem or repurchase any of its Equity Interests and (c) there
is no agreement, arrangement or plan to which any Credit Party or any of its
Subsidiaries is a party or of which any Credit Party or any of its Subsidiaries
has knowledge that could directly or indirectly affect the capital structure of
any Credit Party or any of its Subsidiaries. The Equity Interests of each Credit
Party and each of its Subsidiaries described on Schedule 5.22 (i) are validly
issued and fully paid and non‑assessable (to the extent such concepts are
applicable to the respective Equity Interests) and (ii) are owned of record and
beneficially as set forth on Schedule 5.22, free and clear of all Liens (other
than Liens created under the Security Documents). No Subsidiary is organized
under laws other

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than the laws of the United States, any State thereof, or the District of
Columbia.
Section 1.45    Anti-Terrorism Law Compliance. No Credit Party nor any of its
Subsidiaries is subject to or in violation of any law, regulation, or list of
any government agency (including, without limitation, the U.S. Office of Foreign
Asset Control list, Executive Order No. 13224 or the USA Patriot Act) that
prohibits or limits the conduct of business with or the receiving of funds,
goods or services to or for the benefit of certain Persons specified therein or
that prohibits or limits any Lender from making any advance or extension of
credit to the Borrower or from otherwise conducting business with the Credit
Parties.
Section 1.46    Location of Bank Accounts. Schedule 5.24 sets forth a complete
and accurate list as of the Closing Date of all deposit, checking and other bank
accounts, all securities and other accounts maintained with any broker dealer
and all other similar accounts maintained by each Credit Party, together with a
description thereof (i.e., the bank or broker dealer at which such deposit or
other account is maintained and the account number and the purpose thereof).
Section 1.47    Material Contracts. Schedule 5.25 contains a true, correct and
complete list of all the Material Contracts in effect on the Closing Date. As of
the Closing Date, all such Material Contracts are in full force and effect
(except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors’ rights and by
equitable principals, regardless of whether enforcement is sought in equity or
in law) and no material defaults by a Credit Party currently exist thereunder
(other than as described in Schedule 5.25).
Section 1.48    Affiliate Transactions. Except as set forth on Schedule 5.26, as
of the date of this Agreement, there are no existing or proposed agreements,
arrangements or transactions between any Credit Party and any of the officers,
members, managers, directors, stockholders, parents, other interest holders,
employees, or Affiliates (other than the Subsidiaries) of any Credit Party or
any members of their respective immediate families, and none of the foregoing
Persons are directly or indirectly indebted to or have any direct or indirect
ownership, partnership, or voting interest in any Affiliate of any Credit Party
or any Person with which any Credit Party has a business relationship or which
competes with any Credit Party.
Section 1.49    Common Enterprise. The successful operation and condition of
each of the Credit Parties is dependent on the continued successful performance
of the functions of the Credit Parties as a whole and the successful operation
of each of the Credit Parties is dependent on the successful performance and
operation of each other Credit Party. Each Credit Party expects to derive
benefit (and its board of directors or other governing body has determined that
it may reasonably be expected to derive benefit), directly and indirectly, from
(i) the successful operations of each of the other Credit Parties and (ii) the
credit extended by the Lenders to the Borrower hereunder, both in their separate
capacities and as members of the group of companies. Each Credit Party has
determined that execution, delivery, and performance of this Agreement and any
other Loan Documents to be executed by such Credit Party is within its purpose,
will be of direct and indirect benefit to such Credit Party, and is in its best
interest.
Section 1.50    REIT Status. The PAC REIT qualifies as, and has elected to be
treated as, a REIT and is in compliance with all requirements and conditions
imposed under the Code to allow the PAC REIT to maintain its status as a REIT.
Section 1.51    Conduct of Business. No Credit Party or any of its Subsidiaries
conducts any business other than the ownership of Real Property or of the Equity
Interests of entities that own Real Property, the making of investments in Real
Property and investments secured by Equity Interests of entities that own Real
Property. None of the Credit Parties or any of their Subsidiaries have or will
have any employees.

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AFFIRMATIVE COVENANTS
Each of the Borrower and the PAC REIT hereby covenants and agrees that on the
Closing Date and thereafter so long as this Agreement is in effect and until
such time as the Commitments have been terminated, no Notes remain outstanding
and the Loans, together with interest, Fees and all other Obligations incurred
hereunder and under the other Loan Documents, have been paid in full, as
follows:
Section 1.52    Reporting Requirements. The Borrower will furnish to the
Administrative Agent and each Lender:
(a)    Annual Financial Statements. Not later than five (5) days following the
date the PAC REIT files its annual Form 10-K with the SEC, but in any event
within 95 days after the close of each fiscal year of the PAC REIT, the audited
consolidated balance sheets of the PAC REIT and its consolidated Subsidiaries as
at the end of such fiscal year and the related consolidated statements of
income, of stockholders’ equity and of cash flows for such fiscal year, in each
case setting forth comparative figures for the preceding fiscal year, all in
reasonable detail and accompanied by the opinion with respect to such
consolidated financial statements of independent public accountants of
recognized national standing selected by the PAC REIT, which opinion shall be
unqualified and shall (i) state that such accountants audited such consolidated
financial statements in accordance with generally accepted auditing standards,
that such accountants believe that such audit provides a reasonable basis for
their opinion, and that in their opinion such consolidated financial statements
present fairly, in all material respects, the consolidated financial position of
the PAC REIT and its consolidated subsidiaries as at the end of such fiscal year
and the consolidated results of their operations and cash flows for such fiscal
year in conformity with generally accepted accounting principles, or (ii)
contain such statements as are customarily included in unqualified reports of
independent accountants in conformity with the recommendations and requirements
of the American Institute of Certified Public Accountants (or any successor
organization, together with all management letters of such accountants addressed
to the PAC REIT or any other Credit Party.
(b)    Quarterly Financial Statements. Not later than five (5) days following
the date the PAC REIT files its Form 10-Q with the SEC for each of the first
three fiscal quarters of the PAC REIT, but in any event within 50 days after the
close of each of such first three quarterly accounting periods in each fiscal
year of the PAC REIT, the unaudited consolidated and consolidating balance
sheets of the PAC REIT and its consolidated Subsidiaries as at the end of such
quarterly period and the related unaudited consolidated and consolidating
statements of income and of cash flows for such quarterly period and/or for the
fiscal year to date, and setting forth, in the case of such unaudited
consolidated and consolidating statements of income and of cash flows,
comparative figures for the related periods in the prior fiscal year.
(c)    Officer’s Compliance Certificates. At the time of the delivery of the
financial statements provided for in subparts (a) and (b) above, (i) a
certificate (a “Compliance Certificate”), substantially in the form of Exhibit
E, signed by a Financial Officer of the PAC REIT to the effect that (A) no
Default or Event of Default exists or, if any Default or Event of Default does
exist, specifying the nature and extent thereof and the actions the Credit
Parties have taken or proposes to take with respect thereto, and (B) the
representations and warranties of the Credit Parties are true and correct in all
material respects, except to the extent that any relate to an earlier specified
date, in which case, such representations shall be true and correct in all
material respects as of the date made, which certificate shall set forth the
calculations required to establish compliance with the provisions of Section
7.07, and (ii) if, as a result of any change in accounting principles and
policies (or the application thereof) from those used in the preparation of the
historical financial

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statements of the PAC REIT, the consolidated financial statements of the Credit
Parties delivered pursuant to Sections 6.01(a) and (b) will differ in any
material respect from the consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then, together with the first delivery of
such financial statements after such change, one or more statements of
reconciliation for all such prior financial statements in form and substance
reasonably satisfactory to the Administrative Agent.
(d)    Monthly Equity Raise Reports. Not later than five (5) days following the
last day of each calendar month, a report regarding the status of the sale to
the public of Equity Interests in the PAC REIT, and including, without
limitation, information as to amounts issued and sold, amounts received and
lists of selling agreements and brokers.
(e)    Budgets and Forecasts. Not later than 30 days prior to the commencement
of any fiscal year of the PAC REIT and its Subsidiaries, commencing with the
fiscal year ending December 31, 2012, a consolidated budget in reasonable detail
for each of the four fiscal quarters of such fiscal year, and (if and to the
extent prepared by management of the Borrower or any other Credit Party) for any
subsequent fiscal years, as customarily prepared by management for its internal
use, setting forth, with appropriate discussion, the forecasted balance sheet,
income statement, operating cash flows and Capital Expenditures of the PAC REIT
and its Subsidiaries for the period covered thereby, and the principal
assumptions upon which forecasts and budget are based.
(f)    Notices. Promptly, and in any event within three Business Days, after any
Credit Party or any Subsidiary obtains knowledge thereof, notice of:
(i)    the occurrence of any event that constitutes a Default or Event of
Default, which notice shall specify the nature thereof, the period of existence
thereof and what action the Borrower proposes to take with respect thereto;
(ii)    the commencement of, or any other material development concerning, any
litigation or governmental or regulatory proceeding pending against any Credit
Party or any Subsidiary or the occurrence of any other event, if the same could
be reasonably likely to have a Material Adverse Effect;
(iii)    any significant adverse change in the Borrower’s or any Subsidiary’s
relationship with, or any significant event or circumstance that is in the
Borrower’s reasonable judgment likely to adversely affect the Borrower’s or any
Subsidiary’s relationship with, (A) any customer (or related group of customers)
representing more than 10% of the Borrower’s consolidated revenues during its
most recent fiscal year, or (B) any supplier that is material to the operations
of the PAC REIT and its Subsidiaries considered as an entirety;
(iv)    any written notice of default under, or other material written notice
delivered or received pursuant to or relating to, the terms of any of (A) the
Property Senior Loan Documentation, (B) the Mezzanine Loan Documentation, or (C)
the Note Receivable Documentation; or
(v)    any event that could reasonably be expected to have a Material Adverse
Effect.
(g)    ERISA. Promptly, and in any event within 10 days after any Credit Party
or any Subsidiary of a Credit Party or any ERISA Affiliate knows of the
occurrence of any ERISA Event, the Borrower will deliver to the Administrative
Agent and each of the Lenders a certificate of an Authorized Officer of the
Borrower setting forth the full details as to such occurrence and the action, if
any, that such Credit Party or

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such Subsidiary of such Credit Party or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given by
such Credit Party or such Subsidiary of such Credit Party or the ERISA Affiliate
to or filed with the PBGC, a Plan participant or the Plan administrator with
respect thereto.
(h)    Environmental Matters. Promptly upon, and in any event within 10 Business
Days after, an officer of a Credit Party or any Subsidiary of a Credit Party
obtaining knowledge thereof, notice of one or more of the following
environmental matters to the extent any of the following could reasonably be
expected to have a Material Adverse Effect: (i) any pending or threatened
Environmental Claim against such Credit Party or any of its Subsidiaries or any
Real Property owned or operated by such Credit Party or any of its Subsidiaries
or which constitutes collateral security for any Mezzanine Loan Investment or
Note Receivable Investment; (ii) any condition or occurrence on or arising from
any Real Property owned or operated by such Credit Party or any of its
Subsidiaries or which constitutes collateral security for any Mezzanine Loan
Investment or Note Receivable Investment that (A) results in noncompliance by
such Credit Party or any of its Subsidiaries with any applicable Environmental
Law or (B) would reasonably be expected to form the basis of a Environmental
Claim against such Credit Party or any of its Subsidiaries or any such Real
Property; (iii) any condition or occurrence on any Real Property owned, leased
or operated by such Credit Party or any of its Subsidiaries or which constitutes
collateral security for any Mezzanine Loan Investment or Note Receivable
Investment that could reasonably be expected to cause such Real Property to be
subject to any restrictions on the ownership, occupancy, use or transferability
by such Credit Party or any of its Subsidiaries of such Real Property under any
Environmental Law; and (iv) the taking of any removal or remedial action in
response to the actual or alleged presence of any Hazardous Material on any Real
Property owned, leased or operated by such Credit Party or any of its
Subsidiaries or which constitutes collateral security for any Mezzanine Loan
Investment or Note Receivable Investment as required by any Environmental Law or
any governmental or other Global agency. All such notices shall describe in
reasonable detail the nature of the Environmental Claim, the Credit Party's or
such Subsidiary’s response thereto and the potential exposure in Dollars of the
Credit Parties and their Subsidiaries with respect thereto.
(i)    SEC Reports and Registration Statements. Promptly after transmission
thereof or other filing with the SEC, copies of all registration statements
(other than the exhibits thereto and any registration statement on Form S-8 or
its equivalent) and all annual, quarterly or current reports that any Credit
Party or any Subsidiary files with the SEC on Form 10-K, 10-Q or 8-K (or any
successor forms). Any such documents that are filed pursuant to and are
accessible through the SEC’s EDGAR system will be deemed to have been provided
to the Administrative Agent and each Lender.
(j)    Annual, Quarterly and Other Reports. Promptly after transmission thereof
to its stockholders, copies of all annual, quarterly and other reports and all
proxy statements that the PAC REIT or the Borrower furnishes to its stockholders
generally. Any such documents that are filed pursuant to and are accessible
through the SEC’s EDGAR system will be deemed to have been provided to the
Administrative Agent and each Lender.
(k)    Auditors’ Internal Control Comment Letters, etc. Promptly upon receipt
thereof, a copy of each letter or memorandum commenting on internal accounting
controls and/or accounting or financial reporting policies followed by the
Credit Parties and/or any of their Subsidiaries that is submitted to such Credit
Party or Subsidiary, as applicable, by its independent accountants in connection
with any annual or interim audit made by them of the books of the PAC REIT or
any of its Subsidiaries.
(l)    Information Relating to Collateral. At the time of the delivery of the
annual financial statements provided for in subpart (a) above, a certificate of
an Authorized Officer of the Borrower (i) setting

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forth any changes to the information required pursuant to the Perfection
Certificate or confirming that there has been no change in such information
since the date of the most recently delivered or updated Perfection Certificate,
(ii) outlining all material insurance coverage maintained as of the date of such
report by the Credit Parties and all material insurance coverage planned to be
maintained by the Credit Parties in the immediately succeeding fiscal year, and
(iii) certifying that no Credit Party has taken any actions (and is not aware of
any actions so taken) to terminate any UCC financing statements or other
appropriate filings, recordings or registrations, including all refilings,
rerecordings and reregistrations, containing a description of the Collateral
have been filed of record in each governmental, municipal or other appropriate
office in each jurisdiction identified pursuant to clause (i) above to the
extent necessary to protect and perfect the security interests and Liens under
the Security Documents for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).
(m)    Other Notices. Promptly after the transmission or receipt thereof, as
applicable, copies of all written notices received or sent by any Credit Party
to or from the holders of any Material Indebtedness or any trustee with respect
thereto.
(n)    Proposed Amendments, etc. to Certain Agreements. No later than five (5)
Business Days prior to the effectiveness thereof, copies of substantially final
drafts of any proposed amendment, supplement, waiver or other modification with
respect to any Material Indebtedness Agreement, any of the Property Senior Loan
Documentation, any of the Mezzanine Loan Documentation, any of the Note
Receivable Documentation, or any other agreement or instrument subject to the
restrictions contained in Section 7.12.
(o)    Notice Regarding Material Contracts. Promptly, and in any event within
ten (10) Business Days (i) after any Material Contract of any Credit Party is
terminated or amended in a manner that could reasonably be expected to have a
Material Adverse Effect, or (ii) after any new Material Contract is entered
into, written notice of the same. For the avoidance of doubt, no notice will be
required in connection with the expiry of a Material Contract pursuant to its
terms.
(p)    Violation of Anti-Terrorism Laws. Promptly (i) if any Credit Party
obtains knowledge that any Credit Party or any Person that owns, directly or
indirectly, any Equity Interests of any Credit Party, or any other holder at any
time of any direct or indirect equitable, legal or beneficial interest therein
is the subject of any of the Anti-Terrorism Laws, such Credit Party will notify
the Administrative Agent and (ii) upon the request of the Administrative Agent
or any Lender (through the Administrative Agent), such Credit Party will provide
any information the Administrative Agent or such Lender believes is reasonably
necessary to be delivered to comply with the USA Patriot Act.
(q)    Other Information. Promptly upon the reasonable request therefor (and in
any events within 10 days of such request), such other information or documents
(financial or otherwise) relating to any Credit Party or any Subsidiary as the
Administrative Agent or any Lender (through the Administrative Agent) may
reasonably request from time to time.
Section 1.53    Books, Records and Inspections. Each Credit Party will, and will
cause each of its Subsidiaries to, (i) keep proper books of record and account,
in which full and correct entries shall be made of all financial transactions
and the assets and business of such Credit Party or such Subsidiary, as the case
may be, in accordance with GAAP; and (ii) permit officers and designated
representatives of the Administrative Agent or any of the Lenders to visit and
inspect any of the properties or assets of such Credit Party and/or its
Subsidiaries in whomsoever’s possession (but only to the extent such Credit
Party or such Subsidiary, as applicable, has the right to do so to the extent in
the possession of another Person), to examine

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the books of account of such Credit Party or such Subsidiary, as applicable, and
make copies thereof and take extracts therefrom, and to discuss the affairs,
finances and accounts of such Credit Party and/or such Subsidiary, as
applicable, with, and be advised as to the same by, its and their officers and
independent accountants and independent actuaries, if any, all at such
reasonable times and intervals (and prior to the occurrence of an Event of
Default, at Administrative Agent and the Lenders’ cost) and to such reasonable
extent as the Administrative Agent or any of the Lenders (through the
Administrative Agent) may request.
Section 1.54    Insurance.
(a)    Each Credit Party will, and will cause each of its Subsidiaries to, (i)
maintain insurance coverage by such insurers and in such forms and amounts and
against such risks as are generally consistent with the insurance coverage
maintained by the Credit Parties and their Subsidiaries as of the Closing Date,
and (ii) forthwith upon the Administrative Agent’s or any Lender’s written
request, furnish to the Administrative Agent or such Lender such information
about such insurance as the Administrative Agent or such Lender may from time to
time reasonably request, which information shall be prepared in form and detail
reasonably satisfactory to the Administrative Agent or such Lender and certified
by an Authorized Officer of the Borrower.
(b)    Each Credit Party will at all times keep its respective property that is
subject to the Lien of any Security Document insured in favor of the
Administrative Agent, for the benefit of the Secured Creditors and all policies
or certificates (or certified copies thereof) with respect to such insurance
(and any other insurance maintained by the Credit Parties) (i) shall be endorsed
to the Administrative Agent’s satisfaction for the benefit of the Administrative
Agent (including, without limitation, by naming the Administrative Agent as loss
payee (with respect to Collateral) or, to the extent permitted by applicable
law, as an additional insured), (ii) shall state that such insurance policies
shall not be canceled without 30 days’ prior written notice thereof (or 10 days’
prior written notice in the case of cancellation for the non-payment of
premiums) by the respective insurer to the Administrative Agent, (iii) shall
provide that the respective insurers irrevocably waive any and all rights of
subrogation with respect to the Administrative Agent and the Lenders, and (iv)
shall in the case of any such certificates or endorsements in favor of the
Administrative Agent, be delivered to or deposited with the Administrative
Agent.
(c)    If any Credit Party shall fail to maintain any insurance in accordance
with this Section 6.03, or if any Credit Party shall fail to so endorse and
deliver or deposit all endorsements or certificates with respect thereto, the
Administrative Agent shall have the right (but shall be under no obligation) to
procure such insurance and the Borrower agrees to reimburse the Administrative
Agent on demand for all costs and expenses of procuring such insurance.
Section 1.55    Payment of Taxes and Claims. Each Credit Party will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits, or upon any properties belonging to it, prior to the date
on which penalties attach thereto, and all lawful claims that, if unpaid, might
become a Lien or charge upon any properties of any Credit Party or any of their
respective Subsidiaries; provided, however, that no Credit Party nor any of
their respective Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim that is being contested in good faith and by proper
proceedings if (i) it has maintained adequate reserves with respect thereto in
accordance with GAAP and (ii) in the case of a tax or claim that has or may
become a Lien against any of the Collateral, such proceedings conclusively
operate to stay the sale of any portion of the Collateral to satisfy such tax or
claim. Without limiting the generality of the foregoing, each Credit Party will,
and will cause each of its Subsidiaries to, pay in full all of its wage
obligations in accordance with the Fair Labor Standards Act (29 U.S.C. Sections
206‑207), with respect to its employees subject

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thereto, and any comparable provisions of applicable law.
Section 1.56    Corporate Franchises. Each Credit Party will do, and will cause
each of its Subsidiaries to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its corporate existence, rights and
authority, qualification, franchises, licenses and permits; provided, however,
that nothing in this Section 6.05 shall be deemed to prohibit any transaction
permitted by Section 7.02.
Section 1.57    Good Repair. Each Credit Party will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used or
useful in its business in whomsoever’s possession they may be, are kept in
reasonably good repair, working order and condition, normal wear and tear
excepted, and that from time to time there are made in such properties and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, in each case, to the extent and
in the manner customary for companies in similar businesses.
Section 1.58    Compliance with Statutes, etc. Each Credit Party will, and will
cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
Governmental Authorities in respect of the conduct of its business and the
ownership of its property, other than those the noncompliance with which would
not individually or in the aggregate be reasonably expected to have a Material
Adverse Effect.
Section 1.59    Compliance with Environmental Laws. Without limitation of the
covenants contained in Section 6.07:
(a)    Each Credit Party will comply, and will cause each of its Subsidiaries to
comply, with all Environmental Laws applicable to the ownership, lease or use of
all Real Property now or hereafter owned, leased or operated by such Credit
Party or any of its Subsidiaries, and will promptly pay or cause to be paid all
costs and expenses incurred in connection with such compliance, except to the
extent that such compliance with Environmental Laws is being contested in good
faith and by appropriate proceedings and for which adequate reserves have been
established to the extent required by GAAP, and the reasonably likely outcome in
such proceedings could not reasonably be expected to have a Material Adverse
Effect.
(b)    Each Credit Party will keep or cause to be kept, and will cause each of
its Subsidiaries to keep or cause to be kept, all such Real Property free and
clear of any Liens imposed pursuant to such Environmental Laws other than
Permitted Liens.
(c)    No Credit Party nor any of its Subsidiaries will generate, use, treat,
store, release or dispose of, or permit the generation, use, treatment, storage,
release or disposal of, Hazardous Materials on any Real Property now or
hereafter owned, leased or operated by the Credit Parties or any of their
Subsidiaries or transport or permit the transportation of Hazardous Materials to
or from any such Real Property other than in compliance with applicable
Environmental Laws and in the ordinary course of business, except to the extent
that any noncompliance with Environmental Laws is being contested in good faith
and by appropriate proceedings and for which adequate reserves have been
established to the extent required by GAAP, and the reasonably likely outcome in
such proceedings could not reasonably be expected to have a Material Adverse
Effect.
(d)    If required to do so under any applicable order of any Governmental
Authority, each Credit Party will undertake, and cause each of its Subsidiaries
to undertake any clean up, removal, remedial or other action necessary to remove
and clean up any Hazardous Materials from any Real Property owned, leased or
operated by the Credit Parties or any of its Subsidiaries in accordance with, in
all material respects, the requirements of all applicable Environmental Laws and
in accordance with, in all material respects, such

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orders of all Governmental Authorities, except to the extent that such Credit
Party or such Subsidiary contesting such order in good faith and by appropriate
proceedings and for which adequate reserves have been established to the extent
required by GAAP, and the reasonably likely outcome in such proceedings could
not reasonably be expected to have a Material Adverse Effect.
Section 1.60    Certain Subsidiaries to Join in Guaranty. In the event that at
any time after the Closing Date, any Credit Party acquires, creates or has any
Subsidiary that is not already a party to the Guaranty, such Credit Party will,
promptly, but in any event within 10 Business Days, cause such Subsidiary to
deliver to the Administrative Agent, in sufficient quantities for the Lenders,
(a) a Guaranty Supplement (as defined in the Guaranty), duly executed by such
Subsidiary, pursuant to which such Subsidiary joins in the Guaranty as a
guarantor thereunder, (b) resolutions of the Board of Directors or equivalent
governing body of such Subsidiary, certified by the Secretary or an Assistant
Secretary of such Subsidiary, as duly adopted and in full force and effect,
authorizing the execution and delivery of such joinder supplement and the other
Loan Documents to which such Subsidiary is or will be a party, together with
such other corporate documentation and an opinion of counsel as the
Administrative Agent shall reasonably request, in each case, in form and
substance satisfactory to the Administrative Agent and (c) all such documents,
instruments, agreements, and certificates as are similar to those described in
Section 6.10. Notwithstanding the foregoing, the provisions of this Section 6.09
and of Section 6.10 below shall not apply to any Subsidiary of the Borrower that
is a Real Estate Subsidiary to the extent the Organizational Documents of such
Real Estate Subsidiary or the Property Senior Loan Documents to which such Real
Estate Subsidiary is (or within 30 days of its formation will become) a party
expressly prohibit such guaranty or such grant of a lien on Real Property or
personal property (it being understood that to the extent not so prohibited,
such Real Estate Subsidiary is required by the terms hereof to comply with
Section 6.10).
Section 1.61    Additional Security; Real Property Matters; Further Assurances.
(a)    Additional Security. Subject to subpart (b) below, if any Credit Party
acquires, owns or holds an interest in any Real Property, or any personal
property of a type included in the Collateral that is not at the time included
in the Collateral, the Borrower will promptly notify the Administrative Agent in
writing of such event, identifying the property or interests in question and
referring specifically to the rights of the Administrative Agent and the Lenders
under this Section, and the Credit Party will, or will cause such Subsidiary to,
within 10 Business Days, grant to the Administrative Agent for the benefit of
the Secured Creditors a Lien on such Real Property or such personal property
(which in the case of any Real Estate Subsidiary shall consist of the maximum
available to be pledged, but not less than a pledge of 49% of the Equity
Interests issued by it) pursuant to the terms of such security agreements,
pledge agreements, assignments, Mortgages, Collateral Assignments of Loan
Documents, Buy-Sell Agreements, or other documents as the Administrative Agent
deems appropriate (collectively, the “Additional Security Documents”) or a
joinder in any existing Security Document. Furthermore, the Borrower or such
other Credit Party shall cause to be delivered to the Administrative Agent such
opinions of local counsel, corporate resolutions, a Perfection Certificate, all
Collateral items required to be physically delivered to the Administrative Agent
thereunder, and other related documents as may be reasonably requested by the
Administrative Agent in connection with the execution, delivery and recording of
any such Additional Security Document or joinder, all of which documents shall
be in form and substance satisfactory to the Administrative Agent.
(b)    Real Property Matters.
(i)     The Credit Parties shall deliver to the Administrative Agent with
respect to each parcel of Real Property acquired by a Credit Party or any of its
Subsidiaries after the Closing Date

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(but solely for Real Property on which the Credit Parties are required to grant
a Mortgage in favor of the Administrative Agent for the benefit of the Lenders),
within 30 days after the acquisition of such parcel of Real Property, all of the
following:
(A)    an American Land Title Association (ALTA) mortgagee title insurance
policy or policies, or unconditional commitments therefor (a “Title Policy”)
issued by a title insurance company reasonably satisfactory to the
Administrative Agent (a “Title Company”), in an amount not less than the amount
reasonably required therefor by the Administrative Agent (taking into account
the estimated value of the property involved), insuring fee simple title to, or
a valid leasehold interest in, such Real Property vested in the applicable
Credit Party and assuring the Administrative Agent that the applicable Mortgage
creates a valid and enforceable first priority mortgage lien on the respective
Real Property encumbered thereby, subject only to Permitted Liens, which Title
Policy (1) shall include an endorsement for mechanics’ liens, for revolving,
“variable rate” and future advances under this Agreement and for any other
matters reasonably requested by the Administrative Agent, and (2) shall provide
for affirmative insurance and such reinsurance as the Administrative Agent may
reasonably request, all of the foregoing in form and substance reasonably
satisfactory to the Administrative Agent;
(B)    a title report issued by the Title Company with respect thereto, dated
not more than 30 days prior to the date of execution of the applicable Mortgage
and satisfactory in form and substance to the Administrative Agent;
(C)    copies of all recorded documents listed as exceptions to title or
otherwise referred to in the Title Policy or in such title report relating to
such Real Property;
(D)    evidence, which may be in the form of a letter or other certification
from the Title Company or from an insurance broker, surveyor, engineer or other
provider, as to whether (1) such Real Property is a Flood Hazard Property, and
(2) the community in which such Flood Hazard Property is located is
participating in the National Flood Insurance Program, and if such Real Property
is a Flood Hazard Property, evidence that the applicable Credit Party or
Subsidiary has obtained flood insurance in respect of such Flood Hazard Property
to the extent required under the applicable regulations of the Board of
Governors of the Federal Reserve System;
(E)    a survey, in form and substance reasonably satisfactory to the
Administrative Agent, of such Real Property, certified in a manner reasonably
satisfactory to the Administrative Agent by a licensed professional surveyor
reasonably satisfactory to the Administrative Agent;
(F)    a certificate of the Borrower identifying any Phase I, Phase II or other
environmental report received in draft or final form by any Credit Party or any
of its Subsidiaries during the five year period prior to the date of execution
of the Mortgage relating to such Real Property and/or the operations conducted
therefrom, or stating that no such draft or final form reports have been
requested or received by any Credit Party or such Subsidiary (or its counsel),
together with true and correct copies of all such environmental reports so
listed (in draft form, if not finalized); and all such environmental reports
shall be satisfactory in form and substance to

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the Administrative Agent;
(G)    an opinion of local counsel admitted to practice in the jurisdiction in
which such Real Property is located, reasonably satisfactory in form and
substance to the Administrative Agent, as to the validity and effectiveness of
such Mortgage as a lien on such Real Property encumbered thereby, and covering
such other matters of law in connection with the execution, delivery, recording
and enforcement of such Mortgage as the Administrative Agent may reasonably
request; and
(H)    upon request of the Administrative Agent and the Lenders shall have
received appraisals, satisfactory in form and substance to the Administrative
Agent and each Lender, dated not more than 60 days prior to the date of
execution of each Mortgage and addressed to the Administrative Agent and the
Lenders or accompanied by a separate letter indicating that the Administrative
Agent and the Lenders may rely thereon, from one or more nationally recognized
appraisal firms, reasonably satisfactory to the Administrative Agent, covering
(i) the Real Properties, and (ii) all other tangible property, plant and
equipment owned by a Credit Party or any of its Subsidiaries, that is to be
subjected to the Lien of the Security Agreement and is located at any plant or
facility owned or leased by a Credit Party or any of its Subsidiaries in the
United States of America, which appraisals shall set forth (A) the “fair market
value” of such property (i.e., the amount at which such property would equitably
exchange between a willing buyer and a willing seller, neither being under a
compulsion and both having reasonable knowledge of all relevant facts on the
premise that such property will continue in its present use as part of an
ongoing business enterprise), (B) the “orderly disposal value” of such property
(i.e., the amount that may be realized through a forced sale disposal of such
property when a reasonable time to find a buyer is allowed), and (C) the “forced
liquidation value” of such property (i.e., the amount that may be realized
through an immediate forced sale disposal of such property), in each case as
determined in accordance with sound appraisal standards.
(ii)    The Credit Parties shall deliver or cause to be delivered to the
Administrative Agent with respect to each parcel of Real Property (i) acquired
by a Real Estate Subsidiary after the Closing Date if such Real Estate
Subsidiary’s Organizational Documents or the Property Senior Loan Documents to
which it is a party prohibit such Subsidiary from complying with Section
6.10(b)(i), or (ii) constituting collateral security for any Mezzanine Loan
Investment or Note Receivable Investment after the Closing Date; in each case
within ten (10) Business Days after the acquisition of such parcel of Real
Property or the making of such Investment, all of the following:
(A)    A Title Policy issued by a Title Company insuring fee simple title to, or
a valid leasehold interest in, such Real Property;
(B)    a title report issued by the Title Company with respect thereto;
(C)    copies of all recorded documents listed as exceptions to title or
otherwise referred to in the Title Policy or in such title report relating to
such Real Property;
(D)    evidence, which may be in the form of a letter or other certification
from the Title Company or from an insurance broker, surveyor, engineer or other
provider, as to whether (1) such Real Property is a Flood Hazard Property, and
(2) the

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community in which such Flood Hazard Property is located is participating in the
National Flood Insurance Program, and if such Real Property is a Flood Hazard
Property, evidence that flood insurance has been obtained in respect of such
Flood Hazard Property to the extent required under the applicable regulations of
the Board of Governors of the Federal Reserve System;
(E)    a survey of such Real Property by a licensed professional surveyor;
(F)    any Phase I, Phase II or other environmental report received in draft or
final form relating to such Real Property and/or the operations conducted
therefrom; and
(G)    appraisals of such Real Property;
(H)    such other documentation and diligence delivered by a Real Estate
Subsidiary pursuant to any Property Senior Loan Documentation or delivered with
respect to any Real Property in connection with any Mezzanine Loan Investment or
Note Receivable Investment.
(c)    Taxes. The Credit Parties shall have paid or caused to be paid all costs
and expenses payable in connection with all of the actions set forth in Section
6.10(b), including but not limited to (A) all mortgage, intangibles or similar
taxes or fees, however characterized, payable in respect of this Agreement, the
execution and delivery of the Notes, any of the Mortgages or any of the other
Loan Documents or the recording of any of the same or any other documents
related thereto; and (B) all expenses and premiums of the Title Company in
connection with the issuance of such policy or policies of title insurance and
to all costs and expenses required for the recording of the Mortgages or any
other Loan Documents or any other related documents in the appropriate public
records.
(d)    Further Assurances. The Credit Parties will, and will cause each of their
respective Subsidiaries to, at the expense of the Borrower, make, execute,
endorse, acknowledge, file and/or deliver to the Administrative Agent from time
to time such conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Administrative Agent may reasonably require. If at any time the
Administrative Agent determines, based on applicable law, that all applicable
taxes (including, without limitation, mortgage recording taxes or similar
charges) were not paid in connection with the recordation of any mortgage or
deed of trust, the Borrower shall promptly pay the same upon demand.
Section 1.62    Control Agreements. Upon the request of the Administrative
Agent, the Credit Parties will enter into, and will maintain in effect, Control
Agreements with respect to each Deposit Account maintained by the Credit Parties
after the Closing Date. Each such Control Agreement shall be in form and
substance reasonably satisfactory to the Administrative Agent.
Section 1.63    Material Contracts. Each Credit Party and each of its
Subsidiaries will perform and observe in all material respects all the terms and
provisions of each Material Contract to be performed or observed by it, and no
Credit Party will take any action that would cause any such Material Contract to
not be in full force and effect, and cause each of its Subsidiaries to do so
except, in each case, where the failure to do so, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Section 1.64    Senior Debt. The Obligations shall, and the Credit Parties shall
take all necessary action to ensure that the Obligations shall, at all times
rank (a) at least pari passu in right of

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payment (to the fullest extent permitted by law) with all other senior Secured
Indebtedness of the Credit Parties and (b) prior in right of payment, to the
extent set forth in the applicable subordination agreement, to the Subordinated
Indebtedness.
Section 1.65    Subordination. Each Credit Party shall cause all Indebtedness
and other obligations now or hereafter owed by it to any of its Affiliates to be
subordinated in right of payment and security to the Indebtedness and other
Obligations owing to the Administrative Agent and the Lenders in accordance with
a subordination agreement or other arrangements in form and substance reasonably
satisfactory to the Administrative Agent.
Section 1.66    Lender Meetings. The Credit Parties will, upon the request of
the Administrative Agent or the Required Lenders, participate in a meeting of
the Administrative Agent and the Lenders once during each fiscal year to be held
at the Borrower’s corporate offices (or at such other location as may be agreed
to by the Borrower and Administrative Agent) at such time as may be agreed to by
the Borrower and the Administrative Agent.
Section 1.67    REIT Status. The PAC REIT shall maintain its status as, and
election to be treated as, a REIT under the Code.
Section 1.68    Post Closing Covenants. The Credit Parties shall satisfy the
requirements and/or provide to the Administrative Agent each of the documents,
instruments, agreements and information set forth below, each in form and
substance reasonably acceptable to the Administrative Agent, on or before the
date specified for such requirement or such later date to be determined by the
Administrative Agent, in its reasonable discretion, each of which shall be
completed or provided in form and substance reasonably satisfactory to the
Administrative Agent:
(a)    On or before the 5th Business Day following the Closing Date, the
Borrower shall provide to the Administrative Agent (i) foreign qualification
certificates issued by the Commonwealth of Virginia for Trail Creek and issued
by the Commonwealth of Pennsylvania for Stone Rise, (ii) an updated title report
issued by a Title Company with respect to the Real Property owned by Trail
Creek, together with copies of all recorded documents listed as exceptions to
title or otherwise referred to in such title report, all in form and substance
satisfactory to the Administrative Agent, and (iii) all original promissory
notes held by any Credit Party and which were issued prior to the Closing Date
in connection with the Mezzanine Loan Documentation and the Note Receivable
Documentation, together with executed allonges thereto, executed in blank.
(b)    On or before the 15thth day following the Closing Date, the Borrower
shall (i) close all deposit accounts of the Borrower held with financial
institutions other than KeyBank National Association and shall move such funds
into accounts held with KeyBank National Association; or (ii) to the extent such
accounts with such other financial institutions are not so closed and moved,
provide Control Agreements to the Administrative Agent in connection with such
accounts.
(c)    On or before the 30th day following the Closing Date, the Credit Parties
shall use commercially reasonable efforts to provide to the Administrative Agent
a written consent of each senior lender under the Mezzanine Loan Documentation
and the Note Receivable Documentation, as the case may be, to the pledge of the
Mezzanine Loan Investment and the related Mezzanine Loan Documentation or Note
Receivable Investment and the related Note Receivable Documentation, as
applicable, to the Administrative Agent for the benefit of the Lenders as
contemplated by this Agreement and the other Loan Documents.
(d)    On or before the 45th day following the Closing Date, the Credit Parties
shall provide to

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the Administrative Agent (i) either (A) a written consent of each senior lender
under the Property Senior Loan Documentation to the amendment to the
Organizational Documents of each Real Estate Subsidiary to permit such entities
to opt into Article 8 of the UCC, together with an executed copy of each such
amendment to such Organizational Documents and certificates and transfer powers
evidencing 49% of Equity Interests of each such Real Estate Subsidiary, or (B)
to the extent all of the items set forth in clause (i)(A) hereof cannot be
obtained, a limited guaranty from Mr. John A. Williams guaranteeing liabilities
in connection with the inability of such Equity Interests to be certificated,
and (ii) concurrently with the items necessary to satisfy clause (i) hereof, a
policy of UCC insurance in form and substance acceptable to the Administrative
Agent.

NEGATIVE COVENANTS
Each of the Borrower and the PAC REIT hereby covenants and agrees that on the
Closing Date and thereafter for so long as this Agreement is in effect and until
such time as the Commitments have been terminated, no Notes remain outstanding
and the Loans, together with interest, Fees and all other Obligations incurred
hereunder and under the other Loan Documents, have been paid in full as follows:
Section 1.69    Changes in Business. No Credit Party nor any of its Subsidiaries
will engage in any business other than the businesses engaged in by the Credit
Parties and its Subsidiaries on the Closing Date and any other business
reasonably related thereto.
Section 1.70    Consolidation, Merger, Acquisitions, Asset Sales, etc. No Credit
Party will, nor will any Credit Party permit any of its Subsidiaries to, (i)
wind up, liquidate or dissolve its affairs, (ii) enter into any transaction of
merger or consolidation, (iii) make or otherwise effect any Acquisition, (iv)
without the prior written consent of the Administrative Agent in the exercise of
its Permitted Discretion, sell or dispose of any of its Real Property, any
Mezzanine Loan Investment or any Note Receivable Investment, or convert any
Mezzanine Loan Investment or Note Receivable Investment to an ownership interest
in the underlying Real Property, (v) sell or otherwise dispose of any of its
other property or assets outside the ordinary course of business, or otherwise
make or otherwise effect any Asset Sale, or (vi) agree to do any of the
foregoing at any future time, except that, if no Event of Default shall have
occurred and be continuing or would result therefrom, each of the following
shall be permitted:
(a)    the merger, consolidation or amalgamation of (i) any Subsidiary of the
Borrower with or into the Borrower, provided the Borrower is the surviving or
continuing or resulting corporation; or (ii) any Subsidiary of the Borrower with
or into any Subsidiary Guarantor, provided that the surviving or continuing or
resulting corporation is a Subsidiary Guarantor;
(b)    any Asset Sale by (i) the Borrower to any other Credit Party, or (ii) any
Subsidiary of the Borrower to any Credit Party;
(c)    any transaction permitted pursuant to Section 7.05; and
(d)    the Borrower or any Subsidiary may make any Acquisition that is a
Permitted Acquisition, provided that all of the conditions contained in the
definition of the term Permitted Acquisition are satisfied.
Section 1.71    Liens. No Credit Party will, nor will any Credit Party permit
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets of any kind of such Credit Party or such
Subsidiary whether now owned or hereafter acquired, except that the foregoing

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shall not apply to:
(a)    any Standard Permitted Lien;
(b)    Liens in existence on the Closing Date that are listed in Schedule 7.03
hereto;
(c)    any first mortgage Lien granted pursuant to any Property Senior Loan
Documentation by a Real Estate Subsidiary on Real Property owned by such
Subsidiary; provided that (A) such Liens only secure Indebtedness permitted by
Section 7.04(c), and (B) the recourse thereunder is limited to such Real
Property and such Lien does not apply to any other property or assets of the
Credit Parties or any of their respective Subsidiaries.
(d)    Liens (other than those described in subpart (c) above) (i) that are
placed upon fixed or capital assets acquired, constructed or improved by the
Credit Parties or any of their respective Subsidiaries, provided that (A) such
Liens only secure Indebtedness permitted by Section 7.04(c), (B) such Liens and
the Indebtedness secured thereby are incurred prior to or within 120 days after
such acquisition or the completion of such construction or improvement, (C) the
Indebtedness secured thereby does not exceed 90% of the cost of acquiring,
constructing or improving such fixed or capital assets; and (D) such Liens shall
not apply to any other property or assets of the Credit Parties or any of their
respective Subsidiaries; or (ii) arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any such Liens, provided
that the principal amount of such Indebtedness is not increased and such
Indebtedness is not secured by any additional assets; or
(e)    any Lien granted to the Administrative Agent securing any of the
Obligations or any other Indebtedness of the Credit Parties under the Loan
Documents or any Indebtedness under any Designated Hedge Agreement.
Section 1.72    Indebtedness. No Credit Party will, nor will any Credit Party
permit any of its Subsidiaries to, contract, create, incur, assume or suffer to
exist any Indebtedness of the Credit Parties or any of their respective
Subsidiaries (including, for the avoidance of doubt, Real Estate Subsidiaries),
except:
(a)    Indebtedness incurred under this Agreement and the other Loan Documents;
(b)    the Indebtedness set forth on Schedule 7.04 hereto;
(c)    (i) Indebtedness consisting of Capitalized Lease Obligations of the
Credit Parties and their Subsidiaries, (ii) Indebtedness secured by a Lien
referred to in Section 7.03(d), and (iii) any refinancing, extension, renewal or
refunding of any such Indebtedness not involving an increase in the principal
amount thereof, provided the aggregate outstanding principal amount (using
Capitalized Lease Obligations in lieu of principal amount, in the case of any
Capital Lease) of Indebtedness permitted by this subpart (c) shall not exceed
$500,000 at any time;
(d)    any intercompany loans made by the PAC REIT, the Borrower or any
Subsidiary of the Borrower to any Credit Party (other than the PAC REIT);
provided that such intercompany loans shall constitute Subordinated
Indebtedness;
(e)    Indebtedness constituting Guaranty Obligations permitted by Section 7.05;
(f)    Indebtedness incurred by any Real Estate Subsidiary under any Property
Senior Loan Documentation; provided that at the time of the incurrence of any
such Indebtedness (i) no Event of Default

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shall have occurred and be continuing, or would result therefrom, and (ii) such
Real Estate Subsidiary shall have complied with the applicable provisions of
Section 6.09 and Section 6.10; and
(g)    Indebtedness in respect of accrued but unpaid dividends in respect of
Equity Interests.
Section 1.73    Investments and Guaranty Obligations. No Credit Party will, nor
will any Credit Party permit any of its Subsidiaries to, directly or indirectly,
(i) make or commit to make any Investment or (ii) be or become obligated under
any Guaranty Obligations, except:
(a)    Investments by the PAC REIT or any of its Subsidiaries in cash and Cash
Equivalents;
(b)    any endorsement of a check or other medium of payment for deposit or
collection, or any similar transaction in the normal course of business;
(c)    the PAC REIT and its Subsidiaries may acquire and hold receivables and
similar items owing to them in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
(d)    any Permitted Creditor Investment;
(e)    loans and advances to employees for business-related travel expenses,
moving expenses, costs of replacement homes, business machines or supplies,
automobiles and other similar expenses, in each case incurred in the ordinary
course of business, provided the aggregate outstanding amount of all such loans
and advances shall not exceed $100,000 at any time;
(f)    Investments existing as of the Closing Date and described on Schedule
7.05 hereto;
(g)    any Guaranty Obligations of the Credit Parties or any of their respective
Subsidiaries in favor of the Administrative Agent and the Lenders;
(h)    Investments (i) of the PAC REIT or any of its Subsidiaries in any
Subsidiary existing as of the Closing Date, (ii) of the PAC REIT or the Borrower
in any Credit Party made after the Closing Date, or (iii) of any Credit Party in
any other Credit Party (other than the PAC REIT) made after the Closing Date;
(i)    intercompany loans and advances permitted by Section 7.04(d);
(j)    the Acquisitions permitted by Section 7.02(d);
(k)    the Investment by the Borrower in the Advisor in the nature of a
$1,000,000 revolving line of credit from the Borrower to the Advisor evidenced
by a Promissory Note, dated as of August 21, 2012, made by the Advisor payable
to the order of the Borrower; provided that after the occurrence and during the
continuance of an Event of Default, the Borrower will cause all outstanding
amounts thereunder to be paid in full and no further loans and advance will be
permitted thereunder; and
(l)    Mezzanine Loan Investments made by any Mezzanine Loan Subsidiary and Note
Receivable Investments made by any Credit Party after the Closing Date; provided
that (i) no unfunded capital commitment to make a Mezzanine Loan Investment or
Note Receivable Investment shall permitted without the prior written consent of
the Administrative Agent in the exercise of its Permitted Discretion, and (ii)
at the time of making any Mezzanine Loan Investment or Note Receivable
Investment (A) no Event of Default shall have occurred and be continuing, or
would result therefrom, and (B) such Mezzanine Loan Subsidiary

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or Credit Party shall have complied with the applicable provisions of Section
6.09 and Section 6.10.
Section 1.74    Restricted Payments. No Credit Party will, nor will any Credit
Party permit any of its Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except:
(a)    the PAC REIT or any of its Subsidiaries may declare and pay or make
Capital Distributions that are payable solely in additional shares of its common
stock (or warrants, options or other rights to acquire additional shares of its
common stock);
(b)    any Subsidiary of the Borrower may declare and pay or make Capital
Distributions to the Borrower or any Subsidiary Guarantor;
(c)    so long as no Event of Default shall have occurred and be continuing or
would result therefrom, (A) the PAC REIT may declare and make Cash Dividends to
its stockholders, and (B) the Borrower may pay Cash Dividends to the PAC REIT
and other holders of partnership interests in the Borrower in an aggregate
amount not to exceed, with respect to any period of four consecutive fiscal
quarters, the greater of (i) the amount required to be distributed for the PAC
REIT to remain in compliance with Section 6.16, or (ii) 95% of the Adjusted
Funds From Operations of the Consolidated Entities; provided however, that the
PAC REIT may not increase or otherwise deviate in any material respect from its
historical practices with respect to the making of Capital Distributions to its
equityholders without first obtaining the prior written consent of the
Administrative Agent and the Required Lenders determined in the exercise of
their Permitted Discretion;
(d)    so long as no Event of Default shall have occurred and be continuing or
would result therefrom and subject to the terms of the Management Subordination
Agreement, the Borrower may pay, or make distributions to the PAC REIT to pay,
management fees pursuant to the Management Agreement.
Notwithstanding the foregoing, but subject to the following sentence, if an
Event of Default exists, the Borrower may only declare and make Cash Dividends
to the PAC REIT and other holders of partnership interests in the Borrower with
respect to any fiscal year to the extent necessary for the PAC REIT to
distribute, and the PAC REIT may so distribute, an aggregate amount not to
exceed the minimum amount necessary for the PAC REIT to remain in compliance
with Section 6.16. If a Event of Default specified in Section 8.01(a) or 8.01(i)
shall exist, or if as a result of the occurrence of any other Event of Default
any of the Obligations have been accelerated pursuant to the terms hereof, 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 Guarantor.
Section 1.75    Financial Covenants.
(a)    Consolidated Net Worth.
(i)    The Credit Parties will not permit the Consolidated Net Worth of the
Consolidated Entities to at any time be less than the sum of (i) $30,000,000
plus (ii) 75% of the net proceeds of any equity offering (or any debt offering
to the extent converted into equity) by any Credit Party or any of its
Subsidiaries.
(ii)    The Credit Parties will not permit Consolidated Net Worth of the
Consolidated Entities as at December 31, 2012 to be less than $50,000,000.

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(b)    Leverage Ratios.
(i)    The Credit Parties will not permit at any time the Senior Leverage Ratio
to be greater than 0.65 to 1:00.
(ii)    The Credit Parties will not permit at any time the Total Leverage Ratio
to be greater than 0.70 to 1:00.
(c)    Debt Service Coverage Ratio. The Credit Parties will not permit at any
time the Debt Coverage Ratio to be less than 1:50 to 1:00.
(d)    Minimum Property Debt Yield. The Credit Parties will not permit at any
time the Property Debt Yield to be 7.75% or less.
Section 1.76    Limitation on Certain Restrictive Agreements. No Credit Party
will, nor will any Credit Party permit any of its Subsidiaries to, directly or
indirectly, enter into, incur or permit to exist or become effective, any
“negative pledge” covenant or other agreement, restriction or arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of any Credit
Party or any of their respective Subsidiaries to create, incur or suffer to
exist any Lien upon any of its property or assets as security for Indebtedness,
or (b) the ability of any such Credit Party or any such Subsidiary to make
Capital Distributions or any other interest or participation in its profits
owned by any Credit Party or any Subsidiary, or pay any Indebtedness owed to any
Credit Party or any Subsidiary, or to make loans or advances to any Credit Party
or any Subsidiary, or transfer any of its property or assets to any Credit Party
or any Subsidiary, except for such restrictions existing under or by reason of
(i) applicable law, (ii) this Agreement and the other Loan Documents, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest, (iv) customary provisions restricting assignment of any
licensing agreement entered into in the ordinary course of business, (v)
customary provisions restricting the transfer or further encumbering of assets
subject to Liens permitted under Section 7.03(d), (vi) customary restrictions
affecting only a Subsidiary of the Borrower under any agreement or instrument
governing any of the Indebtedness of a Credit Party permitted pursuant to
Section 7.04, (vii) any document relating to Indebtedness secured by a Lien
permitted by Section 7.03, insofar as the provisions thereof limit grants of
junior liens on the assets securing such Indebtedness, and (viii) any Operating
Lease or Capital Lease, insofar as the provisions thereof limit grants of a
security interest in, or other assignments of, the related leasehold interest to
any other Person.
Section 1.77    Transactions with Affiliates. No Credit Party will, nor will any
Credit Party permit any of its Subsidiaries to, enter into any transaction or
series of transactions with any Affiliate (other than, in the case of the
Borrower, any Subsidiary, and in the case of a Subsidiary, the Borrower or
another Subsidiary) other than in the ordinary course of business of and
pursuant to the reasonable requirements of such Credit Party’s or such
Subsidiary’s business and upon fair and reasonable terms no less favorable to
such Credit Party or such Subsidiary than would be obtained in a comparable
arm’s-length transaction with a Person other than an Affiliate, except (i) sales
of goods to an Affiliate for use or distribution outside the United States that
in the good faith judgment of the Credit Parties comply with any applicable
legal requirements of the Code, or (ii) agreements and transactions with and
payments to officers, directors and shareholders that are either (A) entered
into in the ordinary course of business and not prohibited by any of the other
provisions of this Agreement, or (B) entered into outside the ordinary course of
business, approved by the directors or shareholders of the Borrower, and not
prohibited by any of the other provisions of this Agreement or in violation of
any law, rule or regulation.
Section 1.78    Plan Terminations, Minimum Funding, etc. No Credit Party will,
nor will any Credit Party permit any of its Subsidiaries to, and will not permit
any ERISA Affiliate to, (i) terminate any

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Plan or Plans so as to result in liability of the Credit Parties, their
Subsidiaries or any ERISA Affiliate to the PBGC in excess of, in the aggregate,
the amount that is equal to 5% of the PAC REIT’s Consolidated Net Worth as of
the date of the then most recent financial statements furnished to the Lenders
pursuant to the provisions of this Agreement, (ii) permit to exist one or more
events or conditions that present a material risk of the termination by the PBGC
of any Plan or Plans with respect to which the Credit Parties, their
Subsidiaries or ERISA Affiliate would, in the event of such termination, incur
liability to the PBGC in excess of such amount in the aggregate, (iii) fail to
comply with the minimum funding standards of ERISA and the Code with respect to
any Plan, or (iv) incur an obligation to contribute to, or become a contributing
sponsor (as such term is defined in Section 4001 of ERISA) in, any
Multi-Employer Plan or Multiple Employer Plan.
Section 1.79    PAC REIT Covenant. The PAC REIT shall not engage in any trade or
business, other than the ownership of the Equity Interests in its Subsidiaries
and activities relating thereto, the performance of its respective obligations
under the Loan Documents to which it is a party, and the maintenance of its
corporate existence and corporate governance.
Section 1.80    New Mezzanine Loan Documentation; Modification of Certain
Agreements. No Credit Party will execute and deliver any Mezzanine Loan
Documentation after the Closing Date without first obtaining the prior written
approval of the Administrative Agent and the Required Lenders of the terms and
conditions of such Mezzanine Loan Documentation; it being understood that the
Mezzanine Loan Investments to be made by City Vista Mezzanine Lending, LLC, City
Park Mezzanine Lending, LLC and a new special purpose entity to be formed by the
Credit Parties in connection with the Shopping Center Asset and transactions
related thereto are approved by the Administrative Agent and the Required
Lenders, subject to compliance with the terms and conditions of this Agreement,
including without limitation, Sections 6.09 and 6.10 hereof. All Mezzanine Loan
Documentation entered into after the Closing Date shall contain express
exculpatory provisions providing that no member, manager or other equityholder
of the Credit Party that is the mezzanine lender thereunder shall be liable in
any respect for any failure to fund thereunder. Furthermore, other than in
connection with the Registration Statement filed by the PAC REIT with the SEC on
August 16, 2012 and the transactions related thereto, without the prior written
consent of the Required Lenders determined in the exercise of their Permitted
Discretion, no Credit Party will amend, modify, supplement, waive or otherwise
change, or consent or agree to any amendment, modification, supplement, waiver
or other change to, or enter into any forbearance from exercising any rights
with respect to the terms or provisions contained in:
(a)    any of the terms of any preferred Equity Interests of the Credit Parties
(other than any such amendment, modification, supplement, waiver or other change
for which no fee is payable to the holders of such preferred stock and that (i) 
extends the scheduled redemption date or reduces the amount of any scheduled
redemption payment or (ii)  reduces the rate or extend any date for payment of
dividends thereon);
(b)    any Credit Party's Organizational Documents;
(c)    the Management Agreement; or
(d)    any of the Property Senior Loan Documentation (other than any amendment,
modification, supplement, waiver or other change for which no fee is payable to
the holders of the Indebtedness evidenced thereby and that (i)  extends the
maturity or reduces the amount of any repayment, prepayment or redemption of the
principal of such Indebtedness, (ii)  reduces the rate or extends any date for
payment of interest, premium (if any) or fees payable on such Indebtedness or
(iii) makes the covenants, events of default or remedies in such documentation
less restrictive on

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any applicable Real Estate Entity), any of the Note Receivable Documentation or
any of the Mezzanine Loan Documentation.
Section 1.81    Bank Accounts. On or prior to the Closing Date, the Borrower
shall establish, and shall thereafter maintain, its Deposit Accounts at KeyBank
National Association. No Credit Party shall establish any new Deposit Accounts
unless the Administrative Agent and the depository institution at which the
account is to be opened enter into a Control Agreement pursuant to which such
depository institution acknowledges the security interest of the Administrative
Agent in such Deposit Account, agrees to comply with instructions originated by
the Administrative Agent directing disposition of the funds in the Deposit
Account without further consent from the Borrower or such Credit Party, and
agrees to subordinate and limit any security interest the bank may have in the
Deposit Account and waive all rights of set-off with respect thereto (other than
for customary fees and expenses) on terms satisfactory to the Administrative
Agent.
Section 1.82    Anti-Terrorism Laws. No Credit Party nor any of their respective
Subsidiaries shall be subject to or in violation of any law, regulation, or list
of any government agency (including, without limitation, the U.S. Office of
Foreign Asset Control list, Executive Order No. 13224 or the USA Patriot Act)
that prohibits or limits the conduct of business with or the receiving of funds,
goods or services to or for the benefit of certain Persons specified therein or
that prohibits or limits any Lender from making any advance or extension of
credit to the Borrower or from otherwise conducting business with the Borrower
or any other Credit Party.
Section 1.83    Fiscal Year. No Credit Party shall, nor shall it permit any of
its Subsidiaries to, change its Fiscal Year end from December 31.
Section 1.84    Issuance of Disqualified Equity Interests. No Credit Party
shall, nor shall it permit any of its Subsidiaries to, issue or sell any
Disqualified Equity Interests.

EVENTS OF DEFAULT
Section 1.85    Events of Default. Any of the following specified events shall
constitute an Event of Default (each an “Event of Default”):
(a)    Payments: the Borrower shall (i) default in the payment when due (whether
at maturity, on a date fixed for a scheduled repayment, on a date on which a
required prepayment is to be made, upon acceleration or otherwise) of any
principal of the Loans; or (ii) default, and such default shall continue for
five or more Business Days, in the payment when due of any interest on the
Loans, any Fees or any other Obligations; or
(b)    Representations, etc.: any representation, warranty or statement made by
the Borrower or any other Credit Party herein or in any other Loan Document or
in any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove to be untrue in any material respect (without
duplication as to any materiality modifiers, qualifications, or limitations
applicable thereto) on the date as of which made, deemed made, or confirmed; or
(c)    Certain Covenants: the Borrower shall default in the due performance or
observance by it of any term, covenant or agreement contained in Sections 6.01,
6.05, 6.09, 6.10, 6.11, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16 or 6.17, or Article
VII of this Agreement; or

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(d)    Other Covenants: any Credit Party shall default in the due performance or
observance by it of any term, covenant or agreement contained in this Agreement
or any other Loan Document (other than those referred to in Section 8.01(a) or
(b) or (c) above) and such default is not remedied within 30 days after the
earlier of (i) an Authorized Officer of any Credit Party obtaining knowledge of
such default or (ii) the Borrower receiving written notice of such default from
the Administrative Agent or the Required Lenders (any such notice to be
identified as a “notice of default” and to refer specifically to this
paragraph); or
(e)    Cross Default Under Other Agreements; Designated Hedge Agreements: any
Credit Party or any of its Subsidiaries shall (i) default in any payment with
respect to any Indebtedness evidenced by the Property Senior Loan Documentation
or any other Material Indebtedness (other than the Obligations), and such
default shall continue after the applicable grace period, if any, specified in
the Property Senior Loan Documentation or in any agreement or instrument
relating to such Material Indebtedness; or (ii) default in the observance or
performance of any agreement or condition relating to any Indebtedness evidenced
by the Property Senior Loan Documentation or any other Material Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto (and all grace periods applicable to such observance, performance or
condition shall have expired), or any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause, or
to permit the holder or holders of such Indebtedness evidenced by the Property
Senior Loan Documentation or of such Material Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause any such Indebtedness
evidenced by the Property Senior Loan Documentation or such Material
Indebtedness to become due prior to its stated maturity; or any such
Indebtedness evidenced by the Property Senior Loan Documentation or such
Material Indebtedness of any Credit Party or any of its Subsidiaries shall be
declared to be due and payable, or shall be required to be prepaid (other than
by a regularly scheduled required prepayment or redemption, prior to the stated
maturity thereof); or (iii) without limitation of the foregoing clauses, default
in any payment obligation under a Designated Hedge Agreement, and such default
shall continue after the applicable grace period, if any, specified in such
Designated Hedge Agreement or any other agreement or instrument relating
thereto; or
(f)    Invalidity of Loan Documents: any provision of any Loan Document, at any
time after its execution and delivery and for any reason other than as expressly
permitted hereunder or under such Loan Document or satisfaction in full of all
the Obligations, ceases to be in full force and effect; or any Credit Party or
any other Person contests in any manner the validity or enforceability of any
provision of any Loan Document; or any Credit Party denies that it has any or
further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document or the Administrative Agent fails to
have; or
(g)    Invalidity of Liens: any security interest and Lien purported to be
created by any Security Document shall cease to be in full force and effect
(other than in accordance with the terms hereof and thereof), or shall cease to
give the Administrative Agent, for the benefit of the Secured Creditors, the
Liens, rights, powers and privileges purported to be created and granted under
such Security Documents (including a perfected first priority security interest
in and Lien on, all of the Collateral thereunder (except as otherwise expressly
provided in such Security Document)) or shall be asserted by any Credit Party
not to be, a valid, perfected, first priority (except as otherwise expressly
provided in this Agreement or such Security Document) security interest in or
Lien on any Collateral covered thereby;
(h)    Judgments: (i) one or more judgments, orders or decrees (or any
settlement of any claim that, if breached, could result in a judgment order or
decree) shall be entered against any Credit Party and/or any of its Subsidiaries
involving a liability (other than a liability covered by insurance, as to which
the carrier has adequate claims paying ability and has not effectively reserved
its rights) of $5,000,000 or more individually or in the aggregate for all such
judgments, orders, decrees and settlements for the Credit Parties

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and their Subsidiaries in any calendar year, and any such judgments or orders or
decrees or settlements shall not have been vacated, discharged or stayed or
bonded pending appeal within 30 days from the entry thereof; or (ii) one or more
judgments, orders, decrees or settlements shall be entered against any Credit
Party and/or any of its Subsidiaries involving a required divestiture of any
material properties, assets or business reasonably estimated to have a fair
value in excess of $5,000,000, and any such judgments, orders or decrees shall
not have been vacated, discharged or stayed or bonded pending appeal within 30
days from the entry thereof; or
(i)    Insolvency Event: any Insolvency Event shall occur with respect to any
Credit Party or any of its Subsidiaries; or
(j)    ERISA: any ERISA Event shall have occurred and either (i) such event or
events could reasonably be expected to have a Material Adverse Effect, (ii)
there shall result from any such event or events the imposition of a Lien, or
(iii) a liability of any Credit Party or any Subsidiary in excess of $5,000,000
or more individually or in the aggregate shall result; or
(k)    Change of Control: if there occurs a Change of Control; or
(l)    Cessation of Business: any cessation of a substantial part of the
business of any Credit Party for a period that could reasonably be expected to
have a Material Adverse Effect; or
(m)    Environmental: the PAC REIT and its Subsidiaries shall have any
Environmental Liabilities and Costs (other than Environmental Liabilities and
Costs covered by insurance, as to which the carrier has adequate claims paying
ability and has not effectively disclaimed coverage), the payment of which is
reasonably probable and which could reasonably be expected to have a Material
Adverse Effect (after taking into consideration available claims or rights of
recovery that the PAC REIT and its Subsidiaries may have against any
third-party, to the extent reasonably expected to be realized); or
(n)    Subordinated Affiliate Obligations: any Affiliate of any Credit Party
holding obligations of any Credit Party that are subordinated to the Obligations
shall fail to perform or comply with any of the subordination provisions of any
subordination agreement or other subordination document evidencing or governing
such obligations; or
(o)    Subordinated Indebtedness: (i) any holder of Subordinated Indebtedness
that is an Affiliate of any Credit Party shall fail to perform or comply with
any of the subordination provisions of the documentation evidencing or governing
such Subordinated Indebtedness, or (ii) the subordination provisions of the
documents evidencing or governing any Subordinated Indebtedness shall, in whole
or in part, terminate, cease to be effective or cease to be legally valid,
binding and enforceable against any holder of the applicable Subordinated
Indebtedness; or
(p)    REIT Status: The PAC REIT fails to maintain its status as a REIT; or
(q)    Equity Raise. Except to the extent the execution and delivery of this
Agreement results in a delay necessitated in order to comply with SEC
requirements, there shall occur for a period of ten (10) or more Business Days
any cessation, suspension or interruption of the sale to the public of Equity
Interests in the PAC REIT.
Section 1.86    Remedies. Upon the occurrence of any Event of Default, and at
any time thereafter, if any Event of Default shall then be continuing, the
Administrative Agent (i) may, in its discretion, or (ii) shall, upon the written
request of the Required Lenders, by written notice to the Borrower, take any

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or all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower or
any other Credit Party in any manner permitted under applicable law:
(a)    declare the Commitments terminated, whereupon the Commitment of each
Lender shall forthwith terminate immediately without any other notice of any
kind;
(b)    declare the principal of and any accrued interest in respect of all Loans
and all other Obligations (other than any Obligations under any Designated Hedge
Agreement) owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; or
(c)    exercise any other right or remedy available under any of the Loan
Documents or applicable law;
provided that, if an Event of Default specified in Section 8.01(i) shall occur,
the result that would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (a), (b) and/or (c)(ii) above shall
occur automatically without the giving of any such notice.
The Borrower agrees that upon the occurrence of an Event of Default, upon
request by the Administrative Agent, it will cooperate with the Administrative
Agent and the Lenders to cause the Real Properties owned by the respective Real
Estate Subsidiaries to be refinanced and to use the Net Cash Proceeds of such
Indebtedness to prepay the Loans in accordance with Section 2.10(b)(iii) and the
Total Revolving Commitment shall be permanently reduced on the date of any such
prepayment by an amount equal to such prepayment.
Section 1.87    Application of Certain Payments and Proceeds. All payments and
other amounts received by the Administrative Agent or any Lender through the
exercise of remedies hereunder or under the other Loan Documents shall, unless
otherwise required by the terms of the other Loan Documents or by applicable
law, be applied as follows:
(i)    first, to the payment of that portion of the Obligations constituting
fees, indemnities and expenses and other amounts (including attorneys’ fees and
amounts due under Article III) payable to the Administrative Agent in its
capacity as such;
(ii)    second, to the payment of that portion of the Obligations constituting
fees, indemnities and expenses (including attorneys’ fees and amounts due under
Article III) payable to each Lender, ratably among them in proportion to the
aggregate of all such amounts;
(iii)    third, to the payment of that portion of the Obligations constituting
accrued and unpaid interest on the Loans, ratably among the Lenders in
proportion to the aggregate of all such amounts;
(iv)    fourth, pro rata to the payment of (A) that portion of the Obligations
constituting unpaid principal of the Loans, ratably among the Lenders in
proportion to the aggregate of all such amounts, and (B) the amounts due to
Designated Hedge Creditors under Designated Hedge Agreements subject to
confirmation by the Administrative Agent that any calculations of termination or
other payment obligations are being made in accordance with normal industry
practice;
(v)    fifth, to the payment of all other Obligations of the Credit Parties
owing under or

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in respect of the Loan Documents that are then due and payable to the
Administrative Agent, the Lenders and the Designated Hedge Creditors, ratably
based upon the respective aggregate amounts of all such Obligations owing to
them on such date; and
(vi)    finally, any remaining surplus after all of the Obligations have been
paid in full, to the Borrower or to whomsoever shall be lawfully entitled
thereto.

THE ADMINISTRATIVE AGENT
Section 1.88    Appointment.
(a)    Each Lender hereby irrevocably designates and appoints KeyBank National
Association to act as specified herein and in the other Loan Documents, and each
such Lender hereby irrevocably authorizes KeyBank National Association as the
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
The Administrative Agent agrees to act as such upon the express conditions
contained in this Article. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in the other
Loan Documents, nor any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
The provisions of this Article IX are solely for the benefit of the
Administrative Agent and the Lenders, and no Credit Party shall have any rights
as a third-party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement, the Administrative Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed to
have assumed any obligation or relationship of agency or trust with or for the
Credit Parties or any of their respective Subsidiaries.
(b)    Each Lender hereby further irrevocably authorizes the Administrative
Agent on behalf of and for the benefit of the Lenders, to be the agent for and
representative of the Lenders with respect to the Guaranty, the Security
Agreement, the Collateral and any other Loan Document. Subject to Section 11.12,
without further written consent or authorization from Lenders, the
Administrative Agent may execute any documents or instruments necessary to (i)
release any Lien encumbering any item of Collateral that is the subject of a
sale or other disposition of assets permitted hereby or to which the Required
Lenders (or such other Lenders as may be required to give such consent under
Section 11.12) have otherwise consented, or (ii) release any Guarantor from the
Guaranty with respect to which the Required Lenders (or such other Lenders as
may be required to give such consent under Section 11.12) have otherwise
consented.
(c)    Anything contained in any of the Loan Documents to the contrary
notwithstanding, the Borrower, the Administrative Agent and each Lender hereby
agree that (i) no Lender shall have any right individually to realize upon any
of the Collateral or to enforce the Guaranty, it being understood and agreed
that all powers, rights and remedies hereunder may be exercised solely by the
Administrative Agent, on behalf of the Lenders in accordance with the terms
hereof and all powers, rights and remedies under the Loan Documents may be
exercised solely by the Administrative Agent, and (ii) in the event of a
foreclosure by the Administrative Agent on any of the Collateral pursuant to a
public or private sale, the Administrative Agent or any Lender may be the
purchaser of any or all of such Collateral at any such sale and the
Administrative Agent, as agent for and representative of the Secured Creditors
(but not any Lender or Lenders in its or their respective individual capacities
unless the Required Lenders shall otherwise agree in writing)

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shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
public sale, to use and apply any of the Obligations as a credit on account of
the purchase price for any collateral payable by the Administrative Agent at
such sale.
Section 1.89    Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, sub-agents or attorneys-in-fact, and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents,
sub-agents or attorneys-in-fact selected by it with reasonable care except to
the extent otherwise required by Section 9.03. All of the rights, benefits and
privileges (including the exculpatory and indemnification provisions) of Section
9.03 shall apply to any such sub-agent and to the Affiliates of any such
sub-agent, and shall apply to their respective activities as sub-agent as if
such sub-agent and Affiliates were named herein. Notwithstanding anything herein
to the contrary, with respect to each sub-agent appointed by the Administrative
Agent, (i) such sub-agent shall be a third party beneficiary under this
Agreement with respect to all such rights, benefits and privileges (including
exculpatory and rights to indemnification) and shall have all of the rights,
benefits and privileges of a third party beneficiary, including an independent
right of action to enforce such rights, benefits and privileges (including
exculpatory rights and rights to indemnification) directly, without the consent
or joinder of any other Person, against any or all of the Credit Parties and the
Lenders, (ii) such rights, benefits and privileges (including exculpatory rights
and rights to indemnification) shall not be modified or amended without the
consent of such sub-agent, and (iii) such sub-agent shall only have obligations
to the Administrative Agent and not to any Credit Party, any Lender or any other
Person and no Credit Party, Lender or any other Person shall have the rights,
directly or indirectly, as a third party beneficiary or otherwise, against such
sub-agent.
Section 1.90    Exculpatory Provisions. Neither the Administrative Agent nor any
of its Related Parties shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or any other Loan Document (except for its or such Related Parties’
own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction) or (b) responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Credit Parties or any of their
respective Subsidiaries or any of their respective officers contained in this
Agreement, any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement or any other Loan Document or
for any failure of any Credit Party or any of its officers to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Credit Parties or any of their respective Subsidiaries. The
Administrative Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any Loan Document or for any representations,
warranties, recitals or statements made herein or therein or made in any written
or oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Administrative Agent to the Lenders or by or on behalf
of the Credit Parties or any of their respective Subsidiaries to the
Administrative Agent or any Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or of the existence or possible existence of any Default
or Event of Default.
Section 1.91    Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate,

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affidavit, letter, cablegram, telegram, e-mail or other electronic transmission,
facsimile transmission, telex or teletype message, statement, order or other
document or conversation believed by it, in good faith, to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the PAC REIT or any of its Subsidiaries), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders or all of the
Lenders, as applicable, as to any matter that, pursuant to Section 11.12, can
only be effectuated with the consent of all Required Lenders, or all applicable
Lenders, as the case may be), and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders.
Section 1.92    Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default.” If the
Administrative Agent receives such a notice, the Administrative Agent shall give
prompt notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided, however, that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
Section 1.93    Non-Reliance. Each Lender expressly acknowledges that neither
the Administrative Agent nor any of its Related Parties has made any
representations or warranties to it and that no act by the Administrative Agent
hereinafter taken, including, without limitation, any review of the affairs of
the Credit Parties or their respective Subsidiaries, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent, or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of, and investigation into, the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Credit Parties and their Subsidiaries and made its own
decision to make its Loans hereunder and enter into this Agreement. Each Lender
also represents that it will, independently and without reliance upon the
Administrative Agent, or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Credit Parties and their
Subsidiaries. The Administrative Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, assets, property, financial and other conditions,
prospects or creditworthiness of the Credit Parties and their Subsidiaries that
may come into the possession of the Administrative Agent or any of its Related
Parties.
Section 1.94    No Reliance on Administrative Agent’s Customer Identification
Program. Each Lender acknowledges and agrees that neither such Lender, nor any
of its Affiliates, participants or assignees, may rely on the Administrative
Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s

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customer identification program, or other obligations required or imposed under
or pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the
“CIP Regulations”), or any other Anti-Terrorism Law, including any programs
involving any of the following items relating to or in connection with the
Credit Parties or their respective Subsidiaries, any of their respective
Affiliates or agents, the Loan Documents or the transactions hereunder: (a) any
identity verification procedures, (b) any record keeping, (c) any comparisons
with government lists, (d) any customer notices or (e) any other procedures
required under the CIP Regulations or such other laws.
Section 1.95    USA Patriot Act. Each Lender or assignee or participant of a
Lender that is not organized under the laws of the United States of America or a
state thereof (and is not excepted from the certification requirement contained
in Section 313 of the USA Patriot Act and the applicable regulations because it
is both (a) an affiliate of a depository institution or foreign bank that
maintains a physical presence in the United States or foreign country, and
(b) subject to supervision by a banking authority regulating such affiliated
depository institution or foreign bank) shall deliver to the Administrative
Agent the certification, or, if applicable, recertification, certifying that
such Lender is not a “shell” and certifying to other matters as required by
Section 313 of the USA Patriot Act and the applicable regulations: (i) within 10
days after the Closing Date, and (ii) at such other times as are required under
the USA Patriot Act.
Section 1.96    Indemnification. The Lenders agree to indemnify the
Administrative Agent and its Related Parties, ratably according to their pro
rata share of the Aggregate Credit Facility Exposure, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, reasonable expenses or disbursements of any kind whatsoever that
may at any time (including, without limitation, at any time following the
payment of the Obligations) be imposed on, incurred by or asserted against the
Administrative Agent or such Related Parties in any way relating to or arising
out of this Agreement or any other Loan Document, or any documents contemplated
by or referred to herein or the transactions contemplated hereby or any action
taken or omitted to be taken by the Administrative Agent or such Related Parties
under or in connection with any of the foregoing, but only to the extent that
any of the foregoing is not paid by the Borrower; provided, however, that no
Lender shall be liable to the Administrative Agent or any of its Related Parties
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting solely from the Administrative Agent’s or such Related
Parties’ gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. If any indemnity
furnished to the Administrative Agent or any such Related Parties for any
purpose shall, in the opinion of the Administrative Agent, be insufficient or
become impaired, the Administrative Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished. The agreements in this Section shall survive the payment
of all Obligations.
Section 1.97    The Administrative Agent in Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Credit Parties, their
respective Subsidiaries and their Affiliates as though not acting as
Administrative Agent hereunder. With respect to the Loans made by it and all
Obligations owing to it, the Administrative Agent shall have the same rights and
powers under this Agreement as any Lender and may exercise the same as though it
were not the Administrative Agent, and the terms “Lender” and “Lenders” shall
include the Administrative Agent in its individual capacity.
Section 1.98    Successor Administrative Agent. The Administrative Agent may
resign at any time upon not less than 30 days notice to the Lenders and the
Borrower. Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with the Borrower, to appoint a successor.
If no such successor shall have been so appointed by the Required Lenders and
shall have accepted

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such appointment within 30 days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may on behalf
of the Lenders, appoint a successor Administrative Agent; provided, however,
that if the Administrative Agent shall notify the Borrower and the Lenders that
no such successor is willing to accept such appointment, then such resignation
shall nonetheless become effective in accordance with such notice and (i) the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the
case of any collateral security held by the Administrative Agent on behalf of
the Lenders under any of the Loan Documents, the retiring Administrative Agent
shall continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (ii) all payments, communications and
determinations provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender directly, until such time as the
Required Lenders appoint a successor Administrative Agent as provided for above
in this paragraph. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring (or
retired) Administrative Agent, and the retiring Administrative Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents (if not already discharged therefrom as provided above in this
paragraph). The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions
of this Article and Section 11.02 shall continue in effect for the benefit of
such retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent.
Section 1.99    Other Agents. Any Lender identified herein as a co-agent,
syndication agent, documentation agent or any other corresponding title, other
than “Administrative Agent,” shall have no right, power, obligation, liability,
responsibility or duty under this Agreement or any other Loan Document except
those applicable to all Lenders as such. Each Lender acknowledges that it has
not relied, and will not rely, on any Lender so identified in deciding to enter
into this Agreement or in taking or not taking any action hereunder.
Section 1.100    Collateral Matters. The Administrative Agent may from time to
time make such disbursements and advances (“Agent Advances”) that the
Administrative Agent, in its sole discretion, deems necessary or desirable to
preserve, protect, prepare for sale or lease or dispose of the Collateral or any
portion thereof, to enhance the likelihood or maximize the amount of repayment
by the Borrower of the Loans and other Obligations or to pay any other amount
chargeable to the Borrower or the other Credit Parties pursuant to the terms of
this Agreement, including, without limitation, costs, fees and expenses as
described in Section 11.01. The Agent Advances shall constitute Obligations
hereunder, shall be repayable on demand, shall be secured by the Collateral and
shall bear interest at a rate per annum equal to the rate then applicable to
Revolving Loans that are Base Rate Loans. The Administrative Agent shall notify
each Lender and the Borrower in writing of each such Agent Advance, which notice
shall include a description of the purpose of such Agent Advance. Without
limitation to its obligations pursuant to Section 9.09, each Lender agrees that
it shall make available to the Administrative Agent, upon the Administrative
Agent's demand, in Dollars in immediately available funds, the amount equal to
such Lender's pro rata share of each such Agent Advance. If such funds are not
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such funds on demand from such Lender,
together with interest thereon for each day from the date such payment was due
until the date such amount is paid to the Administrative Agent, at the Federal
Funds Effective Rate for three Business Days and thereafter at the Base Rate.
Section 1.101    Agency for Perfection. The Administrative Agent and each Lender
hereby

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appoints the Administrative Agent and each other Lender as agent and bailee for
the purpose of perfecting the security interests in and liens upon the
Collateral in assets that, in accordance with Article 9 of the UCC, can be
perfected only by possession or control (or where the security interest of a
secured party with possession or control has priority over the security interest
of another secured party) and the Administrative Agent and each Lender hereby
acknowledges that it holds possession of or otherwise controls any such
Collateral for the benefit of the Administrative Agent and the Lenders as
secured party. Should any Lender obtain possession or control of any such
Collateral, such Lender shall notify the Administrative Agent thereof, and,
promptly upon the Administrative Agent's request therefor shall deliver such
Collateral to the Administrative Agent or in accordance with the Administrative
Agent's instructions. Without limiting the generality of the foregoing, each
Lender hereby appoints the Administrative Agent for the purpose of perfecting
the Administrative Agent's Liens on the Deposit Accounts or on any other deposit
accounts or securities accounts of any Credit Party. Each Credit Party by its
execution and delivery of this Agreement hereby consents to the foregoing.
Section 1.102    Proof of Claim. The Lenders and the Borrower hereby agree that
after the occurrence of an Event of Default pursuant to Section 8.01(i), in case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Borrower or any of the Guarantors, the Administrative
Agent (irrespective of whether the principal of any Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower or
any of the Guarantors) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(a)    to file and prove a claim for the whole amount of principal and interest
owing and unpaid in respect of the Loans and any other Obligations that are
owing and unpaid and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
agents and counsel and all other amounts due the Lenders and the Administrative
Agent hereunder) allowed in such judicial proceeding; and
(b)    to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent and other agents hereunder. Nothing herein contained shall
be deemed to authorize the Administrative Agent to authorize or consent to or
accept or adopt on behalf of any Lender any plan of reorganization, arrangement,
adjustment or composition affecting the Obligations or the rights of any Lenders
or to authorize the Administrative Agent to vote in respect of the claim of any
Lender in any such proceeding. Further, nothing contained in this Section 9.15
shall affect or preclude the ability of any Lender to (i) file and prove such a
claim in the event that the Administrative Agent has not acted within ten (10)
days prior to any applicable bar date and (ii) require an amendment of the proof
of claim to accurately reflect such Lender’s outstanding Obligations.
Section 1.103    Posting of Approved Electronic Communications.
(a)    Delivery of Communications. Each Credit Party hereby agrees, unless
directed otherwise

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by the Administrative Agent or unless the electronic mail address referred to
below has not been provided by the Administrative Agent to such Credit Party
that it will, or will cause its Subsidiaries to, provide to the Administrative
Agent all information, documents and other materials that it is obligated to
furnish to the Administrative Agent or to the Lenders pursuant to the Loan
Documents, including all notices, requests, financial statements, financial and
other reports, certificates and other information materials, but excluding any
such communication that (i) is or relates to a Notice of Borrowing or a Notice
of Continuation or Conversion, (ii) relates to the payment of any principal or
other amount due under this Agreement prior to the scheduled date therefor,
(iii) provides notice of any Default under this Agreement or any other Loan
Document or (iv) is required to be delivered to satisfy any condition precedent
to the effectiveness of this Agreement and/or any Loan or other extension of
credit hereunder (all such non-excluded communications being referred to herein
collectively as “Communications”), by transmitting the Communications in an
electronic/soft medium that is properly identified in a format acceptable to the
Administrative Agent to an electronic mail address as directed by the
Administrative Agent. In addition, each Credit Party agrees, and agrees to cause
its Subsidiaries, to continue to provide the Communications to the
Administrative Agent or the Lenders, as the case may be, in the manner specified
in the Loan Documents but only to the extent requested by the Administrative
Agent.
(b)    Platform. Each Credit Party further agrees that Administrative Agent may
make the Communications available to the Lenders by posting the Communications
on Intralinks, SyndTrak or a substantially similar electronic transmission
system (the “Platform”).
(c)    No Warranties as to Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.” THE INDEMNITEES DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY
FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE INDEMNITEES IN CONNECTION WITH THE
COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE INDEMNITEES HAVE ANY
LIABILITY TO ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR
NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT,
CONTRACT OR OTHERWISE) ARISING OUT OF THE ADMINISTRATIVE AGENT’S TRANSMISSION OF
COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY
INDEMNITEES IS FOUND IN A FINAL, NON-APPEALABLE ORDER BY A COURT OF COMPETENT
JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH INDEMNITEE’S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT.
(d)    Delivery Via Platform. The Administrative Agent agrees that the receipt
of the Communications by the Administrative Agent at its electronic mail address
set forth above shall constitute effective delivery of the Communications to the
Administrative Agent for purposes of the Loan Documents. Each Lender agrees that
receipt of notice to it (as provided in the next sentence) specifying that the
Communications have been posted to the Platform shall constitute effective
delivery of the Communications to such Lender for purposes of the Loan
Documents. Each Lender agrees to notify the Administrative Agent in writing
(including by electronic communication) from time to time of such Lender’s
electronic mail address to which the foregoing notice may be sent by electronic
transmission and that the foregoing notice may be sent to such electronic mail
address.

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(e)    No Prejudice to Notice Rights. Nothing herein shall prejudice the right
of the Administrative Agent or any Lender to give any notice or other
communication pursuant to any Loan Document in any other manner specified in
such Loan Document.
Section 1.104    Credit Bidding. Each Lender hereby irrevocably authorizes the
Administrative Agent, based upon the instruction of the Required Lenders, to
credit bid and purchase (either directly or through one or more acquisition
vehicles) all or any portion of the Collateral at any sale thereof conducted
under the provisions of the UCC, including pursuant to Sections 9-610 or 9-620
thereof, at any sale thereof conducted under the provisions of the Bankruptcy
Code (including Section 363 of the Bankruptcy Code) or any applicable
bankruptcy, insolvency, reorganization or other similar law (whether domestic or
foreign) now or hereafter in effect, or at any sale or foreclosure conducted by
the Administrative Agent (whether by judicial action or otherwise) in accordance
with applicable law. 

GUARANTY
Section 1.105    Guaranty by the Borrower. The Borrower hereby irrevocably and
unconditionally guarantees, for the benefit of the Benefited Creditors, all of
the following (collectively, the “Borrower Guaranteed Obligations”): all
amounts, indemnities and reimbursement obligations, direct or indirect,
contingent or absolute, of every type or description, and at any time existing
owing by any Subsidiary of the Borrower under any Designated Hedge Agreement or
any other document or agreement executed and delivered in connection therewith
to any Designated Hedge Creditor, in all cases whether now existing, or
hereafter incurred or arising, including any such interest or other amounts
incurred or arising during the pendency of any bankruptcy, insolvency,
reorganization, receivership or similar proceeding, regardless of whether
allowed or allowable in such proceeding or subject to an automatic stay under
Section 362(a) of the Bankruptcy Code). Such guaranty is an absolute,
unconditional, present and continuing guaranty of payment and not of
collectibility and is in no way conditioned or contingent upon any attempt to
collect from any Subsidiary or Affiliate of the Borrower, or any other action,
occurrence or circumstance whatsoever. Upon failure by any Credit Party to pay
punctually any of the Borrower Guaranteed Obligations, the Borrower shall
forthwith on demand by the Administrative Agent pay the amount not so paid at
the place and in the currency and otherwise in the manner specified in this
Agreement or any other applicable agreement or instrument.
Section 1.106    Additional Undertaking. As a separate, additional and
continuing obligation, the Borrower unconditionally and irrevocably undertakes
and agrees, for the benefit of the Benefited Creditors that, should any Borrower
Guaranteed Obligations not be recoverable from the Borrower under Section 10.01
for any reason whatsoever (including, without limitation, by reason of any
provision of any Loan Document or any other agreement or instrument executed in
connection therewith being or becoming void, unenforceable, or otherwise invalid
under any applicable law) then, notwithstanding any notice or knowledge thereof
by any Lender, the Administrative Agent, any of their respective Affiliates, or
any other person, at any time, the Borrower as sole, original and independent
obligor, upon demand by the Administrative Agent, will make payment to the
Administrative Agent, for the account of the Benefited Creditors, of all such
obligations not so recoverable by way of full indemnity, in such currency and
otherwise in such manner as is provided in the Loan Documents or any other
applicable agreement or instrument.
Section 1.107    Guaranty Unconditional. The obligations of the Borrower under
this Article X shall be unconditional and absolute and, without limiting the
generality of the foregoing shall not be released, discharged or otherwise
affected by the occurrence, one or more times, of any of the following:

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(a)    any extension, renewal, settlement, compromise, waiver or release in
respect to the Borrower Guaranteed Obligations under any agreement or
instrument, by operation of law or otherwise;
(b)    any modification or amendment of or supplement to this Agreement, any
Note, any other Loan Document, or any agreement or instrument evidencing or
relating to any Borrower Guaranteed Obligation;
(c)    any release, non-perfection or invalidity of any direct or indirect
security for the Borrower Guaranteed Obligations under any agreement or
instrument evidencing or relating to any Borrower Guaranteed Obligations;
(d)    any change in the corporate existence, structure or ownership of any
Credit Party or other Subsidiary or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting any Credit Party or other Subsidiary or
its assets or any resulting release or discharge of any obligation of any Credit
Party or other Subsidiary contained in any agreement or instrument evidencing or
relating to any of the Borrower Guaranteed Obligations;
(e)    the existence of any claim, set-off or other rights that the Borrower may
have at any time against any other Credit Party, the Administrative Agent, any
Lender, any Affiliate of any Lender or any other Person, whether in connection
herewith or any unrelated transactions;
(f)    any invalidity or unenforceability relating to or against any other
Credit Party for any reason of any agreement or instrument evidencing or
relating to any of the Borrower Guaranteed Obligations, or any provision of
applicable law or regulation purporting to prohibit the payment by any Credit
Party of any of the Borrower Guaranteed Obligations; or
(g)    any other act or omission of any kind by any other Credit Party, the
Administrative Agent, any Lender or any other Person or any other circumstance
whatsoever that might, but for the provisions of this Article, constitute a
legal or equitable discharge of the Borrower’s obligations under this Section
other than the irrevocable payment in full of all Borrower Guaranteed
Obligations.
Section 1.108    Borrower Obligations to Remain in Effect; Restoration. The
Borrower’s obligations under this Article X shall remain in full force and
effect until the Commitments shall have terminated, and the principal of and
interest on the Notes and other Borrower Guaranteed Obligations, and all other
amounts payable by the Borrower, any other Credit Party or other Subsidiary,
under the Loan Documents or any other agreement or instrument evidencing or
relating to any of the Borrower Guaranteed Obligations, shall have been paid in
full. If at any time any payment of any of the Borrower Guaranteed Obligations
is rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Credit Party, the Borrower’s obligations
under this Article with respect to such payment shall be reinstated at such time
as though such payment had been due but not made at such time.
Section 1.109    Waiver of Acceptance, etc. The Borrower irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
person against any other Credit Party or any other Person, or against any
collateral or guaranty of any other Person.
Section 1.110    Subrogation. Until the indefeasible payment in full of all of
the Obligations and the termination of the Commitments hereunder, the Borrower
shall have no rights, by operation of law or otherwise, upon making any payment
under this Section 10.06 to be subrogated to the rights of the payee against any
other Credit Party with respect to such payment or otherwise to be reimbursed,
indemnified or

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exonerated by any such Credit Party in respect thereof.
Section 1.111    Effect of Stay. In the event that acceleration of the time for
payment of any amount payable by any Credit Party under any of the Borrower
Guaranteed Obligations is stayed upon insolvency, bankruptcy or reorganization
of such Credit Party, all such amounts otherwise subject to acceleration under
the terms of any applicable agreement or instrument evidencing or relating to
any of the Borrower Guaranteed Obligations shall nonetheless be payable by the
Borrower under this Article forthwith on demand by the Administrative Agent.

MISCELLANEOUS
Section 1.112    Payment of Expenses etc. Each Credit Party agrees to pay (or
reimburse the Administrative Agent, the Lenders or their Affiliates, as the case
may be) all of the following: (i) whether or not the transactions contemplated
hereby are consummated, for all reasonable out-of-pocket costs and expenses of
the Administrative Agent in connection with the negotiation, preparation,
syndication, administration and execution and delivery of the Loan Documents and
the documents and instruments referred to therein and the syndication of the
Commitments; (ii) all reasonable out-of-pocket costs and expenses of the
Administrative Agent in connection with any amendment, waiver or consent
relating to any of the Loan Documents; (iii) all reasonable out-of-pocket costs
and expenses of the Administrative Agent, the Lenders and their Affiliates in
connection with the enforcement of any of the Loan Documents or the other
documents and instruments referred to therein, including, without limitation,
 the reasonable fees and disbursements of any individual counsel to the
Administrative Agent and any Lender; (iv) any and all present and future stamp
and other similar taxes with respect to the foregoing matters and save the
Administrative Agent and each of the Lenders harmless from and against any and
all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to any such indemnified Person) to pay such
taxes; (v) all the actual costs and expenses of creating and perfecting Liens in
favor of the Administrative Agent, for the benefit of Secured Creditors,
including filing and recording fees, expenses and amounts owed pursuant to
Article III, search fees, title insurance premiums and fees, expenses and
disbursements of counsel to the Administrative Agent and of counsel providing
any opinions that the Administrative Agent or the Required Lenders may request
in respect of the Collateral or the Liens created pursuant to the Security
Documents; (vi) all the actual costs and fees, expenses and disbursements of any
auditors, accountants, consultants or appraisers whether internal or external;
and (vii) all the actual costs and expenses (including the fees, expenses and
disbursements of counsel (including allocated costs of internal counsel) and of
any appraisers, consultants, advisors and agents employed or retained by the
Administrative Agent and its counsel) in connection with the custody or
preservation of any of the Collateral.
Section 1.113    Indemnification. Each Credit Party agrees to indemnify the
Administrative Agent, each Lender, and their respective Related Parties
(collectively, the “Indemnitees”) from and hold each of them harmless against
any and all losses, liabilities, claims, damages or expenses reasonably incurred
by any of them as a result of, or arising out of, or in any way related to, or
by reason of (i) any investigation, litigation or other proceeding (whether or
not any Indemnitee is a party thereto) related to the entering into and/or
performance of any Loan Document or the use of the proceeds of any Loans
hereunder or the consummation of any transactions contemplated in any Loan
Document, other than any such investigation, litigation or proceeding arising
out of transactions solely between any of the Lenders or the Administrative
Agent, transactions solely involving the assignment by a Lender of all or a
portion of its Loans and Commitments, or the granting of participations therein,
as provided in this Agreement, or arising solely out of any examination of a
Lender by any regulatory or other Governmental Authority having jurisdiction
over

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it that is not in any way related to the entering into and/or performance of any
Loan Document, or (ii) the actual or alleged presence of Hazardous Materials in
the air, surface water or groundwater or on the surface or subsurface of any
Real Property owned, leased or at any time operated by the Credit Parties or any
of their respective Subsidiaries, the release, generation, storage,
transportation, handling or disposal of Hazardous Materials at any location,
whether or not owned or operated by the Credit Parties or any of their
respective Subsidiaries, if the Borrower or any such Subsidiary could have or is
alleged to have any responsibility in respect thereof, the non-compliance of any
such Real Property with foreign, federal, state and local laws, regulations and
ordinances (including applicable permits thereunder) applicable thereto, or any
Environmental Claim asserted against any Credit Party or any of their respective
Subsidiaries, in respect of any such Real Property, including, in the case of
each of (i) and (ii) above, without limitation, the reasonable documented fees
and disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses of any Indemnitee to the extent incurred by reason
of the gross negligence or willful misconduct of such Indemnitee, in each case,
as determined by a final non-appealable judgment of a court of competent
jurisdiction). To the extent that the undertaking to indemnify, pay or hold
harmless any Person set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, each Credit Party shall
make the maximum contribution to the payment and satisfaction of each of the
indemnified liabilities that is permissible under applicable law.
Section 1.114    Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Lender is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by such Lender (including,
without limitation, by branches, agencies and Affiliates of such Lender wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of any Credit Party to such Lender
under this Agreement or under any of the other Loan Documents, including,
without limitation, all claims of any nature or description arising out of or
connected with this Agreement or any other Loan Document, irrespective of
whether or not such Lender shall have made any demand hereunder and although
said Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured; provided that in the event that any Defaulting Lender shall exercise
any such right of setoff, (a) all amounts so set off shall be paid over
immediately to the Administrative Agent for further application in accordance
with the provisions of Section 2.12 and, pending such payment, shall be
segregated by such Defaulting Lender from its other funds and deemed held in
trust for the benefit of the Administrative Agent and the Lenders, and (y) the
Defaulting Lender shall provide promptly to the Administrative Agent a statement
describing in reasonable detail the Obligations owing to such Defaulting Lender
as to which it exercised such right of setoff. Each Lender agrees to promptly
notify the Borrower after any such set off and application, provided, however,
that the failure to give such notice shall not affect the validity of such set
off and application.
Section 1.115    Equalization.
(a)    Equalization. If at any time any Lender receives any amount hereunder
(whether by voluntary payment, by realization upon security, by the exercise of
the right of setoff or banker’s lien, by counterclaim or cross action, by the
enforcement of any right under the Loan Documents, or otherwise) that is
applicable to the payment of the principal of, or interest on, the Loans or Fees
(other than Fees that are intended to be paid solely to the Administrative Agent
and amounts payable to a Lender under Article III), of a sum that with respect
to the related sum or sums received by other Lenders is in a greater proportion
than the total of such Obligation then owed and due to such Lender bears to the
total of such Obligation then owed and due

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to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations to such Lenders
in such amount as shall result in a proportional participation by all of the
Lenders in such amount. The provisions of this Section 11.04(a) shall not be
construed to apply to (i) any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement (including the application
of funds arising from the existence of a Defaulting Lender), or (ii) any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to
the Borrower or any Subsidiary thereof (as to which the provisions of this
paragraph shall apply).
(b)    Recovery of Amounts. If any amount paid to any Lender pursuant to subpart
(a) above is recovered in whole or in part from such Lender, such original
purchase shall be rescinded, and the purchase price restored ratably to the
extent of the recovery.
(c)    Consent of Borrower. 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.
Section 1.116    Notices.
(a)    Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in subpart
(c) below), 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 facsimile as follows:
(i)    if to the Borrower, to it at 3625 Cumberland Boulevard, Suite 400,
Atlanta, GA 30339, Attention: Leonard A. Silverstein (Facsimile No. (770)
818-4105);
(ii)    if to any other Credit Party, to it at 3625 Cumberland Boulevard, Suite
400, Atlanta, GA 30339, Attention: Leonard A. Silverstein (Facsimile No. (770)
818-4105);
(iii)    if to the Administrative Agent, to it at the Notice Office; and
(iv)    if to a Lender, to it at its address (or facsimile number) set forth
next to its name on the signature pages hereto or, in the case of any Lender
that becomes a party to this Agreement by way of assignment under Section 11.04
of this Agreement, to it at the address set forth in the Assignment Agreement to
which it is a party;
(b)    Receipt of Notices. Notices and communications sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be deemed to
have been given when received; notices sent by facsimile shall be deemed to have
been given when sent and receipt has been confirmed by telephone. Notices
delivered through electronic communications to the extent provided in subpart
(c) below shall be effective as provided in said subpart (c).
(c)    Electronic Communications. Notices and other communications to the
Administrative Agent or any Lender hereunder and required to be delivered
pursuant to Section 6.01 may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet web sites) pursuant to
procedures approved by the Administrative Agent. The Administrative Agent and
the Borrower may, in their discretion,

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agree in a separate writing to accept notices and other communications to them
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications. Unless the Administrative Agent otherwise prescribes,
(i) notices and other communications sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if such notice or
other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at the
opening of business on the next Business Day for the recipient, and (ii) notices
or communications posted to an Internet or intranet web site shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the web site address therefor.
(d)    Change of Address, Etc. Any party hereto may change its address or
facsimile number for notices and other communications hereunder by notice to
each of the other parties hereto in accordance with Section 11.05(a).
Section 1.117    Successors and Assigns.
(a)    Successors and Assigns Generally. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns; provided, however, that the Borrower may not
assign or transfer any of its rights or obligations hereunder without the prior
written consent of all the Lenders, provided, further, that any assignment or
participation by a Lender of any of its rights and obligations hereunder shall
be effected in accordance with this Section 11.06.
(b)    Participations. Each Lender may at any time grant participations in any
of its rights hereunder or under any of the Notes to an Eligible Assignee or any
other Person, provided that in the case of any such participation,
(i)    the participant shall not have any rights under this Agreement or any of
the other Loan Documents, including rights of consent, approval or waiver (the
participant’s rights against such Lender in respect of such participation to be
those set forth in the agreement executed by such Lender in favor of the
participant relating thereto),
(ii)    such Lender’s obligations under this Agreement (including, without
limitation, its Commitments hereunder) shall remain unchanged,
(iii)    such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations,
(iv)    such Lender shall remain the holder of the Obligations owing to it and
of any Note issued to it for all purposes of this Agreement, and
(v)    the Borrower, the Administrative Agent, and the other Lenders shall
continue to deal solely and directly with the selling Lender in connection with
such Lender’s rights and obligations under this Agreement, and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had not
sold such participation, except that the participant shall be entitled to the
benefits of Article III to the extent that such Lender would be entitled to such
benefits if the participation had not been entered into or sold,
and, provided, further, that no Lender shall transfer, grant or sell any
participation under which the participant

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shall have rights to approve any amendment to or waiver of this Agreement or any
other Loan Document except to the extent (A) such participant is an Affiliate or
an Approved Fund of the Lender granting the participations or (B) such amendment
or waiver would (x) extend the final scheduled maturity of any of the Loans in
which such participant is participating, or reduce the rate or extend the time
of payment of interest or Fees thereon (except in connection with a waiver of
the applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant’s participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default shall not constitute a change
in the terms of any such Commitment), (y) release all or any substantial portion
of the Collateral, or release any guarantor from its guaranty of any of the
Obligations, except in accordance with the terms of the Loan Documents, or (z)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and, provided still further that each
participant shall be entitled to the benefits of Section 3.03 with respect to
its participation as if it was a Lender, except that a participant shall (i)
only deliver the forms described in Section 3.03(g) to the Lender granting it
such participation and (ii) not be entitled to receive any greater payment under
Section 3.03(g) than the applicable Lender would have been entitled to receive
absent the participation, except to the extent such entitlement to a greater
payment arose from a Change in Law, after the participant became a participant
hereunder.
In the event that any Lender sells participations in a Loan, such Lender shall,
acting for this purpose as a non-fiduciary agent of the Borrower, maintain a
register on which it enters the name of all participants in such Loan and the
principal amount (and stated interest thereon) of the portion of such Loan that
is the subject of the participation (the “Participant Register”). A Loan (and
the registered note, if any, evidencing the same) may be participated in whole
or in part only by registration of such participation on the Participant
Register (and each registered note shall expressly so provide). Any
participation of a Loan (and the registered note, if any, evidencing the same)
may be effected only by the registration of such participation on the
Participant Register. The Participant Register shall be available for inspection
by the Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(c)    Assignments by Lenders.
(i)    Any Lender may assign all, or if less than all, a fixed portion, of its
Loans and/or Commitments and its rights and obligations hereunder to one or more
Eligible Assignees, each of which shall become a party to this Agreement as a
Lender by execution of an Assignment Agreement; provided, however, that
(A)    except in the case of (x) an assignment of the entire remaining amount of
the assigning Lender’s Loans and/or Commitments or (y) an assignment to another
Lender, an Affiliate of such Lender or an Approved Fund with respect to such
Lender, the aggregate amount of the Commitment so assigned (which for this
purpose includes the Loans outstanding thereunder) shall not be less than
$5,000,000;
(B)    in the case of any assignment to an Eligible Assignee at the time of any
such assignment the Lender Register shall be deemed modified to reflect the
Commitments of such new Lender and of the existing Lenders;
(C)    upon surrender of the old Notes, if any, upon request of the new Lender,
new Notes will be issued, at the Borrower’s expense, to such new Lender and to
the assigning Lender, to the extent needed to reflect the revised Commitments;
and
(D)    unless waived by the Administrative Agent, the Administrative Agent shall

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receive at the time of each such assignment, from the assigning or assignee
Lender, the payment of a non-refundable assignment fee of $3,500.
(ii)    To the extent of any assignment pursuant to this subpart (c), the
assigning Lender shall be relieved of its obligations hereunder with respect to
its assigned Commitments provided, that except to the extent otherwise expressly
agreed by the affected parties, no assignment by a Defaulting Lender will
constitute a waiver or release of any claim of any party hereunder arising from
that Lender’s having been a Defaulting Lender.
(iii)    At the time of each assignment pursuant to this subpart (c), to a
Person that is not already a Lender hereunder and that is not a U.S. Person for
Federal income tax purposes, the respective assignee Lender shall provide to the
Borrower and the Administrative Agent the applicable Internal Revenue Service
Forms (and any necessary additional documentation) described in Section 3.03(g).
(iv)    With respect to any Lender, the transfer of any Commitment of such
Lender and the rights to the principal of, and interest on, any Loan made
pursuant to such Commitment shall not be effective until such transfer is
recorded on the Lender Register maintained by the Administrative Agent (on
behalf of and acting solely for this purpose as a non-fiduciary agent of the
Borrower) with respect to ownership of such Commitment and Loans, including the
name and address of the Lenders and the principal amount of the Loans (and
stated interest thereon). Prior to such recordation, all amounts owing to the
transferor with respect to such Commitment and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or part of any
Commitments and Loans shall be recorded by the Administrative Agent on the
Lender Register only upon the acceptance by the Administrative Agent of a
properly executed and delivered Assignment Agreement pursuant to this subpart
(c). The Lender Register shall be available for the inspection by the Borrower
at any reasonable time and from time to time upon reasonable prior notice.
(v)    Nothing in this Section shall prevent or prohibit (A) any Lender that is
a bank, trust company or other financial institution from pledging its Notes or
Loans to a Federal Reserve Bank or to any Person that extends credit to such
Lender in support of borrowings made by such Lender from such Federal Reserve
Bank or such other Person, or (B) any Lender that is a trust, limited liability
company, partnership or other investment company from pledging its Notes or
Loans to a trustee or agent for the benefit of holders of certificates or debt
securities issued by it. No such pledge, or any assignment pursuant to or in
lieu of an enforcement of such a pledge, shall relieve the transferor Lender
from its obligations hereunder.
(vi)    In connection with any assignment of rights and obligations of any
Defaulting Lender hereunder, no such assignment shall be effective unless and
until, in addition to the other conditions thereto set forth herein, the parties
to the assignment shall make such additional payments to the Administrative
Agent in an aggregate amount sufficient, upon distribution thereof as
appropriate (which may be outright payment, purchases by the assignee of
participations or subparticipations, or other compensating actions, including
funding, with the consent of the Borrower and the Administrative Agent, the
applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment liabilities
then owed by such Defaulting Lender to the Administrative Agent and each other
Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as
appropriate) its full pro rata share of all Loans in accordance with its
Revolving Facility Percentage. Notwithstanding the foregoing, in the event that
any assignment of

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rights and obligations of any Defaulting Lender hereunder shall become effective
under applicable law without compliance with the provisions of this paragraph,
then the assignee of such interest shall be deemed to be a Defaulting Lender for
all purposes of this Agreement until such compliance occurs.
Notwithstanding anything contained herein, no Lender may assign, sell, negotiate
or otherwise transfer (a “Sale”) its Loans and/or Commitments to Advisor, PAC
REIT, any other Credit Party or any Affiliate of any of the foregoing.

(d)    No SEC Registration or Blue Sky Compliance. Notwithstanding any other
provisions of this Section, no transfer or assignment of the interests or
obligations of any Lender hereunder or any grant of participation therein shall
be permitted if such transfer, assignment or grant would require the Borrower to
file a registration statement with the SEC or to qualify the Loans under the
“Blue Sky” laws of any State.
(e)    Representations of Lenders. Each Lender initially party to this Agreement
hereby represents, and each Person that becomes a Lender pursuant to an
assignment permitted by this Section will, upon its becoming party to this
Agreement, represents that it is a commercial lender, other financial
institution or other “accredited” investor (as defined in SEC Regulation D) that
makes or acquires loans in the ordinary course of its business and that it will
make or acquire Loans for its own account in the ordinary course of such
business; provided, however, that subject to the preceding Section 11.06(b) and
(c), the disposition of any promissory notes or other evidences of or interests
in Indebtedness held by such Lender shall at all times be within its exclusive
control.
(f)    Special Purpose Funding Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (“Granting Lender”) may grant to a special
purpose funding vehicle (a “SPC”), identified as such in writing from time to
time by the Granting Lender to the Administrative Agent and the Borrower, the
option to provide to the Borrower all or any part of any Loan that such Granting
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement; provided that (x) nothing herein shall constitute a commitment by any
SPC to make any Loans and (y) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof. The making of
a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender
to the same extent, and as if, such Loan were made by such Granting Lender. Each
party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Lender). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this clause, any SPC may (i) with notice to, but without the prior written
consent of, the Borrower or the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to the Granting Lender or to any financial institutions (consented to by the
Borrower and the Administrative Agent) providing liquidity and/or credit support
to or for the account of such SPC to support the funding or maintenance of Loans
and (ii) disclose on a confidential basis any non-public information relating to
its Loans to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC. This Section
may not be amended without the written consent of the SPC. The Borrower
acknowledges and agrees, subject to the next sentence, that, to the fullest
extent permitted under applicable law, each SPC, for purposes of Sections 2.07,
2.11, 3.01, 3.03, 11.01, 11.02 and 11.03, shall be considered a Lender. The
Borrower shall not be required to pay any

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amount under Sections 2.07, 2,11, 3.01, 3.03, 11.01, 11.02 and 11.03 that is
greater than the amount that it would have been required to pay had no grant
been made by a Granting Lender to a SPC.
Section 1.118    No Waiver; Remedies Cumulative. No failure or delay on the part
of the Administrative Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Loan Document and no course of dealing
between the Borrower and the Administrative Agent or any Lender shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Lenders to any other or further action in any
circumstances without notice or demand. Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default or Event of Default, regardless of whether the Administrative Agent or
any Lender may have had notice or knowledge of such Default or Event of Default
at the time. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies that the Administrative Agent or any
Lender would otherwise have.
Section 1.119    Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial.
(a)    THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT (EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH IN A LOAN DOCUMENT) AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b)    EACH CREDIT PARTY HEREBY IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW
YORK CITY IN ANY LITIGATION OR OTHER PROCEEDING BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE
ADMINISTRATIVE AGENT, THE LENDERS, OR THE CREDIT PARTIES IN CONNECTION HEREWITH
OR THEREWITH; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND; PROVIDED, FURTHER, THAT NOTHING HEREIN SHALL LIMIT THE
RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY
CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
(c)    EACH CREDIT PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF NEW YORK AT THE ADDRESS FOR NOTICES SPECIFIED IN SECTION 11.05. EACH
CREDIT PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO IN
CLAUSE (b) ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT ANY CREDIT PARTY HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT

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OR FROM ANY LEGAL PROCESS WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR
ITS PROPERTY, SUCH CREDIT PARTY HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE LOAN
DOCUMENTS. EACH CREDIT PARTY HEREBY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED
BY LAW, ANY RIGHT THAT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
(d)    THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH CREDIT PARTY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED
BY LAW ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, ANY LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, SUCH LENDER OR SUCH CREDIT
PARTY IN CONNECTION THEREWITH. EACH CREDIT PARTY ACKNOWLEDGES AND AGREES THAT IT
HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH
OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND EACH
LENDER ENTERING INTO THE LOAN DOCUMENTS.
Section 1.120    Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
Section 1.121    Integration. This Agreement, the other Loan Documents and any
separate letter agreements with respect to fees payable to the Administrative
Agent, for its own account and benefit and/or for the account, benefit of, and
distribution to, the Lenders, 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 or thereof. To the extent that there is any conflict between the
terms and provisions of this Agreement and the terms and provisions of any other
Loan Document, the terms and provisions of this Agreement will prevail.
Section 1.122    Headings Descriptive. The headings of the several Sections and
other portions of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
Section 1.123    Amendment or Waiver; Acceleration by Required Lenders.
(a)    Neither this Agreement nor any other Loan Document, nor any terms hereof
or thereof, may be amended, changed, waived or otherwise modified unless such
amendment, change, waiver or other modification is in writing and signed by the
Borrower, the Administrative Agent, and the Required Lenders or by the
Administrative Agent acting at the written direction of the Required Lenders;
provided, however, that
(i)    no change, waiver or other modification shall:
(A)    (1) increase the amount of any Commitment of any Lender hereunder,

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without the written consent of such Lender or (2) increase the Total Credit
Facility Amount without the consent of all the Lenders;
(B)    extend or postpone the Revolving Facility Termination Date or the
maturity date provided for herein that is applicable to any Loan of any Lender,
or extend or postpone any scheduled expiration or termination date provided for
herein that is applicable to a Commitment of any Lender, without the written
consent of such Lender;
(C)    reduce the principal amount of any Loan made by any Lender, or reduce the
rate or extend, defer or delay the time of payment of, or excuse the payment of,
principal or interest thereon (other than as a result of (x) waiving the
applicability of any post-default increase in interest rates or (y) any
amendment or modification of defined terms used in financial covenants), without
the written consent of such Lender; or
(D)    reduce the rate or extend the time of payment of, or excuse the payment
of, any Fees to which any Lender is entitled hereunder, without the written
consent of such Lender; and
(ii)    no change, waiver or other modification or termination shall, without
the written consent of each Lender affected thereby,
(A)    release the Borrower from any of its obligations hereunder;
(B)    release the Borrower from its guaranty obligations under Article X or
release any Credit Party from the Guaranty, except, in the case of a Subsidiary
Guarantor, in accordance with a transaction permitted under this Agreement;
(C)    release all or any substantial portion of the Collateral, except in
connection with a transaction permitted under this Agreement;
(D)    amend, modify or waive any provision of this Section 11.12, Section 8.03,
or any other provision of any of the Loan Documents pursuant to which the
consent or approval of all Lenders, or a number or specified percentage or other
required grouping of Lenders or Lenders having Commitments, is by the terms of
such provision explicitly required;
(E)    reduce the percentage specified in, or otherwise modify, the definition
of Required Lenders;
(F)    consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement; or
(G)    amend, modify or waive any provision of Section 2.04(b), Section 2.11(b)
or Section 2.11(e).
Any waiver or consent with respect to this Agreement given or made in accordance
with this Section shall be effective only in the specific instance and for the
specific purpose for which it was given or made.

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(b)    No provision of Article IX may be amended without the consent of the
Administrative Agent.
(c)    To the extent the Required Lenders (or all of the Lenders, as applicable,
as shall be required by this Section) waive the provisions of Section 7.02 with
respect to the sale, transfer or other disposition of any Collateral, or any
Collateral is sold, transferred or disposed of as permitted by Section 7.02, (i)
such Collateral (but not any proceeds thereof) shall be sold, transferred or
disposed of free and clear of the Liens created by the respective Security
Documents; (ii) if such Collateral includes all of the capital stock of a
Subsidiary that is a party to the Guaranty or whose stock is pledged pursuant to
the Security Agreement, such capital stock (but not any proceeds thereof) shall
be released from the Security Agreement and such Subsidiary shall be released
from the Guaranty; and (iii) the Administrative Agent shall be authorized to
take actions deemed appropriate by it in order to effectuate the foregoing.
(d)    In no event shall the Required Lenders, without the prior written consent
of each Lender, direct the Administrative Agent to accelerate and demand payment
of the Loans held by one Lender without accelerating and demanding payment of
all other Loans or to terminate the Commitments of one or more Lenders without
terminating the Commitments of all Lenders.  Each Lender agrees that, except as
otherwise provided in any of the Loan Documents and without the prior written
consent of the Required Lenders, it will not take any legal action or institute
any action or proceeding against any Credit Party with respect to any of the
Obligations or Collateral, or accelerate or otherwise enforce its portion of the
Obligations. Without limiting the generality of the foregoing, none of Lenders
may exercise any right that it might otherwise have under applicable law to
credit bid at foreclosure sales, uniform commercial code sales or other similar
sales or dispositions of any of the Collateral except as authorized by the
Required Lenders. Notwithstanding anything to the contrary set forth in this
Section 11.12(d) or elsewhere herein, each Lender shall be authorized to take
such action to preserve or enforce its rights against any Credit Party where a
deadline or limitation period is otherwise applicable and would, absent the
taking of specified action, bar the enforcement of Obligations held by such
Lender against such Credit Party, including the filing of proofs of claim in any
insolvency proceeding.
(e)    Notwithstanding anything to the contrary contained in this Section 11.12,
(x) Security Documents (including any Additional Security Documents) and related
documents executed by Subsidiaries of the Borrower in connection with this
Agreement may be in a form reasonably determined by the Administrative Agent and
may be amended, supplemented and waived with the consent of the Administrative
Agent and the Borrower without the need to obtain the consent of any other
Person if such amendment, supplement or waiver is delivered in order (i) to
comply with local law or advice of local counsel, (ii) to cure ambiguities,
omissions, mistakes or defects or (iii) to cause such Security Document or other
document to be consistent with this Agreement and the other Loan Documents and
(y) if following the Closing Date, the Administrative Agent and the Borrower
shall have jointly identified an ambiguity, inconsistency, obvious error or any
error or omission of a technical or immaterial nature, in each case, in any
provision of the Loan Documents, then the Administrative Agent and the Credit
Parties shall be permitted to amend such provision and such amendment shall
become effective without any further action or consent of any other party to any
Loan Documents if the same is not objected to in writing by the Required Lenders
within five (5) Business Days following receipt of notice thereof.
(f)    If, in connection with any proposed amendment, modification, termination,
waiver or consent with respect to any provisions hereof as contemplated by this
Section 11.12 that requires the consent of a greater percentage of the Lenders
than the Required Lenders, the consent of the Required Lenders shall have been
obtained but the consent of a Lender whose consent is required shall not have
been obtained (each a “Non-Consenting Lender”), 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

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accordance with the restrictions contained in Section 11.06(c), all its
interests, rights and obligations under this Agreement to an Eligible Assignee
that shall assume such obligations; provided that (A) the Borrower shall have
received the prior written consent of the Administrative Agent, which consent
shall not be unreasonably withheld or delayed, (B) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans,
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,
including any breakage compensation under Section 3.02 and any amounts accrued
and owing to such Lender under Section 3.01(a)(i), Section 3.01(c), or Section
3.03), and (C) such Eligible Assignee shall consent at the time of such
assignment to each matter in respect of which such Non-Consenting Lender did not
consent. Each Lender agrees that, if it becomes a Non-Consenting Lender and is
being replaced in accordance with this Section 11.12(e), it shall execute and
deliver to the Administrative Agent an Assignment Agreement to evidence such
assignment and shall deliver to the Administrative Agent any Notes previously
delivered to such Non-Consenting Lender. A Lender shall not be required to make
any such assignment and 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 1.124    Survival of Indemnities. All indemnities set forth herein
including, without limitation, in Article III, Section 9.09 or Section 11.02
shall survive the execution and delivery of this Agreement and the making and
repayment of the Obligations.
Section 1.125    Domicile of Loans. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Lender; provided, however, that the Borrower shall not be responsible for costs
arising under Section 3.01 resulting from any such transfer (other than a
transfer pursuant to Section 3.04) to the extent not otherwise applicable to
such Lender prior to such transfer.
Section 1.126    Confidentiality.
(a)    Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Confidential Information, except that Confidential
Information may be disclosed (1) 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 Confidential Information and
instructed to keep such Confidential Information confidential), (2) to any
direct or indirect contractual counterparty in any Hedge Agreement (or to any
such contractual counterparty’s professional advisor), so long as such
contractual counterparty (or such professional advisor) agrees to be bound by
the provisions of this Section, (3) to the extent requested by any regulatory
authority, (4) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (5) to any other party to this Agreement,
(6) to any other creditor of any Credit Party that is a direct or intended
beneficiary of any of the Loan Documents, (7) in connection with the exercise of
any remedies hereunder or under any of the other Loan Documents, or any suit,
action or proceeding relating to this Agreement or any of the other Loan
Documents or the enforcement of rights hereunder or thereunder, (8) subject to
an agreement containing provisions substantially the same as those of this
Section, to any assignee of or participant in any of its rights or obligations
under this Agreement, or in connection with transactions permitted pursuant to
Section 11.06(c)(v) or Section 11.06(f), (9) with the consent of the Borrower,
or (10) to the extent such Confidential Information (i) becomes publicly
available other than as a result of a breach of this Section 11.15, or
(ii) becomes available to the Administrative Agent or any Lender on a
non-confidential basis from a source other than a Credit Party and not otherwise
in violation of this Section 11.15.
(b)    As used in this Section, “Confidential Information” shall mean all
information received

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from the Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
non-confidential basis prior to disclosure by the Borrower; provided, however,
that, in the case of information received from the Borrower after the Closing
Date, such information is clearly identified at the time of delivery as
confidential.
(c)    Any Person required to maintain the confidentiality of Confidential
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 maintain the confidentiality of such Confidential Information as such
Person would accord to its own confidential information. The Borrower hereby
agrees that the failure of the Administrative Agent or any Lender to comply with
the provisions of this Section shall not relieve the Borrower, or any other
Credit Party, of any of its obligations under this Agreement or any of the other
Loan Documents.
Section 1.127    General Limitation of Liability. No claim may be made by any
Credit Party, any Lender, the Administrative Agent or any other Person against
the Administrative Agent, or any other Lender or the Affiliates, directors,
officers, employees, attorneys or agents of any of them for any damages other
than actual compensatory damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any of the other Loan Documents, or any act,
omission or event occurring in connection therewith; and the Borrower, each
Lender and the Administrative Agent hereby, to the fullest extent permitted
under applicable law, waive, release and agree not to sue or counterclaim upon
any such claim for any special, consequential or punitive damages, whether or
not accrued and whether or not known or suspected to exist in their favor.
Section 1.128    No Duty. All attorneys, accountants, appraisers, consultants
and other professional persons (including the firms or other entities on behalf
of which any such Person may act) retained by the Administrative Agent or any
Lender with respect to the transactions contemplated by the Loan Documents shall
have the right to act exclusively in the interest of the Administrative Agent or
such Lender, as the case may be, and shall have no duty of disclosure, duty of
loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrower, to any of its Subsidiaries, or to any other Person,
with respect to any matters within the scope of such representation or related
to their activities in connection with such representation. The Borrower agrees,
on behalf of itself and its Subsidiaries, not to assert any claim or
counterclaim against any such persons with regard to such matters, all such
claims and counterclaims, now existing or hereafter arising, whether known or
unknown, foreseen or unforeseeable, being hereby waived, released and forever
discharged.
Section 1.129    Lenders and Agent Not Fiduciary to Borrower, etc. The
relationship among the PAC REIT and its Subsidiaries, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, is solely that of
debtor and creditor, and the Administrative Agent and the Lenders have no
fiduciary or other special relationship with the PAC REIT and its Subsidiaries,
and no term or provision of any Loan Document, no course of dealing, no written
or oral communication, or other action, shall be construed so as to deem such
relationship to be other than that of debtor and creditor.
Section 1.130    Survival of Representations and Warranties. All representations
and warranties herein shall survive the making of Loans hereunder, the execution
and delivery of this Agreement, the Notes and the other documents the forms of
which are attached as Exhibits hereto, the issue and delivery of the Notes, any
disposition thereof by any holder thereof, and any investigation made by the
Administrative Agent or any Lender or any other holder of any of the Notes or on
its behalf. All statements contained in any certificate or other document
delivered to the Administrative Agent or any Lender or any holder of any Notes
by or on behalf of the PAC REIT or any of its Subsidiaries pursuant hereto or
otherwise specifically for use

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in connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower hereunder, made as of the
respective dates specified therein or, if no date is specified, as of the
respective dates furnished to the Administrative Agent or any Lender.
Section 1.131    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 1.132    Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action, event, condition or
circumstance is not permitted by any of such covenants, the fact that it would
be permitted by an exception to, or would otherwise be within the limitations or
restrictions of, another covenant, shall not avoid the occurrence of a Default
or an Event of Default if such action is taken or event, condition or
circumstance exists.
Section 1.133    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 that are treated as interest on such
Loan under applicable law (collectively, the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) that 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 Base Rate to the date of repayment, shall have been
received by such Lender.
Section 1.134    USA Patriot Act. Each Lender subject to the USA Patriot Act
hereby notifies the Borrower that pursuant to the requirements of the USA
Patriot Act, it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow such Lender to identify the
Borrower in accordance with the USA Patriot Act.
Section 1.135    Advertising and Publicity. No Credit Party shall issue or
disseminate to the public (by advertisement, including without limitation any
“tombstone” advertisement, press release or otherwise), submit for publication
or otherwise cause or seek to publish any information describing the credit or
other financial accommodations made available by the Lenders pursuant to this
Agreement and the other Loan Documents without the prior written consent of the
Administrative Agent. Nothing in the foregoing shall be construed to prohibit
any Credit Party from making any submission or filing which it is required to
make by applicable law or pursuant to judicial process..
Section 1.136    Release of Guarantees and Liens. Notwithstanding anything to
the contrary contained herein or in any other Loan Document, the Administrative
Agent is hereby irrevocably authorized by each Lender (without requirement of
notice to or consent of any Lender) to take any action requested by the Borrower
having the effect of releasing any Collateral or guarantee obligations (i) to
the extent necessary to permit consummation of any transaction permitted by any
Loan Document or that has been consented to in accordance with the terms hereof
or (ii) under the circumstances described in the next succeeding sentence. When
this Agreement has been terminated and all of the Obligations have been fully
and finally discharged

100

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

(other than obligations in respect of Designated Hedge Agreements and contingent
indemnity obligations) and the obligations of the Administrative Agent and the
Lenders to provide additional credit under the Loan Documents have been
terminated irrevocably, and the Credit Parties have delivered to the
Administrative Agent a written release of all claims against the Administrative
Agent and the Lenders, in form and substance satisfactory to the Administrative
Agent, the Administrative Agent will, at the Borrower's sole expense, execute
and deliver any termination statements, lien releases, mortgage releases,
re-assignments of intellectual property, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are necessary or advisable to release, as of record, the Administrative
Agent's Liens and all notices of security interests and liens previously filed
by the Administrative Agent with respect to the Obligations.
Section 1.137    Payments Set Aside. To the extent that any Secured Creditor
receives a payment from or on behalf of the Borrower or any other Credit Party,
from the proceeds of any Collateral, from the exercise of its rights of setoff,
any enforcement action or otherwise, and such payment is subsequently, in whole
or in part, invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligations or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not occurred.
[Remainder of page intentionally left blank.]

101

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

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.

 
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., as the Borrower
By: Preferred Apartment Advisors, LLC, its manager

By:   /s/ Leonard A. Silverstein
Name:   Leonard A. Silverstein
Title:   President

 

PREFERRED APARTMENT COMMUNITIES, INC., as a Credit Party
By: Preferred Apartment Advisors, LLC, its manager

By:   /s/ Leonard A. Silverstein
Name:   Leonard A. Silverstein
Title:   President

 
 
 
KEYBANK NATIONAL ASSOCIATION, as the sole initial Lender and as the
Administrative Agent

By:   /s/ Kevin P. Murray
Name:   Kevin P. Murray
Title:   Senior Vice President

[Signature Page to Credit Agreement]

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

 
 

    
SCHEDULES TO
CREDIT AGREEMENT
dated as of
August 31, 2012
among
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.,
as Borrower,
PREFERRED APARTMENT COMMUNITIES, INC.,
as a Credit Party,

THE LENDING INSTITUTIONS NAMED HEREIN,
as Lenders,

and

KEYBANK NATIONAL ASSOCIATION,
as the Administrative Agent
$15,000,000 Senior Secured Revolving Credit Facility
    

#PageNum#

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

Schedule 1

Lenders and Commitments
Lender
Revolving
Commitment
Revolving Facility Percentage as of the Closing Date
KeyBank National Association
$
15,000,000

1.0

Total:
$
15,000,000

1.0

#PageNum#

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

Schedule 2

Subsidiary Guarantors as of the Closing Date

Summit Crossing Mezzanine Lending LLC
Trail Creek Mezzanine Lending, LLC
Iris Crosstown Mezzanine Lending, LLC
City Vista Mezzanine Lending, LLC
City Park Mezzanine Lending, LLC

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

Schedule 5.05
Litigation
None.

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

Schedule 5.11
Real Property

Stone Rise Apartments, LLC owns that certain 216-unit multifamily apartment
community located in suburban Philadelphia, Pennsylvania.

PAC Summit Crossing, LLC owns that certain 345-unit multifamily apartment
community located in suburban Atlanta, Georgia.

Trail Creek Apartments, LLC owns that certain 204-unit multifamily townhome
community located in Hampton, Virginia

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

Schedule 5.15
Intellectual Property
Intellectual Property Assignment and License Agreement between Preferred
Apartment Advisors, LLC and Preferred Apartment Communities, Inc. dated as of
March 14, 2012

Trademark License Agreement between Preferred Apartment Advisors, LLC and
Preferred Apartment Communities, Inc. dated as of March 14, 2012

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

Schedule 5.17
Insurance
Insured
Carrier
Type
Policy #
Preferred Apartment Communities, Inc.
Liberty Insurance Underwriters, Inc.
Directors and Officers Liability Insurance
DOATAACH8A002
Trail Creek, Summit Crossing & Stone Rise
International Insurance Company of Hannover Limited
Primary property excluding earthquake, wind, hail, and flood
MUA000000301
Trail Creek, Summit Crossing & Stone Rise
Arch Specialty Insurance Company
primary property for earthquake, wind, hail and flood
ESP004735900
Trail Creek, Summit Crossing & Stone Rise
RSUI Indemnity Company
Excess Policy excluding earthquake and flood
NHD374208
Trail Creek
Lloyds of London
Wind/Hail
457560037618S00

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

Schedule 5.22
Capitalization
PAC REIT:
Security
Shares Issued
Shares Authorized
Common Stock
5,212,139
400,066,666
Series A Redeemable Preferred Stock
11,491
150,000

Warrant No.2 to purchase 9,375 shares of Common Stock for $12.50 per share,
issued on October 19, 2011 to International Assets Advisory, LLC
Warrant No.3 to purchase 9,375 shares of Common Stock for $12.50 per share,
issued on October 19, 2011 to Richard Panchookian
Warrant No.4 to purchase 131,250 shares of Common Stock for $12.50 per share,
issued on October 19, 2011 to HarborLight Capital Group, LLC
Warrants to purchase Common Stock from the current Unit Offering:
WARRANTS
 
 
 
 
 
 
 
 
 
 
 
 
 
CUSIP #
Issue Date
Initial Exercise Date
Maturity Date
Exercise Price
Warrants Issued
Maxium Shares to be Issued
74039L 111
3/30/2012
3/30/2013
3/30/2016
$9.59
2,155
43,100
74039L 129
4/30/2012
4/30/2013
4/30/2016
$9.68
2,830
56,600
74039L 137
5/31/2012
5/31/2013
5/31/2016
$9.08
3,456
69,120
74039L 145
6/28/2012
6/28/2013
6/28/2016
$9.00
1,577
31,540
74039L 152
7/17/2012
7/17/2013
7/17/2016
$9.00
256
5,120
74039L 160
7/31/2012
7/31/2013
7/31/2016
$9.00
408
8,160
74039L 178
8/16/2012
8/16/2013
8/16/2016
$9.53
145
2,900
74039L 186
8/30/2012
8/30/2013
8/30/2016
$9.77
664
13,280
 
 
 
 
Total
11,491
 

Redemption Rights – Series A Redeemable Preferred Stock:
Redemption at the Option of a Holder. Beginning two years from the date of
original issuance of the shares of Series A Redeemable Preferred Stock to be
redeemed, the holder will have the right to require PAC REIT to redeem such
shares of Series A Redeemable Preferred Stock at a redemption price equal to the
Stated Value (initial $1,000.00/share), less a 10% redemption fee, plus any
accrued but unpaid

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

dividends.
Beginning three years from the date of original issuance of the shares of Series
A Redeemable Preferred Stock to be redeemed, the holder will have the right to
require PAC REIT to redeem such shares of Series A Redeemable Preferred Stock at
a redemption price equal to the Stated Value, less a 5% redemption fee, plus any
accrued but unpaid dividends.
Beginning four years from the date of original issuance of the shares of Series
A Redeemable Preferred Stock to be redeemed, the holder will have the right to
require PAC REIT to redeem such shares of Series A Redeemable Preferred Stock at
a redemption price equal to the Stated Value, less a 3% redemption fee, plus any
accrued but unpaid dividends.
Beginning five years from the date of original issuance of the shares of Series
A Redeemable Preferred Stock to be redeemed, the holder will have the right to
require PAC REIT to redeem such shares of Series A Redeemable Preferred Stock at
a redemption price equal to 100% of the Stated Value, plus any accrued but
unpaid dividends.
In addition, subject to restrictions, beginning on the date of original issuance
and ending two years thereafter, we will redeem such shares of Series A
Redeemable Preferred Stock of a holder who is a natural person upon his or her
death at the written request of the holder’s estate at a cash redemption price
equal to the Stated Value, plus accrued and unpaid dividends thereon through and
including the date of redemption.
If a holder of Series A Redeemable Preferred Stock or its estate (in the case of
a holder's death) causes PAC REIT to redeem such shares of Series A Redeemable
Preferred Stock, PAC REIT has the right, in its sole discretion, to pay the
redemption price in cash or in equal value of our common stock, based on the
volume weighted average price of PAC REIT's common stock for the 20 trading days
prior to the redemption, in exchange for the Series A Redeemable Preferred
Stock.
Schedule of currently issued Series A Redeemable Preferred Stock:
SERIES A REDEEMABLE PREFERRED STOCK
 
 
 
 
 
 
 
Redemption Fee/Dates*
 
 
CUSIP #
Issue Date
0.1

0.05

0.03

—

 
Shares Issued
74039L 202
3/30/2012
3/30/2014

3/30/2015

3/30/2016

3/30/2017

 
2,155
74039L 301
4/30/2012
4/30/2014

4/30/2015

4/30/2016

4/30/2017

 
2,830
74039L 400
5/31/2012
5/31/2014

5/31/2015

5/31/2016

5/31/2017

 
3,456
74039L 707
6/28/2012
6/28/2014

6/28/2015

6/28/2016

6/28/2017

 
1,577
74039L 806
7/17/2012
7/17/2014

7/17/2015

7/17/2016

7/17/2017

 
256
74039L 889
7/31/2012
7/31/2014

7/31/2015

7/31/2016

7/31/2017

 
408
74039L 871
8/16/2012
8/16/2014

8/16/2015

8/16/2016

8/16/2017

 
145
74039L 863
8/30/2012
8/30/2014

8/30/2015

8/30/2016

8/30/2017

 
664
 
 
 
 
 
 
Total
11,491

* On or after the date shown, the listed Redemption Fee percentage is applicable
to the CUSIP
Borrower:

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

Name of Partner
Type of Interest
Type of Unit
Units Held
Preferred Apartment Communities, Inc.
General Partner
GP Unit
36,666

Preferred Apartment Communities, Inc.
Limited Partner
Class A Units
5,212,139

Preferred Apartment Communities, Inc.
Limited Partner
Series A Redeemable Preferred Units
11,491

Preferred Apartment Advisors, LLC
Limited Partner
Class A Units
0.1

Preferred Apartment Advisors, LLC
Special Limited Partner
N/A
N/A

John A. Williams
Limited Partner
Class B
82,366

Leonard A. Silverstein
Limited Partner
Class B
65,892

William F. Leseman
Limited Partner
Class B
32,947

Michael J. Cronin
Limited Partner
Class B
32,947

Daniel M. DuPree
Limited Partner
Class B
6,128

Subsidiaries:
Each of the following entities is owned 100% by Borrower:
City Vista Mezzanine Lending, LLC
City Park Mezzanine Lending, LLC
Iris Crosstown Mezzanine Lending, LLC
PAC Summit Crossing, LLC
Stone Rise Apartments, LLC
Summit Crossing Mezzanine Lending LLC
Trail Creek Apartments, LLC
Trail Creek Mezzanine Lending, LLC

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

Schedule 5.24
Bank Accounts

Entity
Bank
Account Type
Purpose
Account Name
Account Number
PAC REIT
Northern Trust
Business Checking
Operating Account
Preferred Apartment Communities, Inc.
3800845385
PAC REIT
Community Bank of the South
Business Checking
Depository/Investment
Preferred Apartment Communities, Inc.
128827
PAC REIT
Community Bank of the South
Money Market
Investment
Preferred Apartment Communities, Inc.
905547
PAC REIT
First Landmark Bank
Business Checking
Depository/Investment
Preferred Apartment Communities, Inc.
200004372
PAC REIT
First Landmark Bank
Money Market
Investment
Preferred Apartment Communities, Inc.
400004891
PAC REIT
Vinings Bank
Business Checking
Depository/Investment
Preferred Apartment Communities, Inc.
2503605
PAC REIT.
Vinings Bank
Money Market
Investment
Preferred Apartment Communities, Inc.
3501707
PAC REIT
Georgia Commerce Bank
Business Checking
Depository/Investment
Preferred Apartment Communities, Inc.
2220002
PAC REIT
Georgia Commerce Bank
Money Market
Investment
Preferred Apartment Communities, Inc.
3507639
PAC REIT
KeyBank
Business Checking
Operating Account
Preferred Apartment Communities, Inc.
359681340485
Borrower
Northern Trust
Business Checking
Operating Account
Preferred Apartment Communities Operating Partnership, LP
3800845415
Borrower
Northern Trust
Business Checking
Capital Reserve
Preferred Apartment Communities Operating Partnership, LP
Cap Improvement Reserve Acct
3800904020
Borrower
KeyBank
Business Checking
Operating Account
Preferred Apartment Communities Operating Partnership LP
359681340493
Trail Mezz
Northern Trust
Money Market
Depository
Trail Creek Mezzanine Lending, LLC
3800904470
Trail Creek
Bank of America
Business Checking
Operating Account
Trail Creek Apts LLC
Trail Creek Apts Operating Trust Account
435025796430
Trail Creek
Bank of America
Business Checking
Reserved - Security Deposits
Trail Creek Apts LLC
Trail Creek Apts Sec Dep Account
435025796443
Trail Creek
Bank of America
Business Checking
Reserve - Insurance Escrow
Trail Creek Apts LLC
Trail Creek Apts Insurance Escrow Account
435019769978
Stone Rise
Bank of America
Business Checking
Operating Account
Stone Rise Apts LLC
Stone Rise Apts Rental Mgt Account
383007325832
Stone Rise
Bank of America
Business Checking
Reserved - Security Deposits
Stone Rise Apts LLC
Stone Rise Apts Security Dep Escrow Account
383007325845

11

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

Stone Rise
Bank of America
Business Checking
Reserve - Insurance Escrow
Stone Rise Apts LLC
Stone Rise Apts Insurance Escrow Account
383007329317
Summit Crossing
Georgia Commerce Bank
Business Checking
Operating Account
PAC Summit Crossing LLC
Operating Trust Account
2220838
Summit Crossing
Georgia Commerce Bank
Business Checking
Reserved - Security Deposits
PAC Summit Crossing LLC
Security Deposit Trust Account
2220903

12

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

Schedule 5.25

Material Contracts

1.
Multifamily Mortgage, Assignment of Rents and Security Agreement, dated as of
April 15, 2011, between Stone Rise Apartments, LLC and Jones Lang LaSalle,
L.L.C.

2.
Multifamily Note dated as of April 15, 2011, by Stone Rise Apartments, LLC in
favor of Jones Lang LaSalle, L.L.C.

3.
Multifamily Deed to Secure Debt, Assignment of Rents and Security Agreement
dated as of April 21, 2011, between PAC Summit Crossing, LLC and Prudential
Multifamily Mortgage, Inc.

4.
Multifamily Note dated as of April 21, 2011, by PAC Summit Crossing, LLC in
favor of Prudential Multifamily Mortgage, Inc.

5.
Multifamily Deed of Trust, Assignment of Rents and Security Agreement dated as
of April 29, 2011, between Trail Creek Apartments, LLC and Jones Lang LaSalle,
L.L.C.

6.
Multifamily Note dated as of April 29, 2011, by Trail Creek Apartments, LLC in
favor of Jones Lang LaSalle, L.L.C.

7.
Dealer Manager Agreement dated as of November 18, 2011 between Preferred
Apartment Communities, Inc. and International Assets Advisory, LLC

8.
Third Amended and Restated Management Agreement, dated May 13, 2011, among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and Preferred Apartment Advisors, LLC

9.
$575,000 Promissory Note dated May 21, 2012 issued by Madison Retail, LLC to
Preferred Apartment Communities Operating Partnership, L.P.

10.
Personal Guaranty Agreement dated as of May 21, 2012 entered into by Stephen H.
Whisenant in favor of Preferred Apartment Communities Operating Partnership,
L.P.

11.
$1,000,000 Master Promissory Note issued August 21, 2012 by Preferred Apartment
Advisors, LLC to Preferred Apartment Communities Operating Partnership, L.P.

12.
Collateral Assignment of Management Agreement dated as of August 21, 2012
between Preferred Apartment Advisors, LLC and Preferred Apartment Communities
Operating Partnership, L.P.

13.
Warrant No.2 to purchase 9,375 shares of Common Stock for $12.50 per share,
issued on October 19, 2011 to International Assets Advisory, LLC

14.
Warrant No.3 to purchase 9,375 shares of Common Stock for $12.50 per share,
issued on October 19, 2011 to Richard Panchookian

15.
Warrant No.4 to purchase 131,250 shares of Common Stock for $12.50 per share,
issued on October 19, 2011 to HarborLight Capital Group, LLC

Mezzanine Loan to Oxford Hampton Partners LLC (Trail Creek II)
16.
Purchase Option Agreement, dated June 30, 2011, between Oxford Hampton Partners,
LLC and Trail Creek Mezzanine Lending, LLC

17.
Mezzanine Loan Agreement, dated June 30, 2011, among Oxford Hampton Partners LLC
and Trail Creek Mezzanine Lending, LLC

18.
Note, dated June 30, 2011, from Oxford Hampton Partners LLC to Trail Creek
Mezzanine Lending, LLC, in the amount of $6,000,000.00

19.
Unconditional Guaranty of Completion, dated June 30, 2011, by W. Daniel Faulk,
Jr. and Richard A. Denny, III in favor of Trail Creek Mezzanine Lending, LLC

20.
Guaranty of Recourse Obligations, dated June 30, 2011, by W. Daniel Faulk, Jr.
and Richard A. Denny, III in favor of Trail Creek Mezzanine Lending, LLC

21.
Assignment of Interests, dated June 30, 2011, by Oxford Hampton Holdings LLC to
Trail Creek

1

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

Mezzanine Lending, LLC
22.
Acknowledgment, dated June 30, 2011, by Oxford Hampton Partners LLC

23.
Certificate No. 1 for Membership Interest in Oxford Hampton Partners LLC, dated
June 30, 2011, with Membership Interest Power

24.
Irrevocable Proxy Agreement, dated June 30, 2011, by and among Oxford Hampton
Holdings, LLC, Oxford Hampton Partners LLC and Trail Creek Mezzanine Lending,
LLC

25.
Indemnity Agreement Regarding Hazardous Materials, dated June 30, 2011, by
Oxford Hampton Partners LLC, W. Daniel Faulk, Jr. and Richard A. Denny, III for
the benefit of Trail Creek Mezzanine Lending, LLC

26.
Assignment of Project Documents, dated June 30, 2011, by Oxford Hampton Partners
LLC to Trail Creek Mezzanine Lending, LLC

27.
Subordination of Development Agreement, dated June 30, 2011, by Oxford
Properties, LLC

28.
Subordination of Construction Contract, dated June 30, 2011, by Oxford
Properties, LLC

29.
Certification Regarding Project Budget, dated June 30, 2011, by Oxford Hampton
Partners LLC

30.
Intercreditor Agreement, dated June 30, 2011, by and between Atlantic Capital
Bank and Trail Creek Mezzanine Lending, LLC

31.
Construction and Mezzanine Loan Closing Statement, dated June 30, 2011, among
Oxford Hampton Partners LLC (Borrower), Atlantic Capital Bank (Lender) and Trail
Creek Mezzanine Lending, LLC (Mezzanine Lender)

Mezzanine Loan to Oxford Summit Apartments II LLC (Summit II)
32.
Purchase Option Agreement , dated May 7, 2012, between Oxford Summit Apartments
II LLC and Summit Crossing Mezzanine Lending, LLC

33.
Memorandum of Purchase Option Agreement, dated May 7, 2012, between Oxford
Summit Apartments II LLC and Summit Crossing Mezzanine Lending, LLC

34.
Mezzanine Loan Agreement , dated May 7, 2012, among Oxford Summit Apartments II
LLC and Summit Crossing Mezzanine Lending, LLC

35.
Note, dated May 7, 2012, from Oxford Summit Apartments II LLC to Summit Crossing
Mezzanine Lending, LLC, in the amount of $6,103,027.00

36.
Unconditional Guaranty of Completion, dated May 7, 2012, by W. Daniel Faulk, Jr.
and Richard A. Denny, III in favor of Summit Crossing Mezzanine Lending, LLC

37.
Guaranty of Recourse Obligations, dated May 7, 2012, by W. Daniel Faulk, Jr. and
Richard A. Denny, III in favor of Summit Crossing Mezzanine Lending, LLC

38.
Unconditional Guaranty of Payment and Performance, dated May 7, 2012, by Richard
A. Denny, III in favor of Summit Crossing Mezzanine Lending, LLC

39.
Unconditional Guaranty of Payment and Performance, dated May 7, 2012, by W.
Daniel Faulk, Jr. in favor of Summit Crossing Mezzanine Lending, LLC

40.
Assignment of Interests, dated May 7, 2012, by Oxford Summit Development II LLC
to Summit Crossing Mezzanine Lending, LLC

41.
Acknowledgment, dated May 7, 2012, by Oxford Summit Apartments II LLC

42.
Certificate No. 1 for Membership Interest in Oxford Summit Apartments II LLC,
dated May 7, 2012, with Membership Interest Power

43.
Irrevocable Proxy Agreement, dated May 7, 2012, by and among Oxford Summit
Development II LLC, Oxford Summit Apartments II LLC and Summit Crossing
Mezzanine Lending, LLC

44.
Indemnity Agreement Regarding Hazardous Materials, dated May 7, 2012, by Oxford
Summit Apartments II LLC, W. Daniel Faulk, Jr. and Richard A. Denny, III for the
benefit of Summit Crossing Mezzanine Lending, LLC

45.
Assignment of Project Documents, dated May 7, 2012, by Oxford Summit Apartments
II LLC to

2

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

Summit Crossing Mezzanine Lending, LLC
46.
Subordination of Development Agreement, dated May 7, 2012, by Oxford Properties,
LLC

47.
Subordination of Construction Contract, dated May 7, 2012, by Oxford Properties,
LLC

48.
Certification Regarding Project Budget, dated May 7, 2012, by Oxford Summit
Apartments II LLC

49.
Intercreditor Agreement, dated May 7, 2012, between Atlantic Capital Bank and
Summit Crossing Mezzanine Lending, LLC

50.
Construction and Mezzanine Loan Closing Statement, dated May 7, 2012 among
Oxford Summit Apartments II LLC (Borrower), Atlantic Capital Bank (Lender) and
Summit Crossing Mezzanine Lending, LLC (Mezzanine Lender)

Bridge Loan to Iris Crosstown Apartments LLC
51.
Note, dated June 29, 2012, from Iris Crosstown Apartments LLC to Iris Crosstown
Mezzanine Lending, LLC, in the amount of $2,868,470.78

52.
Construction Mortgage, Assignment and Security Agreement, dated June 29, 2012,
between Iris Crosstown Apartments LLC and Iris Crosstown Mezzanine Lending, LLC,
recorded in Book 21218, page 1220, Hillsborough County, Florida records

53.
Unconditional Guaranty of Payment and Performance, dated June 29, 2012, by W.
Daniel Faulk, Jr. in favor of Iris Crosstown Mezzanine Lending, LLC

54.
Unconditional Guaranty of Payment and Performance, dated June 29, 2012, by J.
Michael Morris in favor of Iris Crosstown Mezzanine Lending, LLC

55.
Unconditional Guaranty of Payment and Performance, dated June 29, 2012, by
Richard A. Denny, III in favor of Iris Crosstown Mezzanine Lending, LLC

56.
Assignment of Project Documents, dated June 29, 2012, by Iris Crosstown
Apartments LLC to Iris Crosstown Mezzanine Lending, LLC

57.
Indemnity Agreement Regarding Hazardous Materials, dated June 29, 2012, by Iris
Crosstown Apartments LLC, W. Daniel Faulk, Jr., Richard A. Denny, III and J.
Michael Morris for the benefit of Iris Crosstown Mezzanine Lending, LLC

58.
Loan Closing Statement, dated June 29, 2012, with Iris Crosstown Apartments LLC
(Borrower) and Iris Crosstown Mezzanine Lending, LLC (Lender)

Amendment to Bridge Loan to Iris Crosstown Apartments LLC
59.
First Amendment to Note and Other Loan Documents, dated August 28, 2012, by and
among Iris Crosstown Apartments LLC, W. Daniel Faulk, Jr. Richard A. Denny, III,
J. Michael Morris and Crosstown Mezzanine Lending, LLC

60.
First Amendment to Construction Mortgage, Assignment and Security Agreement,
dated August 28, 2012, between Iris Crosstown Apartments LLC and Iris Crosstown
Mezzanine Lending, LLC

 

3

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

Schedule 5.26

Affiliate Transactions

1.
Indemnification Agreement dated as of April 5, 2011 between Preferred Apartment
Communities, Inc. and Steve Bartkowski

2.
Indemnification Agreement dated as of April 5, 2011 between Preferred Apartment
Communities, Inc. and Gary B. Coursey

3.
Indemnification Agreement dated as of April 5, 2011 between Preferred Apartment
Communities, Inc. and Daniel M. Dupree

4.
Indemnification Agreement dated as of April 5, 2011 between Preferred Apartment
Communities, Inc. and Howard A. McLure

5.
Indemnification Agreement dated as of April 5, 2011 between Preferred Apartment
Communities, Inc. and Timothy A. Peterson

6.
Indemnification Agreement dated as of April 5, 2011 between Preferred Apartment
Communities, Inc. and John A. Williams

7.
Indemnification Agreement dated as of April 5, 2011 between Preferred Apartment
Communities, Inc. and Leonard A. Silverstein

8.
Indemnification Agreement dated as of April 5, 2011 between Preferred Apartment
Communities, Inc. and Michael J. Cronin

9.
Indemnification Agreement dated as of April 5, 2011 between Preferred Apartment
Communities, Inc. and William F. Leseman

10.
2011 Class B Unit Award Agreement dated as of December 30, 2011 by and among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and John A. Williams

11.
2011 Class B Unit Award Agreement dated as of December 30, 2011 by and among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and Leonard A. Silverstein    

12.
2011 Class B Unit Award Agreement dated as of December 30, 2011 by and among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and Michael J. Cronin

13.
2011 Class B Unit Award Agreement dated as of December 30, 2011 by and among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and William F. Leseman

14.
2012 Class B Unit Award Agreement dated as of January 3, 2012 by and among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and John A. Williams

15.
2012 Class B Unit Award Agreement dated as of January 3, 2012 by and among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and Leonard A. Silverstein

16.
2012 Class B Unit Award Agreement dated as of January 3, 2012 by and among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and Michael J. Cronin

17.
2012 Class B Unit Award Agreement dated as of January 3, 2012 by and among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and William F. Leseman

18.
2012 Class B Unit Award Agreement dated as of August 15, 2012 by and among
Preferred Apartment Communities, Inc., Preferred Apartment Communities Operating
Partnership, L.P. and Daniel M. DuPree

4

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

5

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

Principal Stockholders of PAC REIT:

Beneficial Owner
 
Common Stock
Notes
 
 
 
 
NELL Partners, Inc.
 
36,666
(12) 
John A. Williams
 
72,661
(123) 
Leonard A. Silverstein
 
39,166
(12) 
William F. Leseman
 
1,000
 
Michael J. Cronin
 
2,500
 
Daniel M. DuPree
 
6,651
 
Timothy A. Peterson
 
9,871
 
Steve Bartkowski
 
10,201
 
Gary B. Coursey
 
6,911
 
Howard A. McLure
 
27,482
 

(1)
NELL Partners, Inc. owns 36,666 shares of our common stock. John A. Williams and
Leonard A. Silverstein share joint voting and investment power of these shares.

(2)
Although John A. Williams and Leonard A. Silverstein share joint voting and
investment power of the shares held by NELL Partners, Inc., each disclaims any
economic interest in such shares. 70% of such shares are owned indirectly by the
Nancy Ann Richardson Williams Children’s Trust, formed on January 30, 1995, a
trust created by Mr. Williams’ spouse for the benefit of their children. 30% of
such shares are owned indirectly by the Northside Partners Trust, formed on
November 2, 2009, a trust created by Leonard A. Silverstein’s spouse for the
benefit of their children.

(3)
30,495 of these shares are owned by Mr. Williams’ spouse. Mr. Williams disclaims
any beneficial ownership of such shares.

See also Schedule 5.22

6

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

Schedule 7.03

Liens
None.

7

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

Schedule 7.04

Indebtedness

None.

8

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

Schedule 7.05

Investments
None.

9

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

EXHIBIT A
______________________________
Form of Revolving Facility Note
______________________________

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

EXHIBIT A
 
REVOLVING FACILITY NOTE
 
$_____________
_______________, 20__
 
New York, NY

FOR VALUE RECEIVED, the undersigned PREFERRED APARTMENT COMMUNITIES OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership (the “Borrower”), hereby
promises to pay to the order of [_______________________] (the “Lender”) the
principal sum of ___________________________ ($        ) or, if less, the then
unpaid principal amount of all Revolving Loans (such term and each other
capitalized term used herein without definition shall have the meanings ascribed
thereto in the Credit Agreement referred to below) made by the Lender to the
Borrower pursuant to the Credit Agreement, in Dollars and in immediately
available funds, at the Payment Office on the Revolving Facility Termination
Date.
The Borrower also promises to pay interest in like currency and funds at the
Payment Office on the unpaid principal amount of each Revolving Loan made by the
Lender from the date of such Revolving Loan until paid at the rates and at the
times provided in Section 2.06 of the Credit Agreement.
This Revolving Facility Note is one of the Notes referred to in the Credit
Agreement, dated as of August 31, 2012, among the Borrower, Preferred Apartment
Communities, Inc., a Maryland corporation (the “PAC REIT”), the lenders from
time to time party thereto (including the Lender), and KeyBank National
Association, as the Administrative Agent (as the same may be amended, restated
or otherwise modified from time to time, the “Credit Agreement”), and is
entitled to the benefits thereof and of the other Loan Documents. As provided in
the Credit Agreement, this Revolving Facility Note is subject to mandatory
repayment prior to the Revolving Facility Termination Date, in whole or in part.
In case an Event of Default shall occur and be continuing, the principal of and
accrued interest on this Revolving Facility Note may be declared to be due and
payable in the manner and with the effect provided in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of any kind in
connection with this Revolving Facility Note, except as expressly set forth in
the Credit Agreement. No failure to exercise, or delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of any such
rights.
THIS REVOLVING FACILITY NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS REVOLVING
FACILITY NOTE, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.

[Signature Page Follows]

    

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

 
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.

By: Preferred Apartment Advisors, LLC, its manager

 
By:______________________________________
      Name:
      Title:

    

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

EXHIBIT B-1
______________________________
Form of Notice of Borrowing
______________________________

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

NOTICE OF BORROWING
 
August 31, 2012
 
KeyBank National Association,
  as Administrative Agent
1200 Abernathy Road NE, Suite 1550
Atlanta, Georgia 30328

Re:    Notice of Borrowing
Ladies and Gentlemen:
The undersigned, PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., a
Delaware limited liability company (the “Borrower”), refers to the Credit
Agreement, dated as of August 31, 2012 (as the same may be amended, restated or
otherwise modified from time to time, the “Credit Agreement,” the terms defined
therein being used herein as therein defined), among the Borrower, Preferred
Apartment Communities, Inc., a Maryland corporation (the “PAC REIT”), the
lenders from time to time party thereto, and KeyBank National Association, as
the Administrative Agent, and hereby gives you notice, irrevocably, pursuant to
Section 2.03(b) of the Credit Agreement, that the undersigned hereby requests
one or more Borrowings under the Credit Agreement, and in that connection
therewith sets forth on Annex 1 hereto the information relating to each such
Borrowing (collectively the “Proposed Borrowing”) as required by Section 2.03(b)
of the Credit Agreement.
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:
(A)    the representations and warranties of the Credit Parties contained in the
Credit Agreement and the other Loan Documents are and will be true and correct
in all material respects, before and after giving effect to the Proposed
Borrowing and to the application of the proceeds thereof, as though made on such
date, except to the extent that such representations and warranties expressly
relate to an earlier specified date, in which case such representations and
warranties were true and correct in all material respects as of the date when
made; and
(B)    no Default or Event of Default has occurred and is continuing, or would
result from such Proposed Borrowing or from the application of the proceeds
thereof.

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

 
Very truly yours,

 
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.

By: Preferred Apartment Advisors, LLC, its manager

 
By:______________________________________
      Name:
      Title:
 
 

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

Annex 1
to
Notice of Borrowing
_____________________________________________________________________________________

1.    The Business Day of the Proposed Borrowing is August 31, 2012.
2.
The Type of Loan comprising the Proposed Borrowing is a Eurodollar Loan.

3.    The Aggregate amount of the Loan is as follows:
(a)    Base Rate Loan: $0.
(b)    Eurodollar Loan: $5,609,500
4.
The Interest Period for the respective Loan is set forth below opposite such
Loan:

(a)    Eurodollar Loan: 1 month.
(b)    Base Rate Loan: Not Applicable.
5.
The use of proceeds of the Proposed Borrowing is ________________.

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

EXHIBIT B-2
______________________________
Form of Notice of Continuation or Conversion
______________________________

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

EXHIBIT B-2
 
NOTICE OF CONTINUATION OR CONVERSION
 
________________, 20____

KeyBank National Association,
  as Administrative Agent
1200 Abernathy Road NE, Suite 1550
Atlanta, Georgia 30328

Re:    Notice of Continuation or Conversion
Ladies and Gentlemen:
The undersigned, PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership (the “Borrower”), refers to the Credit Agreement,
dated as of August 31, 2012 (as the same may be amended, restated or otherwise
modified from time to time, the “Credit Agreement,” the terms defined therein
being used herein as therein defined), among the Borrower, Preferred Apartment
Communities, Inc., a Maryland corporation (the “PAC REIT”), the lenders from
time to time party thereto, and KeyBank National Association, as the
Administrative Agent, and hereby gives you notice, irrevocably, pursuant to
Section 2.07(b) of the Credit Agreement, that the undersigned hereby requests
one or more Continuations or Conversions of Loans, consisting of one Type of
Loan, pursuant to Section 2.07(b) of the Credit Agreement, and in that
connection therewith has set forth on Annex 1 hereto the information required
pursuant to such Section 2.07(b) of the Credit Agreement relating to each such
Continuation or Conversion.
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Continuation or Conversion:
(A)    the representations and warranties of the Credit Parties contained in the
Credit Agreement and the other Loan Documents are and will be true and correct
in all material respects, before and after giving effect to the Continuation or
Conversion, as though made on such date, except to the extent that such
representations and warranties expressly relate to an earlier specified date, in
which case such representations and warranties were true and correct in all
material respects as of the date when made; and
(B)    no Default or Event of Default has occurred and is continuing, or would
result from such Continuation or Conversion.

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

 
Very truly yours,

 
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.

By: Preferred Apartment Advisors, LLC, its manager

 
By:______________________________________
      Name:
      Title:

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

EXHIBIT C-1
______________________________
Form of Guaranty
______________________________

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

GUARANTY
THIS GUARANTY, dated as of August 31, 2012 (as the same may be amended, restated
or otherwise modified from time to time, this “Guaranty”), made by (i) each of
the undersigned (each, a “Guarantor” and collectively, the “Guarantors” and such
terms shall include an Additional Guarantor that becomes a party to this
Guaranty pursuant to Section 16 hereof), with (ii) KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent (herein, together with its successors and assigns in
such capacity, the “Administrative Agent”), for the benefit of the Creditors (as
defined below):
RECITALS:

(1)    Except as otherwise defined herein, terms used herein and defined in the
Credit Agreement (as defined below) shall be used herein as therein defined.
Certain terms used herein are defined in Section 1 hereof.
(2)    This Guaranty is made pursuant to the Credit Agreement, dated as of the
date hereof (as the same may be amended, restated or otherwise modified from
time to time, the “Credit Agreement”), among Preferred Apartment Communities
Operating Partnership, L.P., a Delaware limited partnership (together with its
successors and assigns, the “Borrower”), Preferred Apartment Communities, Inc.,
a Maryland corporation (the “Parent”), the financial institutions named as
lenders therein (together with their successors and assigns, the “Lenders”), and
the Administrative Agent.
(3)    Each Guarantor (other than the Parent) is a direct or indirect Subsidiary
of the Borrower.
(4)    It is a condition to the making of Loans under the Credit Agreement that
each Guarantor shall have executed and delivered this Guaranty.
(5)    Each Guarantor will obtain benefits from the Credit Agreement and,
accordingly, desires to execute this Guaranty in order to satisfy the condition
described in the preceding paragraph and to induce the Creditors to extend the
Guaranteed Obligations.
AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to
each Guarantor, the receipt and sufficiency of which are hereby acknowledged,
each Guarantor hereby makes the following representations and warranties to the
Administrative Agent and the other Creditors and hereby covenants and agrees
with the Administrative Agent and each other Creditor as follows:
Section 1. Certain Definitions. As used in this guaranty, the following terms
shall have the meanings herein specified unless the context otherwise requires:
“Additional Guarantor” has the meaning provided in Section 16.
“Creditor” means the Administrative Agent and the Lenders and the respective
successors and assigns of each of the foregoing.
“Guaranteed Documents” means, collectively, the Credit Agreement and the other
Loan Documents.

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

“Guaranteed Obligations” means collectively (i) the principal of and interest on
the Loans made to the Borrower under the Credit Agreement, and (ii) all of the
other Obligations, whether primary, secondary, direct, contingent, fixed or
otherwise, in the case of each of the foregoing whether now existing, or
hereafter incurred or arising, including any such interest or other amounts
incurred or arising during the pendency of any bankruptcy, insolvency,
reorganization, receivership or similar proceeding, regardless of whether
allowed or allowable in such proceeding or subject to an automatic stay under
Section 362(a) of the Bankruptcy Code.
“Guaranty Supplement” has the meaning provided in Section 16.
“Subordinated Obligations” has the meaning given to such term in Section 3
hereof.
“Taxes” has the meaning specified in Section 25(a) hereof.
Section 2. Guaranty by the Guarantors, etc.
(a)Each Guarantor, jointly and severally, irrevocably and unconditionally
guarantees to the Administrative Agent and the Lenders the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all of the Guaranteed Obligations. Such guaranty is an absolute,
unconditional, present and continuing guaranty of payment and not of
collectibility and is in no way conditioned or contingent upon any attempt to
collect from the Borrower or any other Subsidiary or Affiliate of the Borrower,
or any other action, occurrence or circumstance whatsoever. If an Event of
Default shall occur and be continuing under the Credit Agreement, each Guarantor
will, immediately upon (and in any event no later than one Business Day
following) its receipt of written notice from the Administrative Agent demanding
payment hereunder, pay to the Administrative Agent, for the benefit of the
Creditors, in immediately available funds, at the Payment Office, such amount of
the Guaranteed Obligations as the Administrative Agent shall specify in such
notice.
(b)In addition to the foregoing, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees to the Creditors the payment of any
and all Guaranteed Obligations of the Borrower and each other Credit Party,
whether or not due or payable by the obligor thereon, upon the occurrence of an
Insolvency Event in respect of the Borrower or such other Credit Party, and
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Administrative Agent, for the benefit of the
Creditors, on demand, in such currency and otherwise in such manner as is
provided in the Guaranteed Documents governing such Guaranteed Obligations.
(c)As a separate, additional and continuing obligation, each Guarantor
unconditionally and irrevocably undertakes and agrees, for the benefit of the
Creditors, that, should any amounts constituting Guaranteed Obligations not be
recoverable from the Borrower or any other Credit Party for any reason
whatsoever (including, without limitation, by reason of any provision of any
Guaranteed Document or any other agreement or instrument executed in connection
therewith being or becoming, at any time, voidable, void, unenforceable, or
otherwise invalid under any applicable law), then notwithstanding any notice or
knowledge thereof by the Administrative Agent, any other Creditor, any of their
respective Affiliates, or any other Person, each Guarantor, jointly and
severally, as sole, original and independent obligor, upon demand by the
Administrative Agent, will make payment to the Administrative Agent, for the
account of the Creditors, of all such obligations not so recoverable by way of
full indemnity.
(d)All payments by each Guarantor under this Guaranty shall be made to the
Administrative Agent, for the benefit of the Creditors, in such currency and
otherwise in such manner as is provided in the Guaranteed Documents to which
such payments relate.

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

Section 3. Subordination.
(a)    Any Indebtedness or other obligations or liabilities of the Borrower now
or hereafter held by any Guarantor (collectively, “Subordinated Obligations”)
are hereby subordinated to the Indebtedness of the Borrower to any Creditor; and
such Subordinated Obligations of the Borrower to any Guarantor, if the
Administrative Agent, after an Event of Default has occurred, so requests, shall
be collected, enforced and received by such Guarantor as trustee for the
Administrative Agent and the other Creditors and be paid over to the
Administrative Agent, for the benefit of the Creditors, on account of the
Indebtedness of the Borrower owing under the Guaranteed Documents to the
Administrative Agent and to the other Creditors, but without affecting or
impairing in any manner the liability of such Guarantor under the other
provisions of this Guaranty. Prior to the transfer by any Guarantor of any note
or negotiable instrument evidencing any Subordinated Obligation of the Borrower
to such Guarantor, such Guarantor shall mark such note or negotiable instrument
with a legend that the same is subject to this subordination.
(b)    If and to the extent that any Guarantor makes any payment to the
Administrative Agent or any other Creditor or to any other Person pursuant to or
in respect of this Guaranty, any reimbursement or similar claim that such
Guarantor may have against the Borrower by reason thereof shall be subject and
subordinate to the prior termination of all of the Commitments and indefeasible
payment in full of all Guaranteed Obligations.
Section 4. Guarantors’ Obligations Absolute. The obligations of each guarantor
under this guaranty shall be absolute and unconditional, shall not be subject to
any counterclaim, setoff, deduction or defense based on any claim such guarantor
may have against the borrower or any other person, including, without
limitation, the administrative agent, any other creditor, any of their
respective affiliates, or any other guarantor, and shall remain in full force
and effect without regard to, and shall not be released, suspended, abated,
deferred, reduced, limited, discharged, terminated or otherwise impaired or
adversely affected by, any circumstance or occurrence whatsoever, other than
indefeasible payment in full of, and complete performance of, all of the
guaranteed obligations, including, without limitation:
(a)    any increase in the amount of the Guaranteed Obligations outstanding from
time to time, including, without limitation, any increase in the aggregate
outstanding amount of the Loans above any specific maximum amount referred to
herein or in the Credit Agreement as in effect on the date hereof, and any
increase in any interest rate, Fee or other amount applicable to any portion of
the Guaranteed Obligations or otherwise payable under any Guaranteed Document;
(b)    any direction as to the application of any payment by the Borrower or by
any other Person;
(c)    any incurrence of additional Guaranteed Obligations at any time or under
any circumstances, including, without limitation, (i) during the continuance of
a Default or Event of Default, (ii) at any time when all conditions to such
incurrence have not been satisfied, or (iii) in excess of any limitations
contained in the Credit Agreement or any of the other Guaranteed Documents;
(d)    any renewal or extension of the time for payment or maturity of any of
the Guaranteed Obligations, or any amendment or modification of, or addition or
supplement to, or deletion from, the Credit Agreement, any other Guaranteed
Document, or any other instrument or agreement applicable to the Borrower or any
other Person, or any part thereof, or any assignment, transfer or other
disposition of any thereof;
(e)    any failure of the Credit Agreement, any other Guaranteed Document, or
any other instrument or agreement applicable to the Borrower or any other
Person, to constitute the legal, valid and binding agreement or obligation of
any party thereto, enforceable in accordance with its terms, or any

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

irregularity in the form of any Guaranteed Document;
(f)    any waiver, consent, extension, indulgence or other action or inaction
(including, without limitation, any lack of diligence, any failure to mitigate
damages or marshal assets, or any election of remedies) under or in respect of
(i) the Credit Agreement, any other Guaranteed Document, or any such other
instrument or agreement, or (ii) any obligation or liability of the Borrower or
any other Person;
(g)    any payment made to the Administrative Agent or any other Creditor on the
Guaranteed Obligations that the Administrative Agent or any other Creditor
repays, returns or otherwise restores to the Borrower or any other applicable
obligor pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding;
(h)    any sale, exchange, release, surrender or foreclosure of, or any
realization upon, or other dealing with, in any manner and in any order, any
property, rights or interests by whomsoever at any time granted, assigned,
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations, or any other liabilities or obligations (including any of those
hereunder), or any portion of any thereof;
(i)    any release of any security or any guaranty by or at the direction of the
Administrative Agent or any other Creditor, or any release or discharge of, or
limitation of recourse against, any Person furnishing any security or guaranty,
including, without limitation, any release or discharge of any Guarantor from
this Guaranty;
(j)    any Insolvency Event relating to the Borrower or to any of its properties
or assets;
(k)    any assignment, transfer or other disposition, in whole or in part, by
the Borrower or any other Person of its interest in any of the property, rights
or interests constituting security for all or any portion of the Guaranteed
Obligations or any other Indebtedness, liabilities or obligations;
(l)    any lack of notice to, or knowledge by, any Guarantor of any of the
matters referred to above; or
(m)    to the fullest extent permitted under applicable law now or hereafter in
effect, any other circumstance or occurrence, whether similar or dissimilar to
any of the foregoing, that could or might constitute a defense available to, or
a discharge of the obligations of, a guarantor or other surety.
Section 5. Waivers. Each guarantor unconditionally waives, to the maximum extent
permitted under any applicable law now or hereafter in effect, insofar as its
obligations under this guaranty are concerned, (a) notice of any of the matters
referred to in section 4, (b) all notices required by statute, rule of law or
otherwise to preserve any rights against such guarantor hereunder, including,
without limitation, any demand, presentment, proof or notice of dishonor or
non‑payment of any guaranteed obligation, notice of acceptance of this guaranty,
notice of the incurrence of any guaranteed obligation, notice of any failure on
the part of the borrower, any of its subsidiaries or affiliates, or any other
person, to perform or comply with any term or provision of the credit agreement,
any other guaranteed document or any other agreement or instrument to which the
borrower or any other person is a party, or notice of the commencement of any
proceeding against any other person or its any of its property or assets, (c)
any right to the enforcement, assertion or exercise against the borrower or
against any other person or any collateral of any right, power or remedy under
or in respect of the credit agreement, the other guaranteed documents or any
other agreement or instrument, and (d) any requirement that such guarantor be
joined as a party to any proceedings against the borrower or any other person
for the enforcement of any term or provision of the credit agreement, the other
guaranteed documents, this guaranty or any other agreement or instrument.

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

Section 6. Subrogation Rights. Until such time as the guaranteed obligations
have been paid in full in cash and otherwise fully performed and all of the
commitments under the credit agreement have been terminated, each guarantor
hereby irrevocably waives all rights of subrogation that it may at any time
otherwise have as a result of this guaranty (whether contractual, under section
509 of the bankruptcy code, or otherwise) to the claims of the administrative
agent and/or the other creditors against the borrower, any other guarantor or
any other guarantor of or surety for the guaranteed obligations and all
contractual, statutory or common law rights of reimbursement, contribution or
indemnity from the borrower or any other guarantor that it may at any time
otherwise have as a result of this guaranty.
Section 7. Separate Actions. A separate action or actions may be brought and
prosecuted against any guarantor whether or not action is brought against any
other guarantor, any other guarantor or the borrower, and whether or not any
other guarantor, any other guarantor of the borrower or the borrower be joined
in any such action or actions.
Section 8. Guarantors Familiar With Borrower’s Affairs. Each guarantor confirms
that an executed (or conformed) copy of each of the loan documents has been made
available to its principal executive officers, that such officers are familiar
with the contents thereof and of this guaranty, and that it has executed and
delivered this guaranty after reviewing the terms and conditions of the credit
agreement, the other loan documents and this guaranty and such other information
as it has deemed appropriate in order to make its own credit analysis and
decision to execute and deliver this guaranty. Each guarantor confirms that it
has made its own independent investigation with respect to the creditworthiness
of the borrower and its other subsidiaries and affiliates and is not executing
and delivering this guaranty in reliance on any representation or warranty by
the administrative agent or any other creditor or any other person acting on
behalf of the administrative agent or any other creditor as to such
creditworthiness. Each guarantor expressly assumes all responsibilities to
remain informed of the financial condition of the borrower and its other
subsidiaries and affiliates and any circumstances affecting (a) the borrower’s
or any other subsidiary’s or affiliate’s ability to perform its obligations
under the credit agreement and the other guaranteed documents to which it is a
party, or (b) any collateral securing, or any other guaranty for, all or any
part of the borrower’s or such other subsidiary’s or affiliate’s payment and
performance obligations thereunder; and each guarantor further agrees that the
administrative agent and the other creditors shall have no duty to advise any
guarantor of information known to them regarding such circumstances or the risks
such guarantor undertakes in this guaranty.
Section 9. Covenant Under Credit Agreement. Each guarantor covenants and agrees
that on and after the date hereof and until this guaranty is terminated in
accordance with section 26 hereof, such guarantor shall take, or will refrain
from taking, as the case may be, all actions that are necessary to be taken or
not taken so that no default or event of default, is caused by the actions or
inactions of such guarantor or any of its subsidiaries.
Section 10. Solvency. Each guarantor represents and warrants to the
administrative agent and each of the other creditors that as of the date such
guarantor has become a party to this guaranty, (i) such guarantor has received
consideration that is the reasonable equivalent value of the obligations and
liabilities that such guarantor has incurred to the administrative agent and the
other creditors under this guaranty and the other loan documents to which such
guarantor is a party; (ii) such guarantor has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage and is solvent and able to pay its debts as they mature; (iii) such
guarantor owns property having a value, both at fair valuation and at present
fair salable value, greater than the amount required to pay its debts; and (iv)
such guarantor is not entering into the loan documents to which it is a party
with the intent to hinder, delay or defraud its creditors.

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

Section 11. Continuing Guaranty; Remedies Cumulative, etc. This guaranty is a
continuing guaranty, all liabilities to which it applies or may apply under the
terms hereof shall be conclusively presumed to have been created in reliance
hereon, and this guaranty shall remain in full force and effect until terminated
as provided in section 26 hereof. No failure or delay on the part of the
administrative agent or any other creditor in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly specified are cumulative and
not exclusive of any rights or remedies that the administrative agent or any
other creditor would otherwise have. No notice to or demand on any guarantor in
any case shall entitle such guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
administrative agent or any other creditor to any other or further action in any
circumstances without notice or demand. It is not necessary for, and neither the
administrative agent nor any other creditor, undertakes any obligation or duty
to, inquire into the capacity or powers of the borrower or any of its
subsidiaries or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
Section 12. Application Of Payments And Recoveries. All amounts received by the
administrative agent pursuant to, or in connection with the enforcement of, this
guaranty, together with all amounts and other rights and benefits realized by
any creditor (or to which any creditor may be entitled) by virtue of this
guaranty, shall be applied as provided in section 8.03 of the credit agreement.
Section 13. Enforcement Expenses. The guarantors hereby jointly and severally
agree to pay, to the extent not paid pursuant to section 11.01 of the credit
agreement, all out-of-pocket costs and expenses of the administrative agent and
each other creditor in connection with the enforcement of this guaranty and any
amendment, waiver or consent relating hereto (including, without limitation, the
fees and disbursements of counsel employed by the administrative agent or any of
the other creditors).
Section 14. Successors and Assigns. This guaranty shall be binding upon each
guarantor and its successors and assigns, and shall inure to the benefit of the
administrative agent and the other creditors and their successors and assigns.
Section 15. Entire Agreement. This guaranty and the other guaranteed documents
represent the final agreement among the parties with respect to the subject
matter hereof and thereof, supersede any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof, and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements among the parties. There are no unwritten oral
agreements among the parties.
Section 16. Amendments; Additional Guarantors. No amendment or waiver of any
provision of this guaranty and no consent to any departure by any guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the administrative agent acting at the direction of the requisite
number of lenders, if any, required pursuant to section 11.12 of the credit
agreement, and the applicable guarantor or guarantors, as the case may be, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. Upon the execution and delivery by any
person of a guaranty supplement in substantially the form of exhibit a hereto
(each, a “guaranty supplement”), (a) such person shall be referred to as an
“additional guarantor” and shall become and be a guarantor hereunder, and each
reference in this guaranty to a “guarantor” shall also mean and be a reference
to such additional guarantor, and each reference in any other loan document to a
“guarantor” shall also mean and be a reference to such additional guarantor, and
(b) each reference herein to “this guaranty”, “hereunder”,

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“hereof” or words of like import referring to this guaranty, and each reference
in any other loan document to the “guaranty”, “thereunder”, “thereof” or words
of like import referring to this guaranty, shall mean and be a reference to this
guaranty as supplemented by such guaranty supplement.
Section 17. Headings Descriptive. The headings of the several sections of this
guaranty are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this guaranty.
Section 18. Severability. Any provision of this guaranty that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 19. Right of Setoff. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of an event of default (such term to mean
any “event of default” as defined in the credit agreement), each creditor is
hereby authorized at any time or from time to time, without notice to any
guarantor or to any other person, any such notice being expressly waived, to the
fullest extent permitted under applicable law now or hereafter in effect, to set
off and to appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held or owing by such creditor to or for the
credit or the account of such guarantor, against and on account of the
obligations and liabilities of such guarantor to such creditor under this
guaranty, irrespective of whether or not the administrative agent or such
creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured. Each creditor agrees to promptly notify the relevant guarantor after
any such set off and application, provided, however, that the failure to give
such notice shall not affect the validity of such set off and application.
Section 20. Notices. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing and mailed,
sent by telecopier or delivered, (a) if to any guarantor, at the address
specified for it in the credit agreement (or if no such address is specified, to
it c/o the borrower), with a courtesy copy to the borrower at its address
specified in or pursuant to the credit agreement, (b) if to the administrative
agent, to it at its notice office, or (c) if to any lender, at its address
specified in or pursuant to the credit agreement; or in any case at such other
address as any of the persons listed above may hereafter notify the others in
writing. All such notices and communications shall be mailed, sent via
telecopier, sent by overnight courier or delivered, and shall be effective when
received.
Section 21. Reinstatement. If claim is ever made upon the administrative agent
or any other creditor for recission, repayment, recovery or restoration of any
amount or amounts received by the administrative agent or any other creditor in
payment or on account of any of the guaranteed obligations and any of the
aforesaid payees repays all or part of said amount by reason of (a) any
judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property, or (b) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including the borrower), then and in such event (i) any such judgment, decree,
order, settlement or compromise shall be binding upon each guarantor,
notwithstanding any revocation hereof or other instrument evidencing any
liability of the borrower, (ii) each guarantor shall be and remain liable to the
aforesaid payees hereunder for the amount so repaid or otherwise recovered or
restored to the same extent as if such amount had never originally been received
by any such payee, and (iii) this guaranty shall continue to be effective or be
reinstated, as the case may be, all as if such repayment or other recovery had
not occurred.

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Section 22. Sale of Capital Stock of a Guarantor. In the event that all of the
capital stock of one or more guarantors is sold or otherwise disposed of or
liquidated in connection with a sale or other disposition that has been approved
in writing by the required lenders (or all lenders, as applicable, if required
by section 11.12 of the credit agreement) and the proceeds of such sale,
disposition or liquidation are applied, to the extent applicable, in accordance
with the provisions of the credit agreement, such guarantor shall, in accordance
with section 11.12 of the credit agreement, be released from this guaranty and
this guaranty shall, as to each such guarantor or guarantors, terminate, and
have no further force or effect.
Section 23. Contribution Among Guarantors. Each guarantor, in addition to the
subrogation rights it shall have against the borrower under applicable law as a
result of any payment it makes hereunder, shall also have a right of
contribution against all other guarantors in respect of any such payment pro
rata among the same based on their respective net fair value as enterprises,
provided any such right of contribution shall be subject and subordinate to the
prior payment in full of the guaranteed obligations (and such guarantor’s
obligations in respect thereof).
Section 24. Full Recourse Obligations; Effect of Fraudulent Transfer Laws, etc.
It is the desire and intent of each guarantor, the administrative agent and the
other creditors that this guaranty shall be enforced as a full recourse
obligation of each guarantor to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
If and to the extent that the obligations of any guarantor under this guaranty
would, in the absence of this sentence, be adjudicated to be invalid or
unenforceable because of any applicable state or federal law relating to
fraudulent conveyances or transfers, then the amount of such guarantor’s
liability hereunder in respect of the guaranteed obligations shall be deemed to
be reduced ab initio to that maximum amount that would be permitted without
causing such guarantor’s obligations hereunder to be so invalidated.
Section 25. Payments Free and Clear of Setoffs, Counterclaims and Taxes, etc.
(a)    All payments made by any Guarantor hereunder will be made without setoff,
counterclaim or other defense and, except as provided for in this Section 25(a),
all such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in the
second succeeding sentence, any tax, imposed on or measured by the net income or
net profits of a Creditor pursuant to the laws of the jurisdiction under which
such Creditor is organized or the jurisdiction in which the principal office or
Applicable Lending Office of such Creditor is located or any subdivision thereof
or therein) and all interest, penalties or similar liabilities with respect to
such non excluded taxes, levies imposts, duties, fees, assessments or other
charges (all such nonexcluded taxes levies, imposts, duties, fees assessments or
other charges being referred to collectively as “Taxes”). If any Taxes are so
levied or imposed, the applicable Guarantor agrees to pay the full amount of
such Taxes and such additional amounts as may be necessary so that every payment
by it of all amounts due hereunder, after withholding or deduction for or on
account of any Taxes will not be less than the amount provided for herein. If
any amounts are payable in respect of Taxes pursuant to the preceding sentence,
the applicable Guarantor agrees to reimburse each Creditor, upon the written
request of such Creditor for taxes imposed on or measured by the net income or
profits of such Creditor pursuant to the laws of the jurisdiction in which such
Creditor is organized or in which the principal office or Applicable Lending
Office of such Creditor is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which the principal
office or Applicable Lending Office of such Creditor is located and for any
withholding of income or similar taxes imposed by the United States of America
as such Creditor shall determine are payable by, or withheld from, such Creditor
in respect of such amounts so paid to or on behalf of such Creditor pursuant to
the

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preceding sentence, which request shall be accompanied by a statement from such
Creditor setting forth, in reasonable detail, the computations used in
determining such amounts. The applicable Guarantor will furnish to the
Administrative Agent within 45 days after the date the payment of any Taxes, or
any withholding or deduction on account thereof, is due pursuant to applicable
law certified copies of tax receipts, or other evidence satisfactory to the
applicable Creditor, evidencing such payment by the applicable Creditor. Each
applicable Guarantor will indemnify and hold harmless the Administrative Agent
and each Creditor, and reimburse the Administrative Agent or such Creditor upon
its written request, for the amount of any Taxes so levied or imposed and paid
or withheld by such Creditor.
(b)    Notwithstanding anything to the contrary contained in this Section 25,
(i) any applicable Guarantor shall be entitled, to the extent it is required to
do so by law, to deduct or withhold income or other similar taxes imposed by the
United States (or any political subdivision or taxing authority thereof or
therein) from any amounts payable hereunder for the account of any Creditor that
is not a United States Person (as such term is defined in Section 7701(a)(30) of
the Code) for United States federal income tax purposes and that has not
provided to the Borrower such forms that establish a complete exemption from
such deduction or withholding; and (ii) any applicable Guarantor shall not be
obligated pursuant to this Section 25 hereof to gross-up payments to be made to
a Creditor in respect of income or similar taxes imposed by the United States or
any additional amounts with respect thereto if such Creditor has not provided to
the Borrower such forms.
Section 26. Termination. After the termination of all of the commitments and
when all loans and other guaranteed obligations (other than unasserted indemnity
obligations) have been paid in full, this guaranty will terminate and the
administrative agent, at the request and expense of the borrower and/or any of
the guarantors, will execute and deliver to the guarantors an instrument or
instruments acknowledging the satisfaction and termination of this guaranty.
Section 27. Enforcement Only by Administrative Agent. The creditors agree that
this guaranty may be enforced only by the action of the administrative agent,
acting upon the instructions of the required lenders, and that no creditor shall
have any right individually to seek to enforce or to enforce this guaranty, it
being understood and agreed that such rights and remedies may be exercised by
the administrative agent, for the benefit of the creditors, upon the terms of
this guaranty.
Section 28. General Limitation on Claims by Guarantors. NO CLAIM MAY BE MADE BY
ANY GUARANTOR AGAINST THE ADMINISTRATIVE AGENT OR ANY OTHER CREDITOR, OR THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF ANY OF THEM,
FOR ANY DAMAGES OTHER THAN ACTUAL COMPENSATORY DAMAGES IN RESPECT OF ANY CLAIM
FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY OR ANY OF THE OTHER
GUARANTEED DOCUMENTS, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH; AND EACH GUARANTOR HEREBY, TO THE FULLEST EXTENT PERMITTED UNDER
APPLICABLE LAW, WAIVES, RELEASES AND AGREES NOT TO SUE OR COUNTERCLAIM UPON ANY
SUCH CLAIM FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT
ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
Section 29. Creditors Not Fiduciary to Guarantors. The relationship among any
guarantor and its affiliates, on the one hand, and the administrative agent and
the other creditors, on the other hand, is solely that of debtor and creditor,
and the administrative agent and the other creditors have no fiduciary or other
special relationship with any guarantor or any of its affiliates, and no term or
provision of any guaranteed

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document, no course of dealing, no written or oral communication, or other
action, shall be construed so as to deem such relationship to be other than that
of debtor and creditor.
Section 30. Counterparts. This guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts
including, by way of facsimile transmission or other electronic transmission
capable of authentication, each of which when so executed and delivered shall be
an original, but all of which shall together constitute one and the same
instrument.
Section 31. Governing Law; Venue; Waiver Of Jury Trial
(a)    THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES (OTHER
THAN SECTION 5-14-1 OF THE NEW YORK GENERAL OBLIGATION LAW).
(b)    ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS GUARANTY, EACH GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS GUARANTY OR OTHER DOCUMENT RELATED THERETO. EACH GUARANTOR WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
(c)    EACH GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS GUARANTY OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS GUARANTY, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH GUARANTOR HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS GUARANTY MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 31 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.]

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and
delivered as of the date first above written.
 
PREFERRED APARTMENT COMMUNITIES, INC.

By:__________________________________
   Name:
   Title:

 
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.

By: Preferred Apartment Communities, Inc., its general partner

By:__________________________________
   Name:
   Title:

 
TRAIL CREEK MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its advisor

By:__________________________________
   Name:
   Title:

SUMMIT CROSSING MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its advisor

By:__________________________________
   Name:
   Title:

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IRIS CROSSTOWN MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its advisor

By:__________________________________
   Name:
   Title:

CITY VISTA MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its advisor

By:__________________________________
   Name:
   Title:

CITY PARK MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its advisor

By:__________________________________
   Name:
   Title:

Accepted by:

KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent,

By:_______________________________
   Name:
   Title:

 

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Exhibit A to
Guaranty

GUARANTY SUPPLEMENT
This Guaranty Supplement, dated as of ________ __, 200_ (as amended, restated or
otherwise modified from time to time, this “Supplement”), is made by
[____________________, a _________________ corporation] (the “Additional
Guarantor”), in favor of KEYBANK NATIONAL ASSOCIATION, as administrative agent
(the “Administrative Agent”) for the benefit of the Creditors (as defined in the
Guaranty referred to below).
RECITALS:
(1)    Preferred Apartment Communities Operating Partnership, L.P., a Delaware
limited partnership (the “Borrower”) and Preferred Apartment Communities, Inc.,
a Maryland corporation (the “Parent”), are party to a Credit Agreement, dated as
of August 31, 2012 (as the same may from time to time be amended, restated or
otherwise modified, the “Credit Agreement”) with the Administrative Agent and
the financial institutions party thereto (collectively, the “Lenders”).
(2)    In connection with the Credit Agreement, Parent and certain of the
Borrower’s subsidiaries (collectively, the “Guarantors” and, individually, each
a “Guarantor”) executed and delivered a Subsidiary Guaranty dated as of August
31, 2012 (as the same may from time to time be amended, restated, supplemented
or otherwise modified, the “Guaranty”) to the Administrative Agent for the
benefit of the Creditors (as defined in the Guaranty) pursuant to which the
Guarantors guaranteed the payment and performance in full of all of the
Guaranteed Obligations (as defined in the Guaranty).
(3)    The Additional Guarantor is a newly created or acquired subsidiary of the
Borrower and, pursuant to Section 6.09 of the Credit Agreement, is required to
become a “Guarantor” under the Guaranty and to guaranty, for the benefit of the
Creditors, all of the Guaranteed Obligations.
(4)    The Additional Guarantor deems it to be in its direct pecuniary and
business interests to become a “Guarantor” under the Guaranty and, accordingly,
desires to enter into this Supplement in accordance with Section 16 of the
Guaranty in order to satisfy the condition described in the preceding paragraph
and to induce the Creditors to make financial accommodations to or for the
benefit of the Additional Guarantor.
AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing and the other benefits
accruing to the Additional Guarantor, the receipt and sufficiency of which are
hereby acknowledged, the Additional Guarantor covenants and agrees with the
Administrative Agent and the Creditors as follows:
Section 1.     Definitions. Capitalized terms used in this supplement and not
otherwise defined herein shall have the meanings given to such terms in the
guaranty.
Section 2.     Supplement; Guaranty. The additional guarantor hereby
acknowledges, agrees and confirms that, by its execution of this supplement, on
and after the date hereof it shall become a party to the guaranty and shall be
fully bound by, and subject to, all of the covenants, terms, obligations and
conditions of the guaranty applicable to a “guarantor” as though originally
party thereto as a “guarantor,” and the additional guarantor shall be deemed a
“guarantor” for all purposes of the guaranty and the other

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

 

loan documents (as defined in the credit agreement). The additional guarantor
acknowledges and confirms that it has received a copy of the guaranty, the other
loan documents and all exhibits thereto and has reviewed and understands all of
the terms and provisions thereof. The additional guarantor (i) agrees that it
will comply with all the terms and conditions of the guaranty as if it were an
original signatory thereto, and (ii) irrevocably and unconditionally guarantees
to the administrative agent and the lenders the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all of the
guaranteed obligations of the borrower and each other guarantor.
Section 3.     Effect of this Agreement. Except as expressly provided in this
supplement, the guaranty shall remain in full force and effect, without
modification or amendment.
Section 4.     Representations and Warranties. The additional guarantor, as of
the date hereof, hereby:
(n)    makes to the Administrative Agent and the Creditors each of the
representations and warranties contained in the Guaranty applicable to a
Guarantor; and
(o)    represents and warrants that upon the execution and delivery of this
Supplement, all of the conditions set forth in Section 6.09 of the Credit
Agreement have been satisfied.
Section 5.     Successors and Assigns; Entire Agreement. This supplement is
binding upon and shall inure to the benefit of the additional guarantor, the
administrative agent and each of the creditors and their respective successors
and assigns. This supplement and the guaranty set forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supercedes all prior discussions, agreements and understandings of any and every
nature among them. This supplement shall be a loan document under the credit
agreement. No guarantor shall be permitted to assign any of its rights or
obligations hereunder except as expressly permitted pursuant to or in accordance
with the credit agreement.
Section 6.     Headings. The descriptive headings of this supplement are for
convenience or reference only and do not constitute a part of this supplement.
Section 7.     Governing Law. This supplement and the rights of the parties
hereunder shall be construed and interpreted in accordance with the laws of the
state of new york, without application of the rules regarding conflicts of laws.
Section 8.     JURY TRIAL WAIVER. THE ADDITIONAL GUARANTOR HEREBY IRREVOCABLY
WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS SUPPLEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
[Remainder of page intentionally left blank.]

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

By:__________________________________
   Name:
   Title:

 
 

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EXHIBIT C-2
______________________________
Form of Pledge and Security Agreement
______________________________

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

    
    

PLEDGE AND SECURITY AGREEMENT
dated as of
August 31, 2012
Among
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.
as a Grantor,

THE OTHER GRANTORS NAMED HEREIN,

and

KEYBANK NATIONAL ASSOCIATION,
as the Administrative Agent,

for the benefit of

THE SECURED CREDITORS NAMED HEREIN

    
    

    

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ARTICLE I
DEFINITIONS AND TERMS    2

Section 1.01
Defined Terms    2

Section 1.02
Additional Defined Terms    2

Section 1.03
Terms Generally    7

ARTICLE II
SECURITY INTEREST    8

Section 2.01
Grant of Security Interest    8

Section 2.02
Excluded Property    9

Section 2.03
No Assumption of Liability    9

Section 2.04
Power of Attorney    9

ARTICLE III
REPRESENTATIONS AND WARRANTIES    10

Section 3.01
Title and Authority    10

Section 3.02
Absence of Other Liens    10

Section 3.03
Validity of Security Interest    10

Section 3.04
Perfection of Security Interest under UCC.    10

Section 3.05
Perfection Certificates    11

Section 3.06
Places of Business; Jurisdiction Where Organized; Locations of Collateral;
etc    11

Section 3.07
Pledged Collateral    11

Section 3.08
Deposit Accounts    11

Section 3.09
Securities Accounts    11

Section 3.10
Status of Pledged Collateral    11

ARTICLE IV
GENERAL COVENANTS    12

Section 4.01
No Other Liens; Defense of Title; etc    12

Section 4.02
Further Assurances; Filings and Recordings    12

Section 4.03
Use and Disposition of the Collateral    12

Section 4.04
Delivery or Marking of Chattel Paper; Other Actions    13

Section 4.05
Authorization to File Financing Statements    13

Section 4.06
Maintenance of Records    14

Section 4.07
Perfection Certificates; Collateral Reports    14

Section 4.08
Legal Status    14

Section 4.09
Inspections and Verification    14

Section 4.10
Insurance    15

Section 4.11
Proceeds of Casualty Insurance, Condemnation or Taking    15

Section 4.12
Commercial Tort Claims    15

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Section 4.13
Electronic Chattel Paper and Transferable Records    16

Section 4.14
Letter-of-Credit Rights    16

Section 4.15
[Protective Advances by the Administrative Agent    16

ARTICLE V
ACCOUNTS AND COLLECTION OF ACCOUNTS    17

Section 5.01
Deposit Accounts    17

Section 5.02
Securities Accounts    17

Section 5.03
Operation of Collateral Accounts    17

Section 5.04
Collection of Accounts    17

Section 5.05
Collateral Concentration Account    18

ARTICLE VI
PLEDGED COLLATERAL    18

Section 6.01
Delivery of Certificates and Instruments for Pledged Collateral    18

Section 6.02
No Assumption of Liability    19

Section 6.03
Registration of Collateral in the Name of the Administrative Agent    20

Section 6.04
Appointment of Sub-Agents; Endorsements; etc    20

Section 6.05
Voting Rights    20

Section 6.06
Entitlement of Grantors to Cash Dividends and Distributions    20

Section 6.07
Entitlement of Administrative Agent to Dividends and Distributions    20

Section 6.08
Application of Dividends and Distributions    21

Section 6.09
Turnover by Grantors    21

Section 6.10
Registration under 1933 Act    21

Section 6.11
Sale of Pledged Equity Interests in Connection with Enforcement    21

ARTICLE VII
Intellectual property    22

Section 7.01
Intellectual Property    22

Section 7.02
Collateral Assignments; Further Assurances    22

Section 7.03
Licenses and Assignments    22

Section 7.04
Infringements    22

Section 7.05
Trademarks    23

Section 7.06
Patents    23

Section 7.07
Other Patents and Copyrights    23

Section 7.08
Remedies Relating to Intellectual Property    23

ARTICLE VIII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT    24

Section 8.01
Remedies Generally    24

Section 8.02
Disposition of the Collateral    25

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Section 8.03
Grant of License to Use Intellectual Property    26

Section 8.04
Waiver of Claims    26

Section 8.05
Application of Proceeds    27

Section 8.06
Remedies Cumulative    27

Section 8.07
Discontinuance of Proceedings    27

Section 8.08
Purchasers of Collateral    27

ARTICLE IX
MISCELLANEOUS    28

Section 9.01
Notices    28

Section 9.02
Entire Agreement    28

Section 9.03
Obligations Absolute    28

Section 9.04
Successors and Assigns    29

Section 9.05
Headings Descriptive    29

Section 9.06
Severability    29

Section 9.07
Enforcement Expenses, etc    29

Section 9.08
Release of Portions of Collateral    29

Section 9.09
Termination    30

Section 9.10
Administrative Agent    30

Section 9.11
Only Administrative Agent to Enforce on Behalf of Secured Creditors    30

Section 9.12
Other Creditors, etc. Not Third-Party Beneficiaries    30

Section 9.13
Counterparts    30

Section 9.14
Amendments; Additional Grantors    30

Section 9.15
Separate Actions    31

Section 9.16
Full Recourse Obligations; Effect of Fraudulent Transfer Laws    31

Section 9.17
Governing Law; Venue; Waiver of Jury Trial    31

EXHIBITS

Exhibit A        Security Agreement Joinder
Exhibit B        Perfection Certificate

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THIS PLEDGE AND SECURITY AGREEMENT, dated as of August 31, 2012 (as the same may
be amended, restated or otherwise modified from time to time, this “Agreement”),
among: (i)  PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership (the “Borrower”); (ii) each of the Subsidiaries (as
defined in the Credit Agreement referred to below) of the Borrower that is a
signatory hereto (each such Subsidiary, together with each Additional Grantor
(defined below) that becomes a party hereto pursuant to Section 9.14 hereof and
together with the Borrower, collectively, the “Grantors” and, individually, each
a “Grantor”); and (iii) KEYBANK NATIONAL ASSOCIATION, as administrative agent
(the “Administrative Agent”), for the benefit of the Secured Creditors (as
defined below):
RECITALS:

(1)    Except as otherwise defined herein, terms used herein and defined in the
Credit Agreement (as defined below) shall be used herein as therein defined.
Certain terms used herein are defined in Section 1.01 hereof.
(2)    This Agreement is made pursuant to the Credit Agreement, dated as of the
date hereof (as amended, restated or otherwise modified from time to time, the
“Credit Agreement”), among the Borrower, Preferred Apartment Communities, Inc.,
a Maryland corporation (the “Parent”), the financial institutions named as
lenders therein (together with their successors and assigns, the “Lenders”), and
the Administrative Agent.
(3)    It is a condition precedent to the making of Loans under the Credit
Agreement that each Grantor shall have executed and delivered to the
Administrative Agent this Agreement.
(4)    Each Subsidiary Grantor is a direct or indirect Subsidiary of the
Borrower.
(5)    Each Grantor will obtain benefits from the Credit Agreement and,
accordingly, desires to execute this Agreement in order to satisfy the condition
described above and to induce the Secured Creditors to extend credit pursuant to
the Credit Agreement and other Loan Documents.
NOW, THEREFORE, in consideration of the benefits accruing to each Grantor, the
receipt and sufficiency of which are hereby acknowledged, each Grantor hereby
makes the following representations and warranties to the Administrative Agent
and to the other Secured Creditors and hereby covenants and agrees with the
Administrative Agent and to the other Secured Creditors as follows:

DEFINITIONS AND TERMS
Section 1.138    Defined Terms. Capitalized terms used in this Agreement and not
otherwise defined in this Agreement shall have the meanings given to such terms
in the Credit Agreement. Unless otherwise defined herein, all terms used herein
and defined in the UCC shall have the same definitions herein as specified
therein; provided, however, that if a term is defined in Article 9 of the UCC
differently than in another Article of the UCC, the term shall have the meaning
specified in Article 9 of the UCC.
Section 1.139    Additional Defined Terms. The following terms shall have the
meanings herein specified unless the context otherwise requires:
“Accounts Receivable” means (i) all accounts, now existing or hereafter arising;
and (ii) without

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limitation of the foregoing, in any event including, but not limited to, (A) all
right to a payment, whether or not earned by performance, for goods or other
property (other than money) that has been or is to be sold, consigned, leased,
licensed, assigned or otherwise disposed of, for services rendered or to be
rendered, for a policy of insurance issued or to be issued, for a suretyship
obligation incurred or to be incurred, for energy provided or to be provided, or
for the use or hire of a vessel under a charter or other contract whether due or
to become due, whether or not it has been earned by performance, and whether now
existing or hereafter acquired or arising in the future, including Accounts
Receivable from employees and Affiliates of any Grantor, (B) all rights
evidenced by an account, invoice, purchase order, requisition, bill of exchange,
note, contract, security agreement, lease, chattel paper, or any evidence of
indebtedness or security related to the foregoing, (C) all security pledged,
assigned, hypothecated or granted to or held by a Grantor to secure the
foregoing, including all supporting obligations, (D) all guarantees, letters of
credit, banker’s acceptances, drafts, endorsements, credit insurance and
indemnifications on, for or of, any of the foregoing, including all rights to
make drawings, claims or demands for payment thereunder, and (E) all powers of
attorney for the execution of any evidence of indebtedness, guaranty, letter of
credit or security or other writing in connection therewith.
“Additional Grantor” has the meaning provided in Section 9.14.
“Administrative Agent” has the meaning provided in the first paragraph of this
Agreement.
“Agreement” has the meaning provided in the first paragraph of this Agreement.
“Borrower” has the meaning provided in the first paragraph of this Agreement.
“Collateral” has the meaning provided in Section 2.01 hereof.
“Collateral Account” means any Controlled Deposit Account or Controlled
Securities Account.
“Collateral Assignment Agreement” means a Collateral Assignment of Patents, a
Collateral Assignment of Trademarks or a Collateral Assignment of Copyrights.
“Collateral Assignment of Copyrights” means a Collateral Assignment of
Copyrights in form and substance acceptable to the Administrative Agent.
“Collateral Assignment of Patents” means a Collateral Assignment of Patents in
form and substance acceptable to the Administrative Agent.
“Collateral Assignment of Trademarks” means a Collateral Assignment of
Trademarks in form and substance acceptable to the Administrative Agent.
“Collateral Concentration Account” means a cash collateral deposit account
established in the name of the Administrative Agent, and under the sole dominion
and control of the Administrative Agent, for the benefit of the Secured
Creditors, at an office of the Administrative Agent.
“Contract Rights” means all rights of a Grantor under or in respect of a
Contract, including, without limitation, all rights to payment, damages,
liquidated damages, and enforcement.
“Contract” means any contract, agreement or other writing between a Grantor and
one or more additional parties.
“Control” means (i) when used with respect to any security or security
entitlement, the meaning

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specified in Section 8-106 of the UCC; and (ii) when used with respect to any
deposit account, the meaning specified in Section 9-104 of the UCC.
“Control Agreement” means any Deposit Account Control Agreement or Securities
Account Control Agreement or any other control agreement delivered in connection
with this Agreement.
“Controlled Deposit Account” means a deposit account (i) that is subject to a
Deposit Account Control Agreement or (ii) as to which the Administrative Agent
is the Depositary Bank’s “customer” (as defined in Section 4-104 of the UCC).
“Controlled Securities Account” means a securities account that (i) is
maintained in the name of a Grantor at an office of a Securities Intermediary
located in the United States of America and (ii) together with all financial
assets credited thereto and all related security entitlements, is subject to a
Securities Account Control Agreement.
“Copyrights” means any copyright to which a Grantor now or hereafter has title,
as well as any application for a copyright hereafter made by such Grantor.
“Credit Agreement” has the meaning provided in the Recitals of this Agreement.
“Deposit Account Control Agreement” means, with respect to a deposit account of
a Grantor, a Deposit Account Control Agreement in form and substance acceptable
to the Administrative Agent among such Grantor, the Administrative Agent and the
relevant Depositary Bank.
“Depositary Bank” means a bank at which a deposit account of any Grantor is
maintained.
“Equity Interests” means (i) all of the issued and outstanding shares of all
classes of capital stock of any corporation at any time directly owned by any
Grantor and the certificates representing such capital stock, (ii) all of the
membership interests in a limited liability company at any time owned or held by
any Grantor, and (iii) all of the equity interests in any other form of
organization at any time owned or held by any Grantor.
“Event of Default” means any Event of Default under, and as defined in, the
Credit Agreement.
“Governing Documents” means all agreements and instruments evidencing or
relating to investments in or ownership, voting or disposition of, any of the
Pledged Collateral.
“Grantor” and “Grantors” have the meaning provided in the first paragraph of
this Agreement.
“Intercompany and Third-Party Notes” means all promissory notes, instruments,
debentures, bonds, evidences of indebtedness and similar securities from time to
time issued to, or held by, any Grantor.
“Issuer” means the issuer of any Pledged Collateral.
“Intellectual Property” means (i) all Trademarks, together with the
registrations and right to all renewals thereof, and the good will of the
business of any Grantor symbolized by the Trademarks; (ii) all Patents; (iii)
all Copyrights; (iv) all computer programs and software applications and source
codes of such Grantor and all intellectual property rights therein and all other
Proprietary Information of such Grantor, including, but not limited to, Trade
Secrets; and (v) all Permits.

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“Inventory” means (i) all inventory; and (ii) without limitation of the
foregoing, and in all cases including, but not limited to, all merchandise and
other goods held for sale or lease, or furnished or to be furnished under
contracts for service, including, without limitation, raw materials, works in
process, finished goods, products made or processed, intermediates, packing
materials, shipping materials, labels, semi-finished inventory, scrap inventory,
spare parts inventory, manufacturing supplies, consumable supplies, other
substances commingled therewith or added thereto, and all such goods that have
been returned, reclaimed, repossessed or exchanged.
“Lender” has the meaning provided in the Recitals of this Agreement.
“Loan Document Obligations” means, collectively, (i) the principal of and
interest on the Notes issued by, and the Loans made to, the Borrower under the
Credit Agreement, (ii) all indebtedness and other obligations of Parent and each
Subsidiary Grantor under the Guaranty, and (iv) all other indebtedness,
obligations and liabilities owing by the Borrower and the other Credit Parties
to the Administrative Agent or any of the Lenders under the Credit Agreement and
the other Loan Documents to which the Borrower or any other Credit Party is now
or may hereafter become a party (including, without limitation, indemnities,
fees and other amounts payable thereunder), whether primary, secondary, direct,
contingent, fixed or otherwise, in all cases whether now existing, or hereafter
incurred or arising, including any such interest or other amounts incurred or
arising during the pendency of any bankruptcy, insolvency, reorganization,
receivership or similar proceeding, regardless of whether allowed or allowable
in such proceeding or subject to an automatic stay under Section 362(a) of the
Bankruptcy Code.
“Notice of Exclusive Control” means a “Notice of Exclusive Control” as defined
in each of the Control Agreements.
“Patents” means any patent to which a Grantor now or hereafter has title, as
well as any application for a patent now or hereafter made by a Grantor.
“Perfection Certificate” means a certificate in the form of Exhibit B hereto,
completed and supplemented with the schedules contemplated thereby to the
reasonable satisfaction of the Administrative Agent, and signed by an Authorized
Officer of the applicable Grantor delivering the same.
“Permits” means all licenses, permits, rights, orders, variances, franchises or
authorizations of or from any Governmental Authority.
“Pledged Collateral” means the Pledged Equity Interests and the Pledged Debt.
“Pledged Debt” means all of the Intercompany and Third-Party Notes presently
owned or hereafter acquired from time to time by any Grantor, and all interest,
cash, instruments and other property hereafter from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the foregoing.
“Pledged Entity” means the Issuer of any Pledged Equity Interests.
“Pledged Equity Interests” means all of the Equity Interests now owned or
hereafter acquired by each Grantor (other than Equity Interests that are
excluded from the Collateral pursuant to Section 2.02), and all of such
Grantor’s other rights, title and interests in, or in any way related to, each
Pledged Entity to which any of such Equity Interests relate, including, without
limitation: (i) all dividends, cash, instruments and other property hereafter
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such Equity Interests and in all profits, losses
and other distributions to which

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such Grantor shall at any time be entitled in respect of any such Equity
Interest; (ii) all other payments due or to become due to such Grantor in
respect of any such Equity Interest, whether under any partnership agreement,
limited liability company agreement, other agreement or otherwise, whether as
contractual obligations, damages, insurance proceeds or otherwise; (iii) all of
such Grantor’s claims, rights, powers, privileges, authority, puts, calls,
options, security interests, liens and remedies, if any, under any partnership
agreement, limited liability company agreement, other agreement or at law or
otherwise in respect of any such Equity Interest; (iv) all present and future
claims, if any, of such Grantor against any such Pledged Entity for moneys
loaned or advanced, for services rendered or otherwise; (v) all of such
Grantor’s rights under any partnership agreement, limited liability company
agreement, other agreement or at law to exercise and enforce every right, power,
remedy, authority, option and privilege of such Grantor relating to any such
Equity Interest; (vi) all other property hereafter delivered in substitution for
or in addition to any of the foregoing; (vii) all certificates and instruments
representing or evidencing any of the foregoing; and (vii) all cash, securities,
interest, distributions, dividends, rights and other property at any time and
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all thereof.
“Proceeds” means (i) all proceeds; and (ii) without limitation of the foregoing
and in all cases, including, but not be limited to, (A) whatever is acquired
upon the sale, lease, license, exchange, or other disposition of any Collateral,
(B) whatever is collected on, or distributed on account of, any Collateral, (C)
rights arising out of any Collateral, (D) claims arising out of the loss or
nonconformity of, defects in, or damage to any Collateral, (E) claims and rights
to any proceeds of any insurance, indemnity, warranty or guaranty payable to a
Grantor (or the Administrative Agent, as assignee, loss payee or an additional
insured) with respect to any of the Collateral, (G) claims and rights to
payments (in any form whatsoever) made or due and payable to a Grantor from time
to time in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of Governmental Authority), (H) all cash,
money, checks and negotiable instruments received or held on behalf of the
Administrative Agent pursuant to any lockbox or similar arrangement relating to
the payment of Accounts Receivable or other Collateral, and (I) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.
“Proprietary Information” means all information and know-how worldwide,
including, without limitation, technical data; manufacturing data; research and
development data; data relating to compositions, processes and formulations,
manufacturing and production know-how and experience; management know-how;
training programs; manufacturing, engineering and other drawings;
specifications; performance criteria; operating instructions; maintenance
manuals; technology; technical information; software; computer programs;
engineering and computer data and databases; design and engineering
specifications; catalogs; promotional literature; financial, business and
marketing plans; and inventions and invention disclosures.
“Restricted Entity” means the SPEs and any other Subsidiary of the Borrower that
the Administrative Agent has designated as a Restricted Entity in its sole
discretion.
“Secured Creditors” means, collectively, the Administrative Agent and the
Lenders and the respective successors and assigns of each of the foregoing.
“Secured Obligations” means, collectively, (i) all Loan Document Obligations;
(ii) any and all sums advanced by the Administrative Agent in order to preserve
any of the Collateral or to preserve or protect its security interest in such
Collateral, including, without limitation, sums advanced to pay or discharge
insurance premiums, taxes, Liens and claims; and (iii) in the event of any
proceeding for the collection or enforcement of any indebtedness, obligations,
or liabilities referred to in clauses (i) and (ii) above, the expenses of
re-taking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on any of the

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Collateral, or of any exercise by the Administrative Agent of its rights
hereunder in respect of any Grantor or any of the Collateral, together with
attorneys’ fees and court costs.
“Securities Account Control Agreement” means, with respect to a securities
account of a Grantor, a Securities Account Control Agreement in form and
substance acceptable to the Administrative Agent among the relevant Securities
Intermediary, such Grantor and the Administrative Agent.
“Securities Intermediary” means a clearing corporation or a Person, including,
without limitation, a bank or broker, that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
“Security Agreement Joinder” means a Security Agreement Joinder, substantially
in the form of Exhibit A hereto, or otherwise in form and substance acceptable
to the Administrative Agent.
“SPE” means, collectively, PAC Summit Crossing, LLC, a Georgia limited liability
company, Stone Rise Apartments, LLC, a Delaware limited liability company and
Trail Creek Apartments, LLC, a Delaware limited liability company.
“Subsidiary Grantor” means each Grantor other than the Borrower.
“Trademarks” means any trademarks and service marks now held or hereafter
acquired by a Grantor, any unregistered marks used by a Grantor and trade dress
including logos and/or designs in connection with which any of these registered
or unregistered marks are used.
“Trade Secrets” means any secretly held existing engineering and other data,
information, production procedures and other know-how relating to the design,
manufacture, assembly, installation, use, operation, marketing, sale and
servicing of any products or business of a Grantor worldwide whether written or
not written.
“UCC” means, unless the context indicates otherwise, the Uniform Commercial
Code, as at any time adopted and in effect in the State of New York,
specifically including and taking into account all amendments, supplements,
revisions and other modifications thereto.
Section 1.140    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,
restated, 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, and (d) unless otherwise
specified, all references herein to Sections, Schedules, Annexes and Exhibits
shall be construed to refer to Sections of, and Schedules, Annexes and Exhibits
to, this Agreement.

SECURITY INTEREST

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Section 1.141    Grant of Security Interest. As security for the prompt and
complete payment and performance when due of all of the Secured Obligations,
each Grantor does hereby pledge, sell, assign and transfer unto the
Administrative Agent, and does hereby grant to the Administrative Agent, for the
benefit of the Secured Creditors, a continuing security interest in all of the
right, title and interest of such Grantor in, to and under all of the following
of each Grantor, whether now existing or hereafter from time to time arising or
acquired and wherever located (collectively, the “Collateral”):
(i)    all accounts, including, without limitation, each and every Account
Receivable;
(ii)    all goods;
(iii)    all Inventory;
(iv)    all equipment;
(v)    all documents;
(vi)    all instruments;
(vii)    all chattel paper;
(viii)    all money;
(ix)    all deposit accounts, including, but not limited to, the Collateral
Concentration Account and all Controlled Deposit Accounts, together with all
monies, securities and instruments at any time deposited in any such deposit
account or otherwise held for the credit thereof;
(x)    all securities accounts, together with all financial assets credited
therein from time to time, and all financial assets, monies, securities, cash
and other property held therein or credited thereto;
(xi)    all investment property;
(xii)    all fixtures;
(xiii)    all as-extracted collateral, including, without limitation, all
minerals;
(xiv)    all general intangibles, including, but not limited to, all Contract
Rights;
(xv)    all commercial tort claims;
(xvi)    all Intellectual Property;
(xvii)    all letters of credit and letter-of-credit rights;
(xviii)    all payment intangibles;
(xix)    all promissory notes;
(xx)    all supporting obligations;

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(xxi)    all Pledged Debt and Pledged Equity Interests;
(xxii)    all other items, kinds and types of personal property, tangible or
intangible, of whatever nature, and regardless of whether the creation or
perfection or effect of perfection or non-perfection of a security interest
therein is governed by the UCC of any particular jurisdiction or by any other
applicable treaty, convention, statute, law or regulation of any applicable
jurisdiction;
(xxiii)    all additions, modifications, alterations, improvements, upgrades,
accessions, components, parts, appurtenances, substitutions and/or replacements
of, to or for any of the foregoing; and
(xxiv)    all Proceeds and products of any and all of the foregoing.
Section 1.142    Excluded Property. Notwithstanding anything in Section 2.01
hereof to the contrary, the term Collateral shall not include: (i) any equipment
or goods that is subject to a “purchase money security interest” to the extent
that such purchase money security interest (x) constitutes a Permitted Lien
under the Credit Agreement and (y) prohibits the creation by a Grantor of a
junior security interest therein, unless the holder thereof has consented to the
creation of such a junior security interest; (ii) upon the written consent of
the Administrative Agent, any Equity Interests in any Pledged Entity acquired on
or after the Closing Date that is not a Subsidiary of the Borrower, if the terms
of the Organizational Documents of such Pledged Entity do not permit the grant
of a security interest in such Equity Interests by the owner thereof or the
applicable Grantor has been unable to obtain any approval or consent to the
creation of a security interest therein which is required under such
Organizational Documents; and (iii) any Equity Interest in a Restricted Entity
in excess of 49% of the Equity Interests in such Restricted Entity; provided
that such security interest shall attach immediately and automatically to the
remaining 51% of the Equity Interests in such Restricted Entity if such
Restricted Entity is no longer subject to a any restriction in any document or
agreement entered into in connection with the incurrence of Indebtedness
permitted by the Credit Agreement that prohibits the Grantor that owns the
Equity Interests in such Restricted Entity from granting a security interest in
more than 49% of the Equity Interests of such Restricted Entity.
Section 1.143    No Assumption of Liability. The security interest hereunder of
any Grantor is granted as security only and shall not subject the Administrative
Agent or any other Secured Creditor to, or in any way alter or modify, any
obligation or liability of such Grantor with respect to or arising out of any of
the Collateral.
Section 1.144    Power of Attorney. Each Grantor hereby irrevocably constitutes
and appoints the Administrative Agent its true and lawful agent and
attorney-in-fact, and in such capacity the Administrative Agent shall have,
without any further action required by or on behalf of any Grantor, the right,
with full power of substitution, in the name of such Grantor or otherwise, for
the use and benefit of the Administrative Agent and the other Secured Creditors,
after the occurrence of and during the continuance of an Event of Default: (i)
to receive, endorse, present, assign, deliver and/or otherwise deal with any and
all notes, acceptances, letters of credit, checks, drafts, money orders, or
other evidences of payment relating to the Collateral of such Grantor or any
part thereof; (ii) to demand, collect, receive payment of, and give receipt for
and give credits, allowances, discounts, discharges, releases and acquittances
of and for any or all of the Collateral of such Grantor; (iii) to sign the name
of such Grantor on any invoice or bill of lading relating to any of the
Collateral of such Grantor; (iv) to send verifications of any or all of the
Accounts Receivable of such Grantor to its account debtors; (v) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in or
before any court or other tribunal (including any arbitration proceedings) to
collect or otherwise realize on all or any of the Collateral of such Grantor, or
to enforce any rights of such Grantor

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in respect of any of its Collateral; (vi) to settle, compromise, compound,
adjust or defend any actions, suits or proceedings relating to any or all of the
Collateral of such Grantor; (vii) to notify, or require such Grantor to notify
or cause to be notified, its account debtors to make payment directly to the
Administrative Agent or to a Controlled Deposit Account; or (viii) to use, sell,
assign, transfer, pledge, make any agreement with respect to or otherwise deal
with any or all of the Collateral of such Grantor, and to do all other acts and
things necessary or appropriate to carry out the intent and purposes of this
Agreement, as fully and completely as though the Administrative Agent were the
absolute owner of the Collateral of such Grantor for all purposes.

REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants to the Administrative Agent and the other
Secured Creditors, which representations and warranties shall survive the
execution and delivery of this Agreement until the termination of this Agreement
in accordance with Section 9.09, as follows:
Section 1.145    Title and Authority. Such Grantor has (i) good, valid and
unassailable title to all tangible items owned by it and constituting any
portion of the Collateral with respect to which it has purported to grant the
security interest, and good, valid and unassailable rights in all other
Collateral with respect to which it has purported to grant the security
interest, and (ii) full power and authority to grant to the Administrative Agent
the security interest in such Collateral pursuant hereto and to execute, deliver
and perform its obligations in accordance with the terms of this Agreement,
without the consent or approval of any other Person other than any consent or
approval that has been obtained.
Section 1.146    Absence of Other Liens.
(a)    There is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) covering or purporting to cover
any interest of any kind of such Grantor in the Collateral, except for any
filings or recordings made in connection with any Permitted Liens.
(b)    Such Grantor is, and as to any Collateral acquired by it from time to
time after the date hereof such Grantor will be, the owner of all of its
Collateral free and clear of any Lien except for Permitted Liens, and the
security interest of such Grantor in its Collateral is and will be superior and
prior to any other security interest or other Lien, except for Permitted Liens.
Section 1.147    Validity of Security Interest. The security interest of such
Grantor constitutes a legal, valid and enforceable first priority (except as to
any Permitted Liens) security interest in all of the Collateral of such Grantor,
securing the payment and performance of the Secured Obligations.
Section 1.148    Perfection of Security Interest under UCC.
(a)    All notifications and other actions, including, without limitation, (i)
all deposits of certificates and instruments evidencing any Collateral (duly
endorsed or accompanied by appropriate instruments of transfer), (ii) all
notices to and acknowledgments of any bailee or other Person, (iii) all
acknowledgments and agreements respecting the right of the Administrative Agent
to obtain control with respect to any Collateral, and (iv) all filings,
registrations and recordings, which are (x) required by the terms of this
Agreement to have been given, made, obtained, done and accomplished, and (y)
necessary to create, preserve, protect and perfect the security interest granted
by such Grantor to the Administrative Agent hereby in respect of its portion of
the Collateral, have been given, made, obtained, done and accomplished.

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(b)    After giving effect to all such actions, the security interest granted by
such Grantor to the Administrative Agent pursuant to this Agreement in and to
its portion of the Collateral will be perfected to the maximum extent a security
interest in such Grantor’s portion of the Collateral can be perfected under the
UCC of any applicable jurisdiction.
Section 1.149    Perfection Certificates. Each Perfection Certificate delivered
by any Grantor (whether delivered pursuant to Section 4.07(a) of this Agreement
or pursuant to the Credit Agreement), and all information set forth therein, is
true and correct in all respects, except to the extent that such Perfection
Certificate has been supplemented or replaced in each case in accordance with
this Agreement.
Section 1.150    Places of Business; Jurisdiction of Organization; Locations of
Collateral. Each Grantor represents and warrants that (i) the principal place of
business of such Grantor, or its chief executive office, if it has more than one
place of business, is located at the address indicated on the most recent
Perfection Certificate executed and delivered by such Grantor to the
Administrative Agent; (ii) the jurisdiction of formation or organization of such
Grantor is set forth on the most recent Perfection Certificate executed and
delivered by such Grantor to the Administrative Agent; and (iii) the U.S.
Federal Tax I.D. Number and, if applicable, the organizational identification
number of such Grantor is set forth on the most recent Perfection Certificate
executed and delivered by such Grantor to the Administrative Agent. Such Grantor
does not, at and as of the date hereof, conduct business in any jurisdiction,
and except as set forth in the most recent Perfection Certificate delivered to
the Administrative Agent, in the preceding five years, such Grantor and any
predecessors in interest have not conducted business in any jurisdiction, under
any trade name, fictitious name or other name (including, without limitation,
any names of divisions or predecessor entities), except the current legal name
of such Grantor and such other trade, fictitious and other names as are listed
on the most recent Perfection Certificate executed and delivered by such Grantor
to the Administrative Agent.
Section 1.151    Pledged Collateral. Schedule 1 hereto sets forth a true and
complete list of all of the Pledged Collateral owned by each Grantor as of the
Closing Date. As of the Closing Date, all of the Equity Interests that
constitute Pledged Equity Interests are “Securities” under Article 8 of the UCC
(other than the Equity Interests of the SPEs that constitute Pledged Equity
Interests).
Section 1.152    [Intentionally Omitted.]
Section 1.153    Deposit Accounts. The most recent Perfection Certificate
delivered by each Grantor to the Administrative Agent sets forth a true and
complete list of all deposit accounts owned by each Grantor or in which any such
Grantor’s Collateral is held. To the extent required pursuant to Section 5.01 of
this Agreement, all of the deposit accounts of each Grantor are, and all cash
and money of each Grantor is held in, Controlled Deposit Accounts.
Section 1.154    Securities Accounts. The most recent Perfection Certificate
delivered by each Grantor to the Administrative Agent sets forth a true and
complete list of all securities accounts owned by each Grantor or in which any
such Grantor’s Collateral is held. Unless otherwise permitted pursuant to
Section 5.02 of this Agreement, no Grantor has any securities accounts or
otherwise owns or is entitled to any financial assets or securities entitlements
other than Controlled Securties Accounts and financial assets or securities
entitlements that are subject to a Controlled Securities Account.
Section 1.155    Status of Pledged Collateral. All of the Pledged Equity
Interests of each Grantor hereunder have been duly and validly issued and are
fully paid and non-assessable (to the extent such concepts are applicable to the
respective Equity Interests). All of the Pledged Debt of each Grantor is the
legal, valid and binding obligation of the Issuer thereof, enforceable in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization,

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moratorium or other similar laws generally affecting creditors’ rights and by
equitable principles. Except as permitted pursuant to the Credit Agreement, no
Grantor has any obligation to make any further or additional loans or advances
to, or purchases of securities from, any Issuer with respect to any of the
Pledged Debt. No Grantor is in default in the payment of any portion of any
mandatory capital contribution, cash call, or other funding, if any, required to
be made under any Governing Document relating to any of the Pledged Equity
Interests of such Grantor. No Grantor is in violation or default of any other
material provisions of any such Governing Document. No Pledged Collateral of any
Grantor is subject to any defense, offset or counterclaim, nor have any of the
foregoing been asserted or alleged against such Grantor by any Person.

GENERAL COVENANTS
Section 1.156    No Other Liens; Defense of Title. No Grantor will make or
grant, or suffer or permit to exist, any Lien on any of its Collateral, other
than the Permitted Liens. Each Grantor, at its sole cost and expense, will take
any and all actions reasonably necessary and appropriate to defend title to its
Collateral against any and all Persons and to defend the validity,
enforceability, perfection, effectiveness and priority of the security interest
of the Administrative Agent therein against any Lien other than Permitted Liens.
Section 1.157    Further Assurances; Filings and Recordings.
(a)    Each Grantor, at its sole cost and expense, will duly execute,
acknowledge and deliver all such agreements, instruments and other documents and
take all such actions (including, without limitation, (i) physically pledging
instruments, documents, promissory notes, chattel paper and certificates
evidencing any investment property or any of the Pledged Collateral with the
Administrative Agent, (ii) obtaining securities account Control Agreements and
Deposit Account Control Agreements in accordance with this Agreement, (iii)
obtaining from other Persons lien waivers and bailee letters as the
Administrative Agent shall reasonably request, (iv) obtaining from other Persons
agreements evidencing the exclusive control and dominion of the Administrative
Agent over any of the Collateral, in instances where obtaining control over such
Collateral is the only or best method of perfection, and (v) making filings,
recordings and registrations), as the Administrative Agent may from time to time
instruct to better assure, preserve, protect and perfect the security interest
of the Administrative Agent in the Collateral of such Grantor, and the rights
and remedies of the Administrative Agent hereunder, or otherwise to further
effectuate the intent and purposes of this Agreement and to carry out the terms
hereof.
(b)    Each Grantor, at its sole cost and expense, will (i) at all times cause
this Agreement (and/or proper notices, financing statements or other
registrations or filings in respect hereof, and supplemental collateral
assignments or collateral security agreements in respect of any portion of the
Collateral) to be duly filed, recorded, registered and published, and re-filed,
re-recorded, re-registered and re-published in such manner and in such places as
may be required under the UCC or other applicable law in order to establish,
perfect, preserve and protect the rights, remedies and security interest of the
Administrative Agent in or with respect to the Collateral of such Grantor, and
(ii) pay all taxes, fees and charges and comply with all statutes and
regulations applicable to such filing, recording, registration and publishing
and such re-filing, re-recording, re-registration and re-publishing.
Section 1.158    Use and Disposition of the Collateral. Unless and until an
Event of Default shall have occurred and be continuing and the Administrative
Agent shall have notified the Grantors thereof in writing that the rights of any
or all of the Grantors under this Section 4.03(a) are suspended during the
continuance of such Event of Default, each Grantor may use and dispose of its
Collateral in any lawful manner not inconsistent with the provisions of this
Agreement, the Credit Agreement or any other Loan

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Document.
Section 1.159    Delivery or Marking of Chattel Paper; Other Actions. Without
limitation of any of the provisions of Section 4.02(a) or Section 4.13 hereof:
(a)    If any amount payable to a Grantor under or in connection with any of the
Collateral shall be or become evidenced by any chattel paper, document,
promissory note or instrument, such Grantor will, unless otherwise agreed to in
writing by the Administrative Agent, cause such chattel paper, document,
promissory note or instrument to be delivered to the Administrative Agent and
pledged as part of the Collateral hereunder, accompanied by any appropriate
instruments or endorsements or transfer. In the case of any chattel paper, the
Administrative Agent may require, in lieu of the delivery thereof to the
Administrative Agent, that the writings evidencing the chattel paper be legended
to reflect the security interest of the Administrative Agent therein, all in a
manner acceptable to the Administrative Agent.
(b)    If at any time any Grantor shall take and perfect a security interest in
any property of an account debtor, as security for the Accounts Receivable owed
by such account debtor and/or any of its Affiliates, or take and perfect a
security interest arising out of the consignment to any Person of any Inventory
or other Collateral, such Grantor shall, if requested by the Administrative
Agent (which request may be made by the Administrative Agent only upon the
written instructions of the Required Lenders, issued by the Required Lenders, in
their sole respective discretion), promptly execute and deliver to the
Administrative Agent a separate assignment of all financing statements and other
filings made to perfect the same. Such separate assignment need not be filed of
public record unless necessary to continue the perfected status of the security
interest of such Grantor against creditors of any transferees from the account
debtor or consignee.
Section 1.160    Authorization to File Financing Statements. Each Grantor
irrevocably authorizes the Administrative Agent at any time and from time to
time to file in any jurisdiction any initial financing statements and all
amendments thereto that (a) indicate the Collateral (i) as “all assets” or “all
personal property” of such Grantor or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within the scope
of the UCC, or (ii) as being of an equal or lesser scope or with greater detail,
and (b) contain any other information required pursuant to the UCC for the
sufficiency or filing office acceptance of any financing statement or amendment,
including, but not limited to, (i) whether such Grantor is an organization, the
type of organization and any organization identification number, and (ii) in the
case of a financing statement that is filed as a fixture filing or indicating
Collateral as as-extracted collateral or timber to be cut, a sufficient
description of real property to which the Collateral relates.
Section 1.161    Maintenance of Records. Each Grantor will keep and maintain at
its own cost and expense reasonably satisfactory and complete records of its
Accounts Receivable, Contracts and other Collateral, including, but not limited
to, the originals of all documentation with respect thereto, records of all
payments received, all credits granted thereon, all merchandise returned and all
other dealings therewith. All billings and invoices issued by a Grantor with
respect to its Accounts Receivable will be in compliance with, and conform to,
the requirements of all applicable federal, state and local laws and any
applicable laws of any relevant foreign jurisdiction. If an Event of Default
shall have occurred and be continuing and the Administrative Agent so directs,
each Grantor shall legend, in form and manner reasonably satisfactory to the
Administrative Agent, its Accounts Receivable and Contracts, as well as books,
records and documents of such Grantor evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable and Contracts
have been assigned to the Administrative Agent and that the Administrative Agent
has a security interest therein.
Section 1.162    Perfection Certificates; Collateral Reports.

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(a)    Each Grantor shall provide to the Administrative Agent a completed
Perfection Certificate, duly executed by an Authorized Officer of such Grantor,
together with all schedules required to be delivered in connection therewith (i)
on the Closing Date as required pursuant to the Credit Agreement, (ii) on each
date required pursuant to Section 6.01(m) of the Credit Agreement, and (iii) on
the date that any additional Grantor becomes a party to this Agreement pursuant
to Section 9.14 hereof. In addition, if any information contained in any
Perfection Certificate previously delivered to the Administrative Agent shall
become untrue or incorrect in any respect, or if any Grantor acquires or
disposes of any of the Collateral such that any previously delivered Perfection
Certificate is no longer accurate or complete in all respects, then within ten
Business Days after such information becoming untrue, incorrect, inaccurate or
incomplete, such Grantor shall execute and deliver a new Perfection Certificate
to the Administrative Agent, provided that the delivery of such new Perfection
Certificate shall not serve to cure, or constitute a waiver of, any Default or
Event of Default that may have occurred as a result of such information becoming
untrue, incorrect, inaccurate or incomplete in any material respect.
(b)    Collateral Reports. Whenever requested to do so by the Administrative
Agent, each Grantor will promptly, at its own sole cost and expense, deliver to
the Administrative Agent, in written hard copy form or other readable form, as
specified by the Administrative Agent, such listings, agings, descriptions,
schedules and other reports with respect to its Accounts Receivable, Inventory,
equipment and other Collateral as the Administrative Agent may instruct, all of
the same to be in such scope, categories and detail as the Administrative Agent
may reasonably request and to be accompanied by copies of invoices and other
documentation as and to the extent instructed by the Administrative Agent.
Section 1.163    Legal Status. Each Grantor agrees that (a) it will not change
its name, place of business or if more than one, chief executive office, or its
mailing address or organizational identification number if it has one, in each
case without providing the Administrative Agent at least thirty days’ prior
written notice thereof, (b) if such Grantor does not have an organizational
identification number and later obtains one, it will promptly notify the
Administrative Agent of such organizational identification number, and (c) it
will not change its type of organization, jurisdiction of organization or other
legal structure in each case unless (i) it shall have provided the
Administrative Agent at least thirty days’ prior written notice thereof, and
(ii) such action is permitted pursuant to the Credit Agreement.
Section 1.164    Inspections and Verification. The Administrative Agent and such
Persons as the Administrative Agent may designate shall have the right, at the
Administrative Agent’s and the Lenders’ cost and expense (or if an Event of
Default has occurred and is continuing, the Grantor’s own cost and expense), at
any time or from time to time, on not less than two Business Days’ prior notice
to the Borrower (on behalf of any applicable Grantor) if no Event of Default has
occurred and is continuing, and in the event an Event of Default has occurred
and is continuing, on not less than one Business Day’s prior notice to the
Borrower (on behalf of any applicable Grantor), to inspect the Collateral of
such Grantor, all books and records related thereto (and to make extracts and
copies thereof) and the premises upon which any of such Collateral is located,
to discuss such Grantor’s affairs with the officers of such Grantor and its
independent accountants, and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, such Collateral, including, in the case of accounts or other
Collateral in the possession of any third Person, by contacting account debtors
or the third Person possessing such Collateral (after not less than two days’
prior notice to the applicable Grantor) for the purpose of making such
verification. Any procedures or actions taken, prior to the occurrence and
continuance of an Event of Default, in order to verify accounts by contacting
account debtors, shall be effected by the Borrower’s independent accountants,
acting at the direction of the Administrative Agent, in such manner (consistent
with their normal auditing procedures) so as not to reveal the identity of the
Administrative Agent or the existence of the security interest to the account
debtors. The Borrower will instruct its independent

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accountants to undertake any such verification when and as requested by the
Administrative Agent. The results of any such verification by independent
accountants shall be reported by such independent accountants to both the
Administrative Agent and the Borrower. The Administrative Agent shall have the
absolute right to share any information it gains from any such inspection or
verification or from collateral reports furnished to it by a Grantor with the
other Secured Creditors.
Section 1.165    Insurance. Each Grantor will at all times keep its business and
its Collateral insured in accordance with Section 6.03 of the Credit Agreement.
Section 1.166    Proceeds of Casualty Insurance, Condemnation or Taking.
(a)    All amounts recoverable under any policy of casualty insurance or any
award for the condemnation or taking by any governmental authority of any
portion of the Collateral are hereby assigned to the Administrative Agent.
(b)    Each Grantor will apply any such proceeds or amounts received by it in
the manner provided in the Credit Agreement, including, if required under the
terms of the Credit Agreement, by paying over the same directly to the
Administrative Agent.
(c)    In the event any portion of the Collateral suffers a casualty loss or is
involved in any proceeding for condemnation or taking by any Governmental
Authority, then if an Event of Default has occurred and is continuing, the
Administrative Agent is authorized and empowered, at its option, to participate
in, control, direct, adjust, settle and/or compromise any such loss or
proceeding, to collect and receive the proceeds therefrom and, after deducting
from such proceeds any expenses incurred by it in connection with the collection
or handling thereof, to apply the net proceeds to the Secured Obligations in
accordance with Section 8.03 of the Credit Agreement.
(d)    If any proceeds are received by the Administrative Agent as a result of a
casualty, condemnation or taking involving the Collateral and no Event of
Default has occurred and is continuing, then the Administrative Agent will
promptly release such proceeds to the applicable Grantor, unless the Credit
Agreement provides otherwise.
Section 1.167    Commercial Tort Claims. If any Grantor shall at any time hold
or acquire a commercial tort claim, the recovery from which could reasonably be
expected to exceed $1,000,000, such Grantor shall promptly notify the
Administrative Agent thereof in a writing signed by such Grantor, which sets
forth the details thereof and grants to the Administrative Agent (for the
benefit of the Secured Parties) a Lien thereon and on the Proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to the Administrative Agent.
Section 1.168    Electronic Chattel Paper and Transferable Records. If any
Grantor at any time holds or acquires an interest in any electronic chattel
paper or any “transferable record,” as defined in Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act, as in effect in any relevant
jurisdiction, such Grantor shall promptly notify the Administrative Agent
thereof and, at the request of the Administrative Agent, shall take such action
as the Administrative Agent may reasonably request to vest in the Administrative
Agent control under the UCC or control under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in
such jurisdiction, of such transferable record. The Administrative Agent agrees
with such Grantor that the Administrative Agent will arrange, pursuant to
procedures reasonably satisfactory to the Administrative Agent and so long as
such procedures will not result in the Administrative Agent’s loss of control,
for the Grantor to make

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alterations to the electronic chattel paper or transferable record permitted
under the UCC or, as the case may be, Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or Section 16 of the Uniform
Electronic Transactions Act for a party in control to allow without loss of
control, unless an Event of Default has occurred and is continuing or would
occur after taking into account any action by such Grantor with respect to such
electronic chattel paper or transferable record.
Section 1.169    Letter-of-Credit Rights. If any Grantor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of such
Grantor, such Grantor shall promptly notify the Administrative Agent thereof
and, at the request of the Administrative Agent, such Grantor shall, pursuant to
an agreement in form and substance satisfactory to the Administrative Agent,
either (i) arrange for the issuer or any confirming bank of such letter of
credit to consent to an assignment to the Administrative Agent of the proceeds
of any drawing under the letter of credit or (ii) arrange for the Administrative
Agent to become the transferee beneficiary of the letter of credit, with the
Administrative Agent agreeing, in each case, that the proceeds of any drawing
under the letter of credit are to be paid to the applicable Grantor unless an
Event of Default has occurred and is continuing.
Section 1.170    Protective Advances by the Administrative Agent. At its option,
but without being obligated to do so, the Administrative Agent may, upon prior
notice to any applicable Grantor, after the occurrence and during the
continuance of an Event of Default, (i) pay and discharge past due taxes,
assessments and governmental charges, at any time levied on or with respect to
any of the Collateral of such Grantor which such Grantor has failed to pay and
discharge in accordance with the requirements of this Agreement or any of the
other Loan Documents, (ii) pay and discharge any claims of other creditors of
such Grantor which are secured by any Lien on any Collateral, other than a
Permitted Lien, (iii) pay for the maintenance, repair, restoration and
preservation of the Collateral to the extent such Grantor fails to comply with
its obligations in regard thereto under this Agreement and the other Loan
Documents or the Administrative Agent reasonably believes payment of the same is
necessary or appropriate to avoid a material loss or material diminution in
value of the Collateral, and/or (iv) obtain and pay the premiums on insurance
for the Collateral which such Grantor fails to maintain in accordance with the
requirements of this Agreement and the other Loan Documents, and each Grantor
agrees to reimburse the Administrative Agent, on demand, for all payments and
expenses incurred by the Administrative Agent with respect to such Grantor or
any of its Collateral pursuant to the foregoing authorization, provided,
however, that nothing in this Section shall be construed as excusing any Grantor
from the performance of, or imposing any obligation on the Administrative Agent
or any other Secured Creditor to cure or perform, any covenants or other
agreements of any Grantor with respect to any of the foregoing matters as set
forth herein or in any of the other Loan Documents.

ACCOUNTS AND COLLECTION OF ACCOUNTS
Section 1.171    Deposit Accounts.
(a)    The Grantors shall cause all deposit accounts to be Controlled Deposit
Accounts.
(b)    Promptly upon the creation or acquisition of any new deposit account or
any interest therein by any Grantor, such Grantor shall cause such deposit
account to become a Controlled Deposit Account, prior to the deposit of any
funds therein.
Section 1.172    Securities Accounts.

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(a)    The Grantors shall cause all securities accounts to be Controlled
Securities Accounts.
(b)    Promptly upon the creation or acquisition of any new securities account
or any interest therein by any Grantor, such Grantor shall cause such securities
account to be a Controlled Securities Account, prior to the crediting of any
financial asset with respect to which any Grantor is an entitlement holder.
Section 1.173    Operation of Collateral Accounts. Except as expressly permitted
pursuant to this Agreement or the Credit Agreement, the Grantors shall cause all
cash and Cash Equivalents and all securities entitlements to be maintained in
Collateral Accounts. Prior to the occurrence and continuance of an Event of
Default, the Grantors may withdraw, or direct the disposition of, funds and
other investments or financial assets held in the Collateral Accounts. Upon the
occurrence and during the continuance of an Event of Default, upon written
notice to any Grantor, the Administrative Agent shall be permitted to (i)
retain, or instruct the relevant Securities Intermediary or Depositary Bank to
retain, all cash and investments held in any Collateral Account, (ii) liquidate
or issue entitlement orders with respect to, or instruct the relevant Securities
Intermediary or Depositary Bank to liquidate, any or all investments or
financial assets held in any Collateral Account, (iii) issue a Notice of
Exclusive Control or other similar instructions with respect to any Collateral
Account and instruct the Depositary Bank or Securities Intermediary to follow
the instructions of the Administrative Agent, and (iv) withdraw any amounts held
in any Collateral Account and apply such amounts in accordance with the terms of
this Agreement.
Section 1.174    Collection of Accounts.
(a)    Each Grantor shall, in a manner consistent with the provisions of this
Article V, endeavor to cause to be collected from the account debtor named in
each of its Accounts Receivable, as and when due (including, without limitation,
amounts which are delinquent, such amounts to be collected in accordance with
generally accepted lawful collection procedures), any and all amounts owing
under or on account of such Accounts Receivable and shall, if required to do so
pursuant to the terms of this Agreement, cause such collections to deposited or
held in a Collateral Account.
(b)    Each Grantor shall, and the Administrative Agent hereby authorizes each
Grantor to, enforce and collect all amounts owing to it on its Inventory and
Accounts Receivable, for the benefit and on behalf of the Administrative Agent
and the other Secured Creditors; provided, however, that such privilege may at
the sole option of the Administrative Agent, by notice to the Borrower (on
behalf of all Grantors), be terminated upon the occurrence and during the
continuance of any Event of Default.
Section 1.175    Collateral Concentration Account.
(a)    After the occurrence and during the continuance of an Event of Default,
the Administrative Agent shall have the right, upon written notice to the
Borrower, to establish the Collateral Concentration Account pursuant to which,
among other things, the Administrative Agent shall have sole dominion and
control over all funds held to the credit of, and all disbursements from, the
Collateral Concentration Account.
(b)    Upon the establishment of the Collateral Concentration Account, (i) all
of the funds on deposit in or credited to any Controlled Deposit Account (other
than, in the discretion of the Administrative Agent, balances of $1,000 or less)
shall, upon the instruction of the Administrative Agent to the appropriate
Depositary Banks after the issuance of a Notice of Exclusive Control, be
transferred to the Collateral Concentration Account on a daily or other basis
specified by the Administrative Agent, (ii) no Grantor will have the right of
withdrawal from the Collateral Concentration Account or any of the Collateral
Accounts, (iii) the Administrative Agent shall have the right to liquidate any
investments held in any Controlled Securities Account and have the proceeds
thereof deposited in the Collateral Concentration Account, and

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(iv) all amounts held in the Collateral Concentration Account or any of the
Collateral Accounts may be applied, in the Administrative Agent’s discretion,
towards payment of the Secured Obligations in accordance with the terms of this
Agreement.
(c)    Upon the establishment of the Collateral Concentration Account and at all
times thereafter, each Grantor agrees (i) to cause all payments by its account
debtors to be promptly deposited in Controlled Deposit Accounts, if such account
debtors have not already been instructed to do so, and (ii) to deposit promptly
all payments received by it from any other sale of any of its Collateral,
whether in the form of cash, checks, notes, drafts, bills of exchange, money
orders or otherwise, in a Controlled Deposit Account precisely in the form
received (but with any endorsements of such Grantor necessary for deposit or
collection). Until any such payments are so deposited, such payments shall be
held in trust by such Grantor for and as the property of the Administrative
Agent, for the benefit of the Administrative Agent and the other Secured
Creditors hereunder.

PLEDGED COLLATERAL
Section 1.176    Delivery of Certificates and Instruments for Pledged
Collateral.
(a)    On or prior to the Closing Date, each Grantor shall pledge and deposit
with the Administrative Agent all certificates or instruments, if any,
representing any of the Pledged Collateral at the time owned by such Grantor and
subject to the security interest hereof, duly endorsed in blank in the case of
any instrument, and accompanied by undated stock powers duly executed in blank
by such Grantor or such other instruments of transfer as are acceptable to the
Administrative Agent, in the case of Pledged Equity Interests.
(b)    If a Grantor shall acquire (by purchase, conversion, exchange, stock
dividend or otherwise) any additional Pledged Collateral, at any time or from
time to time after the date hereof which is or are intended to be subjected to
the security interest hereof and which is or are represented by certificates or
instruments, such Grantor shall (i) forthwith pledge and deposit with the
Administrative Agent all such certificates or instruments, duly endorsed in
blank in the case of Intercompany and Third-Party Notes, and accompanied by
undated stock powers duly executed in blank by such Grantor or such other
instruments of transfer as are acceptable to the Administrative Agent, in the
case of Equity Interests, and (ii) promptly thereafter deliver to the
Administrative Agent a certificate executed by an authorized officer of such
Grantor describing such additional Pledged Collateral and certifying that the
same have been duly pledged with the Administrative Agent hereunder.
(c)    Without limitation of any other provision of this Agreement, if any of
the Pledged Collateral of a Grantor (whether or not now owned or hereafter
acquired) which is intended to be subjected to the security interest hereof is
(i) an uncertificated security, each such Grantor shall cause each such
uncertificated security to be certificated in all respects in accordance with
applicable laws, accompanied by undated stock powers duly executed in blank by
each such Grantor or by such other instruments of transfer as are acceptable to
the Administrative Agent, and promptly thereafter deposited with the
Administrative Agent or otherwise provide the Administrative Agent control with
respect to such uncertificated security; provided that the , or (ii) held in a
securities account that is not already subject to a Securities Account Control
Agreement, such Grantor shall promptly take all actions required to make such
securities account subject to a Securities Account Control Agreement. Each
Grantor further agrees to take such actions as the Administrative Agent deems
reasonably necessary or desirable to effect the foregoing and to permit the
Administrative Agent to exercise any of its rights and remedies hereunder in
respect thereof, and agrees to provide an opinion of counsel reasonably
satisfactory to the Administrative Agent with respect to any such pledge of any
of the

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securities described in clauses (i) and (ii) above, promptly upon the request of
the Administrative Agent.
(d)    After the Closing Date, no Grantor shall permit any SPE to elect to opt
into or voluntarily allow any Equity Interest to be governed by Article 8 of the
applicable Uniform Commercial Code without the prior written consent of the
Secured Party. Grantor shall cause all Issuers that are limited liability
companies or limited partnerships (other than the SPEs) to elect to opt into and
cause all Equity Interests in such Issuers to be securities governed by, Article
8 of the applicable Uniform Commercial Code.
Section 1.177    No Assumption of Liability. The security interest of any
Grantor is granted as security only and shall not subject the Administrative
Agent or any other Secured Creditor to, or in any way alter or modify, any
obligation or liability of such Grantor with respect to or arising out of any of
the Pledged Collateral. Nothing herein shall be construed to make the
Administrative Agent liable as a general partner or limited partner of any
Pledged Entity or a shareholder of any corporation, and the Administrative Agent
by virtue of this Agreement or any actions taken as contemplated hereby (except
as referred to in the following sentence) shall not have any of the duties,
obligations or liabilities of a general partner or limited partner of any
Pledged Entity or a stockholder of any corporation. The parties hereto expressly
agree that, unless the Administrative Agent shall become the absolute owner of
an Equity Interest pursuant hereto, this Agreement shall not be construed as
creating a partnership or joint venture among the Administrative Agent and/or a
Grantor or any other Person.
Section 1.178    Registration of Collateral in the Name of the Administrative
Agent. The Administrative Agent shall have the right, at any time in its
discretion and without notice to any Grantor, to transfer to or to register in
the name of the Administrative Agent or any of its nominees any or all of the
Pledged Collateral, subject only to the revocable voting and similar rights
specified in this Article VI. In addition, the Administrative Agent shall have
the right at any time to exchange certificates or instruments representing or
evidencing any Pledged Collateral for certificates or instruments of smaller or
larger denominations.
Section 1.179    Appointment of Sub-Agents; Endorsements; etc. The
Administrative Agent shall have the right to appoint one or more sub-agents for
the purpose of retaining physical possession of the instruments and certificates
evidencing any of the Pledged Collateral, which may be held (in the sole
discretion of the Administrative Agent) in the name of the relevant Grantor,
endorsed or assigned in blank or in favor of the Administrative Agent or any
nominee or nominees of the Administrative Agent or a sub-agent appointed by the
Administrative Agent.
Section 1.180    Voting Rights. Unless and until an Event of Default shall have
occurred and be continuing, each Grantor shall be entitled to exercise all
voting rights attaching to any and all Pledged Collateral owned by it, and to
give consents, waivers or ratifications in respect thereof, provided that no
vote shall be cast or any consent, waiver or ratification given or any action
taken which would violate, result in breach of any covenant contained in or be
inconsistent with any of the terms of this Agreement, any other Loan Document,
or which would have the effect of impairing the position or interests of the
Administrative Agent or any Secured Creditor therein. All such rights of such
Grantor to vote and to give consents, waivers and ratifications shall cease in
case an Event of Default shall occur and be continuing.
Section 1.181    Entitlement of Grantors to Cash Dividends and Distributions. A
Grantor shall be entitled to receive all cash dividends or distributions payable
in respect of its Pledged Collateral, except as otherwise provided in this
Article VI.
Section 1.182    Entitlement of Administrative Agent to Dividends and
Distributions. The Administrative Agent shall be entitled to receive and to
retain as part of the Pledged Collateral:

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(a)    all cash dividends and distributions payable in respect of the Pledged
Collateral at any time when an Event of Default shall have occurred and be
continuing; and
(b)    regardless of whether or not an Event of Default shall have occurred and
be continuing at the time of payment or distribution thereof, and except to the
extent any of the following is otherwise permitted by the Credit Agreement: (i)
all cash dividends and distributions in respect of the Pledged Collateral which
are reasonably determined by the Administrative Agent to represent in whole or
in part an extraordinary, liquidating or other distribution in return of
capital; (ii) all other or additional stock, other securities, partnership
interests, membership interests or property (other than cash to which a Grantor
is entitled under Section 6.06) paid or distributed by way of dividend
(including, without limitation, any payment in kind dividend) or otherwise in
respect of the Pledged Collateral; (iii) all other or additional stock, other
securities, partnership interests, membership interests or property (including
cash) paid or distributed in respect of the Pledged Collateral by way of stock
split, spin-off, split up, reclassification, combination of shares or similar
rearrangement; and (iv) all other or additional stock, other securities,
partnership interests, membership interests or property (including cash) which
may be paid in respect of the Pledged Collateral by reason of any consolidation,
merger, exchange of stock, conveyance of assets, liquidation or similar
corporate, partnership or limited liability company reorganization.
Section 1.183    Application of Dividends and Distributions. If no Event of
Default shall have occurred and be continuing at such time, the Administrative
Agent will, at the request of the Borrower (on behalf of any applicable Grantor
or Grantors), pay over to the Administrative Agent, for application to the
payment or prepayment of any of the Loan Document Obligations, any cash held by
it as Pledged Collateral which is attributable to dividends or distributions
received by it and then held as part of the Collateral pursuant to this Article
VI. If an Event of Default shall have occurred and be continuing, all dividends
and distributions received by the Administrative Agent and then held by it
pursuant to this Article VI as part of the Pledged Collateral will be applied as
provided in Section 8.05 hereof.
Section 1.184    Turnover by Grantors. All dividends, distributions or other
payments that are received by any Grantor contrary to the provisions of this
Agreement shall be received in trust for the benefit of the Administrative
Agent, shall be segregated from other property or funds of such Grantor and
shall be forthwith paid over to the Administrative Agent as Collateral in the
same form as so received (with any necessary endorsement).
Section 1.185    Registration under 1933 Act. If an Event of Default shall have
occurred and be continuing and a Grantor shall have received from the
Administrative Agent a written request or requests that such Grantor cause any
registration, qualification or compliance under any Federal or state securities
law or laws to be effected with respect to all or any part of the Pledged Equity
Interest of its Subsidiaries, such Grantor as soon as practicable and at its
expense will use its best efforts to cause such registration to be effected (and
be kept effective) and will use its best efforts to cause such qualification and
compliance to be effected (and be kept effective) as may be so requested and as
would permit or facilitate the sale and distribution of such stock, including,
without limitation, registration under the Securities Act of 1933, as then in
effect (the “Securities Act”) (or any similar statute then in effect),
appropriate qualifications under applicable blue sky or other state securities
laws and appropriate compliance with any other governmental requirements,
provided that the Administrative Agent shall furnish to such Grantor such
information regarding the Administrative Agent as such Grantor may request in
writing and as shall be required in connection with any such registration,
qualification or compliance. The relevant Grantor will advise the Administrative
Agent in writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Administrative
Agent such number of prospectuses, offering circulars and other documents
incident thereto as the Administrative Agent from time to time may reasonably

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request, and will indemnify the Administrative Agent and all others
participating in the distribution of such Pledged Equity Interests against all
claims, losses, damages or liabilities caused by any untrue statement (or
alleged untrue statement) of a material fact contained therein (or in any
related registration statement, notification or the like) or by any omission (or
alleged omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished in writing to such Grantor by the Administrative Agent
expressly for use therein.
Section 1.186    Sale of Pledged Equity Interests in Connection with
Enforcement. If at any time when the Administrative Agent shall determine to
exercise its right to sell all or any part of the Pledged Equity Interests
pursuant to Section 8.01, such Pledged Equity Interests or the part thereof to
be sold shall not, for any reason whatsoever, be effectively registered under
the Securities Act of 1933, as then in effect, the Administrative Agent may, in
its sole and absolute discretion and to the fullest extent permitted by
applicable law now or hereafter in effect, sell such Pledged Equity Interests or
part thereof by private sale in such manner and under such circumstances as the
Administrative Agent may deem necessary or advisable in order that such sale may
legally be effected without such registration, provided that at least ten days’
notice of the time and place of any such sale shall be given to the relevant
Grantor. Without limiting the generality of the foregoing, in any such event the
Administrative Agent, in its sole and absolute discretion, (a) may proceed to
make such private sale notwithstanding that a registration statement for the
purpose of registering such Pledged Equity Interests or part thereof shall have
been filed under such Securities Act, (b) may approach and negotiate with a
single possible purchaser to effect such sale and (c) may restrict such sale to
a purchaser who will represent and agree that such purchaser is purchasing for
its own account, for investment, and not with a view to the distribution or sale
of such Pledged Equity Interests or part thereof. In the event of any such sale,
the Administrative Agent shall incur no responsibility or liability to any
Grantor for selling all or any part of the Pledged Equity Interests at a price
which the Administrative Agent may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until the registration as aforesaid.

INTELLECTUAL PROPERTY
Section 1.187    Collateral Assignments; Further Assurances. Upon request of the
Administrative Agent whenever made, any Grantor shall promptly execute and
deliver to the Administrative Agent such Collateral Assignment Agreements as the
Administrative Agent shall request in connection with such Grantor’s
Intellectual Property. Each Grantor agrees that it will take such action, and
deliver such documents or instruments, as the Administrative Agent shall request
in connection with the preparation, filing or registration and enforcement of
any Collateral Assignment Agreement.
Section 1.188    Remedies Relating to Intellectual Property. If an Event of
Default shall occur and be continuing, the Administrative Agent may, by written
notice to the relevant Grantor, take any or all of the following actions: (i)
declare the entire right, title and interest of such Grantor in and to each of
the Copyrights, Patents and Trademarks, together with all trademark rights and
rights of protection to the same, vested, in which event such rights, title and
interest shall immediately vest in the Administrative Agent for the benefit of
the Secured Creditors, in which case such Grantor agrees to execute an
assignment in form and substance reasonably satisfactory to the Administrative
Agent of all its rights, title and interest in and to the Copyrights, Patents
and Trademarks to the Administrative Agent for the benefit of the Secured
Creditors; (ii) take and practice or sell the Copyrights or Patents and take and
use or sell the Trademarks and the good will of such

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Grantor’s business symbolized by the Trademarks and the right to carry on the
business and use the assets of the Grantor in connection with which the
Trademarks have been used; and (iii) direct such Grantor to refrain, in which
event such Grantor shall refrain, from using the Copyrights, Patents and
Trademarks in any manner whatsoever, directly or indirectly, and, if requested
by the Administrative Agent, change such Grantor’s corporate name to eliminate
therefrom any use of any mark and execute such other and further documents that
the Administrative Agent may request in connection with such Grantor’s
obligations under this Agreement and to transfer ownership of the Copyrights,
Patents and Trademarks, and registrations and any pending trademark application,
to the Administrative Agent for the benefit of the Secured Parties.

REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
Section 1.189    Remedies Generally. Each Grantor agrees that, if any Event of
Default shall have occurred and be continuing, then and in every such case,
subject to any mandatory requirements of applicable law then in effect, the
Administrative Agent, in addition to any rights now or hereafter existing under
applicable law, shall have all rights as a secured creditor under the UCC in all
relevant jurisdictions and may exercise any or all of the following rights (all
of which each Grantor hereby agrees is commercially reasonable to the fullest
extent permitted under applicable law now or hereafter in effect):
(a)    personally, or by agents’ attorneys or other authorized representatives,
immediately retake possession of the Collateral or any part thereof from such
Grantor or any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon such
Grantor’s or such other Person’s premises where any of the Collateral is located
and remove the same and use in connection with such removal any and all
services, supplies, aids and other facilities of such Grantor;
(b)    instruct the obligor or obligors on any Account Receivable, agreement,
instrument or other obligation (including, without limitation, account debtors)
constituting the Collateral to make any payment required by the terms of such
Account Receivable, agreement, instrument or other obligation directly to the
Administrative Agent and/or directly to a lockbox under the sole dominion and
control of the Administrative Agent or to the Collateral Concentration Account;
(c)    sell, assign or otherwise liquidate, or direct such Grantor to sell,
assign or otherwise liquidate, any or all of the Collateral or any part thereof,
and take possession of the proceeds of any such sale or liquidation;
(d)    issue a Notice of Exclusive Control with respect to any or all of the
Collateral Accounts and issue entitlement orders or instructions with respect
thereto;
(e)    withdraw any or all monies, securities and/or instruments in the
Collateral Concentration Account or any Collateral Account for application to
the Secured Obligations in accordance with Section 8.05 hereof;
(f)    pay and discharge taxes, Liens or claims on or against any of the
Collateral;
(g)    pay, perform or satisfy, or cause to be paid, performed or satisfied, for
the benefit of any Grantor, any of the obligations, terms, covenants, provisions
or conditions to be paid, observed, performed or satisfied by such Grantor under
any contract, agreement or instrument relating to its Collateral, all in
accordance with the terms, covenants, provisions and conditions thereof, as and
to the extent that such Grantor fails or refuses to perform or satisfy the same;

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(h)    enter into any extension of, or any other agreement in any way relating
to, any of the Collateral;
(i)    make any compromise or settlement the Administrative Agent deems
desirable or necessary with respect to any of the Collateral; and/or
(j)    take possession of the Collateral or any part thereof, by directing such
Grantor or any other Person in possession thereof in writing to deliver the same
to the Administrative Agent at any place or places designated by the
Administrative Agent, in which event such Grantor shall at its own expense:
(i)    forthwith cause the same to be moved to the place or places so designated
by the Administrative Agent and delivered to the Administrative Agent,
(ii)    store and keep any Collateral so delivered to the Administrative Agent
at such place or places pending further action by the Administrative Agent as
provided in Section 8.02, and
(iii)    while the Collateral shall be so stored and kept, provide such guards
and maintenance services as shall be necessary to protect the same and to
preserve and maintain them in substantially the same condition prior to such
action;
it being understood that such Grantor’s obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Administrative Agent shall be entitled
to a decree requiring specific performance by such Grantor of said obligation.
Section 1.190    Disposition of the Collateral. Upon the occurrence and
continuance of an Event of Default, any Collateral repossessed by the
Administrative Agent under or pursuant to Section 8.01 and any other Collateral
whether or not so repossessed by the Administrative Agent, may be sold,
assigned, leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale of the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Administrative Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Administrative Agent or after any overhaul or repair which the Administrative
Agent shall determine to be commercially reasonable. Except in the case of any
Collateral that is perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, (i) in the case of any such
disposition which shall be a private sale or other private proceedings permitted
by such requirements, such sale shall be made upon not less than ten days’
written notice to such Grantor specifying the time at which such disposition is
to be made and the intended sale price or other consideration therefor, and
shall be subject, for the ten days after the giving of such notice, to the right
of the relevant Grantor or any nominee of the relevant Grantor to acquire the
Collateral involved at a price or for such other consideration at least equal to
the intended sale price or other consideration so specified, and (ii) in the
case of any such disposition which shall be a public sale permitted by such
requirements, such sale shall be made upon not less than ten days’ written
notice to the relevant Grantor specifying the time and place of such sale and,
in the absence of applicable requirements of law, shall be by public auction
(which may, at the Administrative Agent’s sole option, be subject to reserve),
after publication of notice of such auction not less than ten days prior thereto
in two newspapers in general circulation in the city where such Collateral is
located. To the extent permitted by any such requirement of law, the
Administrative Agent on behalf of the Secured Creditors (or certain of them) may
bid for and become the purchaser (by bidding in Secured Obligations or
otherwise) of the Collateral or any item thereof offered for sale in accordance
with this Section without accountability to the relevant Grantor (except to the
extent of surplus money received as provided in Section 8.05). Unless so
obligated

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under mandatory requirements of applicable law, the Administrative Agent shall
not be required to make disposition of the Collateral within a period of time
which does not permit the giving of notice to the Grantor as hereinabove
specified. The Administrative Agent need give the relevant Grantor only such
notice of disposition as the Administrative Agent shall deem to be reasonably
practicable in view of such mandatory requirements of applicable law.
Section 1.191    Grant of License to Use Intellectual Property. For the purpose
of enabling the Administrative Agent to exercise rights and remedies under this
Article VIII at such time as the Administrative Agent shall be lawfully entitled
to exercise such rights and remedies and for no other purpose, each Grantor
hereby grants to the Administrative Agent an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to the Grantor) to
use, assign or sublicense any of the Intellectual Property of such Grantor, now
owned or hereafter acquired by such Grantor, and wherever the same may be
located, including in such license reasonable access to all media in which any
of the licensed items may be recorded or stored and to all computer programs
used for the compilation or printout thereof.
Section 1.192    Waiver of Claims. Except as otherwise provided in this
Agreement, EACH GRANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE ADMINISTRATIVE AGENT’S
TAKING POSSESSION OR THE ADMINISTRATIVE AGENT’S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE GRANTOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Grantor hereby further waives, to the extent permitted
by law: (i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Administrative Agent’s gross
negligence or willful misconduct; (ii) all other requirements as to the time,
place and terms of sale or other requirements with respect to the enforcement of
the Administrative Agent’s rights hereunder; and (iii) all rights of redemption,
appraisement, valuation, stay, extension or moratorium now or hereafter in force
under any applicable law in order to prevent or delay the enforcement of this
Agreement or the absolute sale of the Collateral or any portion thereof, and
each Grantor, for itself and all who may claim under it, insofar as it or they
now or hereafter lawfully may, hereby waives the benefit of all such laws to the
fullest extent permitted by applicable law now or hereafter in effect. Any sale
of, or the grant of options to purchase, or any other realization upon, any
Collateral shall operate to divest all right, title, interest, claim and demand,
either at law or in equity, of the relevant Grantor therein and thereto, and
shall be a perpetual bar both at law and in equity against the relevant Grantor
and against any and all Persons claiming or attempting to claim the Collateral
so sold, optioned or realized upon, or any part thereof, from, through and under
the relevant Grantor.
Section 1.193    Application of Proceeds. All Collateral and proceeds of
Collateral obtained and realized by the Administrative Agent in connection with
the enforcement of this Agreement pursuant to this Article VIII shall be applied
as follows:
(i)    first, to the payment to the Administrative Agent, for application to the
Secured Obligations as provided in Section 8.03 of the Credit Agreement; and
(ii)    second, to the extent remaining after the application pursuant to the
preceding clause (i) and following the termination of this Agreement pursuant to
Section 9.09 hereof, to the relevant Grantor or to whomever may be lawfully
entitled to receive such payment.
Section 1.194    Remedies Cumulative. Each and every right, power and remedy
hereby specifically

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given to the Administrative Agent shall be in addition to every other right,
power and remedy specifically given under this Agreement or the other Loan
Documents or now or hereafter existing at law or in equity, or by statute, and
each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Administrative Agent.
All such rights, powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Administrative Agent
in the exercise of any such right, power or remedy, or partial or single
exercise thereof, and no renewal or extension of any of the Secured Obligations,
shall impair or constitute a waiver of any such right, power or remedy or shall
be construed to be a waiver of any Default or Event of Default or an
acquiescence therein. No notice to or demand on any Grantor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Administrative
Agent to any other or further action in any circumstances without notice or
demand. In the event that the Administrative Agent shall bring any suit to
enforce any of its rights hereunder and shall be entitled to judgment, then in
such suit the Administrative Agent may recover reasonable, actual expenses,
including attorneys’ fees, and the amounts thereof shall be included in such
judgment.
Section 1.195    Discontinuance of Proceedings. In case the Administrative Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Administrative Agent, then and in every such case
the relevant Grantor, the Administrative Agent and each holder of any of the
Secured Obligations shall be restored to their former positions and rights
hereunder with respect to the Collateral subject to the security interest
created under this Agreement, and all rights, remedies and powers of the
Administrative Agent shall continue as if no such proceeding had been
instituted.
Section 1.196    Purchasers of Collateral. Upon any sale of any of the
Collateral by the Administrative Agent hereunder (whether by virtue of the power
of sale herein granted, pursuant to judicial process or otherwise), the receipt
of the Administrative Agent or the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold, and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Administrative Agent or such officer
or be answerable in any way for the misapplication or nonapplication thereof.

MISCELLANEOUS
Section 1.197    Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing,
sent by telecopier, mailed or delivered, (i) if to the Borrower, at its address
specified in or pursuant to the Credit Agreement, (ii) if to any Subsidiary
Grantor, to it c/o the Borrower at its address specified in or pursuant to the
Credit Agreement, (iii) if to the Administrative Agent, to it at the Notice
Office of the Administrative Agent, and (iv) if to any Lender, at its address
specified in or pursuant to the Credit Agreement; or in any case at such other
address as any of the Persons listed above may hereafter notify the others in
writing. All such notices and communications shall be mailed, telecopied, sent
by overnight courier or delivered, and shall be effective when received.
Section 1.198    Entire Agreement. This Agreement and the other Loan Documents
represent the final agreement among the parties with respect to the subject
matter hereof and thereof, supersede any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof,

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and may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements among the parties. There are no unwritten oral agreements among
the parties.
Section 1.199    Obligations Absolute. The obligations of each Grantor under
this Agreement shall be absolute and unconditional 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, other than indefeasible payment in full of, and complete performance
of, all of the Secured Obligations, including, without limitation:
(a)    any renewal, extension, amendment or modification of, or addition or
supplement to, or deletion from other Loan Documents, or any other instrument or
agreement referred to therein, or any assignment or transfer of any thereof;
(b)    any waiver, consent, extension, indulgence or other action or inaction
under or in respect of any such agreement or instrument or this Agreement except
as expressly provided in such renewal, extension, amendment, modification,
addition, supplement, assignment or transfer;
(c)    any furnishing of any additional security to the Administrative Agent or
its assignee or any acceptance thereof or any release of any security by the
Administrative Agent or its assignee;
(d)    any limitation on any Person’s liability or obligations under any such
instrument or agreement or any invalidity or unenforceability, in whole or in
part, of any such instrument or agreement or any term thereof;
(e)    any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to a Grantor or any
Subsidiary of a Grantor, or any action taken with respect to this Agreement by
any trustee or receiver, or by any court, in any such proceeding, whether or not
a Grantor shall have notice or knowledge of any of the foregoing; or
(f)    to the fullest extent permitted by applicable law now or hereafter in
effect, any other event or circumstance which, but for this provision, might
release or discharge a guarantor or other surety from its obligations as such.
Section 1.200    Successors and Assigns. This Agreement shall be binding upon
each Grantor and its successors and assigns and shall inure to the benefit of
the Administrative Agent and each other Secured Creditor and their respective
successors and assigns, provided that no Grantor may transfer or assign any or
all of its rights or obligations hereunder without the written consent of the
Administrative Agent. All agreements, statements, representations and warranties
made by each Grantor herein or in any certificate or other instrument delivered
by such Grantor or on its behalf under this Agreement shall be considered to
have been relied upon by the Secured Creditors and shall survive the execution
and delivery of this Agreement and the other Loan Documents regardless of any
investigation made by the Secured Creditors on their behalf.
Section 1.201    Headings Descriptive. The headings of the several Sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
Section 1.202    Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other

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jurisdiction.
Section 1.203    Enforcement Expenses, etc. The Grantors hereby jointly and
severally agree to pay, to the extent not paid pursuant to Section 11.01 of the
Credit Agreement, all reasonable, actual out-of-pocket costs and expenses of the
Administrative Agent and each other Secured Creditor in connection with the
enforcement of this Agreement, the preservation of the Collateral, the
perfection of the security interest, and any amendment, waiver or consent
relating hereto (including, without limitation, the reasonable fees and
disbursements of counsel employed by the Administrative Agent or any of the
other Secured Creditors).
Section 1.204    Release of Portions of Collateral.
(a)    So long as no Event of Default is in existence or would exist after the
application of proceeds as provided below, the Administrative Agent shall, at
the request of a Grantor, release any or all of the Collateral of such Grantor,
provided that (i) such release is permitted by the terms of the Credit Agreement
(it being agreed for such purposes that a release will be deemed “permitted by
the terms of the Credit Agreement” if the proposed transaction constitutes an
exception contained in Section 7.02 of the Credit Agreement) or otherwise has
been approved in writing by the Required Lenders (or, to the extent required by
Section 11.12 of the Credit Agreement, all of the applicable Lenders) and (ii)
the proceeds of such Collateral are to be applied as required pursuant to the
Credit Agreement or any consent or waiver entered into with respect thereto.
(b)    At any time that a Grantor desires that the Administrative Agent take any
action to give effect to any release of Collateral pursuant to the foregoing
Section 9.08(a), it shall deliver to the Administrative Agent a certificate
signed by a principal executive officer stating that the release of the
respective Collateral is permitted pursuant to Section 9.08(a). In the event
that any part of the Collateral is released as provided in Section 9.08(a), the
Administrative Agent, at the request and expense of a Grantor, will duly release
such Collateral and assign, transfer and deliver to such Grantor (without
recourse and without any representation or warranty) such of the Collateral as
is then being (or has been) so sold and as may be in the possession of the
Administrative Agent and has not theretofore been released pursuant to this
Agreement. The Administrative Agent shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it as permitted
by this Section 9.08.
Section 1.205    Termination. After the termination of all of the Commitments
and when all Loans and other Secured Obligations (other than unasserted
indemnity obligations) have been paid in full, this Agreement shall terminate,
and the Administrative Agent, at the request and expense of the Grantors, will
execute and deliver to the relevant Grantor a proper instrument or instruments
(including UCC termination statements on form UCC-3) acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to the relevant Grantor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Administrative Agent and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement.
Section 1.206    Administrative Agent. The Administrative Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. The acceptance by the Administrative Agent of this
Agreement, with all the rights, powers, privileges and authority so created,
shall not at any time or in any event obligate the Administrative Agent to
appear in or defend any action or proceeding relating to the Collateral to which
it is not a party, or to take any action hereunder or thereunder, or to expend
any money or incur any expenses or perform or discharge any obligation, duty or
liability under the Collateral. By accepting the benefits of this Agreement,
each Secured Creditor acknowledges and agrees that the rights and obligations of
the Administrative Agent shall be as set forth in Article IX of the Credit

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Agreement. Notwithstanding anything to the contrary contained in Section 9.03 of
this Agreement or Section 11.12 of the Credit Agreement, this Section 9.10, and
the duties and obligations of the Administrative Agent set forth in this Section
9.10, may not be amended or modified without the consent of the Administrative
Agent.
Section 1.207    Only Administrative Agent to Enforce on Behalf of Secured
Creditors. The Secured Creditors agree by their acceptance of the benefits
hereof that this Agreement may be enforced on their behalf only by the action of
the Administrative Agent, acting upon the instructions of the Required Lenders
and that no other Secured Creditor shall have any right individually to seek to
enforce or to enforce this Agreement or to realize upon the security to be
granted hereby, it being understood and agreed that such rights and remedies may
be exercised by the Administrative Agent, for the benefit of the Secured
Creditors, upon the terms of this Agreement.
Section 1.208    Other Creditors, etc. Not Third-Party Beneficiaries. No
creditor of any Grantor or any of its Affiliates, or other Person claiming by,
through or under any Grantor or any of its Affiliates, other than the
Administrative Agent and the other Secured Creditors, and their respective
successors and assigns, shall be a beneficiary or third-party beneficiary of
this Agreement or otherwise shall derive any right or benefit herefrom.
Section 1.209    Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, including
via facsimile transmission or other electronic transmission capable of
authentication, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same agreement.
A set of counterparts executed by all the parties hereto shall be lodged with
the Borrower and the Administrative Agent.
Section 1.210    Amendments; Additional Grantors. No amendment or waiver of any
provision of this Agreement and no consent to any departure by any Grantor shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agent acting at the direction of the requisite number of Lenders,
if any, required pursuant to Section 11.12 of the Credit Agreement, and the
applicable Grantor or Grantors, as the case may be, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. Upon the execution and delivery by any Person of a
Security Agreement Joinder, (a) such Person shall be referred to as an
“Additional Grantor” and shall become and be a Grantor hereunder, and each
reference in this Agreement to a “Grantor” shall also mean and be a reference to
such Additional Grantor, and each reference in any other Loan Document to a
“Grantor” shall also mean and be a reference to such Additional Grantor, and (b)
each reference herein to “this Agreement,” “hereunder,” “hereof” or words of
like import referring to this Agreement, and each reference in any other Loan
Document to the “Security Agreement,” “thereunder,” “thereof” or words of like
import referring to this Agreement, shall mean and be a reference to this
Agreement as supplemented by such Security Agreement Joinder.
Section 1.211    Separate Actions. A separate action may be brought and
prosecuted against any Grantor, any other guarantor or obligor or the Borrower,
and whether or not any other Grantor, any other guarantor or obligor or the
Borrower be joined in such action or actions.
Section 1.212    Full Recourse Obligations; Effect of Fraudulent Transfer Laws.
It is the desire and intent of each Grantor, the Administrative Agent and the
other Secured Creditors that this Agreement shall be enforced as a full recourse
obligation of each Grantor to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought. If
and to the extent that the obligations of any Grantor under this Agreement
would, in the absence of this sentence, be adjudicated to

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be invalid or unenforceable because of any applicable state or federal law
relating to fraudulent conveyances or transfers, then the amount of such Grantor
liability hereunder in respect of the Secured Obligations shall be deemed to be
reduced ab initio to that maximum amount that would be permitted without causing
such Grantor’s obligations hereunder to be so invalidated.
Section 1.213    Governing Law; Venue; Waiver of Jury Trial.
(a)    THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
(b)    ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH GRANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GRANTOR
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR OTHER DOCUMENT RELATED THERETO. EACH GRANTOR WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
(c)    EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH GRANTOR HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9.17 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.]
[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
 
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.

By: Preferred Apartment Advisors, LLC., its manager

By:__________________________________
   Name:
   Title:

 
TRAIL CREEK MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its manager

By:__________________________________
   Name:
   Title:

SUMMIT CROSSING MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its manager

By:__________________________________
   Name:
   Title:

    

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IRIS CROSSTOWN MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its manager

By:__________________________________
   Name:
   Title:

CITY VISTA MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its manager

By:__________________________________
   Name:
   Title:

CITY PARK MEZZANINE LENDING, LLC

By: Preferred Apartment Advisors, LLC, its manager

By:__________________________________
   Name:
   Title:

Accepted by:

KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent,

By:_______________________________
   Name:
   Title:

    

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Pledged Collateral
I.    Equity Interests

Grantor
Issuer and Type of Organization
Certificate Number
Percent of Equity Interest Owned
Percent of Equity Interest Pledged
Preferred Apartment Communities Operating Partnership, L.P.
Trail Creek Mezzanine Lending, LLC
1
1.0
1.0
Preferred Apartment Communities Operating Partnership, L.P.
Summit Crossing Mezzanine Lending LLC
1
1.0
1.0
Preferred Apartment Communities Operating Partnership, L.P.
Iris Crosstown Mezzanine Lending, LLC
1
1.0
1.0
Preferred Apartment Communities Operating Partnership, L.P.
City Vista Mezzanine Lending, LLC
1
1.0
1.0
Preferred Apartment Communities Operating Partnership, L.P.
City Park Mezzanine Lending, LLC
1
1.0
1.0
Preferred Apartment Communities Operating Partnership, L.P.
Stone Rise Apartments, LLC
1
1.0
0.49
Preferred Apartment Communities Operating Partnership, L.P.
Trail Creek Apartments, LLC
1
1.0
0.49
Preferred Apartment Communities Operating Partnership, L.P.
PAC Summit Crossing, LLC
1
1.0
0.49

    

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II.    Instruments

Grantor
Obligor
Amount of Instrument
Date of Instrument
Preferred Apartment Communities Operating Partnership, L.P.
Madison Retail, LLC
$575,000
May 21, 2012
Preferred Apartment Communities Operating Partnership, L.P.
Preferred Apartment Advisors, LLC
$1,000,000 (revolving)
August 21, 2012
Iris Crosstown Mezzanine Lending, LLC
Iris Crosstown Apartments LLC
$3,693,470.78
June 29, 2012, as amended August 28, 2012
Summit Crossing Mezzanine Lending LLC
Oxford Summit Apartments II LLC
$6,103,027
May 7, 2012
Trail Creek Mezzanine Lending, LLC
Oxford Hampton Partners LLC
$6,000,000
June 30, 2011

    

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Exhibit A
to Pledge and Security Agreement
SECURITY AGREEMENT JOINDER
SECURITY AGREEMENT JOINDER dated as of _________, ____ (this “Agreement”) made
by [Insert Name of New Grantor], a [Insert State of Organization] [corporation,
limited partnership or limited liability company] (the “New Grantor”) in favor
of KeyBank National Association, as Administrative Agent (the “Administrative
Agent”) for the benefit of the Secured Creditors (as defined in the Security
Agreement referred to below).
RECITALS:

(1)    Preferred Apartment Communities Operating Partnership, L.P., a Delaware
limited partnership (the “Borrower”), Preferred Apartment Communities, Inc., a
Maryland corporation (the “Parent”), the lenders party thereto (the “Lenders”)
and the Administrative Agent are parties to a Credit Agreement dated as of
August 31, 2012 (as the same may from time to time be amended, restated or
otherwise modified, the “Credit Agreement”).
(2)    In connection with the Credit Agreement, the Borrower and certain of its
subsidiaries (such subsidiaries, together with the Borrower, collectively, the
“Grantors” and individually, each a “Grantor”) entered into a Pledge and
Security Agreement (as the same may from time to time be amended, restated or
otherwise modified, the “Security Agreement”), pursuant to which the Grantors
granted to the Administrative Agent, for the benefit of the Secured Creditors a
security interest in and pledge of substantially all of their assets.
(3)    The New Grantor is a Subsidiary (as defined in the Credit Agreement), of
the Borrower and desires to become a party to the Security Agreement pursuant to
Section 9.14 of the Security Agreement and to become a “Grantor” thereunder.
(4)    Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Security Agreement.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, the New Grantor
hereby agrees as follows:
Section 1.    Assumption and Joinder.
(a)    The New Grantor hereby expressly assumes, and hereby agrees to perform
and observe, each and every one of the covenants, rights, promises, agreements,
terms, conditions, obligations, appointments, duties and liabilities of a
“Grantor” under the Security Agreement and all of the other Loan Documents (as
defined in the Credit Agreement) applicable to it as a Grantor under the
Security Agreement. By virtue of the foregoing, the New Grantor hereby accepts
and assumes any liability of a Grantor related to each representation, warranty,
covenant or obligation made by a Grantor in the Security Agreement, and hereby
expressly affirms, as of the date hereof, each of such representations,
warranties, covenants and obligations. In connection with the foregoing, the New
Grantor hereby grants to the Administrative Agent for the benefit of the Secured
Creditors a security interest in, and hereby pledges to the Administrative
Agent, for the benefit of the Secured Creditors, all of the Collateral of the
New Grantor on the terms and conditions set forth in the Security Agreement.

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(b)    All references to the term Grantor in the Security Agreement or in any
document or instrument executed and delivered or furnished, or to be executed
and delivered or furnished, in connection therewith shall be deemed to be a
reference to, and shall include, the New Grantor.
Section 2.    Representations and Warranties. The New Grantor hereby represents
and warrants to the Administrative Agent and the Secured Creditors as follows:
(a)    The New Grantor has the requisite [corporate, partnership or company]
power and authority to enter into this Agreement and to perform its obligations
hereunder and under the Security Agreement and any other Loan Document to which
it is a party. The execution, delivery and performance of this Agreement by the
New Grantor and the performance of its obligations under this Agreement, the
Security Agreement, and any other Loan Document have been duly authorized by the
[Board of Directors of the New Grantor] and no other [corporate, partnership or
company] proceedings on the part of the New Grantor are necessary to authorize
the execution, delivery or performance of this Agreement, the transactions
contemplated hereby or the performance of its obligations under this Agreement,
the Security Agreement or any other Loan Document. This Agreement has been duly
executed and delivered by the New Grantor. This Agreement, the Security
Agreement and each Loan Document constitutes the legal, valid and binding
obligation of the New Grantor enforceable against it in accordance with its
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally and by general principles of equity, whether such
enforceability is considered in a proceeding at law or in equity.
(b)    The representations and warranties set forth in the Security Agreement
are true and correct in all material respects on and as of the date hereof as
such representations and warranties apply to the New Grantor (except to the
extent that any such representations and warranties expressly relate to an
earlier date) with the same force and effect as if made on the date hereof.
Section 3.    Perfection Certificate. Attached hereto is a copy of a fully
completed Perfection Certificate executed by the New Grantor. The information
contained in the Perfection Certificate delivered by the New Grantor is true and
correct in all respects.
Section 4.    Further Assurances. At any time and from time to time, upon the
Administrative Agent’s request and at the sole expense of the New Grantor, the
New Grantor will promptly and duly execute and deliver any and all further
instruments and documents and take such further action as the Administrative
Agent reasonably deems necessary to effect the purposes of this Agreement.
Section 5.    Binding Effect. This Agreement shall be binding upon the New
Grantor and shall inure to the benefit of the Administrative Agent and the other
Secured Creditors and their respective successors and assigns.
Section 6.    Governing Law. This Agreement and the rights of the parties
hereunder shall be construed and interpreted in accordance with the laws of the
State of [Ohio][New York], without application of the rules regarding conflicts
of laws.
Section 7.    JURY TRIAL WAIVER. THE NEW GRANTOR HEREBY IRREVOCABLY WAIVES ALL
RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
Section 8.    Miscellaneous. Delivery of an executed signature page to this
Agreement by

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facsimile shall be effective as delivery of a manually executed copy of this
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered by its duly authorized officer as of the date first above
written.
 
[___________________________]

By:__________________________________
   Name:
   Title:

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Exhibit B to
Pledge and Security Agreement
PERFECTION CERTIFICATE

In connection with a proposed transaction by and among Preferred Apartment
Communities Operating Partnership, L.P., a Delaware limited partnership (the
“Borrower”), certain lending institutions (the “Lenders”), KeyBank National
Association, as the administrative agent for the Lenders (“Administrative
Agent”) and the other grantors specified in Section 1 below under the heading
“Name of Grantor” (together with the Borrower, collectively, the “Grantors” and,
individually, “Grantor”), each Grantor hereby certifies as follows:
Section 1.    Legal Names, Organizations and Jurisdictions of Organization. The
exact legal name, the type of organization and the jurisdiction of organization
or formation, as applicable, of each Grantor are as follows:
Grantor
Type of 
Organization
Jurisdiction of
Organization/ 
Formation
Preferred Apartment Communities Operating Partnership, L.P.
 
 
Trail Creek Mezzanine Lending, LLC
 
 
Summit Crossing Mezzanine Lending, LLC
 
 
Iris Crosstown Mezzanine Lending, LLC
 
 
City Vista Mezzanine Lending, LLC
 
 
City Park Mezzanine Lending, LLC
 
 

Section 2.    Organizational and Federal Taxpayer Identification Numbers. The
state issued organizational identification number and federal taxpayer
identification number of each Grantor are as follows:
Grantor
Organizational  
Identification Number
Federal Taxpayer 
Identification Number
 
 
 
 
 
 
 
 
 

Section 3.    Chief Executive Offices and Mailing Addresses. The chief executive
office address and mailing address, including, in each case, street address,
city, county, state and ZIP code, of each Grantor are as follows:

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Grantor
Chief Executive Office
Mailing Address
 
 
 
 
 
 

Section 4.    Changes in Name, Jurisdiction of Organization or Corporate
Structure. Except as set forth below, no Grantor has changed its legal name,
jurisdiction of organization or corporate structure in any way (e.g., merger,
consolidation, conversion, change in corporate form, change in jurisdiction of
organization or otherwise) within the past five years:

Grantor
Date of Change
Description of Change
 
 
 
 
 
 
 
 
 

Section 5.    Prior Addresses. Except as set forth below, no Grantor has changed
its chief executive office within the past five years:

Grantor
Prior Address of Chief Executive Office
 
 
 
 
 
 

Section 6.    Trade Names. Set forth below is each trade name or assumed name
used by any Grantor during the past five years or by which any Grantor has been
known or has transacted any business during the past five years:
Grantor
Trade/Assumed Name
 
 
 
 
 
 

Section 7.    Acquisitions of Equity Interests or Assets. Except as set forth
below, no Grantor has acquired any equity interests of another entity or
substantially all the assets of another entity within the past five years:

Grantor
Date of Acquisition
Description of Acquisition
 
 
 
 
 
 
 
 
 

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Section 8.    Intellectual Property. Set forth below is a list of all
copyrights, trademarks, patents, and applications therefor owned or used by any
Grantor:

(a)    Copyrights:

Grantor
Copyright
Registration Number
Registration Date
 
 
 
 
 
 
 
 

(b)    Trademarks:
Grantor
Trademark
Country
Application No. and/or  
Registration No.
Application Filing Date and/or Registration Date
 
 
 
 
 
 
 
 
 
 

(c)    Patents:
Grantor
Patent
Country
Application No. or Registration No.  
(as applicable)
Application Filing Date or Registration Date (as applicable)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Section 10.    Securities. Set forth below is a list of all equity interests
owned by each Grantor, together with the type of organization that issued such
equity interests (e.g., corporation, limited liability company, partnership or
trust):
Grantor
Issuer and Type  
of Organization
# of
Shares/Equity Interests 
Owned
Total
Shares/Equity Interests 
Outstanding
% of
Interest Pledged
Certificate No. (if any)
 
 
 
 
 
 
 
 
 
 
 
 

Section 11.    Securities Accounts. Set forth below is a list of all securities
accounts in which any Grantor maintains securities or other similar assets:

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Grantor
Securities Intermediary 
& Address
Account Number
Type of Account
 
 
 
 
 
 
 
 
 
 
 
 

Section 12.    Deposit Accounts. Set forth below is a list of all deposit
accounts of each Grantor:

Grantor
Depositary Institution 
& Address
Account Number
Type of Account
 
 
 
 
 
 
 
 
 
 
 
 

Section 13.    Instruments. Set forth below is a list of all instruments that
evidence amounts owed to any Grantor:

Grantor
Amount
Date of Instrument
Date of Maturity
 
 
 
 
 
 
 
 
 
 
 
 

Section 14.    Commercial Tort Claims. The following is a list of each
commercial tort claim held by each Grantor:

Grantor
Amount of Claim
Brief Description  
of Claim
 
 
 

Section 15.    Authorization to File Financing Statements. Each Grantor hereby
authorizes the Administrative Agent to file financing or continuation
statements, and amendments thereto, in all jurisdictions and with all filing
offices as the Administrative Agent may determine, in its sole discretion, are
necessary or advisable to perfect the security interest granted or to be granted
to Administrative Agent for the benefit of the Lenders. Such financing
statements may describe the collateral in the same manner as described in the
agreement(s) granting a security interest or may contain an indication or
description of collateral that describes such property in any other manner as
the Administrative Agent may determine, in its sole discretion, is necessary or
advisable to ensure the perfection of the security interest in the collateral
granted or to be granted to the Administrative Agent for the benefit of the
Lenders, including, without limitation, describing such property as “all assets”
or “all personal property.”

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IN WITNESS WHEREOF, each Grantor has caused this Perfection Certificate to be
executed as of the 31st day of August, 2012 by its officer thereunto duly
authorized.
 

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EXHIBIT D
______________________________
Form of Solvency Agreement
______________________________

 
 
 

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

SOLVENCY CERTIFICATE
 

PREFERRED APARTMENT COMMUNITIES, INC., a Maryland corporation (the “PAC REIT”),
hereby certifies that the officer executing this Solvency Certificate is the
President of Preferred Apartment Advisors, LLC, in its capacity as manager of
the PAC REIT and that such officer is duly authorized to execute this Solvency
Certificate, which is hereby delivered on behalf of the Borrower pursuant to
Section 4.01(xv) of the Credit Agreement, dated as of August 31, 2012 (as the
same may be amended, restated or otherwise modified from time to time, the
“Credit Agreement”; terms defined or referenced therein and not otherwise
defined or referenced herein being used herein as therein defined or
referenced), among Preferred Apartment Communities Operating Partnership, L.P.,
a Delaware limited partnership (the “Borrower”), the PAC REIT, the lenders from
time to time party thereto, and KeyBank National Association, as the
Administrative Agent.
The PAC REIT further certifies that such officer is generally familiar with the
properties, businesses and assets of the PAC REIT and the Borrower and has
carefully reviewed the Loan Documents and the contents of this Solvency
Certificate and, in connection herewith, has reviewed such other documentation
and information and has made such investigations and inquiries as the PAC REIT
and such officer deem necessary and prudent therefor. The PAC REIT further
certifies that the financial information and assumptions that underlie and form
the basis for the representations made in this Solvency Certificate were
reasonable when made and were made in good faith and continue to be reasonable
as of the date hereof.
The PAC REIT understands that the Lenders are relying on the truth and accuracy
of this Solvency Certificate in connection with the Loan Documents.
The PAC REIT hereby further certifies on behalf of itself and the Borrower that:
1.    On the date hereof, the fair value of the property and assets of the
Borrower is greater than the total amount of liabilities (including contingent,
subordinated, absolute, fixed, matured or unmatured and liquidated or
unliquidated liabilities) of the Borrower.
2.    On the date hereof, the fair value of the property and assets of the PAC
REIT and its Subsidiaries, on a consolidated basis, is greater than the total
amount of liabilities (including contingent, subordinated, absolute, fixed,
matured or unmatured and liquidated or unliquidated liabilities) of the PAC REIT
and its Subsidiaries, on a consolidated basis.
3.     On the date hereof, immediately before and immediately after giving
effect to the Borrowings under the Credit Agreement, the present fair salable
value of the property and assets of the Borrower exceeds the amount that will be
required to pay the probable liabilities of the Borrower on its debts as they
become absolute and matured.
4.     On the date hereof, immediately before and immediately after giving
effect to the Borrowings under the Credit Agreement, the present fair salable
value of the property and assets of the PAC REIT and its Subsidiaries, on a
consolidated basis, exceeds the amount that will be required to pay the probable
liabilities of the PAC REIT and its Subsidiaries, on a consolidated basis, on
their debts as they become absolute and matured.
5.    Neither the PAC REIT nor any of its Subsidiaries currently intends or
believes that it will incur debts and liabilities that will be beyond its
ability to pay as such debts and liabilities mature.

    

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6.     On the date hereof, immediately before and immediately after giving
effect to the Borrowings under the Credit Agreement, neither the PAC REIT nor
any of its Subsidiaries is engaged in business or in a transaction, or is about
to engage in business or in a transaction, for which its property and assets
would constitute unreasonably small capital.
7.     Neither the PAC REIT nor any of its Subsidiaries intend to hinder, delay
or defraud either present or future creditors or any other person to which the
PAC REIT or any of such Subsidiaries are or, on or after the date hereof, will
become indebted.
IN WITNESS WHEREOF, the PAC REIT has caused this Solvency Certificate to be
executed by its __________________, who is signing in such capacity only and in
no way in his/her personal capacity, thereunto duly authorized, on and as of
August 31, 2012.

 
PREFERRED APARTMENT COMMUNITIES, INC.

By: Preferred Apartment Advisors, LLC, its manager

 
By:______________________________________
      Name:
      Title:

    

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EXHIBIT E
______________________________
Form of Compliance Certificate
______________________________

    

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

 
COMPLIANCE CERTIFICATE
 
August 31, 2011
 
KeyBank National Association,
  as Administrative Agent
1200 Abernathy Road NE, Suite 1550
Atlanta, Georgia 30328

 
Each Lender party to the
  Credit Agreement referred to below

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of August 31, 2012,
among PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership (the “Borrower”), Preferred Apartment Communities, Inc., a
Maryland corporation (the “PAC REIT”), the lenders from time to time party
thereto (the “Lenders”), and KeyBank National Association, as the Administrative
Agent (the “Administrative Agent”) (as the same may be amended, restated or
otherwise modified from time to time, the “Credit Agreement”; terms defined
therein being used herein as therein defined). Pursuant to Section 6.01(c) of
the Credit Agreement, the undersigned hereby certifies to the Administrative
Agent and the Lenders on behalf of itself and the Borrower as follows:

(a)    I am the duly elected President of Preferred Apartment Advisors, LLC, the
manager of the PAC REIT.

(b)    I am familiar with the terms of the Credit Agreement and the other Loan
Documents, and I have made, or have caused to be made under my supervision, a
review in reasonable detail of the transactions and conditions of the PAC REIT
and its Subsidiaries during the accounting period covered by the attached
financial statements.

(c)    The review described in paragraph (b) above did not disclose, and I have
no knowledge of, the existence of any condition or event that constitutes or
constituted a Default or Event of Default at the end of the accounting period
covered by the attached financial statements or as of the date of this
Compliance Certificate.

(d)    The representations and warranties of the Credit Parties contained in the
Credit Agreement and in the other Loan Documents are true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and at the date hereof, except to the extent that
such representations and warranties expressly relate to an earlier specified
date, in which case such representations and warranties were true and correct in
all material respects as of the date when made.

(e)    Set forth on Attachment I hereto are calculations of the financial
covenants set forth in Section 7.07 of the Credit Agreement, which calculations
show compliance with the terms thereof for the fiscal quarter of the PAC REIT
ending [ ].

    

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

 
Very truly yours,

 
PREFERRED APARTMENT COMMUNITIES, INC.

By: Preferred Apartment Advisors, LLC, its manager

 
By:___________________________________
      Name:
      Title:
 
 

    

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EXHIBIT F
______________________________
Form of Closing Certificate
______________________________

    

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

CLOSING CERTIFICATE
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership (the “Borrower”), hereby certifies that the officer executing this
Closing Certificate is an Authorized Officer (as defined in the Credit Agreement
referred to below) and that such officer is duly authorized to execute this
Closing Certificate, which is hereby delivered on behalf of the Borrower
pursuant to Section 4.01(xiv) of the Credit Agreement, dated as of August 31,
2012 (as the same may be amended, restated or otherwise modified from time to
time, the “Credit Agreement,” the terms defined therein being used herein as
therein defined), among the Borrower, Preferred Apartment Communities, Inc., a
Maryland corporation (the “PAC REIT”), the lenders from time to time party
thereto, and KeyBank National Association, as the Administrative Agent.
The undersigned further certifies that at and as of the Closing Date and both
before and after giving effect to the initial Borrowings under the Credit
Agreement and the application of the proceeds thereof:
1.    No Default or Event of Default has occurred and is continuing.
2.    All representations and warranties of the Credit Parties contained in the
Credit Agreement and in the other Loan Documents are true and correct, except to
the extent that such representations and warranties expressly relate to an
earlier specified date, in which case such representations and warranties were
true and correct as of the date when made.
3.    All of the conditions precedent to the effectiveness of the Credit
Agreement set forth in Section 4.01 of the Credit Agreement have been satisfied.
IN WITNESS WHEREOF, the Borrower has caused this Closing Certificate to be
executed by its ______________________ thereunto duly authorized, on and as of
this 31st day of August, 2012.
 
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.

By: Preferred Apartment Advisors, LLC, its manager

 
By:___________________________________
      Name:
      Title:
 
 

    

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EXHIBIT G
______________________________
Form of Assignment Agreement
______________________________

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EXHIBIT G
 
ASSIGNMENT AGREEMENT
 
Date: __________, 20__

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

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
Loan Documents and any other documents or instruments delivered pursuant thereto
to the extent related to the amount and percentage interest identified below of
all of such outstanding rights and obligations of the Assignor under the
respective facilities identified below and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other Loan Document and any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned pursuant to
clauses (i) and (ii) above being referred to herein collectively as, the
“Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment Agreement, without
representation or warranty by the Assignor.

1.    Assignor:        ______________________________
[Assignor [is] [is not] a Defaulting Lender.]

2.
Assignee:        ______________________________

[and is an Affiliate/Approved Fund of [identify Lender]

3.
Borrower:    Preferred Apartment Communities Operating Partnership, L.P.

4.
Administrative Agent:    KeyBank National Association, as the administrative
agent under the Credit Agreement.

5.
Credit Agreement:    The Credit Agreement, dated as of August 31, 2012 (as the
same may be

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

amended, restated or otherwise modified from time to time, the “Credit
Agreement”), among the Borrower, Preferred Apartment Communities, Inc., the
lenders from time to time party thereto, and the Administrative Agent.
6.
Assigned Interest:    

Revolving Commitment
Aggregate Amount of Revolving Commitment/Loans for all Lenders
Amount of Revolving Commitment/Loans Assigned
Percentage Assigned of Revolving Commitment/Loans
CUSIP Number
•    
$
$
%
 
 
$
$
%
 
 
$
$
%
 

[7.    Trade Date:        ______________]

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

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

ASSIGNOR
[NAME OF ASSIGNOR]

By:______________________________
Title:

ASSIGNEE
[NAME OF ASSIGNEE]

By:______________________________
Title:

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

Accepted:

KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent

By:______________________________________
Name:
Title:

[Consented to:]

 [PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P., as Borrower 

By: Preferred Apartment Advisors, LLC, its manager

 
By:______________________________________
      Name:
      Title:]
 

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EXHIBIT H
______________________________
Form of Management Subordination Agreement
______________________________

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MANAGEMENT FEE SUBORDINATION AGREEMENT
THIS MANAGEMENT FEE SUBORDINATION AGREEMENT, dated as of August 31, 2012 (as
amended, restated, supplemented or otherwise modified from time to time, this
“Agreement”), is among (i) PREFERRED APARTMENT ADVISORS, LLC, a Delaware limited
liability company (the “Advisor”), (ii) PREFERRED APARTMENT COMMUNITIES, INC., a
Maryland corporation (the “Parent”), (iii) PREFERRED APARTMENT COMMUNITIES
OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“Borrower”), and
(iv) KEYBANK NATIONAL ASSOCIATION, as administrative agent (herein, together
with its successors and assigns in such capacity, the “Administrative Agent”)
for the Benefited Creditors under the Credit Agreement (as defined below).
PRELIMINARY STATEMENTS:
(1)    Reference is made to the Credit Agreement, dated as of the date hereof
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among the Borrower, the Parent, the lenders from time to
time party thereto (herein, together with any other person that becomes a
“Lender” under the Credit Agreement and the respective successors and assigns of
such “Lenders”, the “Lenders”), and the Administrative Agent. Capitalized terms
used herein without definition have the meanings ascribed thereto in the Credit
Agreement.
(2)    Reference is made to that certain Third Amended and Restated Management
Agreement, dated as of May 18, 2011, among the Advisor, Borrower and Parent (the
“Management Agreement”), pursuant to which the Advisor has agreed to provide
certain management services to the Parent, the Borrower and its Subsidiaries,
and Borrower and Parent have agreed to pay certain fees to the Advisor (all such
fees, howsoever designated, from time to time payable by the Borrower and the
Parent to the Advisor, excluding, in any event, payment of any expenses payable
pursuant to Section 8 of the Management Agreement and any indemnification
obligations payable pursuant to Section 9 of the Management Agreement, are
hereinafter collectively referred to as the “Management Fees”).
(3)    The obligation of the Lenders to provide the financial accommodations
described in the Credit Agreement is subject to the condition, among others,
that the Advisor subordinate the payment of the Management Fees to the payment
of any and all Obligations (such Indebtedness of the Credit Parties is herein
called the “Senior Debt”) in the manner set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, and incorporating the
above-defined terms herein, the parties hereto covenant and agree as follows:
1.
Management Fees Subordinated to Senior Debt. The payment of all Management Fees
shall be subordinate and subject in right of payment to the prior payment in
full in cash of all Senior Debt pursuant to the provisions contained herein.

2.
Payment Over of Proceeds Upon Dissolution, Etc. Upon any distribution of assets
of any Credit Party in the event of any Insolvency Event, then and in any such
event the Benefited Creditors shall be entitled to receive payment in full in
cash of all amounts due or to become due (whether or not an Event of Default has
occurred and is continuing under the terms of the Loan Documents or the Senior
Debt has been declared due and payable prior to the date on which it would
otherwise have become due and payable) on or in respect of any and all Senior
Debt before the Advisor is entitled to receive any payment on account of any
accrued and unpaid Management Fees, and to that end the Benefited Creditors
shall be entitled to

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

receive, for application to the payment of the Senior Debt, any payment or
distribution of any kind or character, whether in cash, property or securities,
which may be payable or deliverable in respect of the accrued and unpaid
Management Fees owed by any Credit Party in any such Insolvency Event.
3.
No Commencement of any Proceeding. The Advisor agrees solely in its capacity as
a creditor of the Credit Parties that, so long as the Senior Debt shall remain
unpaid, it will not commence, or join with any creditor other than the
Administrative Agent and the Lenders in commencing, any Insolvency Proceeding or
any other enforcement action of any kind against any Credit Party. In no event
shall any provision of this Agreement have any effect on the rights and
obligations of the Advisor or any of its Affiliates other than in such Person’s
capacity as a party to the Management Agreement.

4.
No Payment Until Payment in Full of Senior Debt. If an Event of Default shall
have occurred and be continuing, the Credit Parties shall not pay to the
Advisor, and the Advisor shall not accept from the Credit Parties, Management
Fees. Any Management Fees missed due to the application of the preceding
sentence may be paid after the Event of Default that prohibited payment of the
Management Fees has been cured or waived and so long as no other Event of
Default has occurred and is continuing.

5.
Receipt of Prohibited Payments. If the Advisor shall have received any payment
or distribution of assets from any Credit Party of any kind or character,
whether in cash, property or securities, in contravention of this Agreement or
the Credit Agreement, then and in such event such payment or distribution shall
be held in trust for the benefit of the Administrative Agent, shall be
segregated from other funds and property held by the Advisor, and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary endorsement) to be applied (in the case of cash) to or held
as collateral (in the case of noncash property or securities) for the payment or
prepayment of the Senior Debt in accordance with the terms of the Credit
Agreement.

6.
Rights of Subrogation. The Advisor agrees that no payment or distribution to the
Administrative Agent pursuant to the provisions of this Agreement shall entitle
it to exercise any rights of subrogation in respect thereof until the Senior
Debt shall have been paid in full in cash (other than contingent indemnity
obligations for which no claim has been asserted) and the Commitments under the
Credit Agreement shall have terminated.

7.
Agreement Solely to Define Relative Rights. The purpose of this Agreement is
solely to define the relative rights of the Advisor, on the one hand, and the
Administrative Agent, on the other hand. Subject to the rights under this
Agreement of the Administrative Agent and the Benefited Creditors to receive
cash, property or securities from the Credit Parties otherwise payable or
deliverable with respect to the Management Fees, nothing otherwise contained in
this Agreement is intended to or shall impair, as between the Advisor and the
Credit Parties, the obligation of any Credit Party to pay the accrued and unpaid
Management Fees as and when the same shall become due and payable in accordance
with the terms applicable thereto.

8.
No Implied Waivers of Subordination. No right of the Administrative Agent to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Credit
Party, by any act or failure to act by the

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

Administrative Agent, or by any non-compliance by any Credit Party with the
terms, provisions and covenants of any agreement pursuant to which the
Management Fees are created, regardless of any knowledge thereof that the
Administrative Agent or any of the Benefited Creditors may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing paragraph, the
Administrative Agent and the Benefited Creditors may, at any time and from time
to time, without the consent of or notice to the Advisor, without incurring
responsibility to the Advisor and without impairing or releasing the
subordination provided in this Agreement or the obligations hereunder of the
Advisor to the Administrative Agent and the Benefited Creditors, do any one or
more of the following: (i) change the manner, place or terms of payment, or
extend the time of payment, renew or alter the Senior Debt or otherwise amend or
supplement the Senior Debt or the Loan Documents, any Designated Hedge Agreement
or any Bank Product Document; (ii) sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise securing the Senior Debt;
(iii) release any person liable in any manner for the payment or collection of
the Senior Debt; and (iv) exercise or refrain from exercising any rights against
any Credit Party and any other person or entity.
9.
Continuing Force and Effect. This Agreement shall continue in full force and
effect until all of the Obligations (other than contingent indemnity obligations
for which no claim has been asserted) is paid in full in cash, and the
Commitments under the Credit Agreement have terminated, it being contemplated
that this Agreement be of a continuing nature. Upon such payment in full and
termination of the Commitments all Loans and other Obligations (other than
contingent indemnity obligations for which no claim has been asserted) have been
paid in full in cash, this Agreement shall automatically terminate, and the
Administrative Agent, at the expense and reasonable request of the Credit
Parties, will execute and deliver to the relevant Credit Party a proper
instrument or instruments acknowledging the satisfaction and termination of this
Agreement.

10.
Modification, Amendments or Waivers. Any and all agreements amending or changing
any provision of this Agreement or the rights of the Administrative Agent and
the Benefited Creditors hereunder, and any and all waivers or consents to any
departures from the due performance of the Advisor hereunder shall be made only
by written agreement, waiver or consent signed by the Advisor and the
Administrative Agent (acting with the consent of the Required Lenders).

11.
Expenses. The Credit Parties unconditionally agree upon demand to pay to the
Administrative Agent the amount of any and all reasonable and documented
out-of-pocket costs, expenses and disbursements for which reimbursement is
customarily obtained, including but not limited to reasonable fees and expenses
of counsel, which the Administrative Agent may incur in connection with (a) the
exercise or enforcement of any of the rights of the Administrative Agent and the
Benefited Creditors hereunder, or (b) the failure by the Advisor or any Credit
Party to perform or observe any of the provisions hereof.

12.
Severability. The provisions of this Agreement are intended to be severable. If
any provision of this Agreement shall be held invalid or unenforceable in whole
or in part in any jurisdiction, such provision shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without in
any manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.

13.
Governing Law; Waiver of Jury Trial.

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

(a)THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
(b)ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, BORROWER, PARENT AND ADVISOR (EACH AN “OBLIGOR”) CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH OBLIGOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR OTHER DOCUMENT
RELATED THERETO. EACH OBLIGOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF
SUCH STATE.
(c)EACH OBLIGOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS RELATED THERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN
CONTRACT OR TORT OR OTHERWISE; AND PACOP HEREBY AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 13 WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
14.
Successors and Assigns. This Agreement shall inure to the benefit of the
Administrative Agent and each of the Benefited Creditors and their respective
successors and assigns and the obligations of the Advisor and each Credit Party
shall be binding upon its successors and assigns. The duties and obligations of
the Advisor and each Credit Party may not be delegated or transferred by the
Advisor or such Credit Party, as applicable.

15.
Counterparts. This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which, when
executed and delivered, shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument.

16.
Application of Payments. In the event any payments are received by the
Administrative Agent under the terms of this Agreement for application to the
Senior Debt at any time when the Senior Debt has not been declared due and
payable and prior to the date on which it would otherwise become due and
payable, such payment shall constitute a voluntary

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

prepayment of the Senior Debt for all purposes under the Credit Agreement.
17.
Remedies. In the event of a breach by the Advisor in the performance of any of
the terms of this Agreement, the Administrative Agent may demand specific
performance of this Agreement and seek injunctive relief and may exercise any
other remedy available at law or in equity, it being recognized that the
remedies of the Administrative Agent and the Benefited Creditors at law may not
fully compensate the Administrative Agent and the Benefited Creditors for the
damages they may suffer in the event of a breach hereof.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed and delivered as of the date first above written.
PREFERRED APARTMENT ADVISORS, LLC.

By:     
Name:     
Title:     

PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.

By: Preferred Apartment Advisors, LLC, its manager

By:     
Name:     
Title:     

PREFERRED APARTMENT COMMUNITIES, INC.

By: Preferred Apartment Advisors, LLC, its manager

By:     
Name:     
Title:     

KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent

By:     
Name:     
Title: