EXHIBIT 10.9
CREDIT AGREEMENT
DATED AS OF OCTOBER 31, 2006
BY AND AMONG
NNN APARTMENT REIT HOLDINGS, L.P.,
AS BORROWER
WACHOVIA CAPITAL MARKETS, LLC
AS LEAD ARRANGER AND BOOK RUNNING MANAGER
AND
WACHOVIA BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
AND
THE FINANCIAL INSTITUTIONS PARTY HERETO
AND THEIR ASSIGNEES UNDER SECTION 12.5,
AS LENDERS

 

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     THIS CREDIT AGREEMENT (this “Agreement”) dated as of October 31, 2006 by
and among NNN APARTMENT REIT HOLDINGS, L.P., a Virginia limited partnership
(“Borrower”), each of the financial institutions initially a signatory hereto
together with their assignees pursuant to Section 12.5(d) (collectively, the
“Lenders” and individually a “Lender”), and WACHOVIA BANK, NATIONAL ASSOCIATION,
as Agent (the “Agent”).
     WHEREAS, the Lenders have agreed to make a credit facility available to the
Borrower; and
     WHEREAS, the parties desire to enter into this Agreement in order to set
forth the terms and provisions applicable to such facility;
     NOW, THEREFORE, in consideration of the recitals herein and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.0 Definitions.
     In addition to terms defined elsewhere herein, the following terms shall
have the following meanings for the purposes of this Agreement:
     “Additional Costs” has the meaning given that term in Section 4.1.
     “Adjusted EBITDA” means as of any date of determination the sum of
(a) EBITDA of Parent for the immediately preceding two (2) calendar quarters
annualized less (b) the Capital Reserve for such period.
     “Adjusted Eurodollar Rate” means, with respect to each Interest Period for
any LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest Period
by (b) a percentage equal to 1 minus the stated maximum rate (stated as a
decimal) of all reserves, if any, required to be maintained against
“Eurocurrency liabilities” as specified in Regulation D of the Board of
Governors of the Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by an office of any Lender outside of the United
States of America to residents of the United States of America).
     “Affiliate” means as to any Person: any other Person directly or indirectly
controlling, controlled by, or under common control with such Person. For
purposes of this definition, “control” (including with correlative meanings, the
terms “controlling”, “controlled by” and “under common control with”) means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or by contract or otherwise.
     “Agent” means Wachovia Bank, as contractual representative for the Lenders
under the terms of this Agreement, and any of its successors.
     “Agreement Date” means the date as of which this Agreement is dated.
     “Anti-Terrorism Laws” has the meaning given that term in Section 6.1(hh).
     “Applicable Law” means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies, common law
and all orders and decrees of all courts, tribunals and arbitrators.

 

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     “Applicable Margin” means at any time the percentage rate per annum set
forth below in the Base Rate Margin column with respect to Base Rate Loans and
the LIBOR Margin column with respect to LIBOR Loans and determined based upon
the Collateral Pool Leverage Ratio:

                  Pricing Level   Base Rate Margin   LIBOR Margin
Pricing Level 1
    0.35 %     1.35 %
Pricing Level 2
    0.50 %     1.50 %

As of the Agreement Date, the Applicable Margin is determined based on Pricing
Level 2. The Applicable Margin shall not be adjusted based upon the Collateral
Pool Leverage Ratio, if at all, until the Performance Pricing Determination Date
(provided that each change in the Applicable Margin as a result of a change in
the Collateral Pool Leverage Ratio shall be effective only for Loans (including
Conversions or Continuations) which are made on or after the date of the
relevant Performance Pricing Determination Date). In the event that Borrower
shall fail to deliver to the Agent a Compliance Certificate and Collateral Pool
Property Certificate on or before the date required by Section 8.3, then without
limiting any other rights of the Agent and the Lenders under this Agreement, the
Applicable Margin shall be at Pricing Level 2 if such failure is not cured
within any applicable grace or notice and cure period.
     “Appraisal” means, in respect of any Collateral Pool Property, an M.A.I.
appraisal commissioned by and addressed to the Agent (acceptable to Agent as to
form, substance and appraisal date), prepared by a professional appraiser
acceptable to the Agent, having at least the minimum qualifications required
under applicable law governing the Agent and the Lenders, including FIRREA, and
determining the “as is” market value of such Property as between a willing buyer
and a willing seller.
     “Appraised Value” means, with respect to any Collateral Pool Property, the
“as is” market value of such Property as reflected in the then most recent
Appraisal of such Property as the same may have been reasonably adjusted by the
Agent based upon its internal review of such Appraisal which is based on
criteria and factors then generally used and considered by the Agent in
determining the value of similar properties, which review shall be conducted
prior to acceptance of such Appraisal by the Agent.
     “Assignee” has the meaning given that term in Section 12.5(d).
     “Assignment and Acceptance Agreement” means an Assignment and Acceptance
Agreement among a Lender, an Assignee and the Agent, substantially in the form
of Exhibit A.
     “Assignment of Leases and Rents” means each of the assignments of leases
and rents from the Borrower or a Subsidiary Guarantor to the Agent, each such
assignment entered into after the date hereof to be substantially in the form of
Exhibit B, with such changes thereto as Agent may require as a result of state
law or practice.
     “Assignment of Management Agreement and Subordination” means the assignment
of the Management Agreements from Borrower or a Subsidiary Guarantor to the
Agent, as the same may be modified or amended, pursuant to which there shall be
assigned to the Agent for the benefit of the Lenders a security interest in the
interest of such Person with respect to the Management Agreements, together with
the consent of the manager thereunder to such assignment and a subordination of
the manager’s rights with respect to the Collateral Pool Property to the rights
of the Agent with respect thereto, each such assignment to be substantially in
the form of Exhibit C hereto.

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     “Available Amount” means, as of any date of determination, an amount equal
to seventy percent (70%) of the Collateral Pool Value.
     “Available Increase Amount” has the meaning given that term in
Section 2.14.
     “Bankruptcy Code” means Title 11, U.S.C.A., as amended from time to time or
any successor statute thereto.
     “Base Rate” means the per annum rate of interest equal to the greater of
(a) the Prime Rate or (b) the Federal Funds Rate plus one-half of one percent
(0.5%). Any change in the Base Rate resulting from a change in the Prime Rate or
the Federal Funds Rate shall become effective as of 12:01 a.m. on the Business
Day on which each such change occurs. The Base Rate is a reference rate used by
the Lender acting as the Agent in determining interest rates on certain loans
and is not intended to be the lowest rate of interest charged by the Lender
acting as the Agent or any other Lender on any extension of credit to any
debtor.
     “Base Rate Loan” means a Loan bearing interest at a rate based on the Base
Rate.
     “Benefit Arrangement” means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.
     “Borrower” has the meaning set forth in the introductory paragraph hereof.
     “Business Day” means (a) any day other than a Saturday, Sunday or other day
on which banks in Charlotte, North Carolina or New York, New York are authorized
or required to close and (b) with reference to a LIBOR Loan, any such day that
is also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
     “Capital Reserves” means, for any period and with respect to a Property, an
amount equal to (a) $200 per unit per annum for Properties, multiplied by (b) a
fraction, the numerator of which is the number of days in such period and the
denominator of which is 365. If the term Capital Reserves is used without
reference to any specific Property, then the amount shall be determined on an
aggregate basis with respect to all Properties of the Borrower and a
proportionate share of all Properties of all of its Subsidiaries and
Unconsolidated Affiliates.
     “Capitalization Rate” means 7.50% for Properties.
     “Capitalized Lease Obligations” means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP. The amount of a Capitalized Lease Obligation is the capitalized amount of
such obligation as would be required to be reflected on a balance sheet of the
applicable Person prepared in accordance with GAAP as of the applicable date.
     “Cash Equivalents” means: (a) securities issued, guaranteed or insured by
the United States of America or any of its agencies with maturities of not more
than one year from the date acquired; (b) certificates of deposit with
maturities of not more than one year from the date acquired which are issued by
a United States federal or state chartered commercial bank of recognized
standing, or a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development,
or a political subdivision of any such country, acting through a branch or
agency, which bank at the time of the acquisition thereof has capital and
unimpaired surplus in excess of $500,000,000 and which bank or its holding
company at the time of the acquisition thereof has a short-term commercial paper
rating of at least A-2 or the equivalent by S&P or at least P-2

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or the equivalent by Moody’s; (c) reverse repurchase agreements with terms of
not more than seven days from the date acquired, for securities of the type
described in clause (a) above and entered into only with commercial banks having
the qualifications described in clause (b) above; (d) commercial paper issued by
any Person incorporated under the laws of the United States of America or any
State thereof and rated at the time of the acquisition thereof at least A-2 or
the equivalent thereof by S&P or at least P-2 or the equivalent thereof by
Moody’s, in each case with maturities of not more than one year from the date
acquired; and (e) investments in money market funds registered under the
Investment Company Act of 1940, which have at the time of the acquisition
thereof net assets of at least $500,000,000 and at least 85% of whose assets
consist of securities and other obligations of the type described in clauses
(a) through (d) above.
     “Change of Control” means the occurrence of any of the following:
          (a) any “person” or “group” (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person will be deemed to have “beneficial
ownership” of all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than twenty percent (20%) of the total voting
power of the then outstanding voting stock of Parent;
          (b) during any period of 12 consecutive months, a majority of the
Board of Trustees or Directors of Parent consists of individuals who were not
either (i) trustees or directors of Parent as of the corresponding date of the
previous year, (ii) selected or nominated to become trustees or directors by the
Board of Trustees or Directors of Parent of which a majority consisted of
individuals described in clause (b)(i) above, or (iii) selected or nominated to
become trustees or directors by the Board of Trustees or Directors of Parent of
which a majority consisted of individuals described in clause (b)(i) above and
individuals described in clause (b)(ii), above (excluding, in the case of both
clause (ii) and (iii) above, any individual whose initial nomination for, or
assumption of office as, a member of the Board of Trustees or Directors occurs
as a result of an actual or threatened solicitation of proxies or consents for
the election or removal of one or more Directors or Trustees by any Person or
group other than a solicitation for the election of one or more directors or
trustees by or on behalf of the Board);
          (c) Parent fails to be the sole general partner of Borrower and to
directly own, free of any liens, encumbrances or adverse claims, at least
fifty-one percent (51%) of the Equity Interests of Borrower;
          (d) Borrower fails to own, free of any liens, encumbrances or adverse
claims, all of the Equity Interests of each Guarantor (other than Parent);
          (e) NNN Apartment REIT Advisors, LLC shall fail to be the sole advisor
to Parent, or NNN Apartment REIT Advisors, LLC shall fail to be controlled by
Triple Net Properties, LLC: or
          (f) to the extent that any Subsidiary Guarantor has a manager other
than Borrower, there shall be any change in such manager.
A “Change of Control” shall not include the sale, transfer or assignment of
interests as a result of the exercise of remedies by the Mezzanine Lender under
the Mezzanine Loan Documents pursuant to the Intercreditor Agreement.
     “Collateral” means all of the property, rights and interests of the
Borrower and each Guarantor which are subject to the security interests,
security title, liens and mortgages created by the Security Documents,
including, without limitation, the Collateral Pool Properties.

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     “Collateral Account” means a special non-interest bearing deposit account
maintained by the Agent at the Principal Office and under its sole dominion and
control.
     “Collateral Pool Leverage Ratio” means, as of any date of determination,
the ratio (expressed as a percentage) of (a) the sum of the outstanding
principal Loans plus the Letter of Credit Liabilities to (b) the Collateral Pool
Value.
     “Collateral Pool Property Certificate” has the meaning given that term in
Section 8.3.
     “Collateral Pool Property or Collateral Pool Properties” means the Eligible
Real Estate owned or leased (pursuant to an Eligible Ground Lease approved by
the Agent) by the Borrower or a Subsidiary Guarantor which is security for the
Obligations pursuant to the Mortgages.
     “Collateral Pool Value” means as of any date of determination the sum
(without duplication) of (a) for all Collateral Pool Properties which have not
been owned by Borrower or a Subsidiary Guarantor for a period of six
(6) consecutive calendar quarters, the aggregate Appraised Value of such
Collateral Properties, plus (b) for all Collateral Pool Properties that have
been owned by Borrower or a Subsidiary Guarantor for a period of at least six
(6) consecutive calendar quarters, an amount equal to (i) the Net Operating
Income from such Collateral Pool Properties for the two (2) calendar quarters
most recently ended times two (2), divided by (ii) the Capitalization Rate.
     “Commitment” means, as to each Lender, such Lender’s obligation to make
Revolving Loans pursuant to Section 2.1, to issue (in the case of the Issuing
Lender) or participate in (in the case of the other Lenders) Letters of Credit
pursuant to Section 2.3 and to participate in Swingline Loans pursuant to
Section 2.2, to an amount up to, but not exceeding (but in the case of the
Lender acting as the Issuing Lender excluding the aggregate amount of
participations in the Letters of Credit held by other Lenders) the amount set
forth for such Lender on its signature page hereto as such Lender’s “Commitment
Amount” or as set forth in the applicable Assignment and Acceptance Agreement,
as the same may be reduced from time to time pursuant to Section 2.11, increased
pursuant to Section 2.14, or as appropriate to reflect any assignments to or by
such Lender effected in accordance with Section 12.5.
     “Commitment Percentage” means, as to each Lender, the ratio, expressed as a
percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate
amount of the Commitments of all Lenders hereunder; provided, however, that if
at the time of determination the Commitments have terminated or been reduced to
zero, the “Commitment Percentage” of each Lender shall be the Commitment
Percentage of such Lender in effect immediately prior to such termination or
reduction.
     “Compliance Certificate” has the meaning given that term in Section 8.3.
     “Condemnation Proceeds” means all compensation, awards, damages, judgments
and proceeds awarded to the Borrower or a Subsidiary Guarantor by reason of any
Taking, net of all reasonable and customary amounts actually expended to collect
the same.
     “Consolidated Basis” means a Person and its Subsidiaries, consolidated in
accordance with GAAP.
     “Construction-in-Process” means cash expenditures for land and improvements
(including indirect costs internally allocated and development costs) determined
in accordance with GAAP on all Development Properties that are under development
or with respect to which construction is reasonably anticipated to commence
within twelve (12) months of the relevant determination.

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     “Contingent Liabilities” means as to any Person, but without duplication of
any amount included or includable in items (a) through (h), (j) and (k) of
Indebtedness, as applied to any obligation, means and includes liabilities or
obligations with respect to: (a) a guaranty (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
directly or indirectly, in any manner, of any part or all of such obligation;
(b) an agreement, direct or indirect, contingent or otherwise, and whether or
not constituting a guaranty, the practical effect of which is to assure the
payment or performance (or payment of damages in the event of nonperformance) of
any part or all of such obligation, whether by: (i) the purchase of securities
or obligations, (ii) the purchase, sale or lease (as lessee or lessor) of
property or the purchase or sale of services primarily for the purpose of
enabling the obligor with respect to such obligation to make any payment (or
payment of damages in the event of nonperformance) of or on account of any part
or all of such obligation, or to assure the owner of such obligation against
loss, (iii) the supplying of funds to or in any other manner investing in the
obligor with respect to such obligation, (iv) repayment of amounts drawn down by
beneficiaries of letters of credit (including Letters of Credit), or (v) the
supplying of funds to or investing in a Person on account of all or any part of
such Person’s obligation under a guaranty of any obligation or indemnifying or
holding harmless, in any way, such Person against any part or all of such
obligation; (c) all obligations, contingent or otherwise, of such Person under
any synthetic lease, tax retention operating lease, or similar off balance sheet
financing arrangement; (d) all obligations of such Person with respect to any
take-out commitment or forward equity commitment; (e) purchase obligations net
of asset value; and (f) all obligations under performance and/or completion
guaranties (or other agreements the practical effect of which is to assure
performance or completion of such obligations) as and to the extent such
obligations are required to be included as liabilities on the balance sheet of
such Person in accordance with GAAP.
     “Continue”, “Continuation” and “Continued” each refers to the continuation
of a LIBOR Loan from one Interest Period to another Interest Period pursuant to
Section 2.8.
     “Contribution Agreement” means the Contribution Agreement of even date
herewith in substantially the form of Exhibit E to be executed by the Borrower
and the Guarantors.
     “Convert”, “Conversion” and “Converted” each refers to the conversion of a
Loan of one Type into a Loan of another Type pursuant to Section 2.9.
     “Credit Event” means any of the following: (a) the making (or deemed
making) of any Loan, (b) the Conversion of a Loan and (c) the issuance of a
Letter of Credit.
     “Debt to Total Asset Value Ratio” means the ratio (expressed as a
percentage) of (a) the sum of Parent’s, Borrower’s and their respective
Subsidiaries’ Indebtedness to (b) Total Asset Value.
     “Default” means any of the events specified in Section 10.1, whether or not
there has been satisfied any requirement for the giving of notice, the lapse of
time, or both.
     “Defaulting Lender” has the meaning set forth in Section 3.11.
     “Derivatives Contract” means any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement. Not in limitation of the
foregoing, the term “Derivatives Contract” includes any and all transactions of
any

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kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement, including any such
obligations or liabilities under any such master agreement.
     “Derivatives Termination Value” means, in respect of any one or more
Derivatives Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Derivatives Contracts, (a) for
any date on or after the date such Derivatives Contracts have been closed out
and termination value(s) determined in accordance therewith, such termination
value(s), and (b) for any date prior to the date referenced in clause (a) the
amount(s) determined as the mark-to-market value(s) for such Derivatives
Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Derivatives
Contracts (which may include the Agent or any Lender).
     “Development Property” means a Property currently under development that
has not become a Stabilized Property, or on which the improvements related to
the development have not been completed, provided that such a Development
Property on which all improvements related to the development of such Property
have been completed for at least twelve (12) months shall cease to constitute a
Development Property notwithstanding the fact that such Property has not become
a Stabilized Property.
     “Dividend Restriction Date” means the first day of the calendar quarter
first occurring after the earlier to occur of (a) the raising of equity
contributions and commitments in Parent and Borrower in the aggregate of not
less than $1,000,000,000 and (b) the date that is thirty-six (36) months after
the Agreement Date.
     “Dollars” or “$” means dollars in lawful currency of the United States of
America.
     “EBITDA” means, with respect to a Person for any period (without
duplication): (a) net income (or loss) of such Person for such period determined
on a Consolidated Basis (prior to any impact from minority interests) in
accordance with GAAP, exclusive of the following (but only to the extent
included in the determination of such net income (or loss)): (i) depreciation
and amortization expense; (ii) Interest Expense; (iii) income tax expense; and
(iv) extraordinary or non-recurring gains and losses; plus (b) such Person’s pro
rata share of EBITDA of its Unconsolidated Affiliates. EBITDA shall be adjusted
to remove any impact from straight line rent leveling adjustments required under
GAAP and amortization of intangibles pursuant to FAS 141.
     “Effective Date” means the later of: (a) the Agreement Date; and (b) the
date on which all of the conditions precedent set forth in Section 5.1 shall
have been fulfilled or waived in writing by the Requisite Lenders.
     “Eligible Assignee” means any Person who is: (i) currently a Lender; (ii) a
commercial bank, trust company, insurance company, investment bank or pension
fund organized under the laws of the United States of America, or any state
thereof, and having total assets in excess of $5,000,000,000; (iii) a savings
and loan association or savings bank organized under the laws of the United
States of America, or any state thereof, and having a tangible net worth of at
least $500,000,000; or (iv) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having total
assets in excess of $10,000,000,000, provided that such bank is acting through a
branch or agency located in the United States of America. Nothing herein shall
preclude a Lender or any affiliate thereof that is or was a Mezzanine Lender
from being a Lender.

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     “Eligible Ground Lease” means a ground lease as to which no default or
event of default exists, approved by Agent and which at least contains the
following terms and conditions: (a) a remaining term (exclusive of any
unexercised extension options) of 40 years or more from the Effective Date;
(b) the right of the lessee to mortgage and encumber its interest in the leased
property without the consent of the lessor; (c) the obligation of the lessor to
give the holder of any mortgage lien on such leased property written notice of
any defaults on the part of the lessee and agreement of such lessor that such
lease will not be terminated until such holder has had a reasonable opportunity
to cure or complete foreclosure, and fails to do so; (d) reasonable
transferability of the lessee’s interest under such lease, including the ability
to sublease; and (e) such other rights customarily required by mortgagees making
a loan secured by the interest of the holder of the leasehold estate demised
pursuant to a ground lease.
     “Eligible Real Estate” means Property:
          (a) which is wholly-owned in fee (or leased pursuant to an Eligible
Ground Lease) by the Borrower or a Wholly-Owned Subsidiary of Borrower which is
or will become a Subsidiary Guarantor;
          (b) which is located within the contiguous 48 States of the
continental United States or the District of Columbia;
          (c) such Property is free of all material structural defects or major
architectural deficiencies, title defects, environmental conditions or other
adverse matters;
          (d) which is improved as a multifamily property;
          (e) as to which all of the representations set forth in this Agreement
concerning Collateral Pool Properties are true and correct;
          (f) as to which the Agent and the Required Lenders, as applicable,
have received and approved all Eligible Real Estate Qualification Documents, or
will receive and approve them prior to inclusion of such Property as a
Collateral Pool Property; and
          (g) as to which, notwithstanding anything to the contrary contained
herein, but subject to the last sentence of Section 2.18(b), the Agent and the
Required Lenders have approved for inclusion in the Collateral Pool.
     “Eligible Real Estate Qualification Documents” means the documents and
other deliveries described in Schedule 1 attached hereto.
     “Environmental Laws” means any Applicable Law pertaining to any Mold
Condition or relating to environmental protection or the manufacture, storage,
disposal or clean-up of Hazardous Materials including, without limitation, the
following: Clean Air Act, 42 U.S.C. § 7401 et seq.; Federal Water Pollution
Control Act, 33 U.S.C. § 1251 et seq.; Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.;
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
§ 9601 et seq.; National Environmental Policy Act, 42 U.S.C. § 4321 et seq.;
regulations of the Environmental Protection Agency and any applicable rule of
common law and any judicial interpretation thereof relating primarily to the
environment or Hazardous Materials.
     “Equity Interest” means, with respect to any Person, any share of capital
stock of (or other ownership or profit interests in) such Person, any warrant,
option or other right for the purchase or other acquisition from such Person of
any share of capital stock of (or other ownership or profit interests in) such
Person, any security convertible into or exchangeable for any share of capital
stock of (or other

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ownership or profit interests in) such Person or warrant, right or option for
the purchase or other acquisition from such Person of such shares (or such other
interests), and any other ownership or profit interest in such Person
(including, without limitation, partnership, member or trust interests therein),
whether voting or nonvoting, and whether or not such share, warrant, option,
right or other interest is authorized or otherwise existing on any date of
determination.
     “Equity Issuance” means any issuance by a Person of any Equity Interest and
shall in any event include the issuance of any Equity Interest upon the
conversion or exchange of any security constituting Indebtedness that is
convertible or exchangeable, or is being converted or exchanged, for Equity
Interests.
     “Equity Percentage” means the aggregate ownership percentage of Borrower or
a Subsidiary of Borrower in each Unconsolidated Affiliate.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
     “ERISA Group” means the Borrower, the other Obligors, any Subsidiary of
Borrower or any of the other Obligors and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, the other Obligors or any of
their respective Subsidiaries, are treated as a single employer under Section
414 of the Internal Revenue Code.
     “Event of Default” means any of the events specified in Section 10.1,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.
     “Executive Order” has the meaning given that term in Section 6.1(hh).
     “Extension Fee” has the meaning given that term in Section 3.6.
     “Extension Request” has the meaning given that term in Section 2.16.
     “Fair Market Value” means, with respect to (a) a security listed on a
national securities exchange or the NASDAQ National Market, the price of such
security as reported on such exchange by any widely recognized reporting method
customarily relied upon by financial institutions, and (b) with respect to any
other property, the price which could be negotiated in an arm’s-length free
market transaction, for cash, between a willing seller and a willing buyer,
neither of which is under pressure or compulsion to complete the transaction.
     “Federal Funds Rate” means, for any day, the rate per annum (rounded upward
to the nearest 1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day, provided
that (a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Agent by
federal funds dealers selected by the Agent on such day on such transaction as
determined by the Agent.
     “Fees” means the fees and commissions provided for or referred to in
Section 3.6 and any other fees payable by the Borrower to the Agent or any
Lender hereunder or under any other Loan Document.

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     “Fixed Charge Coverage Ratio” means the ratio of (a) Adjusted EBITDA to
(b) Fixed Charges for the period used to calculate EBITDA annualized.
     “Fixed Charges” means, for the immediately preceding two (2) calendar
quarters on an annualized basis, the sum of (a) Interest Expense of the Parent,
the Borrower and their Subsidiaries determined on a Consolidated Basis for such
period, plus (b) all regularly scheduled principal payments made with respect to
Indebtedness of the Parent, the Borrower and their Subsidiaries during such
period, other than any balloon, bullet or similar principal payment which repays
such Indebtedness in full, plus (c) all Preferred Dividends paid during such
period. The Parent’s, the Borrower’s and the Subsidiaries’ Equity Percentage in
the Fixed Charges of their Unconsolidated Affiliates shall be included in the
determination of Fixed Charges.
     “Floating Rate Debt” means all Indebtedness of the Borrower, the other
Obligors and each of their respective Subsidiaries which bears interest at
fluctuating rates (and in any event shall include all Loans and other
Indebtedness of the Borrower under any of the Loan Documents) and for which the
Borrower, such Obligor or such Subsidiary has not obtained Interest Rate
Agreements which Interest Rate Agreements effectively cause such variable rates
to be equivalent to, or to be capped at, fixed rates. For purposes of this
definition, Floating Rate Debt of the Borrower, any other Obligor or any
Subsidiary of the Borrower, the other Obligors and their respective Subsidiaries
shall include the Floating Rate Debt of any Unconsolidated Affiliate of the
Borrower, such Obligor or such Subsidiary, as the case may be, only to the
extent such Floating Rate Debt is recourse to the Borrower, such Obligor or such
Subsidiary.
     “Formation Transactions” means the entity formation transactions described
in the Prospectus.
     “Funds From Operations” means, with respect to a Person and for a given
period, (a) net income (or loss) of such Person determined on a Consolidated
Basis for such period minus (or plus) (b) gains (or losses) from debt
restructuring and sales of property during such period, plus (c) depreciation
with respect to such Person’s real estate assets and amortization (other than
amortization of deferred financing costs) of such Person for such period, all
after adjustment for unconsolidated partnerships and joint ventures. Adjustments
for unconsolidated entities will be calculated to reflect funds from operations
on the same basis.
     “GAAP” means U.S. generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the Agreement Date.
     “Governing Documents” of any Person means the declaration of trust,
certificate or articles of incorporation, by-laws, partnership agreement or
operating or members agreement, as the case may be, and any other organizational
or governing documents, of such Person.
     “Governmental Approvals” means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
     “Governmental Authority” means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including, without limitation, the
Federal Deposit Insurance Corporation, the Comptroller of the Currency or the
Federal Reserve Board, any central bank or any comparable authority) or any
arbitrator with authority to bind a party at law.

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     “Guarantors” (whether one or more) means Parent and any other Person that
is now or hereafter a party to the Guaranty as a “Guarantor”.
     “Guaranties” (whether one or more) means the Guaranty substantially in the
form of Exhibit F executed by the Guarantors as of the Agreement Date and
delivered to the Agent in accordance with this Agreement.
     “Hazardous Materials” means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Environmental Laws as “contaminant”, “hazardous substances”,
“hazardous materials”, “hazardous wastes”, “pollutant”, “toxic substances” or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, “TCLP” toxicity or “EP toxicity”;
(b) oil, petroleum or petroleum derived substances, natural gas, natural gas
liquids or synthetic gas and drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil, natural
gas or geothermal resources; (c) any flammable substances or explosives or any
radioactive materials; (d) asbestos in any form; (e) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; and (f) any other chemicals,
materials or substances regulated pursuant to any Environmental Law.
     “Implied Debt Service” means, as of a given date, an amount equal to the
annual principal and interest payment sufficient to amortize in full during a
25-year period an amount equal to the sum of the aggregate principal balance of
the Loans outstanding as of such date and Letter of Credit Liabilities
outstanding as of such date calculated using an interest rate equal to the
greater of (i) the yield on a 10 year United States Treasury Note issued most
recently prior to the date of determination at such time as determined by the
Agent plus 125 basis points or (ii) 7.00%.
     “Implied Debt Service Coverage Ratio” means the ratio of (a) the Net
Operating Income from the Collateral Pool Properties for the preceding two
(2) calendar quarters annualized to (b) the Implied Debt Service.
     “Indebtedness” means, with respect to a Person, at the time of computation
thereof, all of the following (without duplication): (a) all obligations of such
Person in respect of money borrowed; (b) all obligations of such Person, whether
or not for money borrowed (i) represented by notes payable, or drafts accepted,
in each case representing extensions of credit, (ii) evidenced by bonds,
debentures, notes or similar instruments, or (iii) 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; (c) Capitalized Lease Obligations of such Person; (d) all
reimbursement obligations of such Person under any letters of credit or
acceptances (whether or not the same have been presented for payment); (e) all
Off-Balance Sheet Obligations of such Person; (f) all obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in respect of
any Mandatorily Redeemable Stock issued by such Person or any other Person,
valued at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends; (g) 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 satisfied by the issuance of
Equity Interests (other than Mandatorily Redeemable Stock)); (h) net obligations
under any Derivatives Contract not entered into as a hedge against existing
Indebtedness, in an amount equal to the Derivatives Termination Value thereof;
(i) all Contingent Liabilities of such Person (except for and guaranties of
customary exceptions for fraud, misapplication of funds, environmental
indemnities, and other similar exceptions to recourse liability (but not
exceptions relating to bankruptcy, insolvency, receivership or other similar
events)); (j) all Indebtedness of another Person secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property or

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assets owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness or other payment obligation; and
(k) such Person’s pro rata share of the Indebtedness of any Unconsolidated
Affiliate of such Person. Indebtedness of any Person shall include Indebtedness
of any partnership or joint venture in which such Person is a general partner or
joint venturer to the extent of such Person’s pro rata share of the ownership of
such partnership or joint venture (except if such Indebtedness, or portion
thereof, is recourse to such Person, in which case the greater of such Person’s
pro rata portion of such Indebtedness or the amount of the recourse portion of
the Indebtedness, shall be included as Indebtedness of such Person). All Loans
and Letter of Credit Liabilities shall constitute Indebtedness of the Borrower.
     “Indemnity Agreement” means the Agreement Regarding Environmental Activity
now or hereafter made by the Borrower and Guarantors in favor of the Agent and
the Lenders, as the same may be modified, amended or ratified, such agreement to
be substantially in the form of Exhibit O.
     “Insurance Proceeds” means all insurance proceeds, damages and claims and
the right thereto under any insurance policies relating to any portion of any
Collateral, net of all reasonable and customary amounts actually expended to
collect the same.
     “Intellectual Property” has the meaning given that term in Section 6.1(t).
     “Intercreditor Agreement” means the Intercreditor Agreement dated of even
date herewith made by Agent and the Mezzanine Lenders.
     “Interest Expense” means, for any period, without duplication, (a) total
interest expense of the Parent, the Borrower and their Subsidiaries, including
capitalized interest not funded under a construction loan interest reserve
account plus recurring fees such as recurring issuer, trustee and credit
enhancement fees in connection with tax-exempt financings, determined on a
Consolidated Basis in accordance with GAAP for such period, plus (b) the
Borrower’s and its Subsidiaries’ Equity Percentage of Interest Expense of their
Unconsolidated Affiliates for such period.
     “Interest Period” means with respect to any LIBOR Loan, each period
commencing on the date such LIBOR Loan is made or the last day of the next
preceding Interest Period for such Loan and ending one, two, three or six months
thereafter, as the Borrower may select in a Notice of Borrowing, Notice of
Continuation or Notice of Conversion, as the case may be, except that each
Interest Period that commences on the last Business Day of a calendar month
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period for a Revolving Loan shall
end after the Revolving Loan Termination Date; and (ii) each Interest Period
that would otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day (or, if such next succeeding Business Day falls in
the next succeeding calendar month, on the next preceding Business Day).
     “Interest Rate Agreement” means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar contractual
agreement or arrangement entered into with a nationally recognized financial
institution then having an unsecured, long term credit rating of A-/A-3 (or
equivalent) or higher from both S&P and Moody’s for the purpose of protecting
against fluctuations in interest rates.
     “Internal Revenue Code” means the Internal Revenue Code of 1986, as
amended.
     “Investment” means, with respect to any Person, any acquisition or
investment (whether or not of a controlling interest) by such Person, by means
of any of the following: (a) the purchase or other acquisition of any Equity
Interest in another Person; (b) a loan, advance or extension of credit to,
capital

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contribution to, guaranty of Indebtedness of, or purchase or other acquisition
of any Indebtedness of, another Person, including any partnership or joint
venture interest in such other Person; or (c) the purchase or other acquisition
(in one transaction or a series of transactions) of assets of another Person
that constitute the business or a division or operating unit of another Person.
Any binding commitment to make an Investment in any other Person, as well as any
option of another Person to require an Investment in such Person, shall
constitute an Investment. Except as expressly provided otherwise, for purposes
of determining compliance with any covenant contained in the Loan Documents, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.
     “IPO” means the formation of Borrower and the initial public offering of
common stock in Parent and limited partnership interests in Borrower and the
registration of Parent as a public company with the Securities and Exchange
Commission.
     “Issuing Lender” means Wachovia Bank in its capacity as the Lender issuing
the Letters of Credit and its successors and assigns.
     “Joinder Agreement” means the joinder agreement with respect to the
Guaranty, the Indemnity Agreement and the Contribution Agreement to be executed
and delivered pursuant to Section 7.12 by any additional Guarantor,
substantially in the form of Exhibit G.
     “L/C Commitment Amount” equals $10,000,000.
     “Lead Arranger” means Wachovia Capital Markets, LLC.
     “Leases” means all leases, licenses and agreements, whether written or
oral, relating to the use or occupation of space in any Collateral Pool
Property.
     “Lender” means each financial institution from time to time party hereto
which is a holder of a Revolving Note, together with its respective successors
and permitted assigns. The Issuing Lender shall also be a Lender.
     “Lending Office” means, for each Lender and for each Type of Loan, the
office of such Lender specified as such on its signature page hereto or in the
applicable Assignment and Acceptance Agreement, or such other office of such
Lender as such Lender may notify the Agent in writing from time to time.
     “Letter of Credit” means an irrevocable standby letter of credit in respect
of obligations of the Borrower or a Subsidiary incurred pursuant to contracts
made or performances undertaken or to be undertaken in the ordinary course of
such Person’s business which is payable upon presentation of a sight draft and
other documents described in the Letter of Credit, if any, as originally issued
pursuant to this Agreement or as amended, modified, extended, renewed or
supplemented.
     “Letter of Credit Documents” means, with respect to any Letter of Credit,
collectively, any application therefor, any certificate or other document
presented in connection with a drawing under such Letter of Credit and any other
agreement, instrument or other document governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations.
     “Letter of Credit Liabilities” means, without duplication, at any time and
in respect of any Letter of Credit, the sum of (a) the Stated Amount of such
Letter of Credit plus (b) the aggregate unpaid principal amount of all
Reimbursement Obligations of the Borrower at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Lender

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(other than the Lender acting as the Issuing Lender) shall be deemed to hold a
Letter of Credit Liability in an amount equal to its participation interest in
the related Letter of Credit under Section 2.3, and the Lender acting as the
Issuing Lender shall be deemed to hold a Letter of Credit Liability in an amount
equal to its retained interest in the related Letter of Credit after giving
effect to the acquisition by the Lenders other than the Lender acting as the
Issuing Lender of their participation interests under such section.
     “LIBOR” means, for any LIBOR Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%)
appearing on Dow Jones Markets (formerly Telerate) Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period. If
for any reason such rate is not available, the term “LIBOR” means, for any LIBOR
Loan for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) appearing on the Reuters Screen LIBO
Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on the Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates.
     “LIBOR Loans” means Loans bearing interest at a rate based on LIBOR.
     “Lien” as applied to the property of any Person means: (a) any security
interest, encumbrance, mortgage, deed to secure debt, deed of trust, pledge,
lien, charge or lease constituting a Capitalized Lease Obligation, conditional
sale or other title retention agreement, or other security title, encumbrance or
preferential arrangement which has the same practical effect of constituting a
security interest or encumbrance of any kind, whether voluntarily incurred or
arising by operation of law, in respect of any property of such Person, or upon
the income or profits therefrom; (b) any arrangement, express or implied, under
which any property of such Person is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to the payment of the
general, unsecured creditors of such Person; and (c) the filing of any financing
statement under the Uniform Commercial Code or its equivalent in any
jurisdiction, other than a financing statement filed in respect of a lease not
constituting a Capitalized Lease Obligation pursuant to Section 9-505 (or a
successor provision) of the Uniform Commercial Code as in effect in an
applicable jurisdiction that is not in the nature of a security interest.
     “Loan” means a Revolving Loan or a Swingline Loan. Amounts drawn under a
Letter of Credit shall also be considered Revolving Loans as provided in
Section 2.3.
     “Loan Document” means this Agreement, each Note, each Letter of Credit
Document, the Guaranty, the Contribution Agreement, the Security Documents, each
Joinder Agreement, and each other document or instrument now or hereafter
executed and delivered by an Obligor in connection with, pursuant to or relating
to this Agreement.
     “Management Agreements” means agreements, whether written or oral,
providing for the management of the Collateral Pool Properties or any of them.
     “Mandatorily Redeemable Stock” means, with respect to any Person, any
Equity Interest of such Person which by the terms of such Equity Interest (or by
the terms of any security into which it is convertible or for which it is
exchangeable or exercisable), upon the happening of any event or otherwise
(a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation
or otherwise (other than an Equity Interest to the extent redeemable in exchange
for common stock or other equivalent common Equity Interests), (b) is
convertible into or exchangeable or exercisable for Indebtedness or Mandatorily

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Redeemable Stock, or (c) is redeemable at the option of the holder thereof, in
whole or in part (other than an Equity Interest which is redeemable solely in
exchange for common stock or other equivalent common Equity Interests); in each
case, on or prior to the Revolving Loan Termination Date.
     “Material Adverse Effect” means a material adverse change in or effect on
(a) the business, assets, financial condition, liabilities (actual or
contingent), or results of operations or prospects of Borrower and its
Subsidiaries or any other Obligor and its Subsidiaries each taken as a whole,
(b) the ability of an Obligor to perform its obligations under the Loan
Documents to which it is a party, (c) the validity or enforceability of such
Loan Documents or the creation, perfection or priority of any Liens of Agent in
the Collateral, or (d) the rights and remedies of Lenders and Agent under the
Loan Documents.
     “Material Contract” means any contract or other arrangement (other than
Loan Documents), whether written or oral, to which the Borrower, any other
Obligor or any of their respective Subsidiaries is a party as to which the
breach, nonperformance, cancellation or failure to renew by any party thereto
could reasonably be expected to have a Material Adverse Effect.
     “Mezzanine Borrower” means the Borrower.
     “Mezzanine Loan” means the $15,000,000.00 revolving credit facility made by
Mezzanine Lender to Mezzanine Borrower pursuant to the Mezzanine Loan Agreement.
     “Mezzanine Loan Documents” means the Mezzanine Loan Agreement and the other
agreements evidencing or securing the indebtedness contemplated by the Mezzanine
Loan Agreement, as the same may be amended, restated, consolidated,
supplemented, renewed or extended subject to the terms of the Intercreditor
Agreement.
     “Mezzanine Loan Agreement” means that certain Mezzanine Credit Agreement
dated of even date herewith by and among the Mezzanine Borrower, Wachovia Bank,
the other lenders that are or become parties thereto, and Wachovia Bank in its
capacity as agent for itself and the other lenders that are or become parties
thereto, as the same may be amended, restated, consolidated, supplemented,
renewed or extended subject to the terms of the Intercreditor Agreement.
     “Mezzanine Lenders” means the lenders from time to time a party to the
Mezzanine Loan Agreement, which term shall include without limitation any agent,
collateral agent or nominee acting on behalf of such lenders.
     “Mold” means surficial or airborne microbial constituents, regardless of
genus, species, or whether commonly referred to as mildew, mold, mold spores,
fungi, bacteria or similar description.
     “Mold Condition” means the growth or existence of Mold, in such condition,
location or quantity existing on, within or under a Property as would,
individually or in the aggregate, have any material adverse effect on (i) human
health or the environment, as determined by an independent professional engineer
generally recognized as expert in the detection, analysis and remediation of
environmental matters; (ii) the value or condition of a Property, as determined
by the Agent or the Borrower in their respective reasonable good faith judgment;
or (iii) the business or financial condition of such Property or the owner
thereof, as determined by the Agent or the Borrower in their reasonable good
faith judgment.
     “Moody’s” means Moody’s Investors Service, Inc. and its successors.
     “Mortgage Receivable” means mortgage and notes receivable, including
interest payments thereunder, of Borrower or any Subsidiary in a Person (other
than Borrower or its Subsidiaries).

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     “Mortgages” means the mortgages, deeds to secure debt and/or deeds of trust
from the Borrower or a Subsidiary Guarantor to the Agent for the benefit of the
Lenders (or to trustees named therein acting on behalf of the Agent for the
benefit of the Lenders), as the same may be modified or amended, pursuant to
which the Borrower or a Subsidiary Guarantor has conveyed or granted a mortgage
lien upon or a conveyance in fee simple (or of a leasehold, if applicable) of a
Collateral Pool Property as security for the Obligations, each such mortgage
entered into after the date hereof to be substantially in the form of Exhibit D,
with such changes thereto as Agent may require as a result of state law or
practice.
     “Multiemployer Plan” means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
     “Negative Pledge” means a provision of any document, instrument or
agreement (including any Governing Document), other than this Agreement or any
other Loan Document or Mezzanine Loan Document, that prohibits, restricts or
limits, or purports to prohibit, restrict or limit, the creation or assumption
of any Lien on any assets of a Person as security for the Indebtedness of such
Person or any other Person, or entitles another Person to obtain or claim the
benefit of a Lien on any assets of such Person; provided, however, that an
agreement that conditions a Person’s ability to encumber its assets upon the
maintenance of one or more specified ratios that limit such Person’s ability to
encumber its assets but that do not generally prohibit the encumbrance of its
assets, or the encumbrance of specific assets, shall not constitute a Negative
Pledge.
     “Net Operating Income” or “NOI” means, for any Property and for a given
period, the sum of the following (without duplication and determined on a
consistent basis with prior periods): (a) rents and other revenues received in
the ordinary course from such Property (including proceeds of rent loss or
business interruption insurance but excluding pre-paid rents and revenues
(including termination payments) and security deposits except to the extent
applied in satisfaction of tenants’ obligations for rent) minus (b) all expenses
paid (excluding interest but including an appropriate accrual for property taxes
and insurance) related to the ownership, operation or maintenance of such
Property, including but not limited to property 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 Property, but specifically
excluding general overhead expenses of the Borrower or any Subsidiary and any
property management fees) minus (c) the Capital Reserves for such Property as of
the end of such period minus (d) the greater of (i) the actual property
management fee paid during such period and (ii) an imputed management fee in the
amount of 3% of the gross revenues for such Property for such period. Net
Operating Income shall, as appropriate, include a Person’s pro rata share of Net
Operating Income of its Unconsolidated Affiliates. Net Operating Income shall be
adjusted to remove any impact from straight line rent leveling adjustments
required under GAAP and amortization of intangibles pursuant to FAS 141.
     “Nonrecourse Indebtedness” means, with respect to a Person,
(a) Indebtedness in respect of which recourse for payment (except for customary
exceptions for fraud, misapplication of funds, environmental indemnities,
violation of “special purpose entity” covenants, bankruptcy, insolvency,
receivership or other similar events and other similar exceptions to recourse
liability until a claim is made with respect thereto, and then such Indebtedness
shall not constitute “Nonrecourse Indebtedness” only to the extent of the amount
of such claim) is contractually limited to specific assets of such Person
encumbered by a Lien securing such Indebtedness or (b) if such Person is a
Single Asset Entity, any Indebtedness of such Person.

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     “Note” means a Revolving Note or a Swingline Note.
     “Notice of Borrowing” means a notice in the form of Exhibit H to be
delivered to the Agent pursuant to Section 2.1(b) evidencing the Borrower’s
request for a borrowing of Revolving Loans.
     “Notice of Continuation” means a notice in the form of Exhibit I to be
delivered to the Agent pursuant to Section 2.8 evidencing the Borrower’s request
for the Continuation of a LIBOR Loan.
     “Notice of Conversion” means a notice in the form of Exhibit J to be
delivered to the Agent pursuant to Section 2.9 evidencing the Borrower’s request
for the Conversion of a Loan from one Type to another Type.
     “Notice of Swingline Borrowing” means a notice in the form of Exhibit K to
be delivered to the Agent pursuant to Section 2.2 evidencing the Borrower’s
request for a borrowing of Swingline Loans.
     “Obligations” means, individually and collectively: (a) the aggregate
principal balance of, and all accrued and unpaid interest on, all Loans; (b) all
Reimbursement Obligations and all other Letter of Credit Liabilities; and
(c) all other indebtedness, liabilities, obligations, covenants and duties of
the Borrower and the other Obligors owing to the Agent, the Swingline Lender,
the Issuing Lender or any Lender of every kind, nature and description, under or
in respect of this Agreement or any of the other Loan Documents, including,
without limitation, the Fees and indemnification obligations, whether direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any promissory note.
     “Obligors” means any Person now or hereafter primarily or secondarily
obligated to pay all or any part of the Obligations, including Borrower and
Guarantors.
     “Occupancy Rate” means, with respect to a Property at any time, the ratio,
expressed as a percentage, of (a) the number of multifamily units actually
occupied by tenants that are not affiliated with the Borrower and 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 number of multifamily units of such Property.
     “OFAC” means Office of Foreign Asset Control of the Department of the
Treasury of the United States of America.
     “Off-Balance Sheet Obligations” means liabilities and obligations of the
Parent, the Borrower, any Subsidiary or any other Person in respect of
“off-balance sheet arrangements” (as defined in the SEC Off-Balance Sheet Rules)
which the Parent would be required to disclose in the “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” section of the
Parent’s report on Form 10-Q or Form 10-K (or their equivalents) which the
Parent is required to file with the Securities and Exchange Commission (or any
Governmental Authority substituted therefore). As used in this definition, the
term “SEC Off-Balance Sheet Rules” means the Disclosure in Management’s
Discussion and Analysis About Off Balance Sheet Arrangements, Securities Act
Release No. 33-8182, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17 CFR Parts
228, 229 and 249).
     “Parent” means NNN Apartment REIT, Inc., a Maryland corporation.
     “Participant” has the meaning given that term in Section 12.5(c).

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     “Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as
the same may be amended from time to time, and corresponding provisions of
future laws.
     “PBGC” means the Pension Benefit Guaranty Corporation and any successor
agency.
     “Performance Pricing Determination Date” means the first (1st) Business Day
following the delivery by Borrower to the Agent of the Compliance Certificate
and Collateral Pool Property Certificate at the end of a fiscal quarter or year,
as applicable, (or the first (1st) Business Day after such delivery was
required, as applicable).
     “Permitted Liens” means, as to any asset or property of a Person, (a) liens
securing taxes, assessments and other charges or levies imposed by any
governmental authority (excluding any lien imposed pursuant to any of the
provisions of ERISA or pursuant to any Environmental Laws) or the claims of
materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business,
which are not at the time required to be paid or discharged under the applicable
provisions of this Agreement; (b) liens consisting of deposits or pledges made,
in the ordinary course of business, in connection with, or to secure payment of,
obligations under workers’ compensation, unemployment insurance or similar
applicable laws; (c) liens consisting of encumbrances in the nature of zoning
restrictions, easements, and rights or restrictions of record on the use of real
property, which do not materially detract from the value of such property or
impair the intended use thereof in the business of such Person; (d) the rights
of tenants under leases or subleases not interfering with the ordinary conduct
of business of such Person; (e) liens in favor of the Agent for the benefit of
the Lenders; (f) liens in favor of the Borrower or a Guarantor securing
obligations owing by a Subsidiary to the Borrower or a Guarantor; and (g) as to
any Collateral Pool Property, liens permitted by the applicable Security
Documents.
     “Person” means an individual, corporation, partnership, limited liability
company, joint stock company, association, trust or unincorporated organization,
joint venture, a government or any agency or political subdivision thereof, or
any other entity of whatever nature.
     “Plan” means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (a) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (b) has at any time within the
preceding five years been maintained, or contributed to, by any Person which was
at such time a member of the ERISA Group for employees of any Person which was
at such time a member of the ERISA Group.
     “Post-Default Rate” means, in respect of any principal of any Loan or any
other Obligation that is not paid when due (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum equal to the sum of (a) four percent (4.0%) per annum plus (b) the sum of
(i) the Base Rate plus (ii) the Applicable Margin as in effect from time to
time.
     “Potential Collateral” means any Property of the Borrower or a Subsidiary
Guarantor which is not at the time included in the Collateral and which consists
of (i) Eligible Real Estate, or (ii) Property which is capable of becoming
Eligible Real Estate through the approval of the Agent and the Required Lenders
and the completion and delivery of Eligible Real Estate Qualification Documents.
     “Preferred Dividends” means, for any period and without duplication, all
Restricted Payments paid during such period on Preferred Equity Interests issued
by the Parent, the Borrower, or a Subsidiary of either of them. Preferred
Dividends shall not include dividends or distributions (a) paid or payable
solely in Equity Interests (other than Mandatorily Redeemable Stock) payable to
holders of such class of

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Equity Interests; (b) paid or payable to the Borrower or a Subsidiary of
Borrower; or (c) constituting or resulting in the redemption of Preferred Equity
Interests, other than scheduled redemptions not constituting balloon, bullet or
similar redemptions in full.
     “Preferred Equity Interest” means, with respect to any Person, Equity
Interests in such Person which are entitled to preference or priority over any
other Equity Interest in such Person in respect of the payment of dividends or
distribution of assets upon liquidation or both.
     “Pricing Level” means one of the following two pricing levels, as
applicable, based on the Collateral Pool Leverage Ratio as provided herein:
“Pricing Level 1” means the Pricing Level which would be applicable for so long
as the Collateral Pool Leverage Ratio is less than or equal to 55%.
“Pricing Level 2” means the Pricing Level which would be applicable for so long
as the Collateral Pool Leverage Ratio is greater than 55%.
     “Prime Rate” means the rate of interest per annum announced publicly by the
Lender acting as the Agent as its prime rate from time to time. The Prime Rate
is not necessarily the best or the lowest rate of interest offered by the Lender
acting as the Agent or any other Lender.
     “Principal Office” means the office of the Agent located at One Wachovia
Center, Charlotte, North Carolina, or such other office of the Agent as the
Agent may designate from time to time.
     “Prohibited Person” has the meaning given that term in Section 6.1(hh).
     “Property” means any parcel of real property, together with all
improvements thereon, which is a multifamily property owned, leased pursuant to
a ground lease or operated by Borrower, any other Obligor, or any of their
respective Subsidiaries or any Unconsolidated Affiliate of Borrower and which is
located in a State of the United States of America or the District of Columbia.
     “Prospectus” means the prospectus contained in the final Registration
Statement (File No. 333-130945) as filed by Parent on July 19, 2006 with the
Securities and Exchange Commission in connection with the IPO, as supplemented
by Supplement No. 1 to the Prospectus filed on September 19, 2006.
     “Register” has the meaning given that term in Section 12.5(e).
     “Regulatory Change” means, with respect to any Lender, any change in
Applicable Law effective after the Agreement Date (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks, including such Lender, of or under any Applicable
Law (whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any Governmental Authority or monetary authority
charged with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy.
     “Reimbursement Obligation” means the absolute, unconditional and
irrevocable obligation of the Borrower to reimburse the Issuing Lender for any
drawing honored by the Issuing Lender under a Letter of Credit.
     “REIT” means a Person qualifying for treatment as a “real estate investment
trust” under the Internal Revenue Code.

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     “Release” has the meaning given that term in Section 6.1(p)(ii)(C).
     “Requisite Lenders” means, as of any date, Lenders whose aggregate
Commitment Percentage equals or exceeds 66-2/3% (excluding Defaulting Lenders
who, accordingly, are not entitled to vote), or if the Commitments (or any part
thereof) are no longer in effect as a result of the terms of Section 10.2,
Lenders holding at least 66-2/3% of the aggregate outstanding principal amount
of the Loans and participations in Letters of Credit (excluding Defaulting
Lenders who, accordingly, are not entitled to vote); provided that if there
shall only be two Lenders, then the Requisite Lenders shall mean both of the
Lenders (excluding Defaulting Lenders who, accordingly, are not entitled to
vote).
     “Responsible Officer” means (a) with respect to Parent (acting as a
signatory for Borrower), Parent’s President, chief financial officer, chief
accounting officer or any other senior officer, (b) with respect to any other
Obligor, such Obligor’s chief executive officer, chief financial officer, or any
other senior officer, and (c) with respect to any Lender, any officer, partner,
managing member or similar person apparently authorized to execute documents on
behalf of such Lender. A Responsible Officer shall also include any other person
or officer specifically authorized and designated as such by the applicable
Person.
     “Restricted Payment” means (a) any dividend or other distribution, direct
or indirect, on account of any Equity Interest of the Borrower, any Obligor or
any of their respective Subsidiaries now or hereafter outstanding, except a
dividend payable solely in Equity Interests of identical class to the holders of
that class; (b) any redemption, conversion, exchange, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or indirect,
of any Equity Interest of the Borrower, any Obligor or any of their respective
Subsidiaries now or hereafter outstanding; and (c) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options or other rights
to acquire any Equity Interests of the Borrower, any Obligor or any of their
respective Subsidiaries now or hereafter outstanding.
     “Revolving Loan” means a loan made by a Lender to the Borrower pursuant to
Section 2.1.
     “Revolving Loan Termination Date” means October 31, 2009, or if the
Revolving Loan Termination Date has then been extended pursuant to Section 2.16,
such extended Revolving Loan Termination Date, or if the Commitments are earlier
terminated pursuant to Section 2.11, such earlier termination date.
     “Revolving Note” has the meaning given that term in Section 2.10(a).
     “Securities Act” means the Securities Act of 1933, as amended from time to
time, together with all rules and regulations issued thereunder.
     “Security Documents” means, collectively, the Joinder Agreements, the
Mortgages, the Assignments of Leases and Rents, the Indemnity Agreements, the
Assignment of Management Agreement and Subordination, UCC-1 financing statements
and any further collateral assignments to the Agent for the benefit of the
Lenders.
     “Single Asset Entity” means a bankruptcy remote, single purpose entity
which is a Subsidiary of Borrower which owns real property and related assets
which are security for Indebtedness of such entity, and which Indebtedness does
not constitute Indebtedness of any other Person (except for customary
non-recourse exceptions described in the definition of Nonrecourse
Indebtedness).
     “Solvent” means, when used with respect to any Person, that (a) the fair
value and the fair salable value of its assets are each in excess of the fair
valuation of its total liabilities (including all Contingent

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Liabilities computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that could reasonably
be expected to become an actual and matured liability); (b) such Person is able
to pay its debts or other obligations in the ordinary course as they mature; and
(c) such Person has capital not unreasonably small to carry on its business and
all business in which it proposes to be engaged.
     “S&P” means Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc. and its successors.
     “Stabilized Property” means a completed Property that has achieved an
Occupancy Rate of at least eighty-five percent (85%) for a period of not less
than one (1) full calendar quarter.
     “Stated Amount” means the amount available to be drawn by a beneficiary
under a Letter of Credit from time to time, as such amount may be increased,
reinstated or reduced from time to time in accordance with the terms of such
Letter of Credit.
     “Subsidiary” means, for any Person, any corporation, partnership, limited
liability company or other entity of which at least a majority of the Equity
Interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership, limited liability company or other entity (without
regard to the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person, and
shall include all Persons the accounts of which are consolidated with those of
such Person pursuant to GAAP.
     “Subsidiary Guarantors” means Apartment REIT Walker Ranch, LP, Apartment
REIT Walker Ranch GP, LLC and any additional Subsidiary that is the direct or
indirect owner of a Collateral Pool Property which becomes a Guarantor.
     “Survey” means an instrument survey of each Collateral Pool Property
prepared by a registered land surveyor which shall show the location of all
buildings, structures, easements and utility lines on such property, shall be
sufficient to remove the standard survey exception from the Title Policy, shall
show that all buildings and structures are within the lot lines of the
Collateral Pool Property and shall not show any encroachments by others (or to
the extent any encroachments are shown, such encroachments shall be acceptable
to the Agent in its reasonable discretion), shall show rights of way, adjoining
sites, establish building lines and street lines, the distance to and names of
the nearest intersecting streets and such other details as the Agent may
reasonably require; and shall show whether or not the Collateral Pool Property
is located in a flood hazard district as established by the Federal Emergency
Management Agency or any successor agency or is located in any flood plain,
flood hazard or wetland protection district established under federal, state or
local law and shall otherwise be in form and substance reasonably satisfactory
to the Agent.
     “Swingline Commitment” means the Swingline Lender’s obligation to make
Swingline Loans pursuant to Section 2.2 in an amount up to, but not exceeding,
$10,000,000, as such amount may be reduced from time to time in accordance with
the terms hereof.
     “Swingline Lender” means Wachovia Bank, together with its successors and
assigns.
     “Swingline Loan” means a loan made by the Swingline Lender to the Borrower
pursuant to Section 2.2.

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     “Swingline Note” means the promissory note of the Borrower payable to the
order of the Swingline Lender in a principal amount equal to the amount of the
Swingline Commitment as originally in effect and otherwise duly completed,
substantially in the form of Exhibit L.
     “Syndication Agent” means any Lender now or hereafter designated by Agent
and Borrower as “Syndication Agent.”
     “Taking” means the taking or appropriation (including by deed in lieu of
condemnation) of any Collateral Pool Property, or any part thereof or interest
therein, whether permanently or temporarily, for public or quasi-public use
under the power of eminent domain, by reason of any public improvement or
condemnation proceeding, or in any other manner or any damage or injury or
diminution in value through condemnation, inverse condemnation or other exercise
of the power of eminent domain.
     “Tangible Net Worth” means, as of a given date, the sum of (a) the
stockholders’ equity of the Parent, the Borrower and their Subsidiaries
determined on a Consolidated Basis on such date plus (b) accumulated
depreciation and amortization as of such date minus (c) the following (to the
extent reflected in determining stockholders’ equity of the Parent, the Borrower
and their Subsidiaries): (i) the amount of any write-up in the book value of any
assets contained in any balance sheet resulting from revaluation thereof or any
write up in excess of the cost of such assets acquired, and (ii) all amounts
appearing on the assets side of any such balance sheet for assets which would be
classified as intangible assets under GAAP.
     “Taxes” has the meaning given that term in Section 3.12.
     “Titled Agent” means any of the Lead Arranger, the Syndication Agent and
their respective successors and permitted assigns.
     “Title Insurance Company” means any title insurance company or companies
approved by the Agent and the Borrower.
     “Title Policy” means with respect to each Collateral Pool Property, an ALTA
standard form title insurance policy (or, if such form is not available, an
equivalent, legally promulgated form of mortgagee title insurance policy
reasonably acceptable to the Agent) issued by a Title Insurance Company (with
such reinsurance as the Agent may reasonably require, any such reinsurance to be
with direct access endorsements to the extent available under applicable law) in
an amount as the Agent may reasonably require based upon the fair market value
of the applicable Collateral Pool Property insuring the priority of the Mortgage
thereon and that the Borrower or a Subsidiary Guarantor, as applicable, holds
marketable fee simple title to or a valid and subsisting leasehold interest in
such parcel, subject only to the encumbrances acceptable to Agent in its
reasonable discretion and which shall not contain standard exceptions for
mechanics liens, persons in occupancy (other than tenants as tenants only under
Leases) or matters which would be shown by a survey, shall not insure over any
matter except to the extent that any such affirmative insurance is acceptable to
the Agent in its reasonable discretion, and shall contain (a) a revolving credit
endorsement and (b) such other endorsements and affirmative insurance as the
Agent may reasonably require and is available in the State in which the Real
Estate is located including but not limited to (i) a comprehensive endorsement,
(ii) a variable rate of interest endorsement, (iii) a usury endorsement, (iv) a
doing business endorsement, (v) an ALTA form 3.1 zoning endorsement, (vi) a
“tie-in” endorsement relating to all Title Policies issued by such Title
Insurance Company in respect of other Collateral Pool Properties, and (vii) a
“first loss” endorsement.
     “Total Asset Value” means as of any date of determination the sum (without
duplication) of all of the following of the Parent and its Subsidiaries on a
Consolidated Basis determined in accordance with GAAP applied on a consistent
basis: (a) cash and Cash Equivalents, plus (b) Construction-in-Process

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until the earlier of (i) the date such Property is no longer a Development
Property or (ii) the calendar quarter after the Property becomes a Stabilized
Property, plus (c) with respect to each Property which has previously been
included under clause (b) above as Construction-in-Process but is no longer
eligible to be included therein owned by the Parent or any Subsidiary of Parent,
the quotient of (i) Net Operating Income attributable to such Property for the
two calendar quarters most recently ended times two (2), divided by (ii) the
Capitalization Rate, plus (d) the GAAP book value of Properties acquired during
the most recent period of six (6) consecutive calendar quarters, plus (e) with
respect to each Property which has previously been included under clause (d) but
has been owned by Parent or a Subsidiary of Parent for more than six
(6) consecutive calendar quarters, the quotient of (i) the Net Operating Income
attributable to such Property for the two (2) calendar quarters most recently
ended times two (2), divided by (ii) the Capitalization Rate, plus (f) the GAAP
book value of Unimproved Land, Mortgage Receivables and other promissory notes.
The Parent’s pro rata share of assets held by Unconsolidated Affiliates will be
included in Total Asset Value calculations consistent with the above described
treatment for wholly-owned assets. For purposes of determining Total Asset
Value, Net Operating Income from Properties acquired or disposed of by the
Parent, any Subsidiary of Parent or any Unconsolidated Affiliate during the
immediately preceding two (2) calendar quarters of the Parent shall be excluded.
     “Total Commitment” means, as of any date, the sum of the then current
Commitments of the Lenders. As of the Effective Date, the Total Commitment
(including the Swingline Commitment) is $75,000,000, subject to increase upon an
increase of the Commitment in accordance with the provisions of Section 2.14.
     “Total Indebtedness” means all Indebtedness of the Parent, the Borrower and
all of their Subsidiaries determined on a Consolidated Basis.
     “Type” with respect to any Loan, refers to whether such Loan is a LIBOR
Loan or Base Rate Loan.
     “Unconsolidated Affiliate” means, in respect of any Person, any other
Person (a) 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 first Person on the consolidated financial
statements of such first Person, or (b) which is not a Subsidiary of such first
Person.
     “Unfunded Liabilities” means, with respect to any Plan at any time, the
amount (if any) by which (a) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
     “Unimproved Land” means land on which no development (other than
improvements that are not material and are temporary in nature) has occurred or
for which as of the date of determination no development or construction is
planned in the following twelve (12) months.
     “Wachovia Bank” means Wachovia Bank, National Association and its
successors.
     “Wholly Owned Subsidiary” means any Subsidiary of Borrower in respect of
which all of the equity securities or other ownership interests (other than, in
the case of a corporation, directors’ qualifying shares) are at the time
directly or indirectly owned by Borrower.

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Section 2.0 General; References to Times.
     Unless otherwise indicated, all accounting terms, ratios and measurements
shall be interpreted or determined in accordance with GAAP in effect as of the
Agreement Date. References in this Agreement to “Sections”, “Articles”,
“Exhibits” and “Schedules” are to sections, articles, exhibits and schedules
herein and hereto unless otherwise indicated. References in this Agreement to
any document, instrument or agreement (a) shall include all exhibits, schedules
and other attachments thereto, (b) shall include all documents, instruments or
agreements issued or executed in replacement thereof, to the extent permitted
hereby and (c) means such document, instrument or agreement, or replacement or
predecessor thereto, as amended, supplemented, restated or otherwise modified as
of the date of this Agreement and from time to time thereafter to the extent not
prohibited hereby and in effect at any given time. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter.
Titles and captions of Articles, Sections, subsections and clauses in this
Agreement are for convenience only, and neither limit nor amplify the provisions
of this Agreement. Unless otherwise indicated, all references to time are
references to Charlotte, North Carolina time.
ARTICLE II. CREDIT FACILITY
Section 1.0 Revolving Loans.
     (a) Generally. Subject to the terms and conditions hereof, during the
period from the Effective Date to but excluding the Revolving Loan Termination
Date, each Lender severally and not jointly agrees to make Revolving Loans to
the Borrower in an aggregate principal amount at any one time outstanding up to,
but not exceeding, the amount of such Lender’s Commitment. Subject to the terms
and conditions of this Agreement, during the period from the Effective Date to
but excluding the Revolving Loan Termination Date, the Borrower may borrow,
repay and reborrow Revolving Loans hereunder.
     (b) Requesting Revolving Loans. The Borrower shall give the Agent notice
pursuant to a Notice of Borrowing or telephonic notice of each borrowing of
Revolving Loans. Each Notice of Borrowing shall be delivered to the Agent
(i) before 11:00 a.m. in the case of LIBOR Loans, on the date three (3) Business
Days prior to the proposed date of such borrowing and (ii) in the case of Base
Rate Loans, on the date one (1) Business Day prior to the proposed date of such
borrowing. Any such telephonic notice shall include all information to be
specified in a written Notice of Borrowing and shall be promptly confirmed in
writing by the Borrower pursuant to a Notice of Borrowing sent to the Agent by
telecopy on the same day of the giving of such telephonic notice. The Agent will
transmit by telecopy the Notice of Borrowing (or the information contained in
such Notice of Borrowing) or the information contained in a telephonic notice of
borrowing (if such telephonic notice is received prior to a Notice of Borrowing)
to each Lender promptly upon receipt by the Agent. Each Notice of Borrowing or
telephonic notice of each borrowing shall be irrevocable once given and binding
on the Borrower.
     (c) Disbursements of Revolving Loan Proceeds. No later than 1:00 p.m. on
the date specified in the Notice of Borrowing, each Lender will make available
for the account of its applicable Lending Office to the Agent at the Principal
Office, in immediately available funds, the proceeds of the Revolving Loan to be
made by such Lender. Subject to satisfaction of the applicable conditions set
forth in Article V for such borrowing, the Agent will make the proceeds of such
borrowing available to the Borrower in Dollars, in immediately available funds,
no later than 2:00 p.m. on the date and at the account specified by the Borrower
in such Notice of Borrowing.

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Section 2.0 Swingline Loans.
     (a) Swingline Loans. Subject to the terms and conditions hereof, during the
period from the Effective Date to but excluding the Revolving Loan Termination
Date, the Swingline Lender agrees to make Swingline Loans to the Borrower in an
aggregate principal amount at any one time outstanding up to, but not exceeding,
the amount of the Swingline Commitment. If at any time the aggregate principal
amount of the Swingline Loans outstanding at such time exceeds the Swingline
Commitment in effect at such time, the Borrower shall immediately pay the Agent
for the account of the Swingline Lender the amount of such excess. Subject to
the terms and conditions of this Agreement, the Borrower may borrow, repay and
reborrow Swingline Loans hereunder.
     (b) Procedure for Borrowing Swingline Loans. The Borrower shall give the
Agent and the Swingline Lender notice pursuant to a Notice of Swingline
Borrowing or telephonic notice of each borrowing of a Swingline Loan. Each
Notice of Swingline Borrowing shall be delivered to the Swingline Lender no
later than 11:00 a.m. on the proposed date of such borrowing. Any such
telephonic notice shall include all information to be specified in a written
Notice of Swingline Borrowing and shall be promptly confirmed in writing by the
Borrower pursuant to a Notice of Swingline Borrowing sent to the Swingline
Lender by telecopy on the same day of the giving of such telephonic notice. On
the date of the requested Swingline Loan and subject to satisfaction of the
applicable conditions set forth in Article V for such borrowing, the Swingline
Lender will make the proceeds of such Swingline Loan available to the Borrower
in Dollars, in immediately available funds, at the account specified by the
Borrower in the Notice of Swingline Borrowing not later than 2:00 p.m. on such
date.
     (c) Interest. Swingline Loans shall bear interest at a per annum rate equal
to the Base Rate plus the Applicable Margin for Base Rate Loans. Interest
payable on Swingline Loans is solely for the account of the Swingline Lender.
All accrued and unpaid interest on Swingline Loans shall be payable on the dates
and in the manner provided in Section 2.4 with respect to interest on Base Rate
Loans (except as the Swingline Lender and the Borrower may otherwise agree in
writing in connection with any particular Swingline Loan).
     (d) Swingline Loan Amounts, Etc. Each Swingline Loan shall be in the
minimum amount of $1,000,000 and integral multiples of $500,000 or such other
minimum amounts agreed to by the Swingline Lender and the Borrower. Any
voluntary prepayment of a Swingline Loan must be in integral multiples of
$100,000 or the aggregate principal amount of all outstanding Swingline Loans
(or such other minimum amounts upon which the Swingline Lender and the Borrower
may agree) and in connection with any such prepayment, the Borrower must give
the Swingline Lender prior written notice thereof no later than 10:00 a.m. on
the date of such prepayment. The Swingline Loans shall, in addition to this
Agreement, be evidenced by the Swingline Note.
     (e) Repayment and Participations of Swingline Loans. The Borrower agrees to
repay each Swingline Loan within five (5) days after the date such Swingline
Loan was made. Notwithstanding the foregoing, the Borrower shall repay the
entire outstanding principal amount of, and all accrued but unpaid interest on,
the Swingline Loans on the Revolving Loan Termination Date (or such earlier date
as the Swingline Lender and the Borrower may agree in writing). In lieu of
demanding repayment of any outstanding Swingline Loan from the Borrower in
respect of which the Agent has not either (x) received a Notice of Borrowing
indicating that such Swingline Loan is to be repaid with the proceeds thereof
within five (5) days of the date such Swingline Loan was made or (y) received
notice from the Borrower that it intends to repay such Swingline Loan within
five (5) days of the date such Swingline Loan was made and, in the case of this
clause (y) only, such Swingline Loan is not repaid by 11:30 a.m. on such date,
the Swingline Lender may, on behalf of the Borrower (which hereby irrevocably
direct the Swingline Lender to act on their behalf), request a borrowing of
Revolving Loans (which shall be Base Rate Loans) from the Lenders in an amount
equal to the principal balance of such Swingline Loan. The limitations of

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Section 3.5(a) shall not apply to any borrowing of Base Rate Loans made pursuant
to this subsection. The Swingline Lender shall give notice to the Agent of any
such borrowing of Base Rate Loans not later than 12:00 noon on the proposed date
of such borrowing, and the Agent shall promptly give notice to the Lenders of
any such borrowing of Base Rate Loans. No later than 2:00 p.m. on such date,
each Lender will make available to the Agent at the Principal Office for the
account of Swingline Lender, in immediately available funds, the proceeds of the
Base Rate Loan to be made by such Lender. The Agent shall pay the proceeds of
such Base Rate Loans to the Swingline Lender, which shall apply such proceeds to
repay such Swingline Loan. Immediately upon the making of a Swingline Loan, each
Lender will be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase, without recourse or warranty, an undivided participation interest in
the Swingline Loan in an amount equal to its Commitment Percentage of such
Swingline Loan. If the Lenders are prohibited from making Loans required to be
made under this subsection for any reason, including without limitation, the
occurrence of any of the Events of Default described in Sections 10.1(f) or
10.1(g), each Lender shall fund its participation interest (regardless of
whether the conditions precedent thereto set forth in Section 5.2 are then
satisfied, whether or not the Borrower has submitted a Notice of Borrowing and
whether or not the Commitments are then in effect, any Event of Default exists
or all the Loans have been accelerated) by paying the proceeds thereof to the
Agent for the account of the Swingline Lender in Dollars and in immediately
available funds. If such amount is not in fact made available to the Swingline
Lender by any Lender, the Swingline Lender shall be entitled to recover such
amount on demand from such Lender, together with accrued interest thereon for
each day from the date of demand thereof, at the Federal Funds Rate. If such
Lender does not pay such amount forthwith upon the Swingline Lender’s demand
therefor, and until such time as such Lender makes the required payment, the
Swingline Lender shall be deemed to continue to have outstanding Swingline Loans
in the amount of such unpaid participation obligation for all purposes of the
Loan Documents (other than those provisions requiring the other Lenders to
purchase a participation therein). Further, such Lender shall be deemed to have
assigned any and all payments made of principal and interest on its Revolving
Loans, and any other amounts due to it hereunder, to the Swingline Lender to
fund Swingline Loans in the amount of the participation in Swingline Loans that
such Lender failed to purchase pursuant to this Section until such amount has
been purchased (as a result of such assignment or otherwise). A Lender’s
obligation to purchase such a participation in a Swingline Loan shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including without limitation, (i) any claim of setoff, counterclaim,
recoupment, defense or other right which such Lender or any other Person may
have or claim against the Agent, the Swingline Lender or any other Person
whatsoever, (ii) the occurrence or continuation of a Default or Event of Default
(including without limitation, any of the Defaults or Events of Default
described in Sections 10.1(f) or 10.1(g)) or the termination of any Lender’s
Commitment, (iii) the existence (or alleged existence) of an event or condition
which has had or could have a Material Adverse Effect, (iv) any breach of any
Loan Document by the Agent, any Lender or the Borrower or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. Upon the receipt by Swingline Lender of any payment in respect of
any Swingline Loan, Swingline Lender shall promptly pay to each Lender that has
acquired and funded a participation therein under this Section 2.2(e) such
Lender’s Commitment Percentage of such payment; provided, however, that in the
event that such payment received by the Swingline Lender is required to be
returned, such Lender will return to the Swingline Lender any portion thereof
previously distributed by the Swingline Lender to it.
Section 3.0 Letters of Credit.
     (a) Letters of Credit. Subject to the terms and conditions of this
Agreement, the Issuing Lender, on behalf of the Lenders, agrees to issue for the
account of the Borrower during the period from and including the Effective Date
to, but excluding, the date 30 days prior to the Revolving Loan Termination Date
one or more Standby Letters of Credit up to a maximum aggregate Stated Amount at
any one time outstanding not to exceed the L/C Commitment Amount with respect
thereto.

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     (b) Terms of Letters of Credit. At the time of issuance, the amount, form,
terms and conditions of each Letter of Credit, and of any drafts or acceptances
thereunder, shall be subject to approval by the Issuing Lender and the Borrower.
Notwithstanding the foregoing, in no event may (i) the amount of any Standby
Letter of Credit be less than $300,000, or (ii) the expiration date of any
Standby Letter of Credit extend beyond the later of (A) one (1) year from the
issuance date of such Letter of Credit and (B) the date that is five (5) days
prior to the Revolving Loan Termination Date; provided, however, that a Standby
Letter of Credit may provide for the renewal thereof upon terms satisfactory to
the Issuing Lender for an additional period of up to one (1) year, which
extension term shall in no event extend beyond the date referred to in Section
2.3(b)(ii).
     (c) Requests for Issuance of Standby Letters of Credit. The Borrower shall
give the Issuing Lender and the Agent written notice (or telephonic notice
promptly confirmed in writing) at least five (5) Business Days prior to the
requested date of issuance of a Standby Letter of Credit, such notice to
describe in reasonable detail the proposed terms of such Standby Letter of
Credit and the nature of the transactions or obligations proposed to be
supported by such Standby Letter of Credit, and in any event shall set forth
with respect to such Standby Letter of Credit (i) the proposed initial Stated
Amount, (ii) the beneficiary or beneficiaries, and (iii) the proposed expiration
date. The Borrower shall also execute and deliver such customary letter of
credit application forms as requested from time to time by the Issuing Lender.
Provided the Borrower has given the notice prescribed by the first sentence of
this subsection and subject to Section 2.13 and the other terms and conditions
of this Agreement, including, without limitation, the satisfaction of any
applicable conditions precedent set forth in Article V, and Issuing Lender has
not received written notice from any Lender, the Agent or the Borrower, at least
one Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions contained in
Article V shall not be satisfied, the Issuing Lender shall issue the requested
Standby Letter of Credit on the requested date of issuance for the benefit of
the stipulated beneficiary. The Issuing Lender shall deliver to the Borrower a
copy of each issued Standby Letter of Credit within a reasonable time after the
date of issuance thereof. To the extent any term of a Letter of Credit Document
is inconsistent with a term of any Loan Document, the term of such Loan Document
shall control.
     (d) Reimbursement Obligations. Upon receipt by the Issuing Lender from the
beneficiary of a Letter of Credit of any demand for payment under such Letter of
Credit, the Issuing Lender shall promptly notify the Borrower and the Agent of
the amount to be paid by the Issuing Lender as a result of such demand and the
date on which payment is to be made by the Issuing Lender to such beneficiary in
respect of such demand; provided, however, the Issuing Lender’s failure to give,
or delay in giving, such notice shall not discharge the Borrower in any respect
from the applicable Reimbursement Obligation. The Borrower hereby
unconditionally and irrevocably agrees to pay and reimburse the Agent for the
account of the Issuing Lender for the amount of each demand for payment under
such Letter of Credit on or prior to the date on which payment is to be made by
the Issuing Lender to the beneficiary thereunder, without presentment, demand,
protest or other formalities of any kind. Upon receipt by the Issuing Lender of
any payment in respect of any Reimbursement Obligation, the Issuing Lender shall
promptly pay to each Lender that has acquired and funded a participation therein
under the second sentence of Section 2.3(i) such Lender’s Commitment Percentage
of such payment; provided, however, that in the event that such payment received
by the Issuing Lender is required to be returned, such Lender will return to the
Issuing Lender any portion thereof previously distributed by the Issuing Lender
to it.
     (e) Manner of Reimbursement. Upon its receipt of a notice referred to in
Section 2.3(d), the Borrower shall advise the Agent and the Issuing Lender
whether or not the Borrower intends to borrow hereunder to finance its
obligation to reimburse the Issuing Lender for the amount of the related demand
for payment. If the Borrower fails to so advise the Agent and the Issuing
Lender, or if the Borrower fails to reimburse the Issuing Lender for a demand
for payment under a Letter of Credit by the date of such payment, then (i) if
the applicable conditions contained in Article V would permit the making of

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Revolving Loans, the Borrower shall be deemed to have requested a borrowing of
Revolving Loans (which shall be Base Rate Loans) in an amount equal to the
unpaid Reimbursement Obligation and the Agent shall give each Lender prompt
notice (which shall be no later than 12:00 p.m.) of the amount of the Revolving
Loan to be made available to the Agent for the account of the Issuing Lender not
later than 2:00 p.m. and (ii) if such conditions would not permit the making of
Revolving Loans, the provisions of Section 2.3(j) shall apply. The limitations
of Section 3.5(a) shall not apply to any borrowing of Base Rate Loans under this
subsection.
     (f) Effect of Letters of Credit on Commitments. Upon the issuance by the
Issuing Lender of any Letter of Credit and until such Letter of Credit shall
have expired or been terminated, the Commitment of each Lender shall be deemed
to be utilized for all purposes of this Agreement in an amount equal to the
product of (i) such Lender’s Commitment Percentage and (ii) the sum of (A) the
Stated Amount of such Letter of Credit plus (B) any related Reimbursement
Obligations then outstanding.
     (g) Issuing Lender’s Duties Regarding Letters of Credit; Unconditional
Nature of Reimbursement Obligation. In examining documents presented in
connection with drawings under Letters of Credit and making payments under such
Letters of Credit against such documents, the Issuing Lender shall only be
required to use the same standard of care as it uses in connection with
examining documents presented in connection with drawings under letters of
credit in which it has not sold participations and making payments under such
letters of credit. The Borrower assumes all risks of the acts and omissions of,
or misuse of the Letters of Credit by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing,
neither the Agent, the Issuing Lender nor any of the Lenders shall be
responsible for (i) the form, validity, sufficiency, accuracy, genuineness or
legal effects of any document submitted by any party in connection with the
application for and issuance of or any drawing honored under any Letter of
Credit even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit, or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) failure of the beneficiary of any Letter of Credit to comply fully
with conditions required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telex, telecopy or otherwise, whether or not they
be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit, or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any Letter of Credit, or the proceeds of
any drawing under any Letter of Credit; or (viii) any consequences arising from
causes beyond the control of the Agent, the Issuing Lender or the Lenders. None
of the above shall affect, impair or prevent the vesting of any of the Agent’s,
the Issuing Lender’s or any Lender’s rights or powers hereunder. Any action
taken or omitted to be taken by the Issuing Lender under or in connection with
any Letter of Credit, if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create against the Agent, the Issuing Lender or
any Lender any liability to the Borrower or any Lender. In this connection, the
obligation of the Borrower to reimburse the Issuing Lender for any drawing made
under any Letter of Credit shall be absolute, unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including without limitation, the following
circumstances: (A) any lack of validity or enforceability of any Letter of
Credit Document or any term or provisions therein; (B) any amendment or waiver
of or any consent to departure from all or any of the Letter of Credit
Documents; (C) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against the Agent, any Lender, the Issuing
Lender, any beneficiary or transferee of a Letter of Credit or any other Person,
whether in connection with this Agreement, the transactions contemplated hereby
or in the Letter of Credit Documents or any unrelated transaction; (D) any
breach of contract or dispute between the Borrower, any beneficiary or
transferee of a Letter of Credit, the Agent, the Issuing Lender, any Lender or
any other Person; (E) any draft, certificate, demand, statement or any other
document presented under a Letter of Credit proving to be

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forged, fraudulent, invalid or insufficient in any respect or any statement
therein or made in connection therewith being untrue or inaccurate in any
respect whatsoever; (F) any non-application or misapplication by the beneficiary
or transferee of a Letter of Credit or any other Person of the proceeds of any
drawing under such Letter of Credit; (G) payment by the Issuing Lender under any
Letter of Credit against presentation of a draft, certificate, demand, statement
or other document which does not comply with the terms of such Letter of Credit;
(H) any improper use which may be made of any Letter of Credit or any improper
acts or omissions of any beneficiary or transferee of any Letter of Credit in
connection therewith; (I) any irregularity in the transaction with respect to
which any Letter of Credit is issued, including any fraud by the beneficiary or
any transferee of such Letter of Credit; (J) the legality, validity, form,
regularity or enforceability of the Letter of Credit; (K) the failure of any
payment by Issuing Lender to conform to the terms of a Letter of Credit (if, in
Issuing Lender’s good faith judgment, such payment is determined to be
appropriate); (L) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
(M) the occurrence of any Default or Event of Default; and (N) any other act,
omission to act, delay or circumstance whatsoever that might, but for the
provisions of this Section, constitute a legal or equitable defense to or
discharge of the Borrower’s Reimbursement Obligations. Notwithstanding anything
to the contrary contained in this Section or Section 12.9, but not in limitation
of the Borrower’s unconditional obligation to reimburse the Issuing Lender for
any drawing made under a Letter of Credit as provided in this Section, the
Borrower shall have no obligation to indemnify the Agent, the Issuing Lender or
any Lender in respect of any liability incurred by the Issuing Lender arising
solely out of the gross negligence or willful misconduct of the Issuing Lender
in respect of a Letter of Credit (including, without limitation, a failure of
Issuing Lender to comply with the terms of a Letter of Credit) as actually and
finally determined by a court of competent jurisdiction. Except as otherwise
provided in this Section, nothing in this Section shall affect any rights the
Borrower may have with respect to the Issuing Lender’s gross negligence or
willful misconduct with respect to any Letter of Credit.
     (h) Amendments, Etc. The issuance by the Issuing Lender of any extension,
amendment, supplement or other modification to any Letter of Credit shall be
subject to the same conditions applicable under this Agreement to the issuance
of new Letters of Credit (including, without limitation, that the request
therefor be made through the Issuing Lender), and no such extension, amendment,
supplement or other modification shall be issued unless either (i) the
respective Letter of Credit affected thereby would have complied with such
conditions had it originally been issued hereunder in such extended, amended,
supplemented or modified form or (ii) the Requisite Lenders shall have consented
thereto. In connection with any such extension, amendment, supplement or other
modification, the Borrower shall pay the Fees, if any, payable under
Section 3.6(b).
     (i) Lenders’ Participation in Letters of Credit. Immediately upon the
issuance by the Issuing Lender of any Letter of Credit each Lender shall be
deemed to have irrevocably and unconditionally purchased and received from the
Issuing Lender, without recourse or warranty, an undivided interest and
participation to the extent of such Lender’s Commitment Percentage of the
liability of the Issuing Lender with respect to such Letter of Credit and each
Lender thereby shall absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and shall be unconditionally obligated to the
Issuing Lender to pay and discharge when due, such Lender’s Commitment
Percentage of the Issuing Lender’s liability under such Letter of Credit. In
addition, upon the making of each payment by a Lender to the Agent for the
account of the Issuing Lender in respect of any Letter of Credit pursuant to
Section 2.3(j), such Lender shall, automatically and without any further action
on the part of the Agent, the Issuing Lender or such Lender, acquire (i) a
participation in an amount equal to such payment in the Reimbursement Obligation
owing to the Issuing Lender by the Borrower in respect of such Letter of Credit
and (ii) a participation in a percentage equal to such Lender’s Commitment
Percentage in any interest or other amounts payable by the Borrower in respect
of such Reimbursement Obligation (other than the Fees payable to the Issuing
Lender pursuant to Section 3.6(b)(ii)).

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     (j) Payment Obligation of Lenders. Each Lender severally agrees to pay to
the Agent for the account of the Issuing Lender on demand in immediately
available funds in Dollars the amount of such Lender’s Commitment Percentage of
each drawing paid by the Issuing Lender under each Letter of Credit to the
extent such amount is not reimbursed by the Borrower pursuant to Section 2.3(d).
Each such Lender’s obligation to make such payments to the Agent for the account
of the Issuing Lender under this subsection, and the Issuing Lender’s right to
receive the same, shall be absolute, irrevocable and unconditional and shall not
be affected in any way by any circumstance whatsoever, including without
limitation, (i) the failure of any other Lender to make its payment under this
subsection, (ii) the financial condition of the Borrower or any other Obligor,
(iii) the existence of any Default or Event of Default, including any Event of
Default described in Section 10.1(f) or 10.1(g), or (iv) the termination of the
Commitments. Each such payment to the Agent for the account of the Issuing
Lender shall be made without any offset, abatement, withholding or deduction
whatsoever.
     (k) Information to Lenders. Upon the reasonable request of any Lender from
time to time, the Issuing Lender shall deliver to such Lender information
reasonably requested by such Lender with respect to each Letter of Credit then
outstanding. Other than as set forth in this subsection, the Issuing Lender
shall have no duty to notify the Lenders regarding the issuance or other matters
regarding Letters of Credit issued hereunder. The failure of the Issuing Lender
to perform its requirements under this subsection shall not relieve any Lender
from its obligations under Section 2.3(j).
Section 4.0 Rates and Payment of Interest on Loans.
     (a) Rates. The Borrower promises to pay to the Agent for the account of
each Lender interest on the unpaid principal amount of each Loan made by such
Lender for the period from and including the date of the making of such Loan to
but excluding the date such Loan shall be paid in full, at the following per
annum rates:
          (i) during such periods as a Revolving Loan is a Base Rate Loan, at
the Base Rate (as in effect from time to time) plus the Applicable Margin
(utilizing the applicable “Base Rate Margin” as identified in the definition of
Applicable Margin); and
          (ii) during such periods as a Revolving Loan is a LIBOR Loan, at the
Adjusted Eurodollar Rate for such Loan for the Interest Period therefor plus the
Applicable Margin (using the applicable “LIBOR Margin” as identified in the
definition of Applicable Margin).
Notwithstanding the foregoing, during the continuance of an Event of Default,
the Borrower shall pay to the Agent for the account of each Lender interest at
the Post-Default Rate on the outstanding principal amount of any Loan made by
such Lender, on all Reimbursement Obligations and on any other amount payable by
the Borrower hereunder or under the Notes held by such Lender to or for the
account of such Lender (including without limitation, accrued but unpaid
interest to the extent permitted under Applicable Law).
     (b) Payment of Interest. Accrued interest on each Loan shall be payable in
arrears (i) in the case of a Base Rate Loan on the first day of each calendar
month, (ii) in the case of a LIBOR Loan, on the last day of each Interest Period
therefor (provided, however, if any Interest Period for a LIBOR Loan exceeds
ninety (90) days, interest shall also be payable with respect to such Loans on
the ninetieth (90th) day following the commencement of such Interest Period),
and (iii) in the case of any Loan, upon the payment, prepayment or Continuation
thereof or the Conversion of such Loan to a Loan of another Type (but only on
the principal amount so paid, prepaid, Continued or Converted). Interest payable
at the Post-Default Rate shall be payable from time to time on demand. Promptly
after the determination of any interest rate provided for herein or any change
therein, the Agent shall give notice thereof to the Lenders to which such
interest is payable and to the Borrower. All determinations by the Agent of an
interest rate

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hereunder shall be conclusive and binding on the Lenders and the Borrower for
all purposes, absent manifest error (that is an obvious mathematical error).
Section 5.0 Number of Interest Periods.
     There may be no more than six (6) different Interest Periods for LIBOR
Loans that are Revolving Loans outstanding at the same time.
Section 6.0 Repayment of Loans.
     The Borrower shall repay the entire outstanding principal amount of, and
all accrued but unpaid interest on, the Loans, together with all other amounts
then outstanding under this Agreement, on the Revolving Loan Termination Date.
Section 7.0 Prepayments.
     (a) Optional. Subject to Section 3.5 and Section 4.4, the Borrower may
prepay any Loan at any time without premium or penalty. The Borrower shall give
the Agent at least one (1) Business Day’s prior written notice of the prepayment
of any Revolving Loan. Prepayments shall be accompanied by the payment of all
accrued interest on the amount so prepaid.
     (b) Mandatory.
          (i) If at any time the aggregate principal amount of all outstanding
Revolving Loans, together with the aggregate amount of all Letter of Credit
Liabilities and the aggregate principal amount of all outstanding Swingline
Loans, exceeds the amount of the total Commitment in effect at such time, the
Borrower shall immediately pay to the Agent for the accounts of the Lenders the
amount of such excess. Such payment shall be applied by the Agent to pay all
amounts of principal outstanding on the Swingline Loans and any Reimbursement
Obligations and then to any Revolving Loans Outstanding pro rata in accordance
with Section 3.2 and if any Letters of Credit are outstanding at such time the
remainder, if any, shall be deposited by the Agent into the Collateral Account
for application to any Reimbursement Obligations. If the Borrower is required to
pay any outstanding LIBOR Loans by reason of this Section prior to the end of
the applicable Interest Period therefor, the Borrower shall pay all amounts due
under Section 4.4.
          (ii) If at any time the aggregate principal amount of all outstanding
Loans, together with the aggregate amount of all Letter of Credit Liabilities
and the aggregate principal amount of all outstanding Swingline Loans, exceeds
the amount of the Available Amount in effect at such time, the Borrower shall
pay to the Agent within five (5) Business Days of such event for the accounts of
the Lenders the amount of such excess. Such payment shall be applied by the
Agent to pay all amounts of principal outstanding on the Swingline Loans and any
Reimbursement Obligations and then to any Revolving Loans outstanding pro rata
in accordance with Section 3.2 and if any Letters of Credit are outstanding at
such time the remainder, if any, shall be deposited by the Agent into the
Collateral Account for application to any Reimbursement Obligations. If the
Borrower is required to pay any outstanding LIBOR Loans by reason of this
Section prior to the end of the applicable Interest Period therefor, the
Borrower shall pay all amounts due under Section 4.4.
Section 8.0 Continuation.
     So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, with respect to any Revolving
Loan that is a LIBOR Loan, elect to maintain such LIBOR Loan or any portion
thereof as a LIBOR Loan by selecting a new Interest Period for such

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LIBOR Loan. Each new Interest Period selected under this Section shall commence
on the last day of the immediately preceding Interest Period. Each selection of
a new Interest Period shall be made by the Borrower’s giving to the Agent a
Notice of Continuation not later than 11:00 a.m. on the third (3rd) Business Day
prior to the date of any such Continuation. Such notice by the Borrower of a
Continuation shall be by telephone or telecopy, confirmed immediately in writing
if by telephone, in the form of a Notice of Continuation, specifying (a) the
proposed date of such Continuation, (b) the LIBOR Loans and portions thereof
subject to such Continuation and (c) the duration of the selected Interest
Period, all of which shall be specified in such manner as is necessary to comply
with all limitations on Loans outstanding hereunder. Each Notice of Continuation
shall be irrevocable by and binding on the Borrower once given. Promptly after
receipt of a Notice of Continuation, the Agent shall notify each applicable
Lender by telecopy, or other similar form of transmission, of the proposed
Continuation. If the Borrower shall fail to select in a timely manner a new
Interest Period for any such LIBOR Loan in accordance with this Section, or
shall fail to give a timely Notice of Continuation with respect to a Base Rate
Loan, or if a Default or Event of Default shall have occurred and be continuing,
such Loan will automatically, on the last day of the current Interest Period
therefor, Convert into (or, with respect to a Base Rate Loan, continue as) a
Base Rate Loan notwithstanding the first sentence of Section 2.9 or the
Borrower’s failure to comply with any of the terms of such Section.
Section 9.0 Conversion.
     So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, upon the Borrower’s giving of
a Notice of Conversion to the Agent, Convert all or a portion of a Revolving
Loan of one Type into a Revolving Loan of another Type. Any Conversion of a
Revolving Loan that is a LIBOR Loan into a Base Rate Loan shall be made on, and
only on, the last day of an Interest Period for such LIBOR Loan and, upon
Conversion of a Base Rate Loan into a LIBOR Loan, the Borrower shall pay accrued
interest to the date of Conversion on the principal amount so Converted. Each
such Notice of Conversion shall be given not later than 11:00 a.m. on the
Business Day prior to the date of any proposed Conversion into Base Rate Loans
and on the third (3rd) Business Day prior to the date of any proposed Conversion
into LIBOR Loans. Promptly after receipt of a Notice of Conversion, the Agent
shall notify each applicable Lender by telecopy, or other similar form of
transmission, of the proposed Conversion. Subject to the restrictions specified
above, each Notice of Conversion shall be by telephone (confirmed immediately in
writing) or telecopy in the form of a Notice of Conversion specifying (a) the
requested date of such Conversion, (b) the Type of Revolving Loan to be
Converted, (c) the portion of such Type of Revolving Loan to be Converted,
(d) the Type of Revolving Loan such Revolving Loan is to be Converted into and
(e) if such Conversion is into a LIBOR Loan, the requested duration of the
Interest Period of such Loan. Each Notice of Conversion shall be irrevocable by
and binding on the Borrower once given.
Section 10.0 Notes.
     (a) Revolving Note. The Revolving Loans made by each Lender shall, in
addition to this Agreement, also be evidenced by a promissory note of the
Borrower substantially in the form of Exhibit M (each a “Revolving Note”),
payable to the order of such Lender in a principal amount equal to the amount of
its Commitment as originally in effect and otherwise duly completed.
Notwithstanding the foregoing, Wachovia’s Note includes the Available Increase
Amount, which as of the date of this Agreement is not available to be borrowed
by Borrower, but which may become available after the date of this Agreement as
provided in Section 2.14.
     (b) Records. The date, amount, interest rate, Type and duration of Interest
Periods (if applicable) of each Loan made by each Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by such
Lender on its books and such entries shall be binding on the Borrower absent
manifest error (that is an obvious mathematical error).

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     (c) Lost, Stolen, Destroyed or Mutilated Notes. Upon receipt by the
Borrower of (i) written notice from a Lender that a Note of such Lender has been
lost, stolen, destroyed or mutilated, and (ii) (A) in the case of loss, theft or
destruction, an unsecured agreement of indemnity from such Lender in form
reasonably satisfactory to the Borrower, or (B) in the case of mutilation, upon
surrender and cancellation of such Note, the Borrower shall at its own expense
execute and deliver to such Lender a new Note dated the date of such lost,
stolen, destroyed or mutilated Note.
Section 11.0 Voluntary Reductions of the Commitment.
     The Borrower shall have the right to terminate or reduce the aggregate
unused amount of the Commitments (for which purpose use of the Commitments shall
be deemed to include the aggregate amount of Letter of Credit Liabilities and
the aggregate principal amount of all outstanding Swingline Loans) at any time
and from time to time without penalty or premium upon not less than fifteen
(15) Business Days prior written notice to the Agent of each such termination or
reduction, which notice shall specify the effective date thereof and the amount
of any such reduction and shall be irrevocable once given and effective only
upon receipt by the Agent. The Agent will promptly transmit such notice to each
Lender. Any reduction of the Commitments shall also result in a proportionate
reduction (rounded to the next lowest integral multiple of $100,000) in the L/C
Commitment Amount and in the Swingline Commitment. The Commitments may not be
reduced below $50,000,000 in the aggregate unless the Borrower terminates the
Commitments in their entirety, and, once terminated or reduced, the Commitments
may not be increased or reinstated.
Section 12.0 Expiration or Maturity Date of Letters of Credit Past Revolving
Loan Termination Date.
     If on the date (the “Facility Termination Date”) the Commitments are
terminated (whether voluntarily, by reason of the occurrence of an Event of
Default or otherwise), there are any Letters of Credit outstanding hereunder,
without limiting the terms of Section 2.3(b), the Borrower shall, on the
Facility Termination Date, pay to the Agent an amount of money equal to the
Stated Amount of such Letter(s) of Credit for deposit into the Collateral
Account. If a drawing pursuant to any such Letter of Credit (including for the
purposes hereof any Standby Letter of Credit whose term is extended beyond the
Revolving Loan Termination Date pursuant to Section 2.3(b)) occurs on or prior
to the expiration date of such Letter of Credit, the Borrower authorizes the
Issuing Lender to notify the Agent, and authorize the Agent to pay to the
Issuing Lender monies deposited in the Collateral Account for Issuing Lender to
make payment to the beneficiary with respect to such drawing or the payee with
respect to such presentment. If no drawing occurs on or prior to the expiration
date of such Letter of Credit, the Agent shall withdraw the monies deposited in
the Collateral Account with respect to such outstanding Letter of Credit on or
before the date twenty (20) Business Days after the expiration date of such
Letter of Credit and apply such funds to the Obligations, if any, then due and
payable in the order prescribed by Section 10.3. No amount drawn under a Letter
of Credit shall be subject to reinstatement.
Section 13.0 Amount Limitations.
     Notwithstanding any other term of this Agreement or any other Loan
Document, at no time may the aggregate principal amount of all outstanding
Revolving Loans, together with the aggregate principal amount of all outstanding
Swingline Loans and the aggregate amount of all Letter of Credit Liabilities,
exceed the total Commitments at such time.
Section 14.0 Increase of Commitments.
     Subject to the approval of the Agent, the Borrower shall have the right to
request an increase in the aggregate amount of the Commitments by providing
written notice to the Agent, which notice shall be

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irrevocable once given; provided that (a) the aggregate amount of such increases
in the Commitments pursuant to this Section shall not exceed $125,000,000 (the
“Available Increase Amount”); (b) Borrower may not exercise its rights pursuant
to this Section 2.14 more than three (3) times; and (c) Borrower may not
exercise its rights under this Section 2.14 if there are less than six (6) full
months to the Revolving Loan Termination Date. Each such increase in the
Commitments must be an aggregate minimum amount of $25,000,000 and integral
multiples of $1,000,000 in excess thereof. The Agent shall promptly notify each
Lender of such request. Each existing Lender shall have the right to increase
its Commitment by an amount so that such Lender’s Commitment Percentage shall
not be decreased as a result of such requested increase in the Commitments. All
other allocations of such requested increase shall be subject to the approval of
the Agent. Each Lender shall notify the Agent within ten (10) Business Days
after receipt of the Agent’s notice whether such Lender wishes to increase the
amount of its Commitment. If a Lender fails to deliver any such notice to the
Agent within such time period, then such Lender shall be deemed to have declined
to increase its Commitment. No Lender shall be required to increase its
Commitment and any new Lender(s) becoming a party to this Agreement in
connection with any such requested increase must be an Eligible Assignee. As a
condition to any increase in the Commitment, the Borrower shall pay to the Agent
such fees as it may require in connection with the arrangement of such increase,
and to the Lenders acquiring such increase such fees as they may require in
connection therewith, which fees shall, when paid, be fully earned and
non-refundable under any circumstances. In the event a new Lender or Lenders
become a party to this Agreement, or if any existing Lender agrees to increase
its Commitment, such Lender shall on the date it becomes a Lender hereunder (or
increases its Commitment, in the case of an existing Lender) (and as a condition
thereto) purchase from the other Lenders its Commitment Percentage (as
determined after giving effect to the increase of Commitments) of any
outstanding Revolving Loans, by making available to the Agent for the account of
such other Lenders at the Principal Office, in same day funds, an amount equal
to the sum of (a) the portion of the outstanding principal amount of such
Revolving Loans to be purchased by such Lender plus (b) the aggregate amount of
payments previously made by the other Lenders under Sections 2.2(e) or 2.3(j)
which have not been repaid, and the Borrower shall pay to such other Lenders
interest accrued and unpaid to and as of such date on such portion of the
outstanding principal amount of such Revolving Loans. The Borrower shall also
pay to the Lenders amounts payable, if any, to such Lenders under Section 4.4 as
a result of the prepayment of any such Revolving Loans. No increase of the
Commitments may be effected under this Section if either (x) a Default or Event
of Default shall be in existence on the effective date of such increase or
(y) any representation or warranty made or deemed made by or on behalf of the
Borrower or any other Obligor in any Loan Document is not (or would not be) true
or correct in all material respects on the effective date of such increase
(except for representations or warranties which expressly relate solely to an
earlier date). In addition, as a condition to the effectiveness of any increase,
the Borrower and the Guarantors shall execute and deliver to Agent and the
Lenders such additional documents (including, without limitation, amendments to
the Security Documents), instruments, certifications and opinions as the Agent
may reasonably require, and the Borrower shall pay the cost of any mortgagee’s
title insurance policy or any endorsement or update thereto or any updated title
and UCC searches, all recording costs and fees, and any and all intangible taxes
or other documentary or mortgage taxes, assessments or charges or any similar
fees, taxes or expenses which are demanded or payable in connection with such
increase. In connection with any increase in the aggregate amount of the
Commitments pursuant to this subsection, (A) any Lender becoming a party hereto
shall execute such documents and agreements as the Agent may reasonably request
and (B) the Borrower shall make appropriate arrangements so that each new
Lender, and any existing Lender increasing its Commitment, receives a new or
replacement Revolving Note, as appropriate, in the amount of such Lender’s
Commitment contemporaneously with of the effectiveness of the applicable
increase in the aggregate amount of Commitments. Upon the effective date of the
increase in the aggregate Total Commitments pursuant to this Section 2.14,
Wachovia shall assign a portion of its Revolving Note equal to the amount of
such increase acquired by the Lenders or an assignee and such amount shall
become part of the aggregate Total Commitment.

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Section 15.0 Advances by Agent.
     Unless the Agent shall have been notified by any Lender prior to the
specified date of borrowing that such Lender does not intend to make available
to the Agent the Loan to be made by such Lender on such date, the Agent may
assume that such Lender will make the proceeds of such Loan available to the
Agent on the date of the requested borrowing and the Agent may (but shall not be
obligated to), in reliance upon such assumption, make available to the Borrower
the amount of such Loan to be provided by such Lender and such Lender shall be
liable to Agent for the amount of such advance. If such Lender does not pay such
corresponding amount upon the Agent’s demand therefor, the Agent will promptly
notify the Borrower, and the Borrower shall promptly pay such corresponding
amount to the Agent. The Agent shall also be entitled to recover from the 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 Agent to the Borrower to the date such corresponding amount is recovered
by the Agent at a per annum rate equal to (i) from the Borrower at the
applicable rate for such Loan or (ii) from a Lender at the Federal Funds Rate.
Subject to the terms of this Agreement (including, without limitation,
Section 12.15), Borrower does not waive any claim that it may have against a
Defaulting Lender.
Section 16.0 Extension of Revolving Loan Termination Date.
     (a) Provided that no Default or Event of Default shall have occurred and be
continuing, the Borrower shall have the right to extend the Revolving Loan
Termination Date to October 31, 2010 upon satisfaction of the following
conditions precedent which must be satisfied prior to the effectiveness of such
extension of the Revolving Loan Termination Date:
          (i) Extension Request. The Borrower shall deliver written notice of
such request (the “Extension Request”) to Agent not earlier than the date which
is one hundred eighty (180) days prior to the Revolving Loan Termination Date
and not later than the date which is ninety (90) days prior to the Revolving
Loan Termination Date;
          (ii) Payment of the Extension Fee. Borrower shall pay to Agent the
extension fee pursuant to Section 3.6(d);
          (iii) No Default. On the date the Extension Request is submitted and
on the Revolving Loan Termination Date (as determined without regard to such
extension), there shall exist no Default or Event of Default;
          (iv) Representations and Warranties. The representations and
warranties made by or on behalf of the Borrower, the other Obligors and the
Subsidiaries of the Borrower and the other Obligors in the Loan Documents or
otherwise made by or on behalf of the Borrower, the other Obligors and the
Subsidiaries of the Borrower and the other Obligors in connection therewith or
after the date thereof (except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier
date)) shall have been true and correct in all material respects (and without
regard to any qualifications limiting such representations to knowledge or
belief) on the date the Extension Request is made and on the Revolving Loan
Termination Date (as determined without regard to such Extension Request); and
Each Extension Request shall constitute a representation and warranty by the
Borrower that all of the foregoing conditions have been satisfied on the date of
such Extension Request. The Borrower shall not have the right to make an
Extension Request at any time after the Revolving Loan Termination Date.
     (b) In the event that the Revolving Loan Termination Date has been extended
as provided in Section 2.16(a), then provided that no Default or Event of
Default shall have occurred and be continuing,

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the Borrower shall have the option to be exercised by giving an Extension
Request to the Agent not more than one hundred eighty (180) days and not less
than ninety (90) days prior to the scheduled Revolving Loan Termination Date,
subject to the terms and conditions set forth in this Agreement, to extend the
Revolving Loan Termination Date by one (1) additional year to October 31, 2011.
The obligation of the Agent and the Lenders to extend the Revolving Loan
Termination Date as provided in this Section 2.16 shall be subject to the
satisfaction again of each and every condition set forth in Section 2.16(a).
Section 17.0 Appraisals; Appraised Value.
     (a) The Agent may, for the purpose of determining the current Appraised
Value of the Collateral Pool Properties, obtain new Appraisals or an update to
existing Appraisals with respect to the Collateral Pool Properties, or any of
them, as the Agent shall determine (i) at any time that the regulatory
requirements of any Lender generally applicable to real estate loans of the
category made under this Agreement as reasonably interpreted by such Lender
shall require more frequent Appraisals, or (ii) at any time following a Default
or Event of Default, or (iii) if the Agent reasonably believes that there has
been a material adverse change with respect to any Collateral Pool Property
including, without limitation, a material change in the market in which any
Collateral Pool Property is located which may affect the value of such
Collateral Pool Property. The expense of such Appraisals and/or updates
performed pursuant to this Section 2.17(a) shall be borne by the Borrower and
payable to Agent within fifteen (15) days of demand.
     (b) The Borrower acknowledges that the Agent has the right to approve any
Appraisal performed pursuant to this Agreement. The Borrower further agrees that
the Lenders and Agent do not make any representations or warranties with respect
to any such Appraisal and shall have no liability as a result of or in
connection with any such Appraisal for statements contained in such Appraisal,
including without limitation, the accuracy and completeness of information,
estimates, conclusions and opinions contained in such Appraisal, or variance of
such Appraisal from the fair value of such property that is the subject of such
Appraisal given by the local tax assessor’s office, or the Borrower’s idea of
the value of such property.
Section 18.0 Addition of Collateral Pool Properties.
     (a) After the Effective Date, the Borrower shall have the right, subject to
the consent of the Agent and the Required Lenders (which consent may be withheld
in their sole and absolute discretion) and the satisfaction by the Borrower of
the conditions set forth in this Section 2.18, to add Potential Collateral to
the Collateral Pool Properties. In the event the Borrower desires to add
additional Potential Collateral as aforesaid, the Borrower shall provide written
notice to the Agent of such request (which the Agent shall promptly furnish to
the Lenders), together with all documentation and other information required to
permit the Agent to determine whether such Property is Eligible Real Estate.
Thereafter, the Agent shall have ten (10) Business Days from the date of the
receipt of such documentation and other information to advise the Borrower
whether the Required Lenders consent to the acceptance of such Potential
Collateral. Notwithstanding the foregoing, no Potential Collateral shall be
included as a Collateral Pool Property unless and until the following conditions
precedent shall have been satisfied:
          (i) such Potential Collateral shall be Eligible Real Estate;
          (ii) the owner of any such Potential Collateral (and any indirect
owner of such Subsidiary Guarantor if the owner of such Property is or is to
become a Subsidiary Guarantor) shall have executed a Joinder Agreement and
satisfied the conditions of Section 7.12;
          (iii) the Borrower or the Subsidiary which is the owner of the
Potential Collateral shall have executed and delivered to the Agent all Eligible
Real Estate Qualification Documents, all of

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which instruments, documents or agreements shall be in form and substance
reasonably satisfactory to the Agent;
          (iv) after giving effect to the inclusion of such Potential
Collateral, each of the representations and warranties made by or on behalf of
the Borrower and each other Obligor contained in this Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true and accurate in all material
respects both as of the date as of which it was made and shall also be true and
accurate as of the time of the addition of the Collateral Pool Property, except
to the extent that such representations and warranties expressly relate solely
to an earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date) and except for changes in
factual circumstances specifically and expressly permitted hereunder, and no
Default or Event of Default shall have occurred and be continuing (including,
without limitation, any Default under Section 9.14); and
          (v) the Agent shall have consented to, and Agent shall have received
the prior written consent of the Required Lenders to, the inclusion of such
Property as a Collateral Pool Property.
     (b) Borrower may, at its option, obtain preliminary approval of the
Required Lenders of or Potential Collateral by delivering to the Agent and each
of the Lenders the following with respect to such Potential Collateral:
          (i) a physical description of the Property;
          (ii) current rent rolls, historic operating statements and operating
and capital budgets (if available to Borrower), and projected operating and
near-term capital expenditure budgets for such Property reasonably satisfactory
to the Required Lenders;
          (iii) a current environmental report, a current engineering report and
similar information reasonably satisfactory to the Agent; and
          (iv) a certification to the knowledge of Borrower that such Property
will satisfy (or is anticipated to satisfy upon the acceptance of such Property
as a Collateral Pool Property) each of the other conditions to the acceptance of
Property as a Collateral Pool Property. The Required Lenders shall have ten
(10) Business Days following receipt of all of the foregoing items to grant or
deny preliminary approval for such proposed Potential Collateral. If a Lender
shall fail to respond within such ten (10) Business Day period, such Lender
shall be deemed to have approved such proposed Potential Collateral. Agent shall
notify the Borrower if and when the Required Lenders have granted such
preliminary approval. In the event that the Required Lenders grant such
preliminary approval, the Borrower shall satisfy the remaining requirements to
the acceptance of such Property as a Collateral Pool Property as provided in
this Section 2.18. Such Property shall not be included as a Collateral Pool
Property until the requirements of this Section 2.18 are satisfied.
Section 19.0 Release of Collateral Pool Property.
     Provided no Default or Event of Default shall have occurred hereunder and
be continuing (or would exist immediately after giving effect to the
transactions contemplated by this Section 2.19), the Agent shall release a
Collateral Pool Property from the lien or security title of the Security
Documents encumbering the same in connection with a sale, other permanent
disposition or refinancing of such Collateral Pool Property as permitted by this
Agreement upon the request of the Borrower subject to and upon the following
terms and conditions:

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     (a) the Borrower shall deliver to the Agent written notice of its desire to
obtain such release no later than ten (10) days prior to the date on which such
release is to be effected;
     (b) the Borrower shall submit to the Agent with such request a Compliance
Certificate prepared using the financial statements of the Borrower most
recently provided or required to be provided to the Agent under Section 8.1 or
Section 8.2 adjusted in the best good faith estimate of the Borrower to give
effect to the proposed release and demonstrating that no Default or Event of
Default with respect to the covenants referred to therein shall exist after
giving effect to such release;
     (c) all release documents to be executed by the Agent shall be in form and
substance reasonably satisfactory to the Agent;
     (d) the Borrower shall pay all reasonable costs and expenses of the Agent
in connection with such release, including without limitation, reasonable
attorney’s fees;
     (e) such release shall be permitted under the Mezzanine Loan Documents,
upon consummation thereof no default or event of default under any of the
Mezzanine Loan Documents shall exist, and such Collateral Pool Property shall be
released from the Mezzanine Loan Documents;
     (f) the Borrower shall pay to the Agent for the account of the Lenders a
release price, which payment shall be applied to reduce the outstanding
principal balance of the Loans as provided in Section 2.7(b)(ii), in an amount
equal to the amount necessary to reduce the outstanding principal balance of the
Loans and the Letter of Credit Liabilities so that no violation of the covenant
set forth in Section 9.1(f) shall occur; and
     (g) without limiting or affecting any other provision hereof, any release
of a Collateral Pool Property will not cause the Borrower to be in violation of
the covenants set forth in Sections 9.1 or 9.14.
ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS
Section 1.0 Payments.
     Except to the extent otherwise provided herein, all payments of principal,
interest and other amounts to be made by the Borrower under this Agreement or
any other Loan Document shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Agent at its Principal
Office, not later than 2:00 p.m. on the date on which such payment shall become
due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day). Subject to Sections 3.2 and
3.3., the Agent may (but shall not be obligated to) debit the amount of any such
payment which is not made by such time from any special or general deposit
account of Borrower with the Agent. The Borrower shall, at the time of making
each payment under this Agreement or any Note, specify to the Agent the amounts
payable by the Borrower hereunder to which such payment is to be applied. Each
payment received by the Agent for the account of a Lender under this Agreement
or any Note shall be paid to such Lender at the applicable Lending Office of
such Lender no later than one (1) Business Day after receipt. If the Agent fails
to pay such amount to a Lender as provided in the previous sentence, the Agent
shall pay interest on such amount until paid at a rate per annum equal to the
Federal Funds Rate from time to time in effect. If the due date of any payment
under this Agreement or any other Loan Document would otherwise fall on a day
which is not a Business Day such date shall be extended to the next succeeding
Business Day and interest shall be payable for the period of such extension. If
a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be determined by such court.

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Section 2.0 Pro Rata Treatment.
     Except to the extent otherwise provided herein: (i) each borrowing from the
Lenders under Section 2.1(a) shall be made from the Lenders, each payment of the
Fees under Section 3.6(a), Section 3.6(b)(ii) and Section 3.6(d) shall be made
for the account of the Lenders, and each termination or reduction of the amount
of the Commitments under Section 2.11 shall be applied to the respective
Commitments of the Lenders, pro rata according to the amounts of their
respective Commitments; (ii) each payment or prepayment of principal of
Revolving Loans by the Borrower shall be made for the account of the Lenders pro
rata in accordance with the respective unpaid principal amounts of the Revolving
Loans held by them, provided that if immediately prior to giving effect to any
such payment in respect of any Revolving Loans the outstanding principal amount
of the Revolving Loans shall not be held by the Lenders pro rata in accordance
with their respective Commitments in effect at the time such Revolving Loans
were made, then such payment shall be applied to the Revolving Loans in such
manner as shall result, as nearly as is practicable, in the outstanding
principal amount of the Revolving Loans being held by the Lenders pro rata in
accordance with their respective Commitments; (iii) each payment of interest on
Revolving Loans by the Borrower shall be made for the account of the Lenders pro
rata in accordance with the amount of interest on such Revolving Loans then due
and payable to the respective Lenders; (iv) the making, Conversion and
Continuation of Revolving Loans of a particular Type (other than Conversions
provided for by Section 4.6) shall be made pro rata among the Lenders according
to the amounts of their respective Commitments (in the case of making of
Revolving Loans) or their respective Revolving Loans (in the case of Conversions
and Continuations of Revolving Loans) and the then current Interest Period for
each Lender’s portion of each Revolving Loan of such Type shall be coterminous;
(v) the Lenders’ participation in, and payment obligations in respect of,
Letters of Credit under Section 2.3, shall be pro rata in accordance with their
respective Commitments; and (vi) the Lenders’ participation in, and payment
obligations in respect of, Swingline Loans under Section 2.2, shall be in
accordance with their respective Commitments. All payments of principal,
interest, fees and other amounts in respect of the Swingline Loans shall be for
the account of the Swingline Lender only (except to the extent any Lender shall
have acquired a participating interest in any such Swingline Loan pursuant to
Section 2.2(e)).
Section 3.0 Sharing of Payments, Etc.
     If a Lender shall obtain payment of any principal of, or interest on, any
Loan made by it to the Borrower under this Agreement, or shall obtain payment on
any other Obligation owing by the Borrower or an Obligor through the exercise of
any right of set-off, banker’s lien or counterclaim or similar right or
otherwise or through voluntary prepayments directly to a Lender or other
payments made by the Borrower to a Lender not in accordance with the terms of
this Agreement and such payment should be distributed to some or all of the
Lenders pro rata in accordance with Section 3.2 or Section 10.3, as applicable,
such Lender shall promptly purchase from the other applicable Lenders
participations in (or, if and to the extent specified by such Lender, direct
interests in) the Loans made by such other Lenders or other Obligations owed to
such other Lenders in such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all the applicable Lenders shall
share the benefit of such payment (net of any reasonable expenses which may be
incurred by such Lender in obtaining or preserving such benefit) pro rata in
accordance with Section 3.2 or Section 10.3. To such end, all the applicable
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. The Borrower agrees that any Lender so purchasing a participation
(or direct interest) in the Loans or other Obligations owed to such other
Lenders may exercise all rights of set-off, banker’s lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.

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Section 4.0 Several Obligations.
     No Lender shall be responsible for the failure of any other Lender to make
a Loan or to perform any other obligation to be made or performed by such other
Lender hereunder, and the failure of any Lender to make a Loan or to perform any
other obligation to be made or performed by it hereunder shall not relieve the
obligation of any other Lender to make any Loan or to perform any other
obligation to be made or performed by such other Lender.
Section 5.0 Minimum Amounts.
     (a) Borrowings and Conversions. Each borrowing of Base Rate Loans shall be
in an aggregate minimum amount of $1,000,000. Each borrowing and each Conversion
of LIBOR Loans shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $1,000,000 in excess of that amount.
     (b) Prepayments. Each voluntary prepayment of Revolving Loans (except
pursuant to Section 2.19(f)) shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $500,000 in excess thereof (or, if less,
the aggregate principal amount of Revolving Loans then outstanding).
     (c) Reductions of Commitments. Each reduction of the Commitments under
Section 2.11 shall be in an aggregate minimum amount of $5,000,000 and integral
multiples of $1,000,000 in excess thereof.
Section 6.0 Fees.
     (a) Unused Fee. Borrower agrees to pay Agent for the account of each Lender
an annual unused fee calculated at the rate per annum set forth below on the
average daily amount by which the total Commitment exceeds the sum of
outstanding Revolving Loans plus the Stated Amount of the Letters of Credit
during such calendar quarter for the period from and including the Agreement
Date to but excluding the date the total Commitment is terminated or reduced to
zero or the Revolving Loan Termination Date. The unused fee shall be calculated
based on the ratio (expressed as a percentage) of (a) the average daily amount
of the sum of outstanding Revolving Loans plus the Stated Amount of the Letters
of Credit during such calendar quarter to (b) the total Commitment as follows:

          Ratio of Outstanding principal     balance of Revolving Loans and    
Letters of Credit to total Commitment   Rate
Less than 50%
    0.250 %
Greater than or equal to 50%
    0.125 %

Such fee when paid shall be non-refundable and shall be paid in arrears on
(i) the last Business Day of March, June, September and December, (ii) the date
of each reduction of the Commitments (but only on the amount of the reduction)
and (iii) the Revolving Loan Termination Date.
     (b) Letter of Credit Fees.
          (i) The Borrower shall pay to the Agent for the account of the Issuing
Lender only, and not the account of any other Lender, a fee in respect of each
Letter of Credit at the rate equal to one-

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eighth of one percent (0.125%) of the Stated Amount of each Letter of Credit
(but in any event not less than $500) payable (A) for the period from and
including the date of issuance of such Letter of Credit through and including
the expiration date of such Letter of Credit and (B) if the expiration date of
any Letter of Credit is extended (whether as a result of the operation of an
automatic extension clause or otherwise), for the period from but excluding the
previous expiration date to and including the extended expiration date.
          (ii) The Borrower agrees to pay to the Agent for the account of each
Lender a letter of credit fee at a rate per annum equal to the Applicable Margin
for Revolving Loans that are LIBOR Loans times the daily average Stated Amount
of each Letter of Credit for the period from and including the date of issuance
or extension of such Letter of Credit (A) to and including the date such Letter
of Credit expires or is terminated or (B) to but excluding the date such Letter
of Credit is drawn in full. Such fees shall be nonrefundable and payable in
arrears on the last Business Day of March, June, September and December in each
year, on the Revolving Loan Termination Date, and on the date the Commitments
are terminated or reduced to zero. During the continuance of an Event of
Default, the Letter of Credit fee payable pursuant to this Section 3.6(b)(ii)
shall be payable at a rate per annum equal to the sum of (x) the Applicable
Margin for Revolving Loans that are LIBOR Loans plus (y) four percent (4%), and
such fees shall be due and payable upon demand.
          (iii) The Borrower shall pay directly to the Issuing Lender from time
to time on demand all commissions, charges, costs and expenses in the amounts
customarily charged by the Issuing Lender from time to time in like
circumstances with respect to the issuance of each Letter of Credit, drawings,
amendments and other transactions relating thereto.
     (c) Administrative and Other Fees. The Borrower agrees to pay the
reasonable administrative and other fees of the Agent as may be agreed to in
writing from time to time.
     (d) Extension Fee. Borrower agrees to pay Agent for the account of each
Lender an extension fee concurrently with the extension of the Revolving Loan
Termination Date pursuant to Section 2.16 equal to 0.20% of the total Commitment
(the “Extension Fee”).
Section 7.0 Computations.
     Unless otherwise expressly set forth herein, any accrued interest on any
Loan, any Fees or any other Obligations due hereunder shall be computed on the
basis of a year of 360 days (or a year of 365 days in the case of Base Rate
Loans) and the actual number of days elapsed.
Section 8.0 Usury.
     In no event shall the amount of interest due or payable on the Loans or
other Obligations exceed the maximum rate of interest allowed by Applicable Law
and, if any such payment is paid by the Borrower or received by any Lender, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the respective Lender in writing that the Borrower elects to have
such excess sum returned to it forthwith. It is the express intent of the
parties hereto that the Borrower not pay and the Lenders not receive, directly
or indirectly, in any manner whatsoever, interest in excess of that which may be
lawfully paid by the Borrower under Applicable Law.
Section 9.0 Agreement Regarding Interest and Charges.
     The parties hereto hereby agree and stipulate that the only charge imposed
upon the Borrower for the use of money in connection with this Agreement is and
shall be the interest specifically described in Section 2.2(c), Section 2.3 and
Section 2.4(a)(i) and (ii). Notwithstanding the foregoing, the parties

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hereto further agree and stipulate that all agency fees, syndication fees,
arrangement fees, amendment fees, up-front fees, commitment fees, facility fees,
unused fee, exit fees, closing fees, letter of credit fees, underwriting fees,
default charges, late charges, funding or “breakage” charges, increased cost
charges, attorneys’ fees and reimbursement for costs and expenses paid by the
Agent or any Lender to third parties or for damages incurred by the Agent or any
Lender, or any other similar amounts are charges made to compensate the Agent or
any such Lender for underwriting or administrative services and costs or losses
performed or incurred, and to be performed or incurred, by the Agent and the
Lenders in connection with this Agreement and shall under no circumstances be
deemed to be charges for the use of money. Borrower hereby acknowledges and
agrees that the Lenders have imposed no minimum borrowing requirements, reserve
or escrow balances or compensating balances related in any way to the
Obligations. Any use by Borrower of certificates of deposit issued by any Lender
or other accounts maintained with any Lender has been and shall be voluntary on
the part of Borrower. All charges other than charges for the use of money shall
be fully earned and nonrefundable when due.
Section 10.0 Statements of Account.
     The Agent will account to the Borrower monthly with a statement of Loans,
Letters of Credit, accrued interest and Fees, charges and payments made pursuant
to this Agreement and the other Loan Documents, and such account rendered by the
Agent shall be deemed conclusive upon Borrower absent manifest error. The
failure of the Agent to deliver such a statement of accounts shall not relieve
or discharge the Borrower from any of its obligations hereunder.
Section 11.0 Defaulting Lenders.
     (a) Generally. If for any reason any Lender (a “Defaulting Lender”) shall
fail or refuse to perform any of its obligations under this Agreement or any
other Loan Document to which it is a party within the time period specified for
performance of such obligation or, if no time period is specified, if such
failure or refusal continues for a period of two (2) Business Days after notice
from the Agent, then, in addition to the rights and remedies that may be
available to the Agent or the Borrower under this Agreement or Applicable Law,
such Defaulting Lender’s right to participate in the administration of the
Loans, this Agreement and the other Loan Documents, including without
limitation, any right to vote in respect of, to consent to or to direct any
action or inaction of the Agent or to be taken into account in the calculation
of all of the Lenders or the Requisite Lenders, shall be suspended during the
pendency of such failure or refusal. If a Lender is a Defaulting Lender because
it has failed to make timely payment to the Agent of any amount required to be
paid to the Agent hereunder (without giving effect to any notice or cure
periods), in addition to other rights and remedies which the Agent or the
Borrower may have under the immediately preceding provisions or otherwise, the
Agent shall be entitled (i) to collect interest from such Defaulting Lender on
such delinquent payment for the period from the date on which the payment was
due until the date on which the payment is made at the Federal Funds Rate,
(ii) to withhold or setoff and to apply in satisfaction of the defaulted payment
and any related interest, any amounts otherwise payable to such Defaulting
Lender under this Agreement or any other Loan Document, and (iii) to bring an
action or suit against such Defaulting Lender in a court of competent
jurisdiction to recover the defaulted amount and any related interest. Any
amounts received by the Agent in respect of a Defaulting Lender’s Loans shall
not be paid to such Defaulting Lender and shall be held uninvested by the Agent
and either applied against the purchase price of such Loans under
Section 3.11(b) or paid to such Defaulting Lender upon the Defaulting Lender’s
curing of its default. Subject to the terms of this Agreement (including,
without limitation, Section 12.15), Borrower does not waive any claim that it
may have against a Defaulting Lender.
     (b) Purchase or Cancellation of Defaulting Lender’s Commitment. Any Lender
who is not a Defaulting Lender shall have the right, but not the obligation, in
its sole discretion, to acquire all of a Defaulting Lender’s Commitment. Any
Lender desiring to exercise such right shall give written notice

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thereof to the Agent and the Borrower no sooner than two (2) Business Days and
not later than fifteen (15) Business Days after such Defaulting Lender became a
Defaulting Lender. If more than one Lender exercises such right, each such
Lender shall have the right to acquire an amount of such Defaulting Lender’s
Commitment in proportion to the Commitments of the other Lenders exercising such
right. If after such fifteenth (15th) Business Day, the Lenders have not elected
to purchase all of the Commitment of such Defaulting Lender, then the Borrower
may, by giving written notice thereof to the Agent, such Defaulting Lender and
the other Lenders, either (i) demand that such Defaulting Lender assign its
Commitment to an Eligible Assignee approved by Agent (such approval not to be
unreasonably withheld or delayed) subject to and in accordance with the
provisions of Section 12.5(d) for the purchase price provided for below or
(ii) terminate the Commitment of such Defaulting Lender, whereupon such
Defaulting Lender shall no longer be a party hereto or have any rights or
obligations hereunder or under any of the other Loan Documents (except as
expressly provided in this Section 3.11(b)). No party hereto shall have any
obligation whatsoever to initiate any such replacement or to assist in finding
an Eligible Assignee. Upon any such purchase or assignment, the Defaulting
Lender’s interest in the Loans and its rights hereunder (but not its liability
in respect thereof or under the Loan Documents or this Agreement to the extent
the same relate to the period prior to the effective date of the purchase) shall
terminate on the date of purchase, and the Defaulting Lender shall promptly
execute all documents reasonably requested to surrender and transfer such
interest to the purchaser or assignee thereof, including an appropriate
Assignment and Acceptance Agreement and, notwithstanding Section 12.5(d), shall
pay to the Agent an assignment fee in the amount of $3,500. The purchase price
for the Commitment of a Defaulting Lender shall be equal to the amount of the
principal balance of the Loans outstanding and owed by the Borrower to the
Defaulting Lender. Prior to payment of such purchase price to a Defaulting
Lender, the Agent shall apply against such purchase price any amounts retained
by the Agent pursuant to the last sentence of Section 3.11(a). The Defaulting
Lender shall be entitled to receive amounts owed to it by the Borrower under the
Loan Documents which accrued prior to the date of the default by the Defaulting
Lender, to the extent the same are received by the Agent from or on behalf of
the Borrower. There shall be no recourse against any Lender or the Agent for the
payment of such sums except to the extent of the receipt of payments from any
other party or in respect of the Loans.
Section 12.0 Taxes.
     (a) Taxes Generally. All payments by the Borrower of principal of, and
interest on, the Loans and all other Obligations shall be made free and clear of
and without deduction for any present or future excise, stamp or other taxes,
fees, duties, levies, imposts, charges, deductions, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, but excluding
(i) franchise taxes, and (ii) any taxes imposed on or measured by any Lender’s
assets, net income, receipts or branch profits (such non-excluded items being
collectively called “Taxes”). If any withholding or deduction from any payment
to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any Applicable Law, then the Borrower will:
          (i) pay directly to the relevant Governmental Authority the full
amount required to be so withheld or deducted;
          (ii) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
Governmental Authority; and
          (iii) pay to the Agent for its account or the account of the
applicable Lender, as the case may be, such additional amount or amounts as is
necessary to ensure that the net amount actually received by the Agent or such
Lender will equal the full amount that the Agent or such Lender would have
received had no such withholding or deduction been required.

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     (b) Tax Indemnification. If the Borrower fails to pay any Taxes when due to
the appropriate Governmental Authority or fails to remit to the Agent, for its
account or the account of the respective Lender, as the case may be, the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental Taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. For purposes of this Section, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
     (c) Tax Forms. Prior to the date that any Lender or participant organized
under the laws of a jurisdiction outside the United States of America becomes a
party hereto, such Person shall deliver to the Borrower and the Agent (but only
so long as such Lender or participant is or remains lawfully able to do so) such
certificates, documents or other evidence, as required by the Internal Revenue
Code or Treasury Regulations issued pursuant thereto (including Internal Revenue
Service Forms W-8ECI and W-8BEN, as applicable, or appropriate successor forms),
properly completed, currently effective and duly executed by such Lender or
participant indicating whether payments to it hereunder and under the Notes are
(i) not subject to United States Federal backup withholding tax or (ii) not
subject to United States Federal withholding tax under the Internal Revenue Code
because such payment is either effectively connected with the conduct by such
Lender or participant of a trade or business in the United States or totally
exempt from United States Federal withholding tax by reason of the application
of the provisions of a treaty to which the United States is a party or such
Lender is otherwise wholly exempt; provided that nothing herein (including,
without limitation, the failure or inability to provide any of such
certificates, documents or other evidence) shall relieve the Borrower of its
obligations under this Section 3.12. In addition, any such Lender or participant
shall deliver to the Borrower and the Agent (but only so long as such Lender or
participant is or remains lawfully able to do so) further copies of any such
certificate, document or other evidence on or before the date that any such
certificate, document or other evidence expires or becomes obsolete.
ARTICLE IV. YIELD PROTECTION, ETC.
Section 1.0 Additional Costs; Capital Adequacy.
     (a) Additional Costs. The Borrower shall promptly pay to the Agent for the
account of a Lender from time to time such amounts as such Lender may determine
to be necessary to compensate such Lender for any costs incurred by such Lender
that it reasonably determines are attributable to its making or maintaining of
any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any
reduction in any amount receivable by such Lender under this Agreement or any of
the other Loan Documents in respect of any of such Loans or such obligation or
the maintenance by such Lender of capital in respect of its Loans or its
Commitment (such increases in costs and reductions in amounts receivable being
herein called “Additional Costs”), resulting from any Regulatory Change that:
(i) changes the basis of taxation of any amounts payable to such Lender under
this Agreement or any of the other Loan Documents in respect of any of such
Loans or its Commitment (other than taxes which are excluded from the definition
of Taxes pursuant to the first sentence of Section 3.12(a)); or (ii) imposes or
modifies any reserve, special deposit or similar requirements (other than
Regulation D of the Board of Governors of the Federal Reserve System or other
reserve requirement to the extent utilized in the determination of the Adjusted
Eurodollar Rate for such Loan) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Lender, or any
commitment of such Lender (including, without limitation, the Commitments of
such Lender hereunder); or (iii) has or would have the effect of reducing the
rate of return on capital of such Lender to a level below that which such Lender
could have achieved but for such Regulatory Change (taking into consideration
such Lender’s policies with respect to capital adequacy).

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     (b) Lender’s Suspension of LIBOR Loans. Without limiting the effect of the
provisions of Section 4.1(a), if, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Lender that includes deposits by reference to which the interest rate on
LIBOR Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender that includes LIBOR Loans or
(ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets that it may hold, then, if such Lender so elects by notice
to the Borrower (with a copy to the Agent), the obligation of such Lender to
make or Continue, or to Convert any other Type of Loans into, LIBOR Loans
hereunder shall be suspended until such Regulatory Change ceases to be in effect
(in which case the provisions of Section 4.6 shall apply).
     (c) Additional Costs in Respect of Letters of Credit. Without limiting the
obligations of the Borrower under the preceding subsections of this Section (but
without duplication), if as a result of any Regulatory Change or any risk-based
capital guideline or other requirement heretofore or hereafter issued by any
Governmental Authority there shall be imposed, modified or deemed applicable any
tax, reserve, special deposit, capital adequacy or similar requirement against
or with respect to or measured by reference to Letters of Credit and the result
shall be to increase the cost to the Issuing Lender of issuing (or any Lender of
purchasing participations in) or maintaining its obligation hereunder to issue
(or purchase participations in) any Letter of Credit or reduce any amount
receivable by the Issuing Lender or any Lender hereunder in respect of any
Letter of Credit, then, upon demand by the Issuing Lender or such Lender, the
Borrower shall pay promptly, and in any event within thirty (30) days of demand,
to the Agent for its account or the account of the Issuing Lender or such
Lender, as applicable, from time to time as specified by the Issuing Lender or a
Lender, such additional amounts as shall be sufficient to compensate the Issuing
Lender or such Lender for such increased costs or reductions in amount.
     (d) Notification and Determination of Additional Costs. Each of the Agent
and each Lender agrees to notify the Borrower of any event occurring after the
Agreement Date entitling the Agent or such Lender to compensation under any of
the preceding subsections of this Section as promptly as practicable; provided,
however, the failure of the Agent or any Lender to give such notice shall not
release the Borrower from any of its obligations hereunder; provided, however,
that notwithstanding the foregoing provisions of this Section, the Agent or a
Lender, as the case may be, shall not be entitled to compensation for any such
amount relating to any period ending more than six (6) months prior to the date
that the Agent or such Lender, as applicable, first notifies the Borrower in
writing thereof. The Agent and or such Lender agrees to furnish to the Borrower
a certificate setting forth the basis and amount of each request by the Agent or
such Lender for compensation under this Section. Absent manifest error (that is
an obvious mathematical error), determinations by the Agent or any Lender of the
effect of any Regulatory Change shall be conclusive, provided that such
determinations are made on a reasonable basis and in good faith.
Section 2.0 Suspension of LIBOR Loans.
     Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Adjusted Eurodollar Rate for any Interest Period:
     (a) the Agent reasonably determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Adjusted
Eurodollar Rate for such Interest Period, or
     (b) the Agent reasonably determines (which determination shall be
conclusive) that the Adjusted Eurodollar Rate as determined by the Agent will
not adequately and fairly reflect the cost to the Lenders of making or
maintaining LIBOR Loans for such Interest Period;

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then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans
or Convert Loans into LIBOR Loans and the Borrower shall, on the last day of
each current Interest Period for each outstanding LIBOR Loan, either repay such
Loan or Convert such Loan into a Base Rate Loan.
Section 3.0 Illegality.
     Notwithstanding any other provision of this Agreement, if it becomes
unlawful for any Lender to honor its obligation to make or maintain LIBOR Loans
hereunder, then such Lender shall promptly notify the Borrower thereof (with a
copy to the Agent) and such Lender’s obligation to make or Continue, or to
Convert Loans of any other Type into, LIBOR Loans shall be suspended until such
time as such Lender may again make and maintain LIBOR Loans (in which case the
provisions of Section 4.6 shall be applicable).
Section 4.0 Compensation.
     The Borrower shall pay to the Agent for the account of each Lender, upon
the request of such Lender through the Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Lender) to compensate it for any
loss, cost or expense that such Lender determines is attributable to:
     (a) any payment or prepayment (whether mandatory or optional) of a LIBOR
Loan, or Conversion of a LIBOR Loan, made by such Lender for any reason
(including, without limitation, acceleration) on a date other than the last day
of the Interest Period for such Loan; or
     (b) any failure by the Borrower for any reason (including, without
limitation, the failure of any of the applicable conditions precedent specified
in Article V to be satisfied) to borrow a LIBOR Loan from such Lender on the
date for such borrowing, or to Convert a Base Rate Loan into a LIBOR Loan or
Continue a LIBOR Loan on the requested date of such Conversion or Continuation.
Upon the Borrower’s request, any Lender requesting compensation under this
Section shall provide the Borrower with a statement setting forth the basis for
requesting such compensation and the method for determining the amount thereof.
Each Lender may use any reasonable averaging and attribution methods generally
applied by such Lender and may include, without limitation, administrative costs
as a component of such loss, cost or expense. Absent manifest error,
determinations by any Lender in any such statement shall be conclusive, provided
that such determinations are made on a reasonable basis and in good faith.
Section 5.0 Affected Lenders.
     If (a) a Lender requests compensation pursuant to Section 3.12 or 4.1, and
the Requisite Lenders are not also doing the same, or (b) the obligation of any
Lender to make LIBOR Loans or to Continue, or to Convert Base Rate Loans into,
LIBOR Loans shall be suspended pursuant to Section 4.1(b) or 4.3. but the
obligation of the Requisite Lenders shall not have been suspended under such
Sections, then, so long as there does not then exist any Default or Event of
Default, the Borrower, within thirty (30) days of such request for compensation
or suspension, as applicable, may either (i) demand that such Lender (the
“Affected Lender”), and upon such demand the Affected Lender shall promptly,
assign its Commitments to an Eligible Assignee subject to and in accordance with
the provisions of Section 12.5(d) for a purchase price equal to the aggregate
principal balance of Loans then owing to the Affected Lender plus any accrued
but unpaid interest thereon and accrued but unpaid fees owing to the Affected
Lender, or (ii) pay to the Affected Lender the aggregate principal balance of
Loans then owing to the Affected Lender plus any accrued but unpaid interest
thereon and accrued but unpaid fees owing to the Affected Lender,

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whereupon the Affected Lender shall no longer be a party hereto or have any
rights or obligations hereunder or under any of the other Loan Documents. Each
of the Agent and the Affected Lender shall reasonably cooperate in effectuating
the replacement of such Affected Lender under this Section, but at no time shall
the Agent, such Affected Lender nor any other Lender be obligated in any way
whatsoever to initiate any such replacement or to assist in finding an Eligible
Assignee. The exercise by the Borrower of its rights under this Section shall be
at the Borrower’s sole cost and expense and at no cost or expense to the Agent,
the Affected Lender or any of the other Lenders. The terms of this Section shall
not in any way limit the Borrower’s obligation to pay to any Affected Lender
compensation owing to such Affected Lender pursuant to Section 3.12, 4.1 or 4.4.
Section 6.0 Treatment of Affected Loans.
     If the obligation of any Lender to make LIBOR Loans or to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to
Section 4.1(b), 4.2 or 4.3, then such Lender’s LIBOR Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion
required by Section 4.1(b) or 4.3, on such earlier date as such Lender may
specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 4.1 or 4.3 that gave rise to such Conversion no longer exist:
     (a) to the extent that such Lender’s LIBOR Loans have been so Converted,
all payments and prepayments of principal that would otherwise be applied to
such Lender’s LIBOR Loans shall be applied instead to its Base Rate Loans; and
     (b) all Loans that would otherwise be made or Continued by such Lender as
LIBOR Loans shall be made or Continued instead as Base Rate Loans, and all Base
Rate Loans of such Lender that would otherwise be Converted into LIBOR Loans
shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 that gave rise to the Conversion
of such Lender’s LIBOR Loans pursuant to this Section no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist) at a
time when LIBOR Loans made by other Lenders are outstanding, then such Lender’s
Revolving Credit Loans that are Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding LIBOR Loans, to the extent necessary so that, after giving
effect thereto, all Revolving Loans held by the Lenders holding LIBOR Loans and
by such Lender are held pro rata (as to principal amounts, Types and Interest
Periods) in accordance with their respective Commitments.
Section 7.0 Change of Lending Office.
     Each Lender agrees that it will use reasonable efforts to designate an
alternate Lending Office with respect to any of its Loans affected by the
matters or circumstances described in Sections 3.12, 4.1 or 4.3 to reduce the
liability of the Borrower or avoid the results provided thereunder, so long as
such designation is not disadvantageous to such Lender as determined by such
Lender in its sole discretion, except that such Lender shall have no obligation
to designate a Lending Office located in the United States of America.
Section 8.0 Assumptions Concerning Funding of LIBOR Loans.
     Calculation of all amounts payable to a Lender under this Article IV shall
be made as though such Lender had actually funded LIBOR Loans through the
purchase of deposits in the relevant market bearing interest at the rate
applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR

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Loans and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit and the foregoing assumption shall be used only for
calculation of amounts payable under this Article IV.
ARTICLE V. CONDITIONS PRECEDENT
Section 1.0 Initial Conditions Precedent.
     The obligation of the Lenders to effect or permit the occurrence of the
first Credit Event hereunder, whether as the making of a Loan or the issuance of
a Letter of Credit, is subject to the following conditions precedent:
     (a) The Agent shall have received each of the following, in form and
substance satisfactory to the Agent:
          (i) Counterparts of this Agreement executed by each of the parties
hereto;
          (ii) Revolving Notes executed by the Borrower payable to each Lender
and complying with the applicable provisions of Section 2.10, and the Swingline
Note executed by the Borrower payable to the Agent (which Notes shall be
promptly forwarded by the Agent to the applicable Lender);
          (iii) The Guaranty executed by each Guarantor existing as of the
Effective Date;
          (iv) The Security Documents relating to the Collateral Pool Properties
existing as of the Effective Date, together with the Eligible Real Estate
Qualification Documents for such Collateral Pool Properties;
          (v) A favorable opinion of counsel to the Obligors, addressed to the
Agent, the Lenders and the Swingline Lender, addressing such matters as Agent
may reasonably require (provided that such opinion shall not address compliance
with zoning or “best available remedies” under applicable state law or the
enforceability of any provisions of the Guaranty which reference California law
(except with respect to Collateral Properties located in California));
          (vi) The Governing Documents of Borrower, each Guarantor and each
general partner, managing member (or Person performing similar functions) of
such Persons certified as of a recent date by the Secretary of State of the
State of formation of the applicable Person;
          (vii) A good standing certificate with respect to Borrower, each
Guarantor and each general partner, managing member (or Person performing
similar functions) of such Persons issued as of a recent date by the appropriate
Secretary of State (and any state department of taxation, as applicable) and
certificates of qualification to transact business or other comparable
certificates issued by the Secretary of State (and any state department of
taxation, as applicable), of each state in which such Person is organized, in
which the Collateral Pool Properties owned (or leased pursuant to an Eligible
Ground Lease) by such Person are located, and wherever such Person is required
to be so qualified and where the failure to be so qualified would have, in each
instance, a Material Adverse Effect;
          (viii) A certificate of incumbency signed by the general partner,
secretary (or Person performing similar functions) of Borrower, each Guarantor
and their respective general partners, managing members (or Person performing
similar functions) as to each of the partners, officers or other Persons
authorized to execute and deliver the Loan Documents to which any of them is a
party and the officers or other representatives of the Borrower then authorized
to deliver Notices of Borrowing, Notices

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of Continuation, Notices of Conversion, Notices of Swingline Borrowings and to
request the issuance of Letters of Credit;
          (ix) Copies, certified by the general partner, secretary or other
authorized Person of each of the Borrower, the Guarantors and their respective
general partners, managing members (or Persons performing similar functions) of
such Persons of all partnership, limited liability company, corporate (or
comparable) action taken by such Person to authorize the execution, delivery and
performance of the Loan Documents to which such Persons are a party;
          (x) A copy of each document or agreement evidencing any of the
Indebtedness described in Schedule 6.1(g) as Agent may request, in each case
certified as true, correct and complete by the chief operating officer or chief
financial officer of the Borrower;
          (xi) The Fees then due and payable under Section 3.6, and any other
Fees payable to the Agent and the Lenders on or prior to the Effective Date;
          (xii) A pro forma Compliance Certificate calculated as of the
Agreement Date;
          (xiii) Evidence of the closing of the Mezzanine Loan;
          (xiv) An original executed counterpart of the Intercreditor Agreement;
and
          (xv) Such other documents, agreements and instruments as the Agent on
behalf of the Lenders may reasonably request; and
     (b) In the good faith judgment of the Agent and the Lenders:
          (i) There shall not have occurred or become known to the Agent or any
of the Lenders any event, condition, situation or status since the date of the
information contained in the financial and business projections, budgets, pro
forma data and forecasts concerning the Borrower, the other Obligors, their
respective Subsidiaries and the Collateral Pool Properties delivered to the
Agent and the Lenders prior to the Agreement Date that has had or could
reasonably be expected to result in a Material Adverse Effect;
          (ii) No litigation, action, suit, investigation or other arbitral,
administrative or judicial proceeding shall be pending or threatened which could
reasonably be expected to (1) result in a Material Adverse Effect or
(2) restrain or enjoin, impose materially burdensome conditions on, or otherwise
materially and adversely affect the ability of the Borrower or any other Obligor
to fulfill the respective obligations under the Loan Documents to which it is a
party;
          (iii) The Borrower, the other Obligors and their respective
Subsidiaries shall have received all approvals, consents and waivers, and shall
have made or given all necessary filings and notices as shall be required to
consummate the transactions contemplated hereby without the occurrence of any
default under, conflict with or violation of (1) any Applicable Law or (2) any
agreement, document or instrument to which the Borrower or any other Obligor is
a party or by which any of them or their respective properties is bound, except
for such approvals, consents, waivers, filings and notices the receipt, making
or giving of which would not reasonably be likely to (A) have a Material Adverse
Effect, or (B) restrain or enjoin, impose materially burdensome conditions on,
or otherwise materially and adversely affect the ability of the Borrower or any
other Obligor to fulfill their respective obligations under the Loan Documents
to which it is a party;

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          (iv) There shall not have occurred or exist any other material
disruption of financial or capital markets that could reasonably be expected to
materially and adversely affect the transactions contemplated by the Loan
Documents; and
          (v) The Formation Transactions and the IPO shall have been
consummated, the Parent shall have received gross cash proceeds from the IPO in
an amount not less than $4,500,000.00, and the Agent and the Lenders shall be
satisfied with the debt, ownership, management and capitalization transactions
relating to Borrower and Parent.
Section 2.0 Conditions Precedent to All Loans and Letters of Credit.
     (a) The obligations of the Lenders to make any Loans, of the Issuing Lender
to issue Letters of Credit, and of the Swingline Lender to make any Swingline
Loan are all subject to the further condition precedent that: (i) no Default or
Event of Default shall have occurred and be continuing as of the date of the
making of such Loan or date of issuance of such Letter of Credit or would exist
immediately after giving effect thereto; (ii) the representations and warranties
made or deemed made by the Borrower and each other Obligor in the Loan Documents
to which any of them is a party, shall be true and correct in all material
respects (and without regard to any qualifications limiting such representations
to knowledge or belief) on and as of the date of the making of such Loan or date
of issuance of such Letter of Credit with the same force and effect as if made
on and as of such date except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date) and except for changes in factual circumstances specifically
and expressly permitted hereunder, and (iii) in the case of the borrowing of
Revolving Loans, the Agent shall have received a timely Notice of Borrowing.
Each Credit Event shall constitute a certification by the Borrower to the effect
set forth in the preceding sentence (both as of the date of the giving of notice
relating to such Credit Event and, unless the Borrower otherwise notifies the
Agent and the Issuing Lender, as applicable, prior to the date of such Credit
Event, as of the date of the occurrence of such Credit Event). In addition, if
such Credit Event is the making of a Loan, the Borrower shall be deemed to have
represented to the Agent and the Lenders at the time such Loan is made that all
applicable conditions to the making of such Loan contained in Article V have
been satisfied.
     (b) At such times as Agent shall determine in its discretion prior to each
funding, to the extent available under applicable law, a “date down” endorsement
to each Title Policy indicating no change in the state of title and containing
no survey exceptions not approved by the Agent, which endorsement shall,
expressly or by virtue of a proper “revolving credit” clause or endorsement in
each Title Policy, increase the coverage of each Title Policy to the aggregate
amount of all Loans advanced and outstanding and the Stated Amount of Letters of
Credit issued and outstanding on or before the effective date of such
endorsement (provided that the amount of coverage under an individual Title
Policy for an individual Collateral Pool Property need not equal the aggregate
amount of all Loans and the Stated Amount of all Letters of Credit), or if such
endorsement is not available, such other evidence and assurances as the Agent
may reasonably require (which evidence may include, without limitation, an
affidavit from the Borrower stating that there have been no changes in title
from the date of the last effective date of the Title Policy).
     (c) As a condition precedent to the Lenders’ obligations to make any Loans
available to the Borrower hereunder and to the Issuing Lender’s obligation to
issue Letters of Credit, the Borrower will pay to the Agent any mortgage,
recording, intangible, documentary stamp or other similar taxes and charges
which the Agent reasonably determines to be payable as a result of such Loan or
Letter of Credit to any state or any county or municipality thereof in which any
of the Collateral Pool Properties are located, and deliver to the Agent such
affidavits or other information which the Agent reasonably determines to be
necessary in connection with such payment in order to insure that the Mortgages
on the Collateral Pool Property located in such state secure the Borrower’s
obligation with respect to the Loans

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or Letters of Credit then being requested by the Borrower. The provisions of
this Section 5.2(c) shall not limit the Borrower’s obligations under other
provisions of the Loan Documents, including without limitation Sections 12.2 and
12.9 hereof.
Section 3.0 Conditions as Covenants.
     If the Lenders make any Loans, or the Issuing Lender issues a Letter of
Credit, prior to the satisfaction of all applicable conditions precedent set
forth in Sections 5.1 and 5.2, the Borrower shall nevertheless cause such
condition or conditions to be satisfied within five (5) Business Days after the
date of the making of such Loans or the issuance of such Letter of Credit.
Unless set forth in writing to the contrary, the making of its initial Loan by a
Lender shall constitute a certification by such Lender to the Agent and the
other Lenders that the Borrower has satisfied the conditions precedent for
initial Loans set forth in Sections 5.1 and 5.2 or such Lender has waived such
conditions.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Section 1.0 Representations and Warranties.
     In order to induce the Agent and each Lender to enter into this Agreement
and to make Loans and issue Letters of Credit, the Borrower represents and
warrants to the Agent and each Lender as follows:
     (a) Organization; Power; Qualification. Each of the Borrower, the other
Obligors and their respective Subsidiaries is a corporation, partnership or
other legal entity, duly organized or formed, validly existing and in good
standing under the jurisdiction of its incorporation or formation, has the power
and authority to own or lease its respective properties and to carry on its
respective business as now being and hereafter proposed to be conducted and is
duly qualified and is in good standing as a foreign corporation, partnership or
other legal entity, and authorized to do business, in each jurisdiction in which
the Collateral Pool Properties owned by it are located and in each other
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization and where the failure to
be so qualified or authorized could reasonably be expected to have, in each
instance, a Material Adverse Effect.
     (b) Ownership Structure. As of the Agreement Date Part I of Schedule 6.1(b)
is a complete and correct list or diagram of all Subsidiaries of Borrower and
the other Obligors setting forth for each such Subsidiary (i) the jurisdiction
of organization of such Subsidiary, (ii) each Obligor which holds any Equity
Interests in such Subsidiary, (iii) the nature of the Equity Interests held by
each such Person, and (iv) the percentage of ownership of such Subsidiary
represented by such Equity Interests. Except as disclosed in such Schedule, as
of the Agreement Date (i) each Obligor and its Subsidiaries owns, free and clear
of all Liens (other than Permitted Liens) and Negative Pledges, and has the
unencumbered right to vote, all outstanding Equity Interests in each Person
shown to be held by it on such Schedule, (ii) all of the issued and outstanding
capital stock of each such Person organized as a corporation is validly issued,
fully paid and nonassessable, and (iii) there are no outstanding subscriptions,
options, warrants, commitments, preemptive rights or agreements of any kind
(including, without limitation, any stockholders’ or voting trust agreements)
for the issuance, sale, registration or voting of, or outstanding securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, any such Person. As of
the Agreement Date Part II of Schedule 6.1(b) correctly sets forth or diagrams
all Unconsolidated Affiliates of Borrower, including the correct legal name of
such Person, the type of legal entity which each such Person is, and all Equity
Interests in such Person held directly or indirectly by Borrower.
     (c) Authorization of Agreement, Etc. Borrower has the right and power, and
has taken all necessary action to authorize it, to borrow and obtain other
extensions of credit hereunder. Borrower and

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each other Obligor has the right and power, and has taken all necessary action
to authorize it, to execute, deliver and perform each of the Loan Documents to
which it is a party in accordance with their respective terms and to consummate
the transactions contemplated hereby and thereby. The Loan Documents to which
the Borrower or any other Obligor is a party have been duly executed and
delivered by the duly authorized officers or other representatives of such
Person and each is a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its respective terms except
as the same may be limited by bankruptcy, insolvency, and other similar laws
affecting the rights of creditors generally and the availability of equitable
remedies for the enforcement of certain obligations (other than the payment of
principal) contained herein or therein may be limited by equitable principles
generally.
     (d) Compliance of Loan Documents with Laws, Etc. The execution, delivery
and performance of this Agreement, the Notes and the other Loan Documents to
which the Borrower or any other Obligor is a party in accordance with their
respective terms, the borrowings and other extensions of credit hereunder and
the consummation of the Formation Transactions and the IPO do not and will not,
by the passage of time, the giving of notice, or both: (i) except as set forth
on Schedule 6.1(d) as to the IPO, require any Governmental Approval or violate
any Applicable Law (including all Environmental Laws) relating to the Borrower
or any other Obligor; (ii) conflict with, result in a breach of or constitute a
default under the organizational documents of the Borrower or any other Obligor,
or any indenture, agreement or other instrument to which the Borrower or any
other Obligor is a party or by which it or any of its respective properties may
be bound; or (iii) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter acquired by the
Borrower or any other Obligor.
     (e) Compliance with Law; Governmental Approvals, Agreements. The Borrower,
each other Obligor, and each of their respective Subsidiaries is in compliance
with its Governing Documents, each agreement, judgment, decree or order to which
any of them is a party or by which any of them or their properties may be bound,
each Governmental Approval applicable to it and in compliance with all other
Applicable Law (including without limitation, Environmental Laws) relating to
such Person except for noncompliances which, and Governmental Approvals the
failure to possess which, would not, individually or in the aggregate, cause a
Default or an Event of Default or have a Material Adverse Effect.
     (f) Title to Properties; Liens; Title Insurance. As of the Agreement Date,
Part I of Schedule 6.1(f) sets forth all of the real property owned or leased by
the Borrower, each other Obligor and each of their respective Subsidiaries. Each
such Person has good, marketable and legal title to, or a valid leasehold
interest in, its respective assets subject to Permitted Liens. Each of the
Borrower, the other Obligors and their respective Subsidiaries have title to
their properties sufficient for the conduct of their business. The Borrower or
another Obligor is with respect to all Collateral Pool Properties and other real
property reasonably necessary for the operation of its business, the named
insured under a policy of title insurance issued by a title insurer operating in
the jurisdiction where such real property is located. As to each such policy of
title insurance (i) the coverage amount equals or exceeds the acquisition cost
of the related real property and any improvements added thereto by such Person;
(ii) no claims are pending that, if adversely determined, have had or could
reasonably be expected to have a Material Adverse Effect; and (iii) no title
insurer has given notice to the insured Person that such policy of title
insurance is no longer in effect. Neither Borrower, any other Obligor nor any of
their respective Subsidiaries has knowledge of any defect in title of any
Property that, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.
     (g) Existing Indebtedness. Schedule 6.1(g) is, as of the Agreement Date, a
complete and correct listing of all Indebtedness of the Borrower, the other
Obligors and their respective Subsidiaries, including without limitation,
Contingent Liabilities of the Borrower and the other Obligors and their
respective Subsidiaries. The Borrower, the other Obligors, and their respective
Subsidiaries have

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performed and are in compliance with all of the material terms of all
Indebtedness of such Persons and all instruments and agreements relating
thereto, and no default or event of default, or event or condition which with
the giving of notice, the lapse of time, or both, would constitute such a
default or event of default, exists with respect to any such Indebtedness.
     (h) Material Contracts. Each of the Borrower, the other Obligors and their
respective Subsidiaries that is a party to any Material Contract is in
compliance with all of the material terms of such Material Contract, and no
default or event of default, or event or condition which with the giving of
notice, the lapse of time, or both, would constitute such a default or event of
default, exists with respect to any such Material Contract.
     (i) Litigation. Except as set forth on Schedule 6.1(i), there are no
actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened, nor is there any basis
therefor) against or in any other way relating adversely to or affecting the
Borrower, any other Obligor, any of their respective Subsidiaries or any of
their respective property in any court, or before any tribunal, administrative
agency, board, arbitrator or mediator of any kind or before or by any other
Governmental Authority which has had or could reasonably be expected to have a
Material Adverse Effect, which question the validity or enforceability of any of
the Loan Documents or the perfection or priority of any lien, security title or
security interest created or intended to be created in the Collateral or which
relate to the Formation Transactions or the IPO. There are no strikes, slow
downs, work stoppages or walkouts or other labor disputes in progress or
threatened relating to the Borrower, any other Obligor, or any of their
respective Subsidiaries which has had or could be reasonably expected to have a
Material Adverse Effect. There are no judgments outstanding against or affecting
the Borrower, any other Obligor, any of their respective Subsidiaries or any of
their respective properties individually or in the aggregate involving amounts
in excess of $5,000,000.
     (j) Taxes. All federal, state and other tax returns of the Borrower, any
other Obligor or any of their respective Subsidiaries required by Applicable Law
to be filed have been duly filed, and all federal, state and other taxes,
assessments and other governmental charges or levies upon the Borrower, each
other Obligor, any of their respective Subsidiaries and their respective
properties, income, profits and assets which are due and payable have been paid,
except any such nonpayment which is at the time permitted under Section 7.6. As
of the Agreement Date, none of the United States income tax returns of the
Borrower, any other Obligor or any of their respective Subsidiaries is under
audit. All charges, accruals and reserves on the books of the Borrower, any
other Obligor and each of their respective Subsidiaries in respect of any taxes
or other governmental charges are in accordance with GAAP.
     (k) Financial Statements. Borrower has furnished to each Lender copies of
(i) the pro forma consolidated balance sheet of Borrower and its consolidated
Subsidiaries as of the Agreement Date (after giving effect to the Formation
Transactions and the IPO), and (ii) the pro forma consolidated balance sheet of
Parent and its consolidated Subsidiaries as of the Agreement Date (after giving
effect to the Formation Transactions and the IPO). Such financial statements
(including in each case related schedules and notes) are complete and correct
and present fairly, in accordance with GAAP consistently applied throughout the
periods involved, the consolidated financial position of Borrower and its
consolidated Subsidiaries or Parent and its consolidated Subsidiaries, as
applicable, as at their respective dates and the results of operations and the
cash flow for such periods. Such statements included in item (iii) above are
complete and correct and present fairly, in accordance with GAAP consistently
applied throughout the periods involved the Net Operating Income for such
periods. Neither Borrower, Parent, nor any Subsidiary of Borrower or Parent has
on the Agreement Date any material contingent liabilities, liabilities,
liabilities for taxes, or unusual or long-term commitments or unrealized or
forward anticipated losses from any unfavorable commitments, except as referred
to or reflected or provided for in said financial statements or except as set
forth on Schedule 6.1(k).

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     (l) No Material Adverse Change. Since the Agreement Date, there has been no
material adverse change in the consolidated financial condition, results of
operations, business or prospects of the Borrower, the Obligors or their
respective Subsidiaries. Each of the Borrower, the other Obligors and their
respective Subsidiaries are Solvent.
     (m) ERISA. Each member of the ERISA Group is in compliance with its
obligations under the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and is in compliance with the presently
applicable provisions of ERISA and the Internal Revenue Code with respect to
each Plan, except in each case for noncompliances which could not reasonably be
expected to have a Material Adverse Effect. As of the Agreement Date, no member
of the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.
     (n) No Plan Assets; No Prohibited Transaction. None of the assets of the
Borrower, any other Obligor or their respective Subsidiaries constitute “plan
assets” within the meaning of ERISA, the Internal Revenue Code and the
respective regulations promulgated thereunder. The execution, delivery and
performance of this Agreement and the other Loan Documents, and the borrowing
and repayment of amounts hereunder, do not and will not constitute “prohibited
transactions” under ERISA or the Internal Revenue Code.
     (o) Absence of Defaults. None of the Borrower, any other Obligor nor any of
their respective Subsidiaries is in default under its Governing Documents, and
no event has occurred, which has not been remedied, cured or irrevocably waived:
(i) which constitutes a Default or an Event of Default; or (ii) which
constitutes, or which with the passage of time, the giving of notice, a
determination of materiality, the satisfaction of any condition, or any
combination of the foregoing, would constitute, a default or event of default by
Borrower, any other Obligor or any of their respective Subsidiaries under any
agreement (other than this Agreement) or judgment, decree or order to which
Borrower, any other Obligor or any of their respective Subsidiaries is a party
or by which any Borrower, any other Obligor, any of their respective
Subsidiaries or any of their respective properties may be bound where such
default or event of default could, individually or in the aggregate, involve
Indebtedness or other obligations or liabilities in excess of $5,000,000.
     (p) Environmental Matters.
          (i) The Borrower, each other Obligor and each of their respective
Subsidiaries is in compliance with the requirements of all applicable
Environmental Laws except for the matters (A) set forth on Schedule 6.1(p) or
disclosed in the written environmental assessment reports with respect to a
Collateral Pool Property provided to the Agent and (B) such other non-compliance
which with respect to Properties other than the Collateral Pool Properties, in
any event, either individually or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect.
          (ii) (A) No portion of the Collateral Pool Properties has been used
for the handling, processing, storage or disposal of Hazardous Materials except
in accordance with applicable Environmental Laws, and no underground tank or
other underground storage receptacle for Hazardous Materials is located on any
portion of the Collateral Pool Properties except those which are being operated
and maintained in compliance with Environmental Laws; (B) in the course of any
activities conducted by the Borrower, any Guarantor, their respective
Subsidiaries or, to the best knowledge and belief of the Borrower, the operators
of their properties, no Hazardous Materials have been generated or

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are being used on the Property except for small quantities in the ordinary
course of business and in compliance with applicable Environmental Laws;
(C) there has been no past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping (other than the storing of materials in reasonable quantities to the
extent necessary for the operation of multifamily apartments in the ordinary
course of business, and in any event in compliance with all Environmental Laws)
(a “Release”) or threatened Release of Hazardous Materials on, upon, into or
from the Collateral Pool Properties, which Release would have a material adverse
effect on the value of such Collateral Pool Properties or adjacent properties,
or from any other real estate, which Release has had or could reasonably be
expected to have a Material Adverse Effect; (D) except as set forth on
Schedule 6.1(p) hereto, there have been no Releases on, upon, from or into any
real property in the vicinity of any of the Collateral Pool Properties which,
through soil or groundwater contamination, may have come to be located on, and
which could be reasonably anticipated to have a Material Adverse Effect on the
value of, any Collateral Pool Property; and (E) neither the Borrower, any
Guarantor nor any Collateral Pool Property is subject to any applicable
Environmental Law requiring the performance of Hazardous Materials site
assessments, or the removal or remediation of Hazardous Materials, or the giving
of notice to any governmental agency or the recording or delivery to other
Persons of an environmental disclosure document or statement in each case by
virtue of the transactions set forth herein and contemplated hereby, or as a
condition to the recording of the Mortgages or to the effectiveness of any other
transactions contemplated hereby except for such matters that shall be complied
with as of the Agreement Date.
          (iii) Except for the matters set forth on Schedule 6.1(p) or disclosed
in the written environmental assessment reports with respect to a Collateral
Pool Property provided to the Agent and any of the following matters or
liabilities that with respect to Properties other than the Collateral Pool
Properties, in any event, either individually or in the aggregate, have not had
and could not reasonably be expected to have a Material Adverse Effect, neither
the Borrower, any other Obligor nor any of their respective Subsidiaries (A) has
received notice (written or oral) or otherwise learned of any claim, demand,
suit, action, proceeding, event, condition, report, directive, lien, violation,
non-compliance or investigation indicating or concerning any potential or actual
liability (including, without limitation, potential liability for enforcement,
investigatory costs, cleanup costs, government response costs, removal costs,
remedial costs, natural resources damages, property damages, personal injuries
or penalties) arising in connection with (1) any non-compliance with or
violation of the requirements of any applicable Environmental Laws, or (2) the
presence of any Hazardous Materials on any Property (or any Property previously
owned by any of such Persons) or the Release or threatened Release of any
Hazardous Materials into the environment, (B) has any threatened or actual
liability in connection with the presence of any Hazardous Materials on any
Property (or any Property previously owned by any of such Persons) or the
Release or threatened Release of any Hazardous Materials into the environment,
(C) has received notice of any federal or state investigation evaluating whether
any remedial action is needed to respond to the presence of any Hazardous
Materials on any Property (or any Property previously owned by any of such
Persons) or a Release or threatened Release of any Hazardous Materials into the
environment for which the Borrower, any Obligor or any of their respective
Subsidiaries is or may be liable, or (D) has received notice that a Borrower,
any Obligor or any of their respective Subsidiaries is or may be liable to any
Person under any Environmental Law.
          (iv) No Property is located in an area identified by the Secretary of
Housing and Urban Development as an area having special flood hazards, or if any
such Property is located in such a special flood hazard area, then the Borrower
has obtained all insurance that is required to be maintained by law or which is
customarily maintained by Persons engaged in similar businesses and owning
similar Properties in the same general areas in which the Borrower operates
except with respect to Properties other than the Collateral Pool Properties
where such failure individually or in the aggregate has not had and could not
reasonably be expected to have a Material Adverse Effect.

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          (v) There are no existing or closed sanitary landfills, solid waste
disposal sites, or hazardous waste treatment, storage or disposal facilities on
or affecting the Collateral Pool Properties.
          (vi) Except as set forth in the written environmental assessments
delivered to the Agent prior to the acceptance of a Collateral Pool Property as
Collateral, no asbestos is located in or on any Collateral Pool Property.
          (vii) Borrower has not received any claim by any party that any use,
operation, or condition of any Collateral Pool Property has caused any nuisance
or any other liability or adverse condition on any other property which as to
any Property other than a Collateral Pool Property has had or could reasonably
be expected to have a Material Adverse Effect, nor is there any knowledge of any
basis for such a claim.
          (viii) Neither the improvements located on the Collateral Pool
Properties nor any operations therein, is now or has been damaged, impacted, or
otherwise affected by or subject to the growth or existence of a Mold Condition.
     (q) Investment Company. None of the Borrower, any other Obligor or any of
their respective Subsidiaries, is (i) an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended, or (ii) subject to any other Applicable Law
which purports to regulate or restrict its ability to borrow money or to
consummate the transactions contemplated by this Agreement or to perform its
obligations under any Loan Document to which it is a party except for certain
state “blue sky” laws which may prohibit Parent from borrowing in excess of 300%
of its “Net Assets” unless approved by a majority of the independent directors
of Parent and disclosed in the next quarterly report of the Parent along with a
justification for the excess.
     (r) Margin Stock. None of the Borrower, any other Obligor or any of their
respective Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying “margin stock” or a
“margin security” within the meaning of Regulations T, U and X of the Board of
Governors of the Federal Reserve System.
     (s) Affiliate Transactions. Except as permitted by Section 9.10 and as
contemplated by the Prospectus, none of the Borrower, any other Obligor or any
of their respective Subsidiaries is a party to or bound by any agreement or
arrangement (whether oral or written) to which any Affiliate (but not any
Subsidiary of Borrower) of any Borrower, any other Obligor or any of their
respective Subsidiaries is a party.
     (t) Intellectual Property. Except as has not had and could not be
reasonably expected to have a Material Adverse Effect, (i) the Borrower, each
other Obligor and each of their respective Subsidiaries owns or has the right to
use, under valid license agreements or otherwise, all material patents,
licenses, franchises, trademarks, trademark rights, trade names, trade name
rights, trade secrets and copyrights (collectively, “Intellectual Property”)
used in the conduct of their respective businesses as now conducted and as
contemplated by the Loan Documents, without known conflict with any patent,
license, franchise, trademark, trade secret, trade name, copyright, or other
proprietary right of any other Person; (ii) the Borrower, and each other Obligor
and each of their respective Subsidiaries have taken all such steps as they deem
reasonably necessary to protect their respective rights under and with respect
to such Intellectual Property; (iii) no claim has been asserted by any Person
with respect to the use of any Intellectual Property by the Borrower, any other
Obligor or any of their respective Subsidiaries, or challenging or questioning
the validity or effectiveness of any Intellectual Property; and (iv) the use of
such Intellectual Property by the Borrower, the other Obligors and each of their
respective Subsidiaries, does not infringe on the rights of any Person, subject
to such claims and infringements as do not, in the

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aggregate, give rise to any liabilities on the part of the Borrower, the other
Obligors or any of their respective Subsidiaries.
     (u) Business. The Borrower, the other Obligors and each of their respective
Subsidiaries are engaged substantially in the business of the acquisition,
disposition, financing, ownership, development rehabilitation, leasing,
operation and management of multifamily buildings and other business activities
related or incidental thereto.
     (v) Broker’s Fees. No broker’s or finder’s fee, commission or similar
compensation will be payable with respect to the transactions contemplated
hereby except normal accounting, legal or other related or normal charges. No
other similar fees or commissions will be payable by any Obligor for any other
services rendered to the Borrower, any of the Subsidiaries of the Borrower or
any other Obligor or any other Obligor ancillary to the transactions
contemplated hereby.
     (w) Accuracy and Completeness of Information. No written information,
report or other papers or data (excluding financial projections and other
forward looking statements) furnished to the Agent or any Lender by, on behalf
of, or at the direction of, the Borrower, any other Obligor or any of their
respective Subsidiaries in connection with or relating in any way to this
Agreement, contained any untrue statement of a fact material to the
creditworthiness of the Borrower, any other Obligor or any of their respective
Subsidiaries or omitted to state a material fact necessary in order to make such
statements contained therein, in light of the circumstances under which they
were made, not misleading. The written information, reports and other papers and
data with respect to the Borrower, any other Obligor or any of their respective
Subsidiaries or the Collateral Pool Properties (other than projections and other
forward-looking statements) furnished to the Agent or the Lenders in connection
with or relating in any way to this Agreement was, at the time so furnished,
complete and correct in all material respects, or has been subsequently
supplemented by other written information, reports or other papers or data, to
the extent necessary to give in all material respects a true and accurate
knowledge of the subject matter. All financial statements furnished to the Agent
or any Lender by, on behalf of, or at the direction of, the Borrower, any other
Obligor or any of their respective Subsidiaries in connection with or relating
in any way to this Agreement with respect to Borrower, any other Obligor, any of
their respective Subsidiaries or the Collateral Pool Properties, present fairly,
in accordance with GAAP consistently applied throughout the periods involved,
the financial position of the Persons involved as at the date thereof and the
results of operations for such periods. All financial projections and other
forward looking statements prepared by, or on behalf of the Borrower, any other
Obligor or any of their respective Subsidiaries that have been or may hereafter
be made available to the Agent or any Lender with respect to Borrower, any other
Obligor, any of their respective Subsidiaries or the Collateral Pool Properties,
were or will be prepared in good faith based on reasonable assumptions. No fact
or circumstance is known to the Borrower which has had, or may in the future
have (so far as the Borrower can reasonably foresee), a Material Adverse Effect
which has not been set forth in the financial statements referred to in
Section 6.1(k) or in such information, reports or other papers or data or
otherwise disclosed in writing to the Agent and the Lenders prior to the
Effective Date.
     (x) REIT Status. Commencing with the election to be made by Parent in 2007
for calendar year 2006 and subsequent years, Parent will qualify as a REIT, will
elect to be treated as a REIT, and will be in compliance with all requirements
and conditions imposed under the Internal Revenue Code to allow Parent to
maintain its status as a REIT.
     (y) Collateral Pool Properties. As of the Agreement Date, Schedule 6.1(y)
is a correct and complete list of all Collateral Pool Properties. Each of the
Collateral Pool Properties included by the Borrower in calculations of the
Collateral Pool Value satisfies all of the requirements contained in this
Agreement for the same to be included therein.

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     (z) Insurance. The Borrower, the other Obligors and their respective
Subsidiaries have insurance covering the Borrower, the other Obligors and their
respective Subsidiaries and their respective Properties in such amounts and
against such risks and casualties as are required by this Agreement. As of the
Agreement Date, none of the Borrower, any other Obligor nor any of their
respective Subsidiaries has received notice that any such insurance has been
cancelled, not renewed, or impaired in any way.
     (aa) Ownership of Borrower. Parent is the sole general partner of Borrower
and owns free of any Lien or other claim not less than a 99.99% Equity Interest
in Borrower as a general and limited partner thereof.
     (bb) No Bankruptcy Filing. None of the Borrower, any Obligor or any of
their respective Subsidiaries is contemplating either the filing of a petition
by it under any state or federal bankruptcy or insolvency laws or the
liquidation of its assets or property, and the Borrower has no knowledge of any
Person threatening the filing of any such petition against any of the Borrower,
any Obligor or any of their respective Subsidiaries.
     (cc) No Fraudulent Intent. Neither the execution and delivery of this
Agreement or any of the other Loan Documents nor the performance of any actions
required hereunder or thereunder is being undertaken by the Borrower or any
other Obligor with or as a result of any actual intent by any of such Persons to
hinder, delay or defraud any entity to which any of such Persons is now or will
hereafter become indebted.
     (dd) Transaction in Best Interests of Borrower and Obligors; Consideration.
The transaction evidenced by this Agreement and the other Loan Documents is in
the best interests of the Borrower and the other Obligors and the creditors of
such Persons. The direct and indirect benefits to inure to the Borrower and the
other Obligors pursuant to this Agreement and the other Loan Documents
constitute substantially more than “reasonably equivalent value” (as such term
is used in §548 of the Bankruptcy Code) and “valuable consideration,” “fair
value,” and “fair consideration” (as such terms are used in any applicable state
fraudulent conveyance law), in exchange for the benefits to be provided by the
Borrower and the other Obligors pursuant to this Agreement and the other Loan
Documents, and but for the willingness of each Guarantor to guaranty the
Obligations, the Borrower would be unable to obtain the financing contemplated
hereunder which financing will enable the Borrower and the other Obligors to
have available financing to conduct and expand their business. The Borrower and
the other Obligors constitute a single integrated financial enterprise and each
receives a benefit from the availability of credit under this Agreement to the
Borrower.
     (ee) Property. All of the Collateral Pool Properties, and all major
building systems located thereon, are structurally sound, in good condition and
working order and free from material defects, subject to ordinary wear and tear.
The Collateral Pool Properties, and the use and operation thereof, are in
material compliance with all applicable federal and state law and governmental
regulations and any local ordinances, orders or regulations, including without
limitation, laws, regulations and ordinances relating to zoning, building codes,
subdivision, fire protection, health, safety, handicapped access, historic
preservation and protection, wetlands, tidelands, and Environmental Laws. Except
as disclosed to Agent in writing prior to the acceptance of a Collateral Pool
Property as Collateral, the zoning laws permit use of the improvements on the
Collateral Pool Properties for their current use without reliance on any
“grandfathering” or non-conforming use provisions of applicable zoning laws.
There is such number of parking spaces on the lot or lots on which the
Collateral Pool Property is located as is adequate under the zoning laws and
regulations to permit use of the Collateral Pool Property for its current use.
There are no outstanding notices, suits, orders, decrees or judgments relating
to zoning, building use and occupancy, fire, health, sanitation or other
violations affecting, against, or with respect to, the Collateral Pool Property
or any part thereof. All water, sewer, electric, gas, telephone and other
utilities necessary for the use and operation of each Collateral Pool Property
are installed to the property lines of such Collateral

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Pool Property through dedicated public rights of way or through perpetual
private easements approved by the Agent with respect to which the applicable
Mortgage creates a valid and enforceable first lien and are connected to the
buildings located thereon with valid permits and are adequate to service such
buildings in compliance with applicable law. The streets abutting the Collateral
Pool Properties are dedicated and accepted public roads, to which the Collateral
Pool Properties have direct access, or are perpetual private ways (with direct
access to public roads) to which the Collateral Pool Properties have direct
access approved by the Agent and with respect to which the applicable Mortgage
creates a valid and enforceable first lien. All private ways providing access to
the Collateral Pool Properties are zoned in a manner which will permit access to
the Collateral Pool Properties over such ways by trucks and other commercial and
industrial vehicles. There are no unpaid or outstanding real estate or other
taxes or assessments on or against any of the Collateral Pool Properties which
are payable by the Borrower or any Guarantor (except only real estate or other
taxes or assessments, that are not yet delinquent or are being protested as
permitted by this Agreement). Each Collateral Pool Property is separately
assessed for purposes of real estate tax assessment and payment. No abatement
proceedings are pending with reference to any real estate taxes assessed against
the Collateral Pool Properties, other than with respect to taxes which have been
paid under protest and which are being contested in good faith in accordance
with the terms of this Agreement. There are no pending, or to the knowledge of
Borrower threatened or contemplated, Takings against any of the Collateral Pool
Properties. None of the Collateral Pool Properties is now damaged as a result of
any fire, explosion, accident, flood or other casualty. Neither the Borrower nor
any of the Guarantors has received any outstanding notice from any insurer or
its agent requiring performance of any work with respect to any of the
Collateral Pool Properties or canceling or threatening to cancel any policy of
insurance, and each of the Collateral Pool Properties complies with the material
requirements of all of the Borrower’s and the Guarantors’ insurance carriers.
Except as listed on Schedule 6.1(ee), or with respect to the Collateral Pool
Properties added after the Agreement Date as disclosed to Agent in writing, the
Borrower has no Management Agreements for any of the Collateral Pool Properties.
Except as set forth in Schedule 6.1(ee), there are no material agreements
pertaining to any Collateral Pool Property or the operation or maintenance of
either thereof other than as described in this Agreement (including the
Schedules hereto) or the Title Policies; and no person or entity has any right
or option to acquire any Collateral Pool Property or any portion thereof or
interest therein. The buildings and all paved or landscaped areas related to or
used in connection with each Collateral Pool Property are located wholly within
the perimeter lines of the lot or lots on which the Collateral Pool Property is
located, except as may be specifically shown on the Survey for such Collateral
Pool Property. Each Collateral Pool Property constitutes a separate parcel which
has been properly subdivided in accordance with all applicable state and local
laws, regulations and ordinances to the extent required thereby, and neither the
execution and delivery of the Mortgage nor the exercise of any remedies
thereunder by the Agent shall violate any such law or regulation relating to the
subdivision of real property. There are no approvals, consents, licenses,
certificates of occupancy, permits, utility installations and connections, curb
cuts and street openings, required by applicable laws, rules, ordinances or
regulations or any agreement affecting the Collateral Pool Properties for the
maintenance, operation, servicing and use of the Collateral Pool Properties for
their current use which have not been granted, effected, or performed and
completed (as the case may be), or any fees or charges therefor which have not
been fully paid, or which are no longer in full force and effect. No such
approvals, consents, permits or licenses (including, without limitation, any
railway siding agreements) will terminate, or become void or voidable or
terminable on any foreclosure sale of a Collateral Pool Property pursuant to the
Mortgages.
     (ff) No Event of Default. No Default or Event of Default has occurred and
is continuing.
     (gg) Subordination. None of the Borrower or any other Obligor is a party to
or bound by any agreement, instrument or indenture that may require the
subordination in right or time of payment of any of the Obligations to any other
indebtedness or obligation of any of such Persons.

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     (hh) Anti-Terrorism Laws.
          (i) None of the Borrower or any other Obligor or any of their
Affiliates is in violation of any laws or regulations relating to terrorism or
money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001 (the “Executive Order”) and
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.
          (ii) None of the Borrower, any other Obligor or any of their
Affiliates, or any of their brokers or other agents acting or benefiting from
the Loan is a Prohibited Person. A “Prohibited Person” is any of the following:
               (A) a person or entity that is listed in the Annex to, or is
otherwise subject to the provisions of, the Executive Order;
               (B) a person or entity owned or controlled by, or acting for or
on behalf of, any person or entity that is listed in the Annex to, or is
otherwise subject to the provisions of, the Executive Order;
               (C) a person or entity with whom any Lender is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
               (D) a person or entity who commits, threatens or conspires to
commit or supports “terrorism” as defined in the Executive Order; or
               (E) a person or entity that is named as a “specially designated
national and blocked person” on the most current list published by the U.S.
Treasury Department Office of Foreign Asset Control at its official website or
any replacement website or other replacement official publication of such list.
          (iii) None of the Borrower or any other Obligor, any of their
Affiliates or any of their brokers or other agents acting in any capacity in
connection with the Loan (1) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Prohibited Person, (2) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order, or (3) engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law.
          (iv) Borrower and the other Obligors shall not (1) conduct any
business or engage in making or receiving any contribution of funds, goods or
services to or for the benefit of any Prohibited Person, (2) deal in, or
otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order or any other Anti-Terrorism
Law, or (3) engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in any Anti-Terrorism Law (and Borrower shall
deliver to Agent any certification or other evidence requested from time to time
by Agent in its reasonable discretion, confirming Borrower’s and the other
Obligors’ compliance herewith).
     (ii) Setoff, Etc. The Collateral and the rights of the Agent and the
Lenders with respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses by the Borrower, the Guarantors or any of their
respective Subsidiaries or Affiliates or any other Person other than as
permitted in the Security Documents.

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     (jj) Trade Name; Place of Business. Neither the Borrower nor any Guarantor
uses any trade name and conducts business under any name other than its actual
name set forth in the Loan Documents. The principal place of business of the
Borrower and each Guarantor is 1606 Santa Rosa Road, Richmond, Virginia 23229.
     (kk) Leases. An accurate and complete rent roll as of the date of inclusion
of each Collateral Pool Property in the Collateral with respect to all Leases of
any Collateral Pool Property has been provided to the Agent. The Leases
reflected on such rent roll constitute as of the date thereof the sole
agreements relating to leasing or licensing of space at such Collateral Pool
Property. No tenant under any Lease is entitled to any free rent, partial rent,
rebate of rent payments, credit, offset or deduction in rent, including, without
limitation, lease support payments or lease buy-outs, except as reflected in
such rent roll. Except as set forth in Schedule 6.1(kk), the Leases reflected
therein are, as of the date of inclusion of the applicable Collateral Pool
Property in the Collateral, in full force and effect in accordance with their
respective terms, without any payment default or any other material default
thereunder, nor are there any defenses, counterclaims, offsets, concessions or
rebates available to any tenant thereunder, and except as reflected in
Schedule 6.1(kk), neither the Borrower nor any Guarantor has given or made, any
notice of any payment or other material default, or any claim, which remains
uncured or unsatisfied, with respect to any of the Leases, and to the best of
the knowledge and belief of the Borrower, there is no basis for any such claim
or notice of default by any tenant. No property other than the Collateral Pool
Property which is the subject of the applicable Lease is necessary to comply
with the requirements (including, without limitation, parking requirements)
contained in such Lease.
Section 2.0 Survival of Representations and Warranties, Etc.
     All statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of the Borrower, any other Obligor or any
of their respective Subsidiaries to the Agent or any Lender pursuant to or in
connection with this Agreement or any of the other Loan Documents (including,
but not limited to, any such statement made in or in connection with any
amendment thereto or any statement contained in any certificate, financial
statement or other instrument delivered by or on behalf of the Borrower prior to
the Agreement Date and delivered to the Agent or any Lender in connection with
closing the transactions contemplated hereby) shall constitute representations
and warranties made by the Borrower under this Agreement. All representations
and warranties made under this Agreement and the other Loan Documents shall be
deemed to be made at and as of the Agreement Date, the Effective Date and the
date of the occurrence of any Credit Event, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and except for changes in factual circumstances
specifically permitted hereunder. All such representations and warranties shall
survive the effectiveness of this Agreement, the execution and delivery of the
Loan Documents and the making of the Loans and the issuance of the Letters of
Credit.
ARTICLE VII. AFFIRMATIVE COVENANTS
     For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 12.6, all of the Lenders) shall otherwise
consent in the manner provided for in Section 12.6, the Borrower shall comply
with the following covenants:
Section 1.0 Preservation of Existence and Similar Matters.
     Except as otherwise permitted under Section 9.7, the Borrower shall
preserve and maintain, and cause each other Obligor and each Subsidiary of the
Borrower or any other Obligor to preserve and maintain, their respective
existence, rights, franchises, licenses and privileges in the jurisdiction of
its incorporation or formation and qualify and remain qualified and authorized
to do business in each

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jurisdiction in which it is organized, in each jurisdiction in which any
Collateral Pool Property owned (or leased pursuant to an Eligible Ground Lease)
by it is located, and in each other jurisdiction in which the character of its
properties or the nature of its business requires such qualification and
authorization and where the failure to be so authorized and qualified could
reasonably be expected to have a Material Adverse Effect. Borrower shall, and
shall cause the other Obligors and each Subsidiary of the Borrower or any other
Obligor to, develop and implement such programs, policies and procedures as are
necessary to comply with the USA Patriot Act and shall promptly advise Agent in
writing in the event that any of such Persons shall determine that any investors
in such Persons are in violation of such act.
Section 2.0 Compliance with Applicable Law and Contracts.
     The Borrower shall comply, and cause each other Obligor and each Subsidiary
of the Borrower or any other Obligor to comply, with (a) all Applicable Law,
including the obtaining of all Governmental Approvals, (b) their respective
Governing Documents, and (c) all mortgages, indentures, contracts, agreements
and instruments to which it is a party or by which any of its properties may be
bound, the failure, in any such event, with which to comply could reasonably be
expected to have a Material Adverse Effect.
Section 3.0 Maintenance of Property.
     In addition to the requirements of any of the other Loan Documents, the
Borrower shall, and shall cause each other Obligor and each Subsidiary of the
Borrower and each other Obligor to, (a) protect and preserve all of its
properties or cause to be protected and preserved, and maintain or cause to be
maintained in good repair, working order and condition all tangible properties,
ordinary wear and tear excepted, and (b) make or cause to be made all needed and
appropriate repairs, renewals, replacements and additions to such properties, so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
Section 4.0 Conduct of Business.
     The Borrower shall at all times carry on, and cause the other Obligors and
the Subsidiaries of the Borrower and the other Obligors to carry on, their
respective businesses as described in the Prospectus and as described in
Section 6.1(u).
Section 5.0 Insurance; Condemnation.
     (a) The Borrower will, at its expense, procure and maintain for the benefit
of the Borrower and the Agent, insurance policies issued by such insurance
companies, in such amounts, in such form and substance, and with such coverages,
endorsements, deductibles and expiration dates as are acceptable to the Agent,
providing the following types of insurance covering each Collateral Pool
Property:
          (i) “All Risks” property insurance (including malicious mischief
coverage) in an amount not less than one hundred percent (100%) of the full
replacement cost of the improvements thereon, with deductibles not to exceed
$25,000 for any one occurrence, with a replacement cost coverage endorsement, an
agreed amount endorsement, and, if requested by the Agent, a contingent
liability from operation of building laws endorsement in such amounts as the
Agent may require;
          (ii) During the course of construction or repair of any improvements
on a Collateral Pool Property, the insurance required by clause (i) above shall
be written on an “all risk” builders risk, completed value, non-reporting form,
meeting all of the terms required by clause (i) above, covering the total value
of work performed, materials, equipment, machinery and supplies furnished,
existing structures, and temporary structures being erected on or near the
Collateral Pool Property, including

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coverage against collapse and damage during transit or while being stored
off-site, and containing a soft costs (including loss of rents) coverage
endorsement and a permission to occupy endorsement;
          (iii) Flood insurance if at any time any improvements are required to
be insured under federal or state law, in an amount equal to the lesser of the
Collateral Pool Value of such Collateral Pool Property (but in no event less
than the value of the improved structure located in such flood hazard area) or
the maximum amount then available under the National Flood Insurance Program;
          (iv) Rent loss insurance in an amount sufficient to recover at least
the total estimated gross receipts from all sources of income, including without
limitation, rental income, for the Collateral Pool Properties for a twelve
(12) month period;
          (v) Commercial general liability insurance against claims for personal
injury and property damage liability, all on an occurrence basis, if
commercially available, with such coverages as the Agent may reasonably request,
with a general aggregate limit of not less than $2,000,000.00, a completed
operations aggregate limit of not less than $2,000,000.00, and a combined single
“per occurrence” limit of not less than $1,000,000.00 for bodily injury,
property damage and medical payments;
          (vi) During the course of construction or repair of any improvements
on the Collateral Pool Property, owner’s contingent or protective liability
insurance covering claims not covered by or under the terms or provisions of the
insurance required by clause (v) above;
          (vii) Employer’s liability insurance with respect to the Borrower’s
employees;
          (viii) Umbrella liability insurance with limits of not less than
$10,000,000.00 to be in excess of the limits of the insurance required by
clauses (v), (vi) and (vii) above, with coverage at least as broad as the
primary coverages of the insurance required by clauses (v), (vi) and (vii)
above, with any excess liability insurance to be at least as broad as the
coverages of the lead umbrella policy. All such policies shall be endorsed to
provide defense coverage obligations;
          (ix) Workers’ compensation insurance for all employees of the Borrower
or its Subsidiaries engaged on or with respect to the Collateral Pool Property
with limits as required by applicable law; and
          (x) Such other insurance in such form and in such amounts as may from
time to time be reasonably required by the Agent against other insurable hazards
and casualties which at the time are commonly insured against in the case of
properties of similar character and location to the Collateral Pool Properties.
     The Borrower shall pay all premiums on insurance policies. The insurance
policies with respect to all Collateral Pool Properties provided for in clauses
(v), (vi) and (viii) above shall name the Agent and each Lender as an additional
insured. The insurance policies provided for in clauses (i), (ii), (iii) and
(iv) above shall name the Agent as mortgagee and loss payee, shall be first
payable in case of loss to the Agent, and shall contain mortgagee clauses and
lender’s loss payable endorsements in form and substance acceptable to the
Agent. The Borrower shall deliver duplicate originals or certified copies of all
such policies to the Agent, and the Borrower shall promptly furnish to the Agent
all renewal notices and evidence that all premiums or portions thereof then due
and payable have been paid. At least thirty (30) days prior to the expiration
date of the policies, the Borrower shall deliver to the Agent evidence of
continued coverage, including a certificate of insurance, as may be satisfactory
to the Agent.

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     (b) All policies of insurance required by this Agreement shall contain
clauses or endorsements to the effect that (i) no act or omission of the
Borrower or any Subsidiary or anyone acting for the Borrower or any Subsidiary
(including, without limitation, any representations made in the procurement of
such insurance), which might otherwise result in a forfeiture of such insurance
or any part thereof, no occupancy or use of the Collateral Pool Properties for
purposes more hazardous then permitted by the terms of the policy, and no
foreclosure or any other change in title to the Collateral Pool Properties or
any part thereof, shall affect the validity or enforceability of such insurance
insofar as the Agent is concerned, (ii) the insurer waives any right of set off,
counterclaim, subrogation, or any deduction in respect of any liability of the
Borrower or any Subsidiary and the Agent, (iii) such insurance is primary and
without right of contribution from any other insurance which may be available,
(iv) such policies shall not be modified, canceled or terminated prior to the
scheduled expiration date thereof without the insurer thereunder giving at least
thirty (30) days prior written notice to the Agent by certified or registered
mail, and (v) that the Agent or the Lenders shall not be liable for any premiums
thereon or subject to any assessments thereunder, and shall in all events be in
amounts sufficient to avoid any coinsurance liability.
     (c) The insurance required by this Agreement may be effected through a
blanket policy or policies covering additional locations and property of the
Borrower and other Persons not included in the Collateral Pool Properties,
provided that such blanket policy or policies comply with all of the terms and
provisions of this Section 7.5 and contain endorsements or clauses assuring that
any claim recovery will not be less than that which a separate policy would
provide, including, without limitation, a priority claim provision with respect
to property insurance and an aggregate limits of insurance endorsement in the
case of liability insurance.
     (d) All policies of insurance required by this Agreement shall be issued by
companies licensed to do business in the State where the policy is issued and
also in the States where the applicable Collateral Pool Property is located and
having a rating in Best’s Key Rating Guide of at least “A-” and a financial size
category of at least “IX.”
     (e) In the event of any loss or damage to a Collateral Pool Property, the
Borrower or the applicable Guarantor shall give prompt written notice to the
insurance carrier and the Agent. Each of the Borrower and the Guarantors hereby
irrevocably authorizes and empowers the Agent, at the Agent’s option and in the
Agent’s sole discretion or at the request of the Required Lenders in their sole
discretion, as its attorney in fact, to make proof of such loss, to adjust and
compromise any claim under insurance policies, to appear in and prosecute any
action arising from such insurance policies, to collect and receive Insurance
Proceeds and Condemnation Proceeds, and to deduct therefrom the Agent’s
reasonable expenses incurred in the collection of such Insurance Proceeds;
provided, however, that so long as no Default or Event of Default has occurred
and is continuing and so long as the Borrower or any Guarantor shall in good
faith diligently pursue such claim, the Borrower or such Guarantor may make
proof of loss and appear in any proceedings or negotiations with respect to the
adjustment of such claim, except that the Borrower or such Guarantor may not
settle, adjust or compromise any such claim without the prior written consent of
the Agent, which consent shall not be unreasonably withheld or delayed;
provided, further, that the Borrower or such Guarantor may make proof of loss
and adjust and compromise any claim under casualty insurance policies which is
in an amount less than $500,000 so long as no Default or Event of Default has
occurred and is continuing and so long as the Borrower or such Guarantor shall
in good faith diligently pursue such claim. The Borrower and each Guarantor
further authorize the Agent, at the Agent’s option, to (i) apply the balance of
such Insurance Proceeds and Condemnation Proceeds to the payment of the
Obligations whether or not then due, or (ii) if the Agent shall require the
reconstruction or repair of the applicable Collateral Pool Property, to hold the
balance of such proceeds in an interest-bearing account as trustee to be used to
pay taxes, charges, sewer use fees, water rates and assessments which may be
imposed on the applicable Collateral Pool Property and the Obligations as they
become due during the course of reconstruction or repair of the applicable
Collateral Pool Property and to

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pay for or reimburse the Borrower or such Guarantor, in accordance with such
terms and conditions as the Agent may prescribe, for the costs of reconstruction
or repair of the applicable Collateral Pool Property, and upon completion of
such reconstruction or repair to apply any excess to the payment of the
Obligations.
     (f) Notwithstanding the foregoing or anything to the contrary contained in
the Mortgages, the Agent shall make net Insurance Proceeds and Condemnation
Proceeds available to the Borrower or such Guarantor to reconstruct and repair
the applicable Collateral Pool Property, in accordance with such terms and
conditions as the Agent may prescribe in the Agent’s discretion for the
disbursement of the proceeds, provided that (i) the cost of such reconstruction
or repair is not estimated by the Agent to exceed ten percent (10%) of the
replacement cost of the damaged improvements (as reasonably estimated by the
Agent), (ii) no Default or Event of Default shall have occurred and be
continuing, (iii) the Borrower or such Guarantor shall have provided to the
Agent additional cash security in an amount equal to the amount reasonably
estimated by the Agent to be the amount in excess of such proceeds which will be
required to complete such repair or restoration, (iv) the Agent shall have
approved the plans and specifications, construction budget, construction
contracts, and construction schedule for such repair or restoration and
reasonably determined that the repaired or restored Collateral Pool Property
will provide the Agent with adequate security for the Obligations (provided that
the Agent shall not disapprove such plans and specifications if the improvements
are to be restored to substantially their condition immediately prior to such
damage), (v) the Borrower or such Guarantor shall have delivered to the Agent
evidence satisfactory to the Agent that none of the tenants may terminate their
Leases as a result of such casualty or Taking, (vi) the Agent shall reasonably
determine that such repair or reconstruction can be completed not less than six
(6) months prior to the Revolving Loan Termination Date, (vii) the Agent shall
receive evidence reasonably satisfactory to it that any such restoration, repair
or rebuilding complies in all respects with any and all applicable state,
federal and local laws, ordinances and regulations, including without
limitation, zoning laws, ordinances and regulations, and that all required
permits, licenses and approvals relative thereto have been or will be issued in
a manner so as not to materially impede the progress of restoration, (viii) the
Agent shall receive evidence reasonably satisfactory to it that the insurer
under such policies of fire or other casualty insurance does not assert any
defense to payment under such policies against the Borrower, any Guarantor or
the Agent, and (ix) with respect to any Taking, Agent shall determine that
following such repair or restoration there shall be no more than a five percent
(5%) reduction in occupancy or rental income from the Collateral Pool Property
so affected by such specific Taking (excluding any proceeds from rental loss
insurance or proceeds from such award allocable to rent), after giving effect to
the current Taking and any previous Takings which may have occurred. Any excess
Insurance Proceeds shall be paid to the Borrower, or if an Event of Default has
occurred and is continuing, such proceeds shall be applied to the payment of the
Obligations, unless in either case by the terms of the applicable insurance
policy the excess proceeds are required to be returned to such insurer. Any
excess Condemnation Proceeds shall be applied to the payment of the Obligations.
In no event shall the provisions of this section be construed to extend the
Revolving Loan Termination Date or to limit in any way any right or remedy of
the Agent upon the occurrence of an Event of Default hereunder. If a Collateral
Pool Property is sold or a Collateral Pool Property is acquired by the Agent,
all right, title and interest of the Borrower and any Guarantor in and to any
insurance policies and unearned premiums thereon and in and to the proceeds
thereof resulting from loss or damage to such Collateral Pool Property prior to
the sale or acquisition shall pass to the Agent or any other successor in
interest to the Borrower or purchaser of such Collateral Pool Property.
     (g) In addition to the requirements of any of the other Loan Documents, the
Borrower shall, and shall cause each other Obligor and each Subsidiary of the
Borrower and each other Obligor to, maintain or cause to be maintained
commercially reasonable insurance with financially sound and reputable insurance
companies covering such Persons and their respective properties other than the
Collateral Pool Properties in such amounts and against such risks and casualties
as are customary for Persons or properties of similar character and location,
due regard being given to the type of

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improvements thereon, their construction, location, use and occupancy, and from
time to time deliver to the Agent or any Lender upon its request a detailed list
stating the names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties and risks
covered thereby, together with copies of all policies or certificates of the
insurance then in effect.
Section 6.0 Payment of Taxes and Claims.
     The Borrower shall, and shall cause each other Obligor and each Subsidiary
of the Borrower and each other Obligor to, pay and discharge or cause to be paid
and discharged when due (a) all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or upon any properties
belonging to it, and (b) all lawful claims of materialmen, mechanics, carriers,
warehousemen and landlords for labor, materials, supplies and rentals which, if
unpaid, might become a Lien on any properties of such Person; provided, however,
that this Section shall not require the payment or discharge of any such tax,
assessment, charge, levy or claim which is being contested in good faith by
appropriate proceedings which operate to suspend the collection thereof and for
which adequate reserves have been established on the books of such Person, in
accordance with GAAP; provided further that upon the commencement of proceedings
to foreclose any lien that may have attached as security therefor, such Person
either (A) will provide a bond issued by a surety reasonably acceptable to the
Agent and sufficient to stay all such proceedings or (B) if no such bond is
provided, will pay each such tax, assessment, governmental charge, levy or
claim.
Section 7.0 Visits and Inspections.
     The Borrower shall, and shall cause each other Obligor and each Subsidiary
of the Borrower and each other Obligor to, permit representatives or agents of
any Lender or the Agent, from time to time, as often as may be reasonably
requested, but only during normal business hours and at the expense of such
Lender or the Agent (unless a Default or Event of Default shall be continuing,
in which case the exercise by the Agent or such Lender of its rights under this
Section shall be at the expense of the Borrower), as the case may be, to:
(a) visit and inspect all properties of the Borrower, such Subsidiary or other
Obligor (but without disturbing the quiet possession of tenants) to the extent
any such right to visit or inspect is within the control of such Person;
(b) inspect and make extracts from their respective books and records, including
but not limited to management letters prepared by independent accountants; and
(c) discuss with its principal officers, and its independent accountants, its
business, properties, condition (financial or otherwise), results of operations
and performance. If requested by the Agent, the Borrower shall execute an
authorization letter addressed to its accountants authorizing the Agent or any
Lender to discuss the financial affairs of the Borrower, any other Obligor or
any Subsidiary of Borrower or any other Obligor with its accountants.
Section 8.0 Use of Proceeds; Letters of Credit.
     The Borrower shall use the proceeds of all Loans and all Letters of Credit
for general business purposes and real estate acquisitions only. The Borrower
shall not, and shall not permit any other Obligor or any Subsidiary of Borrower
or any other Obligor to, use any part of such proceeds or Letters of Credit to
purchase or carry, or to reduce or retire or refinance any credit incurred to
purchase or carry, any margin stock (within the meaning of Regulations T, U or X
of the Board of Governors of the Federal Reserve System) or to extend credit to
others for the purpose of purchasing or carrying any such margin stock.
Section 9.0 Environmental Matters.
     (a) The Borrower shall, and shall cause all other Obligors and each
Subsidiary of the Borrower and each other Obligor to, comply or cause to be
complied with, all Environmental Laws in all

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material respects. Neither the Borrower nor any Guarantor will, nor will either
of them permit any of its respective Subsidiaries or any other Person to, do any
of the following: (i) use any of the Collateral Pool Properties or any portion
thereof as a facility for the handling, processing, storage or disposal of
Hazardous Materials, except for small quantities of Hazardous Materials used in
the ordinary course of business and in compliance with all applicable
Environmental Laws, (ii) cause or permit to be located on any of the Collateral
Pool Properties any underground tank or other underground storage receptacle for
Hazardous Materials except in full compliance with Environmental Laws, or
(iii) generate any Hazardous Materials on any of the Collateral Pool Properties
except small quantities in the ordinary course of business and in compliance
with all applicable Environmental Laws.
     (b) If the Borrower, any other Obligor or any Subsidiary of Borrower or any
other Obligor shall (i) receive notice that any material violation of any
Environmental Law may have been committed or is about to be committed by such
Person, (ii) receive notice that any administrative or judicial complaint or
order has been filed or is about to be filed against Borrower, or any other
Obligor or any of their respective Subsidiaries alleging material violations of
any Environmental Law or requiring Borrower, any other Obligor or any of their
respective Subsidiaries to take any action in connection with the Release or
threatened Release of Hazardous Materials, or (iii) receive any notice from a
Governmental Authority or private party alleging that Borrower, any other
Obligor or any of their respective Subsidiaries may be liable or responsible for
costs associated with a response to or cleanup of a Release of Hazardous
Materials or any damages caused thereby, the Borrower shall provide the Agent
and each Lender with a copy of such notice within thirty (30) days after the
receipt thereof by such Person. The Borrower shall, and shall cause the other
Obligors and each Subsidiary of the Borrower or any other Obligor to, take or
cause to be taken promptly all actions necessary to prevent the imposition of
any Liens on any of their respective properties arising out of or related to any
Environmental Laws.
     (c) At any time after an Event of Default shall have occurred hereunder the
Agent may at its election (and will at the request of the Required Lenders)
obtain such environmental assessments of any or all of the Collateral Pool
Properties as may be necessary or advisable for the purpose of evaluating or
confirming (i) whether any Hazardous Materials are present in the soil or water
at or adjacent to any such Collateral Pool Property and (ii) whether the use and
operation of any such Collateral Pool Property complies with all Environmental
Laws to the extent required by the Loan Documents. Additionally, at any time
that the Agent or the Required Lenders shall have reasonable grounds to believe
that a Release or threatened Release of Hazardous Materials which any Person may
be legally obligated to contain, correct or otherwise remediate or which
otherwise may expose such Person to liability may have occurred, relating to any
Collateral Pool Property, or that any Collateral Pool Property is not in
compliance with Environmental Laws to the extent required by the Loan Documents,
Borrower shall promptly upon the request of Agent obtain and deliver to Agent
such environmental assessments of such Collateral Pool Property prepared by an
environmental engineer reasonably satisfactory to Agent as may be necessary or
advisable for the purpose of evaluating or confirming (i) whether any Hazardous
Materials are present in the soil or water at or adjacent to such Collateral
Pool Property and (ii) whether the use and operation of such Collateral Pool
Property comply with all Environmental Laws to the extent required by the Loan
Documents. All environmental assessments contemplated by this Section 7.9 shall
be at the sole cost and expense of the Borrower.
Section 10.0 Books and Records.
     The Borrower shall, and shall cause each of the other Obligors and each
Subsidiary of the Borrower or any other Obligor to, maintain true and accurate
books and records pertaining to their respective business operations in which
full, true and correct entries will be made in accordance with GAAP. Borrower
shall maintain its current accounting procedures unless approved by the Agent or
as required by Applicable Law. Neither the Borrower, the other Obligors nor any
of their Subsidiaries shall,

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without the prior written consent of the Agent, make any material change to the
accounting policies or principles used by such Person.
Section 11.0 Further Assurances.
     The Borrower shall, at the Borrower’s cost and expense and upon request of
the Agent, execute and deliver or cause to be executed and delivered, to the
Agent such further instruments, documents and certificates, and do and cause to
be done such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the provisions and
purposes of this Agreement and the other Loan Documents.
Section 12.0 Guarantors.
     (a) Additional Guarantors. In the event that Borrower desires to add
Eligible Real Estate which is not owned by Borrower as a Collateral Pool
Property then as a condition to such Eligible Real Estate becoming a Collateral
Pool Property (and without limiting any other conditions in this Agreement), the
Borrower shall deliver to the Agent each of the following items, each in form
and substance satisfactory to the Agent: (i) a Joinder Agreement executed by
such Wholly-Owned Subsidiary (and any Person having an interest in such
Subsidiary) and (ii) the items that would have been delivered under
Sections 5.1(a)(iv) through (viii) if such Subsidiary (and any Person having an
interest in such Subsidiary) had been one on the Effective Date.
     (b) Release of a Guarantor. The Borrower may request in writing that the
Agent release, and upon receipt of such request the Agent shall release, the
applicable Guarantor from the Guaranty and Indemnity Agreement so long as:
(i) no Default or Event of Default shall then be in existence or would occur as
a result of such release, including without limitation, a Default or Event of
Default resulting from a violation of any of the covenants contained in this
Section 7.12; (ii) the Agent shall have received such written request at least
ten (10) Business Days prior to the requested date of release; (iii) such
Guarantor shall have obtained a release of all Collateral Pool Properties
directly or indirectly owned by it pursuant to Section 2.19; and (iv) such
Guarantor shall have been released as a “guarantor” under the Mezzanine Loan
Documents and any Person owning an Equity Interest in such Guarantor which is a
“borrower” under the Mezzanine Loan Documents shall have been released as a
“borrower” thereunder. Delivery by the Borrower to the Agent of any such request
for a release shall constitute a representation by the Borrower that the matters
set forth in the preceding sentence (both as of the date of the giving of such
request and as of the date of the effectiveness of such request) are true and
correct with respect to such request. Notwithstanding the foregoing, the
foregoing provisions shall not apply to Parent, which may only be released upon
the written approval of Agent and all of the Lenders.
Section 13.0 REIT Status.
     Commencing with the election to be made by Parent in 2007 for calendar year
2006, Parent shall at all times maintain its status as, and elect to receive
status as, a REIT.
Section 14.0 Distribution of Income to the Borrower.
     The Borrower shall cause all of its Subsidiaries to promptly distribute to
the Borrower (but not less frequently than once each fiscal quarter of the
Borrower unless otherwise approved by the Agent), whether in the form of
dividends, distributions or otherwise, all profits, proceeds or other income
relating to or arising from such Subsidiaries’ use, operation, financing,
refinancing, sale or other disposition of their respective assets and properties
after (a) the payment by each such Subsidiary of its debt service and operating
expenses for such quarter; (b) the establishment of reasonable reserves for the
payment of operating expenses not paid on at least a quarterly basis and capital
improvements to be made to such

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Subsidiary’s assets and properties approved by such Subsidiary in the ordinary
course of business consistent with its past practices; (c) funding of reserves
required by the terms of any deed of trust, mortgage or similar lien encumbering
property of the Subsidiary; and (d) payment or establishment of reserves for
payment to minority equity interest holders of amounts required to be paid in
respect of such equity interest.
ARTICLE VIII. INFORMATION
     For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 12.6, all of the Lenders) shall otherwise
consent in the manner set forth in Section 12.6, the Borrower shall furnish to
each Lender (or to the Agent if so provided below) at its Lending Office:
Section 1.0 Quarterly Financial Statements.
     (a) As soon as available and in any event not later than the first to occur
of (i) the date that is five (5) days following the filing of the Parent’s 10-Q
Report with the Securities and Exchange Commission and (ii) the date that is
fifty (50) days after the close of each of the first, second and third calendar
quarters of Parent, the unaudited consolidated balance sheet of Parent and its
Subsidiaries as at the end of such period and the related unaudited consolidated
statements of income, shareholders’ equity and cash flows of Parent and its
Subsidiaries for such period and an unaudited statement of Funds from
Operations, setting forth in each case in comparative form the figures as of the
end of and for the corresponding periods of the previous calendar year, all of
which shall be certified by the chief financial officer or chief executive
officer of Parent, to present fairly, in accordance with GAAP as then in effect,
the consolidated financial position of Parent and its Subsidiaries as at the
date thereof and the results of operations for such period (subject to normal
year-end audit adjustments). Together with such financial statements, the
Borrower shall deliver reports, in form and detail satisfactory to the Agent,
setting forth (A) all capital expenditures made during the calendar quarter then
ended; (B) a description of all Properties acquired during such calendar
quarter, including the Net Operating Income of each such Property, acquisition
costs and related mortgage debt; (C) a description of all Properties sold during
the calendar quarter then ended, including the Net Operating Income from such
Properties and the sales price; (D) a schedule of the Net Operating Income
contribution by each Property and by each market, including a summary of the
economic occupancy, rent potential, and income and expense for such Properties
for the preceding calendar quarter; (E) pro forma quarterly financial
information for Parent and its Subsidiaries for the next four (4) calendar
quarters, including pro forma covenant calculations, EBITDA, sources and uses of
funds, capital expenditures, Net Operating Income for the Properties, and other
income and expenses; and (F) such other information as the Agent may request.
     (b) As soon as available and in any event not later than the first to occur
of (i) the date that is five (5) days following the filing of the Parent’s 10-Q
Report with the Securities and Exchange Commission and (ii) the date that is
fifty (50) days after the close of each of the first, second and third calendar
quarters of Borrower, the unaudited consolidated balance sheet of Borrower and
its Subsidiaries as at the end of such period and the related unaudited
consolidated statements of income, shareholders’ equity and cash flows of
Borrower and its Subsidiaries for such period and an unaudited statement of
Funds from Operations, setting forth in each case in comparative form the
figures as of the end of and for the corresponding periods of the previous
calendar year, all of which shall be certified by the chief financial officer or
chief accounting officer of Parent, to present fairly, in accordance with GAAP
as then in effect, the consolidated financial position of Borrower and its
Subsidiaries as at the date thereof and the results of operations for such
period (subject to normal year-end audit adjustments).

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Section 2.0 Year-End Statements.
     (a) As soon as available and in any event not later than the first to occur
of (i) the date that is five (5) days following the filing of Parent’s 10-K
Report with the Securities and Exchange Commission and (ii) the date that is
ninety-five (95) days after the end of each respective calendar year of Parent
and its Subsidiaries, the audited consolidated balance sheet of Parent and its
Subsidiaries as of the end of such calendar year and the related audited
consolidated statements of income, shareholders’ equity and cash flows of Parent
and its Subsidiaries for such calendar year and an unaudited statement of Funds
from Operations, setting forth in comparative form the figures as at the end of
and for the previous calendar year, all of which shall be certified by (A) the
chief executive officer or chief financial officer of Parent to present fairly,
in accordance with GAAP as then in effect, the consolidated financial position
of Parent and its Subsidiaries as at the date thereof and the results of
operations for such period, and (B) independent certified public accountants of
recognized national standing acceptable to the Agent, whose certificate shall be
unqualified and in scope and substance satisfactory to the Agent and who shall
have authorized Borrower to deliver such financial statements and certification
thereof to the Agent and the Lenders pursuant to this Agreement. Together with
such financial statements, Borrower shall deliver a written statement from such
accountants to the effect that they have read a copy of this Agreement and the
Guaranty, and that in making the examination necessary to such certification,
they have obtained no knowledge of any Default of Event of Default, or if such
accountants shall have obtained knowledge of any then existing Default or Event
of Default they shall disclose in such statement any such Default or Event of
Default; provided that such accountants shall not be liable to Agent or the
Lenders should they fail to obtain knowledge of any Default or Event of Default.
In addition, Borrower shall deliver the reports described in Section 8.1(A)-(E)
with such year-end statements.
     (b) As soon as available and in any event not later than the first to occur
of (i) the date that is five (5) days following the filing of the Parent’s 10-K
Report with the Securities and Exchange Commission and (ii) the date that is
ninety-five (95) days after the end of each respective calendar year of Borrower
and its Subsidiaries, the audited consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such calendar year and the related audited
consolidated statements of income, shareholders’ equity and cash flows of
Borrower and its Subsidiaries for such calendar year and an unaudited statement
of Funds from Operations, setting forth in comparative form the figures as of
the end of and for the previous calendar year, all of which shall be certified
by (A) the chief executive officer or chief financial officer of Parent to
present fairly, in accordance with GAAP as then in effect, the consolidated
financial position of Borrower and its Subsidiaries as of the date thereof and
the results of operations for such period, and (B) independent certified public
accountants of recognized national standing acceptable to the Agent, whose
certificate shall be unqualified and in scope and substance satisfactory to the
Agent and who shall have authorized Borrower to deliver such financial
statements and certification thereof to the Agent and the Lenders pursuant to
this Agreement.
Section 3.0 Compliance Certificate.
     At the time financial statements are required to be furnished pursuant to
Sections 8.1 and 8.2, and within ten (10) Business Days of the Agent’s request
with respect to any other fiscal period, a certificate substantially in the form
of Exhibit N (a “Compliance Certificate”) executed by the chief executive
officer or chief financial officer of Parent: (a) setting forth in reasonable
detail as at the end of such quarterly accounting period, calendar year, or
other fiscal period, as the case may be, the calculations required to establish
whether or not the Parent and the Borrower are in compliance with the covenants
contained in Sections 9.1, 9.6 and 9.14; and (b) stating that no Default or
Event of Default exists, or, if such is not the case, specifying such Default or
Event of Default and its nature, when it occurred, whether it is continuing and
the steps being taken by the Borrower with respect to such event, condition or
failure. With each Compliance Certificate, Borrower shall also deliver a
certificate (a “Collateral Pool Property Certificate”) executed by the chief
financial officer of Parent that: (i) sets forth a list of all Collateral Pool

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Properties; and (ii) certifies that (A) all Collateral Pool Properties so listed
fully qualify as such under the applicable criteria for inclusion as Collateral
Pool Properties, and (B) all acquisitions, dispositions or other removals of
Collateral Pool Properties completed during such quarterly accounting period,
calendar year, or other fiscal period were permitted under this Agreement, and
(C) the acquisition cost of any Collateral Pool Properties acquired during such
period and any other information that Agent may require to determine the
Collateral Pool Value of such Collateral Pool Property, and the Collateral Pool
Value of any Collateral Pool Properties removed during such period. In addition,
with each such Compliance Certificate, Borrower shall deliver the following
information: (w) a development schedule of the announced development pipeline,
including for each announced development project, the project name and location,
number of units to be developed, the expected construction start date, the
expected date of delivery, the expected stabilization date and the total
anticipated cost; (x) a schedule of all outstanding Indebtedness of Parent and
its Subsidiaries, showing for each component of Indebtedness, the lender, the
total commitment, the total indebtedness outstanding, the interest rate, if
fixed, or the applicable margin over an index, if the interest rate floats, the
term, the required amortization (if any) and the security (if any); (y) a
schedule of all interest rate protection agreements to which Borrower, Parent or
any of their respective Subsidiaries are a party, showing for each such
agreement, the total dollar amount, the type of agreement (i.e. cap, collar,
swap, etc.) and the term thereof and (z) a copy of all management reports, if
any, submitted to the Borrower or Parent or its management by its independent
public accountants.
Section 4.0 Other Information.
     (a) Securities Filings. Within five (5) Business Days of the filing
thereof, written notice and a listing of all registration statements, reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) and all other periodic reports
which the Borrower, any other Obligor or any of their respective Subsidiaries
shall file with the Securities and Exchange Commission (or any Governmental
Authority substituted therefor) or any national securities exchange;
     (b) Shareholder Information. Promptly upon the mailing thereof to the
shareholders or partners of Borrower, any other Obligor or any of their
respective Subsidiaries generally, copies of all financial statements, reports
and proxy statements so mailed and promptly upon the issuance thereof copies of
all press releases issued by the Borrower, any other Obligor or any of their
respective Subsidiaries;
     (c) ERISA. If and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any “reportable event” (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer of Parent setting forth details as to
such occurrence and the action, if any, which the Borrower or applicable member
of the ERISA Group is required or proposes to take;

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     (d) Litigation. To the extent Borrower, any other Obligor or any of their
respective Subsidiaries is aware of the same, prompt notice of the commencement
of any proceeding or investigation by or before any Governmental Authority and
any action or proceeding in any court or other tribunal or before any arbitrator
against or in any other way relating adversely to, or adversely affecting,
Borrower, any other Obligor, any of their respective Subsidiaries or any of
their respective properties, assets or businesses which involve claims
individually or in the aggregate in excess of $5,000,000, and prompt notice of
the receipt of notice that any United States income tax returns of Borrower, any
other Obligor, or any of their respective Subsidiaries are being audited;
     (e) Modification of Governing Documents. A copy of any amendment to a
Governing Document of Borrower or any other Obligor promptly upon, and in any
event within fifteen (15) Business Days of, the effectiveness thereof;
     (f) Change of Management or Financial Condition. Prompt notice of any
material change in the senior management of Borrower, any other Obligor or any
of their respective Subsidiaries, any change in the business, assets,
liabilities, financial condition, results of operations or business prospects of
Borrower, any other Obligor, or any of their respective Subsidiaries which has
had or could reasonably be expected to have a Material Adverse Effect, or any
other event or circumstance which has had or could reasonably be expected to
have a Material Adverse Effect;
     (g) Default. Notice of the occurrence of any of the following promptly upon
a Responsible Officer obtaining knowledge thereof: (i) any Default or Event of
Default (which notice shall state that it is a “notice of default” for the
purposes of Section 11.3 below) or (ii) any event which constitutes or which
with the passage of time, the giving of notice, or otherwise, would constitute a
default or event of default by Borrower, any other Obligor, or any of their
respective Subsidiaries under any Indebtedness individually or in the aggregate
in excess of $5,000,000, or under any Material Contract to which any such Person
is a party or by which any such Person or any of its respective properties may
be bound;
     (h) Judgments. Prompt notice of any order, judgment or decree in excess of
$5,000,000 having been entered against Borrower, any other Obligor, or any of
their respective Subsidiaries or any of their respective properties or assets;
     (i) Notice of Violations of Law. Prompt notice if Borrower, any other
Obligor, or any of their respective Subsidiaries shall receive any notification
from any Governmental Authority alleging a violation of any Applicable Law or
any inquiry as to any Collateral Pool Property, or as to any Property other than
a Collateral Pool Property which could reasonably be expected to have a Material
Adverse Effect;
     (j) Material Assets Sales. Prompt notice of the sale, transfer or other
disposition of any material assets of Borrower, any other Obligor, or any of
their respective Subsidiaries to any Person other than Borrower, any other
Obligor, or any of their respective Subsidiaries;
     (k) Material Contracts. Promptly upon (i) entering into any Material
Contract after the Agreement Date, a copy to the Agent of such Material
Contract, together with a copy of all related or ancillary documentation and
(ii) the giving or receipt thereof by Borrower, any other Obligor, or any of
their respective Subsidiaries notice alleging that any party to any Material
Contract is in default of its obligations thereunder;
     (l) Disqualification of Collateral Pool Property. Within five (5) Business
Days after any Collateral Pool Property ceases to qualify as a Collateral Pool
Property, the Borrower shall deliver to the Agent a Collateral Pool Property
Certificate reflecting such disqualification, together with a statement of:

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(i) the identity of the Collateral Pool Property being disqualified, and
(ii) the Collateral Pool Value attributable to such Collateral Pool Property;
     (m) Rent Roll and Operating Statement. Simultaneously with the delivery of
the financial statements referred to in Sections 8.1 and 8.2 above, (i) a rent
roll for each of the Collateral Pool Properties and a summary thereof in form
satisfactory to Agent as of the end of each calendar quarter (including the
fourth calendar quarter in each year), and (ii) an operating statement for each
of the Collateral Pool Properties for the previous two (2) calendar quarters and
year to date and a consolidated operating statement for the Collateral Pool
Properties for the previous two (2) calendar quarters and year to date (such
statements and reports to be in form reasonably satisfactory to Agent).
     (n) Other Information. From time to time and promptly upon each request,
such data, certificates, reports, statements, opinions of counsel, documents or
further information regarding the business, assets, liabilities, financial
condition, results of operations or business prospects of the Borrower, any or
other Obligor or any of their respective Subsidiaries as the Agent or any Lender
may reasonably request.
ARTICLE IX. NEGATIVE COVENANTS
     For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 12.6, all of the Lenders) shall otherwise
consent in the manner set forth in Section 12.6, the Borrower shall comply with
the following covenants:
Section 1.0 Financial Covenants.
     The Borrower shall not permit, on a consolidated basis in accordance with
GAAP:
     (a) the Debt to Total Asset Value Ratio to exceed sixty-five percent (65%)
at any time;
     (b) the Fixed Charge Coverage Ratio to be less than 1.40:1.00 at any time;
     (c) the Implied Debt Service Coverage Ratio to be less than 1.30:1.0 at any
time;
     (d) from and after the date that Parent first achieves a Tangible Net Worth
of $50,000,000 or greater, the Tangible Net Worth of Parent at any time to be
less than the sum of (i) Fifty Million Dollars ($50,000,000), plus
(ii) seventy-five percent (75%) of the net proceeds (gross proceeds less
reasonable and customary costs of sale and issuance paid to Persons not
Affiliates of any Obligor) received by the Borrower or Parent at any time from
an Equity Issuance on or after the Agreement Date;
     (e) the aggregate principal amount of all outstanding Floating Rate Debt to
exceed one hundred percent (100%) of Total Indebtedness, provided that from and
after the date that Total Asset Value first equals or exceeds $175,000,000, the
aggregate principal amount of all outstanding Floating Rate Debt shall not
exceed fifty percent (50%) of Total Indebtedness; and
     (f) the sum of the aggregate outstanding principal amount of Loans and the
amount of all Letter of Credit Liabilities to exceed the Available Amount.
Section 2.0 Indebtedness.
     The Borrower shall not, and shall not permit any other Obligor or any
Subsidiary of Borrower or any other Obligor to, create, incur, assume, or permit
or suffer to exist, or assume or guarantee, directly or indirectly, contingently
or otherwise, or become or remain liable with respect to any Indebtedness other
than the following:

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     (a) the Obligations;
     (b) Indebtedness up to a maximum principal balance of $15,000,000 under the
Mezzanine Loan Documents, provided that the Mezzanine Lenders have entered into
the Intercreditor Agreement;
     (c) intercompany Indebtedness among Borrower and its Wholly Owned
Subsidiaries; provided, however, that the obligations of the Borrower and each
Guarantor in respect of such intercompany Indebtedness shall be subordinate to
the Obligations; and
     (d) any other Indebtedness existing, created, incurred or assumed so long
as immediately prior to the existence, creation, incurring or assumption
thereof, and immediately thereafter and after giving effect thereto, no Default
or Event of Default is or would be in existence, including without limitation, a
Default or Event of Default resulting from a violation of any of the covenants
contained in this Section 9.1.
Section 3.0 [Intentionally Omitted.]
Section 4.0 Investments.
     The Borrower shall not permit any Subsidiary Guarantor to, directly or
indirectly, acquire, make or purchase any Investment, or permit any Investment
of such Person to be outstanding on and after the Agreement Date, other than the
applicable Collateral Pool Property owned by such Subsidiary Guarantor.
Section 5.0 Liens; Negative Pledges; Other Matters.
     (a) The Borrower shall not, and shall not permit any other Obligor or any
Subsidiary of Borrower or any other Obligor to, create, assume, or incur any
Lien (other than Permitted Liens) upon any of its properties, assets, income or
profits of any character whether now owned or hereafter acquired if immediately
prior to the creation, assumption or incurring of such Lien, or immediately
thereafter, a Default or Event of Default is or would be in existence, including
without limitation, a Default or Event of Default resulting from a violation of
any of the covenants contained in Section 9.1. Notwithstanding the foregoing,
the Collateral Pool Properties shall not be subject to any Lien other than Liens
of the type described in clauses (a), (d), (e) and (g) of the definition of
Permitted Liens and second-priority Liens in favor of the Mezzanine Lenders to
secure the Mezzanine Loan which are subject to the terms of the Intercreditor
Agreement.
     (b) The Borrower shall not, and shall not permit any other Obligor or any
Subsidiary of Borrower or any other Obligor to, enter into, assume or otherwise
be bound by any Negative Pledge except for a Negative Pledge contained in any
agreement (i) evidencing Indebtedness which Borrower or such Subsidiary or
Obligor may create, incur, assume, or permit or suffer to exist under Section
9.2, (ii) which Indebtedness is secured by a Lien permitted to exist pursuant to
this Agreement, and (iii) which prohibits the creation of any other Lien on only
the property securing such Indebtedness as of the date such agreement was
entered into.
     (c) Except pursuant to the Mezzanine Loan Documents, the Borrower shall
not, and shall not permit any other Obligor or any Subsidiary of Borrower or any
other Obligor to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of Borrower, any other Obligor or any Subsidiary of Borrower or any other
Obligor to: (i) pay dividends or make any other distribution on any of such
Person’s Equity Interests owned by the Borrower, any other Obligor, or any of
their respective Subsidiaries (other than distributions by Borrower to Parent),
(ii) pay any Indebtedness owed to Borrower, any other Obligor, or any of their
respective Subsidiaries, (iii) make

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loans or advances to Borrower, any other Obligor, or any of their respective
Subsidiaries, or (iv) transfer any of its property or assets to Borrower, any
Obligor, or any of their respective Subsidiaries.
Section 6.0 Restricted Payments; Stock Repurchases.
     (a) Borrower will not make any Restricted Payment to Parent and Parent will
not make any Restricted Payments during any calendar quarter which, based upon
the prior twelve (12) months from the date of calculation, would exceed the
greater of (i) commencing on the Dividend Restriction Date ninety-five percent
(95%) of such Person’s Funds From Operations through the date of any such
Restricted Payment (provided that prior to the Dividend Restriction Date,
Borrower and Parent may make Restricted Payments without regard to the limit in
this Section 9.6(a)(i)) or (ii) the minimum amount required in order for Parent
to maintain its status as a REIT, as set forth in a certification to Agent from
the chief financial officer of Parent. If an Event of Default occurs and is
continuing, then neither Borrower nor Parent shall make any Restricted Payments
in excess of the minimum amount required in order for Parent to maintain its
status as a REIT, as set forth in a certification to Agent from the chief
financial officer of Parent; provided further that if a Default or Event of
Default specified in Section 10.1(a), Section 10.1(b), Section 10.1(f) or
Section 10.1(g) shall have occurred and be continuing or if as a result of the
occurrence of any Event of Default the Obligations have been accelerated
pursuant to Section 10.2(a), then neither the Borrower nor Parent shall make any
Restricted Payments to any Person whatsoever without the prior written consent
of the Requisite Lenders.
     (b) Neither the Borrower nor Parent shall at any time buy back, redeem,
retire or otherwise acquire, directly or indirectly, any shares of its capital
stock if a Default or Event of Default exists or immediately thereafter and
after giving effect thereto, a Default or Event of Default is or would be in
existence.
Section 7.0 Merger, Consolidation, Sales of Assets and Other Arrangements.
     The Borrower shall not, and shall not permit any other Obligor or any
Subsidiary of Borrower or any other Obligor to: (i) enter into any transaction
of merger, consolidation, reorganization or other business combination;
(ii) liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); or (iii) convey, sell, lease, sublease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets, whether now owned or hereafter
acquired, or discontinue or eliminate any business line or segment (any such
event described in clause (iii), a “Sale”); provided, however, that:
     (a) Any of the actions described in the immediately preceding clauses
(i) through (iii) may be taken with respect to any Subsidiary of Borrower that
is not also an Obligor, so long as immediately prior to the taking of such
action, and immediately thereafter and after giving effect thereto, no Default
or Event of Default is or would be in existence;
     (b) a Person may merge with Borrower or any of its Subsidiaries that is a
Guarantor, so long as (i) such Person was organized under the laws of the United
States of America or one of its states; (ii) if such merger involves the
Borrower, Borrower is the survivor of such merger; (iii) if such merger involves
a Subsidiary of Borrower that is a Guarantor, subject to Section 9.7(b)(ii),
such Subsidiary is the survivor of such merger; (iv) immediately prior to such
merger, and immediately thereafter and after giving effect thereto, no Default
or Event of Default is or would be in existence; (v) the Borrower shall have
given the Agent and the Lenders at least ten (10) Business Days’ prior written
notice of such merger (except that such prior notice shall not be required in
the case of the merger of a Subsidiary of Borrower with and into Borrower);
(vi) such merger is completed as a result of negotiations with the approval of
the board of directors or similar body of such Person and is not a so called
“hostile takeover”; and (vii) following such

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merger, Borrower and its Subsidiaries will continue to be engaged solely in the
business of the ownership, development, management and investment in multifamily
real estate; and
     (c) the foregoing limitation on the sale, lease or other transfer of assets
and on the discontinuation or elimination of a business line or segment shall
not prohibit the sale of Properties whether to an Affiliate or a third party,
during any period of twelve (12) calendar months, pursuant to reasonable terms
which are no less favorable to the owner of such Property than would be obtained
in a comparable arm’s length transaction with a Person which is not an
Affiliate, if such sale is to an Affiliate, for fair market value (as determined
in good faith by the board of directors of Parent or an executive committee
thereof), for an aggregate amount, which when combined with all other such sales
pursuant to this clause (c), does not exceed twenty-five percent (25%) of Total
Asset Value as of the end of the fiscal quarter that immediately precedes the
commencement of such twelve (12) calendar month period. Notwithstanding anything
in this Agreement to the contrary, any disposition of assets by the Obligors and
their Subsidiaries shall be made in the ordinary course of business for a full
and fair consideration.
Section 8.0 Fiscal Year.
     Neither the Borrower nor Parent shall change its fiscal year from that in
effect as of the Agreement Date.
Section 9.0 Modifications to Material Contracts.
     The Borrower shall not, and shall not permit any other Obligor or any
Subsidiary of Borrower or any other Obligor to, enter into any amendment or
modification to any Material Contract which could reasonably be expected to have
a Material Adverse Effect.
Section 10.0 Transactions with Affiliates.
     The Borrower shall not, and shall not permit any other Obligor or any
Subsidiary of Borrower or any other Obligor to, permit to exist or enter into,
any transaction (including the purchase, sale, lease or exchange of any property
or the rendering of any service) with any Affiliate (but not including any
Subsidiary of Borrower), except transactions in the ordinary course of and
pursuant to the reasonable requirements of the business of such Person and upon
fair and reasonable terms which are no less favorable to such Person than would
be obtained in a comparable arm’s length transaction with a Person that is not
an Affiliate.
Section 11.0 ERISA Exemptions.
     The Borrower shall not, and shall not permit any other Obligor or any
Subsidiary of Borrower or any other Obligor to, permit any of its respective
assets to become or be deemed to be “plan assets” within the meaning of ERISA,
the Internal Revenue Code and the respective regulations promulgated thereunder.
Section 12.0 Restriction on Prepayment of Indebtedness.
     Without the prior written consent of the Agent, neither Borrower, any other
Obligor, nor any Subsidiary of Borrower or any other Obligor shall prepay,
redeem or purchase the principal amount, in whole or in part, of any
Indebtedness other than the Obligations after the occurrence of any Event of
Default; provided, however, that this Section 9.12 shall not prohibit the
prepayment of Indebtedness which is financed solely from the proceeds of a new
loan which would otherwise be permitted by the terms of this Agreement.

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Section 13.0 Modifications to Governing Documents.
     The Borrower shall not, and shall not permit any other Obligor or any
Subsidiary of Borrower or any other Obligor to enter into any amendment or
modification of any Governing Document of Borrower, such Subsidiary, or such
Obligor which would have a Material Adverse Effect; provided that Borrower shall
not permit any Subsidiary of Borrower which is a “guarantor” under the Mezzanine
Loan Agreement to amend or modify its Governing Documents without the prior
written consent of Agent, such consent not to be unreasonably withheld or
delayed.
Section 14.0 Additional Requirements of Collateral Pool Properties.
     (a) The Collateral Pool Properties in the aggregate shall consist solely of
Properties which have an aggregate occupancy level for the preceding calendar
quarter of tenants in possession, not in default and paying rent of at least
eighty percent (80%) of the aggregate apartment units within such Collateral
Pool Properties.
     (b) From and after May 31, 2007, there shall at no time be less than three
(3) Collateral Pool Properties having an aggregate Collateral Pool Asset Value
equal to or greater than $75,000,000.00.
     (c) No more than fifteen percent (15%) of the Collateral Pool Value shall
be attributable to Collateral Pool Properties pursuant to which Borrower or a
Guarantor holds a leasehold interest under a ground lease.
     (d) In the event that all or any material portion of a Collateral Pool
Property shall be damaged or subject to a Taking, then such Collateral Pool
Property shall no longer be a part of the Collateral Pool Properties unless and
until (i) any damage to such Collateral Pool Property is repaired or restored,
such Collateral Pool Property becomes fully operational and the Agent shall
receive evidence satisfactory to the Agent of the Collateral Pool Value of such
Collateral Pool Property following such repair or restoration (both at such time
and prospectively) or (ii) Agent shall receive evidence satisfactory to the
Agent that the Collateral Pool Value of such Collateral Pool Property (both at
such time and prospectively) shall not be materially adversely affected by such
damage or Taking.
Section 15.0 Management.
     The Borrower shall not and shall not permit any Guarantor to enter into any
management agreement with a third party manager after the date hereof for any
Collateral Pool Property without the prior written consent of the Agent (which
shall not be unreasonably withheld). Agent may condition any approval of a new
manager upon the execution and delivery to Agent of an Assignment of Management
Agreement and Subordination to Agent.
Section 16.0 Leases of the Property.
     Neither the Borrower nor any Guarantor will lease all or any portion of a
Collateral Pool Property or amend, supplement or otherwise modify, terminate or
cancel, or accept the surrender of, or consent to the assignment or subletting
of, or grant any concessions to or waive the performance of any obligations of
any tenant, lessee or licensee under, any now existing or future Lease at any
Collateral Pool Property, except in each case consistent with sound leasing and
management practices for similar properties.
Section 17.0 Registered Servicemark.
     Without prior written notice to the Agent, none of the Collateral Pool
Properties shall be owned or operated by the Borrower or any Guarantor under any
registered or protected trademark, tradename,

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servicemark or logo. In the event any of the Collateral Pool Properties shall be
owned or operated under any registered or protected tradename, trademark,
servicemark or logo, Borrower or the applicable Guarantor shall enter into an
agreement with Agent, in form and substance satisfactory to Agent, granting to
Agent or any successful bidder at a foreclosure sale of such Collateral Pool
Property the right and/or license to continue operating such Collateral Pool
Property under such tradename, trademark, servicemark or logo.
Section 18.0 Zoning and Contract Changes and Compliance.
     Neither the Borrower nor any Guarantor shall initiate or consent to any
zoning reclassification of any Collateral Pool Property or seek any variance
under any existing zoning ordinance or use or permit the use of any Collateral
Pool Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation. Neither the Borrower nor any Guarantor shall initiate
any change in any laws, requirements of governmental authorities or obligations
created by private contracts and Leases which now or hereafter may materially
adversely affect the ownership, occupancy, use or operation of any Collateral
Pool Property.
ARTICLE X. DEFAULT
Section 1.0 Events of Default.
     Each of the following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of Applicable Law or pursuant to any judgment or order of
any Governmental Authority:
     (a) Default in Payment of Principal. The Borrower shall fail to pay when
due (whether at maturity, by reason of acceleration or otherwise) the principal
of any of the Loans, or any Reimbursement Obligation.
     (b) Default in Payment of Interest and Other Obligations. The Borrower
shall fail to pay when due any interest on any of the Loans or any of the other
payment Obligations owing by the Borrower under this Agreement or any other Loan
Document, or any other Obligor shall fail to pay when due any payment Obligation
owing by such other Obligor under any Loan Document to which it is a party, and
such failure shall continue for a period of five (5) Business Days from the date
such payment was due.
     (c) Default in Performance. (i) The Borrower shall fail to perform or
observe any term, covenant, condition or agreement contained in Sections 7.13 or
8.3 or in Article IX, or (ii) the Borrower or any other Obligor shall fail to
perform or observe any term, covenant, condition or agreement contained in this
Agreement or any other Loan Document to which it is a party and not otherwise
mentioned in this Section and such failure under this Section 10.1(c)(ii) shall
continue for a period of thirty (30) days after the earlier of (x) the date upon
which a Responsible Officer of Borrower or such Obligor obtains knowledge of
such failure or (y) the date upon which the Borrower has received written notice
of such failure from the Agent.
     (d) Misrepresentations. Any written statement, representation or warranty
made or deemed made by or on behalf of Borrower or any other Obligor under this
Agreement or under any other Loan Document, or any amendment hereto or thereto,
or in any other writing or statement at any time furnished or made or deemed
made by or on behalf of Borrower or any other Obligor to the Agent or any
Lender, shall at any time prove to have been incorrect or misleading (and
without regard to any qualifications

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limiting such representations to knowledge or belief), in light of the
circumstances in which made or deemed made, in any material respect when
furnished or made or deemed made.
     (e) Indebtedness Cross-Default.
          (i) A Borrower, any other Obligor, or any of their respective
Subsidiaries shall fail to pay when due and payable, the principal of, or
interest on, (A) any Indebtedness (other than the Obligations and Non-Recourse
Indebtedness) or Obligations under Derivative Contracts, in each case having an
aggregate outstanding principal amount greater than or equal to $5,000,000 or
(B) any Non-Recourse Indebtedness having an aggregate outstanding principal
amount greater than or equal to $20,000,000 (all such Indebtedness or
obligations under Derivative Contracts being “Material Indebtedness”); or
          (ii) (x) The maturity of any Material Indebtedness shall have been
accelerated in accordance with the provisions of any indenture, contract or
instrument evidencing, providing for the creation of or otherwise concerning
such Material Indebtedness or (y) any Material Indebtedness shall have been
required to be prepaid or repurchased prior to the stated maturity thereof
(which for the purposes hereof shall include any termination event or other
event resulting in the settling of payments due under a Derivative Contract); or
          (iii) Any other event shall have occurred and be continuing which with
or without the passage of time, the giving of notice, or both, would permit any
holder or holders of Material Indebtedness, any trustee or agent acting on
behalf of such holder or holders or any other Person, to accelerate the maturity
of any such Material Indebtedness or require any such Material Indebtedness to
be prepaid or repurchased prior to its stated maturity (which for the purposes
hereof shall include any termination event or other event resulting in the
settling of payments due under a Derivative Contract).
     (f) Voluntary Bankruptcy Proceeding. Borrower, any other Obligor, or any of
their respective Subsidiaries shall: (i) commence a voluntary case under the
Bankruptcy Code, or other federal bankruptcy laws (as now or hereafter in
effect); (ii) file a petition seeking to take advantage of any other Applicable
Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts; (iii) consent to, or fail to
contest in a timely and appropriate manner, any petition filed against it in an
involuntary case under such bankruptcy laws or other Applicable Laws or consent
to any proceeding or action described in the immediately following subsection;
(iv) apply for or consent to, or fail to contest in a timely and appropriate
manner, the appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of a substantial part of its
property, domestic or foreign; (v) admit in writing its inability to pay its
debts as they become due; (vi) make a general assignment for the benefit of
creditors; (vii) make a conveyance fraudulent as to creditors under any
Applicable Law; or (viii) take any corporate or partnership action for the
purpose of effecting any of the foregoing.
     (g) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against Borrower, any other Obligor or any of their respective
Subsidiaries in any court of competent jurisdiction seeking: (i) relief under
the Bankruptcy Code, or other federal bankruptcy laws (as now or hereafter in
effect) or under any other Applicable Laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of such Person, or of all or any substantial part of the assets,
domestic or foreign, of such Person, and such case or proceeding shall continue
undismissed or unstayed for a period of sixty (60) consecutive calendar days, or
an order granting the remedy or other relief requested in such case or
proceeding against such Person (including, but not limited to, an order for
relief under such Bankruptcy Code or such other federal bankruptcy laws) shall
be entered.

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     (h) Litigation; Enforceability. Borrower or any other Obligor shall
disavow, revoke or terminate (or attempt to terminate) any Loan Document to
which it is a party or shall otherwise challenge or contest in any action, suit
or proceeding in any court or before any Governmental Authority the validity,
priority or enforceability of this Agreement, any Note or any other Loan
Document or this Agreement, any Note, the Guaranty or any other Loan Document
shall cease to be in full force and effect (except as a result of the express
terms thereof).
     (i) Judgment. A judgment or order for the payment of money or for an
injunction shall be entered against Borrower, any other Obligor, or any of their
respective Subsidiaries by any court or other tribunal and (i) such judgment or
order shall continue for a period of thirty (30) days without being paid, stayed
or dismissed through appropriate appellate proceedings, and (ii) either (A) the
amount of such judgment or order for which insurance has not been acknowledged
in writing by the applicable insurance carrier (or the amount as to which the
insurer has denied liability) exceeds, individually or together with all other
such outstanding judgments or orders entered against Borrower, such other
Obligor or such Subsidiary, $5,000,000, or (B) in the case of an injunction or
other non-monetary judgment, such judgment could reasonably be expected to have
a Material Adverse Effect.
     (j) Attachment. A warrant, writ of attachment, execution or similar process
shall be issued against any property of Borrower, any other Obligor, or any of
their respective Subsidiaries which exceeds, individually or together with all
other such warrants, writs, executions and processes for Borrower, such Obligor
or such Subsidiary, $5,000,000, and such warrant, writ, execution or process
shall not be discharged, vacated, stayed or bonded for a period of thirty (30)
days; provided, however, that if a bond has been issued in favor of the claimant
or other Person obtaining such warrant, writ, execution or process, the issuer
of such bond shall execute a waiver or subordination agreement in form and
substance satisfactory to the Agent pursuant to which the issuer of such bond
subordinates its right of reimbursement, contribution or subrogation to the
Obligations and waives or subordinates any Lien it may have on the assets of any
Obligor.
     (k) ERISA. Any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $5,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer, any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $5,000,000.
     (l) Loan Documents. An Event of Default (as defined therein) shall occur
under any of the other Loan Documents.
     (m) Change of Control. A Change of Control shall occur.
     (n) Federal Tax Lien. A federal tax lien shall be filed against the
Borrower, any Obligor, or any of their respective Subsidiaries under
Section 6323 of the Internal Revenue Code or a lien of the PBGC shall be filed
against Borrower, any other Obligor, or any of their respective Subsidiaries
under Section 4068 of ERISA and in either case such lien shall remain
undischarged (or otherwise unsatisfied) for a period of twenty-five (25) days
after the date of filing.

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Section 2.0 Remedies Upon Event of Default.
     Upon the occurrence of an Event of Default the following provisions shall
apply:
     (a) Acceleration; Termination of Facilities.
          (i) Automatic. Upon the occurrence of an Event of Default specified in
Sections 10.1(f) or 10.1(g), (A)(i) the principal of, and all accrued interest
on, the Loans and the Notes at the time outstanding, (ii) an amount equal to the
Stated Amount of all Letters of Credit outstanding as of the date of the
occurrence of such Event of Default, and (iii) all of the other Obligations of
the Borrower, including, but not limited to, the other amounts owed to the
Lenders, the Swingline Lender, the Issuing Lender and the Agent under this
Agreement, the Notes or any of the other Loan Documents shall become immediately
and automatically due and payable by the Borrower without presentment, demand,
protest, or other notice of any kind, all of which are expressly waived by the
Borrower, and (B) all of the Commitments, the obligation of the Lenders to make
Revolving Loans, the Swingline Commitment, the obligation of the Swingline
Lender to make Swingline Loans, and the obligation of the Issuing Lender to
issue Letters of Credit hereunder, shall all immediately and automatically
terminate.
          (ii) Optional. If any other Event of Default shall have occurred and
be continuing, the Agent shall, at the direction of the Requisite Lenders:
(A) declare (1) the principal of, and accrued interest on, the Loans and the
Notes at the time outstanding, (2) an amount equal to the Stated Amount of all
Letters of Credit outstanding as of the date of the occurrence of such other
Event of Default, and (3) all of the other Obligations, including, but not
limited to, the other amounts owed to the Lenders and the Agent under this
Agreement, the Notes or any of the other Loan Documents, to be forthwith due and
payable, whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived by the Borrower, and (B) terminate the Commitments and the
obligation of the Lenders to make Revolving Loans hereunder and the obligation
of the Issuing Lender to issue Letters of Credit hereunder. Further, if the
Agent has exercised any of the rights provided under the preceding sentence, the
Swingline Lender shall: (x) declare the principal of, and accrued interest on,
the Swingline Loans and the Swingline Note at the time outstanding, and all of
the other Obligations owing to the Swingline Lender, to be forthwith due and
payable, whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived by the Borrower and (y) terminate the Swingline Commitment and
the obligation of the Swingline Lender to make Swingline Loans.
     (b) Loan Documents. The Requisite Lenders may direct the Agent to, and the
Agent if so directed shall, exercise any and all of its rights under any and all
of the other Loan Documents.
     (c) Applicable Law. The Requisite Lenders may direct the Agent to, and the
Agent if so directed shall, exercise all other rights and remedies it may have
under any Applicable Law.
     (d) Appointment of Receiver. To the extent permitted by Applicable Law, the
Agent and the Lenders shall be entitled to the appointment of a receiver for the
assets and properties of the Borrower, the other Obligors and their respective
Subsidiaries, without notice of any kind whatsoever and without regard to the
adequacy of any security for the Obligations or the solvency of any party bound
for its payment, to take possession of all or any portion of the business
operations of the Borrower, the other Obligors and their respective Subsidiaries
and to exercise such power as the court shall confer upon such receiver.

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Section 3.0 Allocation of Proceeds.
     If an Event of Default shall have occurred and be continuing and maturity
of any of the Obligations has been accelerated, all payments received by the
Agent under any of the Loan Documents or in respect of the Collateral, in
respect of any principal of or interest on the Obligations or any other amounts
payable by the Borrower hereunder or thereunder, shall be applied in the
following order and priority:
     (a) amounts due to the Agent and the Lenders in respect of fees and
expenses due under Sections 3.6 and 12.2;
     (b) payments of interest on Swingline Loans;
     (c) payments of interest on all other Loans and Reimbursement Obligations,
to be applied for the ratable benefit of the Lenders, pro rata among the Lenders
based upon the aggregate outstanding Revolving Loans and Reimbursement
Obligations (and as to the Revolving Loans, first to Base Rate Loans and then to
LIBOR Loans);
     (d) payments of principal of Swingline Loans;
     (e) payments of principal of all other Loans and Reimbursement Obligations,
to be applied for the ratable benefit of the Lenders, pro rata among the Lenders
based upon the aggregate outstanding Revolving Loans and Reimbursement
Obligations (and as to the Revolving Loans, first to Base Rate Loans and then to
LIBOR Loans);
     (f) amounts to be deposited into the Collateral Account in respect of
Letters of Credit (to be applied as provided in Section 10.4);
     (g) amounts due the Agent and the Lenders pursuant to Sections 11.7 and
12.9;
     (h) payments of all other amounts due and owing by the Borrower under any
of the Loan Documents, if any, to be applied for the ratable benefit of the
Lenders and Agent; and
     (i) any amount remaining after application as provided above, shall be paid
to the Borrower or whomever else may be legally entitled thereto.
Section 4.0 Collateral Account.
     (a) As collateral security for the prompt payment in full when due of all
Letter of Credit Liabilities and the other Obligations, the Borrower hereby
pledges and grants to the Agent, for the ratable benefit of the Lenders as
provided herein, a security interest in all of its right, title and interest in
and to the Collateral Account and the balances from time to time in the
Collateral Account (including the investments and reinvestments therein provided
for below). The balances from time to time in the Collateral Account shall not
constitute payment of any Letter of Credit Liabilities until applied by the
Agent as provided herein. Anything in this Agreement to the contrary
notwithstanding, funds held in the Collateral Account shall be subject to
withdrawal only as provided in this Section and in Section 2.12.
     (b) Amounts on deposit in the Collateral Account shall be invested and
reinvested by the Agent in such Cash Equivalents as the Agent shall determine in
its sole discretion. All such deposits, investments and reinvestments shall be
held in the name of and be under the sole dominion and control of the Agent.
Borrower irrevocably authorizes Agent to exercise any and all rights of Borrower
in respect of the Collateral Account and to give all instructions, directions
and entitlement orders in respect thereof as Agent shall deem necessary or
desirable. Agent is authorized by Borrower to file such financing

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statements as Agent may deem necessary in connection with the perfection of the
security interests in the Collateral Account. Borrower agrees to do such further
acts and things, and to execute and deliver such additional documents as Agent
may reasonably request at any time in connection with the administration or
enforcement of its rights with respect to the Collateral Account. For the
purposes of the Uniform Commercial Code, Georgia shall be deemed to be the
location and jurisdiction of Agent, the Collateral Account and any securities
entitlements relating thereto. The Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Collateral Account and shall
be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Agent accords other funds deposited
with the Agent, it being understood that the Agent shall not have any
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any funds held in the Collateral Account.
     (c) If an Event of Default shall have occurred and be continuing, the
Requisite Lenders may, in their discretion, at any time and from time to time,
instruct the Agent to liquidate any such investments and reinvestments and
credit the proceeds thereof to the Collateral Account and apply or cause to be
applied such proceeds and any other balances in the Collateral Account for the
ratable benefit of the Lenders to the payment of any of the Letter of Credit
Liabilities due and payable.
     (d) If (i) no Default or Event of Default has occurred and is continuing
and (ii) all of the Letter of Credit Liabilities have been paid in full, the
Agent shall, from time to time, at the request of the Borrower, deliver to the
Borrower, against receipt but without any recourse, warranty or representation
whatsoever, such of the balances in the Collateral Account as exceed the
aggregate amount of Letter of Credit Liabilities at such time.
     (e) The Borrower shall pay to the Agent from time to time such fees as the
Agent normally charges for similar services in connection with the Agent’s
administration of the Collateral Account and investments and reinvestments of
funds therein.
Section 5.0 Performance by Agent.
     If the Borrower or any Guarantor shall fail to perform any covenant, duty
or agreement contained in any of the Loan Documents, the Agent may perform or
attempt to perform such covenant, duty or agreement on behalf of the Borrower or
any Guarantor after the expiration of any cure or grace periods set forth
herein. In such event, the Borrower shall, at the request of the Agent, promptly
pay any amount reasonably expended by the Agent in such performance or attempted
performance to the Agent, together with interest thereon at the applicable
Post-Default Rate from the date of such expenditure until paid. Notwithstanding
the foregoing, neither the Agent nor any Lender shall have any liability or
responsibility whatsoever for the performance of any obligation of the Borrower
under this Agreement or any other Loan Document.
Section 6.0 Rights Cumulative.
     The rights and remedies of the Agent and the Lenders under this Agreement
and each of the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which any of them may otherwise have under Applicable
Law. In exercising their respective rights and remedies the Agent and the
Lenders may be selective and no failure or delay by the Agent or any of the
Lenders in exercising any right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right preclude its other or further
exercise or the exercise of any other power or right.

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ARTICLE XI. THE AGENT
Section 1.0 Authorization and Action.
     Each Lender hereby appoints and authorizes the Agent to take such action as
contractual representative on such Lender’s behalf and to exercise such powers
under this Agreement and the other Loan Documents as are specifically delegated
to the Agent by the terms hereof and thereof (including entering into and
performing under the Intercreditor Agreement), together with such powers as are
reasonably incidental thereto. Not in limitation of the foregoing, each Lender
authorizes and directs the Agent to enter into the Loan Documents for the
benefit of the Lenders. Each Lender hereby agrees that, except as otherwise set
forth herein, any action taken by the Requisite Lenders in accordance with the
provisions of this Agreement or the Loan Documents, and the exercise by the
Requisite Lenders of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders. Nothing herein (including the use of the term
“Agent”) shall be construed to deem the Agent a trustee or fiduciary for any
Lender nor to impose on the Agent duties or obligations other than those
expressly provided for herein. At the request of a Lender, the Agent will
forward to such Lender copies or, where appropriate, originals of the documents
delivered to the Agent pursuant to this Agreement or the other Loan Documents.
The Agent will also furnish to any Lender, upon the request of such Lender, a
copy of any certificate or notice furnished to the Agent by the Borrower, any
Obligor or any other Affiliate of the Borrower or any Obligor, pursuant to this
Agreement or any other Loan Document not already delivered to such Lender
pursuant to the terms of this Agreement or any such other Loan Document. As to
any matters not expressly provided for by the Loan Documents (including, without
limitation, enforcement or collection of any of the Obligations), the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Requisite Lenders
(or all of the Lenders if explicitly required under any other provision of this
Agreement), and such instructions shall be binding upon all Lenders and all
holders of any of the Obligations; provided, however, that, notwithstanding
anything in this Agreement to the contrary, the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or any other Loan Document or Applicable Law. Not in
limitation of the foregoing, the Agent shall not exercise any right or remedy it
or the Lenders may have under any Loan Document upon the occurrence of a Default
or an Event of Default unless the Requisite Lenders have so directed the Agent
to exercise such right or remedy. The Borrower may rely on written amendments or
waivers executed by Agent or acts taken by Agent as being authorized by the
Lenders or the Requisite Lenders, as applicable, to the extent Agent does not
advise Borrower that it has not obtained such authorization from the Lenders or
the Requisite Lenders, as applicable.
Section 2.0 Agent’s Reliance, Etc.
     Notwithstanding any other provisions of this Agreement or any other Loan
Documents, neither the Agent nor any of its directors, officers, agents,
employees or counsel shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement, except for its or
their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent: (a) may treat the payee of any Note as
the holder thereof until the Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent;
(b) may consult with legal counsel (including its own counsel or counsel for the
Borrower or any other Obligor), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender or
any other Person and shall not be responsible to any Lender or any other Person
for any statements, warranties or representations made by any Person in or in
connection with this Agreement or any other Loan Document; (d) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
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conditions of any of this Agreement or any other Loan Document or the
satisfaction of any conditions precedent under this Agreement or any Loan
Document on the part of the Borrower or other Persons or inspect the property,
books or records of the Borrower or any other Person; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document, any other instrument or document furnished pursuant thereto or
any collateral covered thereby or the perfection or priority of any Lien in
favor of the Agent on behalf of the Lenders in any such collateral; and
(f) shall incur no liability under or in respect of this Agreement or any other
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telephone or telecopy) believed by it to
be genuine and signed, sent or given by the proper party or parties.
Section 3.0 Notice of Defaults.
     The Agent shall not be deemed to have knowledge or notice of the occurrence
of a Default or Event of Default, except with respect to defaults in the payment
of principal, interest and fees required to be paid to Agent for the account of
the Lenders, unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing with reasonable specificity such Default
or Event of Default and stating that such notice is a “notice of default.” If
any Lender (excluding the Lender which is also serving as the Agent) becomes
aware of any Default or Event of Default, it shall promptly send to the Agent
such a “notice of default.” Further, if the Agent receives such a “notice of
default”, the Agent shall give prompt notice thereof to the Lenders.
Section 4.0 Wachovia Bank as Lender.
     Any Lender which is the Agent, as a Lender, shall have the same rights and
powers under this Agreement and any other Loan Document as any other Lender and
may exercise the same as though it were not the Agent; and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated, include any Lender acting
as the Agent in each case in its individual capacity. Any Lender which is the
Agent and the other Lenders and their affiliates may each accept deposits from,
maintain deposits or credit balances for, invest in, lend money to, act as
trustee under indentures of, serve as financial advisor to, and generally engage
in any kind of business with, the Borrower, any other Obligor or any other
affiliate thereof as if it were any other bank and without any duty to account
therefor to the other Lenders. Further, the Agent and the other Lenders and any
affiliate may accept fees and other consideration from the Borrower for services
in connection with this Agreement and otherwise without having to account for
the same to the other Lenders.
Section 5.0 Approvals of Lenders.
     All communications from the Agent to any Lender requesting such Lender’s
determination, consent, approval or disapproval (a) shall be given in the form
of a written notice to such Lender, (b) shall be accompanied by a description of
the matter or issue as to which such determination, approval, consent or
disapproval is requested, or shall advise such Lender where information, if any,
regarding such matter or issue may be inspected, or shall otherwise describe the
matter or issue to be resolved, (c) shall include, if reasonably requested by
such Lender and to the extent not previously provided to such Lender, written
materials and a summary of all oral information provided to the Agent by the
Borrower in respect of the matter or issue to be resolved, and (d) shall include
the Agent’s recommended course of action or determination in respect thereof.
Each Lender shall reply promptly, but in any event within ten (10) Business Days
(or such lesser or greater period as may be specifically required under the Loan
Documents) of receipt of such communication. Except as otherwise provided in
this Agreement and except with respect to items requiring the unanimous consent
or approval of the Lenders under Section 12.6, unless a Lender shall give
written notice to the Agent that it specifically objects to the recommendation
or determination of the Agent (together with a written explanation of the
reasons behind

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such objection) within the applicable time period for reply, such Lender shall
be deemed to have conclusively approved of or consented to such recommendation
or determination.
Section 6.0 Lender Credit Decision, Etc.
     Each Lender expressly acknowledges and agrees that neither the Agent nor
any of its officers, directors, employees, agents, counsel, attorneys-in-fact or
other affiliates has made any representations or warranties as to the financial
condition, operations, creditworthiness, solvency or other information
concerning the business or affairs of the Borrower, any other Obligor, any of
their respective Subsidiaries or any other Person or any Collateral to such
Lender and that no act by the Agent hereafter taken, including any review of the
affairs of the Borrower, shall be deemed to constitute any such representation
or warranty by the Agent to any Lender. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, any other Lender or counsel
to the Agent, or any of their respective officers, directors, employees and
agents, and based on the financial statements of the Borrower, the other
Obligors, and their respective Subsidiaries, or any other Affiliate thereof, and
inquiries of such Persons, its independent due diligence of the business and
affairs of the Borrower, the Obligors, their respective Subsidiaries and other
Persons and the Collateral, its review of the Loan Documents, the legal opinions
required to be delivered to it hereunder, the advice of its own counsel and such
other documents and information as it has deemed appropriate, made its own
credit and legal analysis and decision to enter into this Agreement and the
transaction contemplated hereby. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent, any other Lender or counsel
to the Agent or any of their respective officers, directors, employees and
agents, and based on such review, advice, documents and information as it shall
deem appropriate at the time, continue to make its own decisions in taking or
not taking action under the Loan Documents. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Agent under this Agreement or any of the other Loan Documents,
the Agent shall have no duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of the Borrower, any other
Obligor, any of their respective Subsidiaries or any other Affiliate thereof
which may come into possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or other Affiliates. Each Lender
acknowledges that the Agent’s legal counsel in connection with the transactions
contemplated by this Agreement is only acting as counsel to the Agent and is not
acting as counsel to such Lender.
Section 7.0 Indemnification of Agent.
     Each Lender agrees to indemnify the Agent (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so) pro
rata in accordance with such Lender’s respective Commitment Percentage, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against the Agent (in its capacity as Agent but not as a Lender) in any way
relating to or arising out of the Loan Documents, any transaction contemplated
hereby or thereby or any action taken or omitted by the Agent under the Loan
Documents (collectively, “Indemnifiable Amounts”); provided, however, that no
Lender shall be liable for any portion of such Indemnifiable Amounts to the
extent resulting from the Agent’s gross negligence or willful misconduct or if
the Agent fails to follow the written direction of the Requisite Lenders, unless
such failure is pursuant to the reasonable advice of counsel of which the
Lenders have received notice. Without limiting the generality of the foregoing
but subject to the preceding provision, each Lender agrees to reimburse the
Agent (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so) promptly upon demand for its ratable share
of any out-of-pocket expenses (including reasonable counsel fees of the
counsel(s) of the Agent’s own choosing) incurred by the Agent in connection with
the preparation, negotiation, execution, administration or enforcement of, or
legal advice with respect to the rights or responsibilities of the parties
under, the Loan Documents, any

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suit or action brought by the Agent to enforce the terms of the Loan Documents
and/or collect any Obligations, any “lender liability” suit or claim brought
against the Agent and/or the Lenders, and any claim or suit brought against the
Agent and/or the Lenders arising under any Environmental Laws. Such
out-of-pocket expenses (including counsel fees) shall be advanced by the Lenders
on the request of the Agent notwithstanding any claim or assertion that the
Agent is not entitled to indemnification hereunder upon receipt of an
undertaking by the Agent that the Agent will reimburse the Lenders if it is
actually and finally determined by a court of competent jurisdiction that the
Agent is not so entitled to indemnification. The agreements in this Section
shall survive the payment of the Loans and all other amounts payable hereunder
or under the other Loan Documents and the termination of this Agreement. If the
Borrower shall reimburse the Agent for any Indemnifiable Amount following
payment by any Lender to the Agent in respect of such Indemnifiable Amount
pursuant to this Section, the Agent shall share such reimbursement on a ratable
basis with each Lender making any such payment.
Section 8.0 Successor Agent.
     The Agent may resign at any time as Agent under the Loan Documents by
giving written notice thereof to the Lenders and the Borrower. Any such
resignation shall also constitute Agent’s resignation as Swingline Lender and
may, at such Agent’s option, also constitute its resignation as Issuing Lender.
Upon any such resignation, the Requisite Lenders shall have the right to appoint
a successor Agent, Swingline Lender and Issuing Lender, as applicable, which
shall be a Lender, if any Lender shall be willing to serve, and otherwise shall
be a commercial bank having total combined assets of at least $5,000,000,000,
which appointment shall, provided no Default or Event of Default shall have
occurred and be continuing, be subject to the Borrower’s approval, which
approval shall not be unreasonably withheld or delayed (except that the Borrower
shall, in all events, be deemed to have approved each Lender and its affiliates
as a successor Agent, Swingline Lender and Issuing Lender). If no successor
Agent shall have been so appointed in accordance with the immediately preceding
sentence, and shall have accepted such appointment, within thirty (30) days
after the resigning Agent’s giving of notice of resignation, then the resigning
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a
Lender, if any Lender shall be willing to serve, and otherwise shall be a
commercial bank having total combined assets of at least $5,000,000,000. Upon
the acceptance of any appointment as Agent, Swingline Lender and/or Issuing
Lender hereunder by a successor Agent, such successor Agent, Swingline Lender
and Issuing Lender, as applicable, shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations under the
Loan Documents as Agent, Swingline Lender and Issuing Lender, as applicable.
After any Agent’s resignation hereunder as Agent, the provisions of this
Article XI and all provisions of this Agreement relating to Swingline Loans or
Letters of Credit shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent, Swingline Lender or Issuing
Lender under the Loan Documents. If the resigning Agent shall also resign as the
Issuing Lender, such successor Agent shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or shall make other arrangements satisfactory to the current Issuing
Lender, in either case, to assume effectively the obligations of the current
Agent with respect to such Letters of Credit. Upon any change in the Agent under
this Agreement, the resigning Agent shall execute such assignments of and
amendments to the Loan Documents as may be necessary to substitute the successor
Agent for the resigning Agent.
Section 9.0 Titled Agents.
     Each of the Titled Agents in each such respective capacity, assumes no
responsibility or obligations hereunder, including, without limitation, for
servicing enforcement or collection of any of the Loans, nor any duties as an
agent hereunder for the Lenders. The titles of “Lead Arranger” and “Syndication
Agent” are solely honorific and imply no fiduciary responsibility on the part of
the Titled Agents to the Agent, the Borrower or any Lender and the use of such
titles does not impose on the Titled

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Agents any duties or obligations greater than those of any other Lender or
entitle the Titled Agents to any rights other than those to which any other
Lender is entitled.
Section 10.0 Other Loans by Lenders to Obligors.
     The Lenders agree that one or more of them may now or hereafter have other
loans to one or more of the Obligors which are not subject to this Agreement.
The Lenders agree that the Lender(s) which may have such other loan(s) to the
Obligors may collect payments on such loan(s) and may secure such loan(s) (so
long as such loan does not itself expressly violate this Agreement). Further,
the Lenders agree that the Lender(s) which may have such other loan(s) to the
Obligors shall have no obligation to attempt to collect payments under the Loans
or Reimbursement Obligations in preference and priority over the collection
and/or enforcement of such other loan(s).
Section 11.0 Request for Agent Action.
     Agent and the Lenders acknowledge that in the ordinary course of business
of the Borrower, (a) a Collateral Pool Property may be subject to a Taking,
(b) Borrower or a Guarantor may desire to enter into easements or other
agreements affecting the Collateral Pool Properties, or (c) take other actions
or enter into other agreements in the ordinary course of business which
similarly require the consent, approval or agreement of the Agent. In connection
with the foregoing, the Lenders hereby expressly authorize the Agent to
(x) execute releases of liens in connection with any Taking, (y) execute
consents or subordinations in form and substance satisfactory to Agent in
connection with any easements or agreements affecting the Collateral Pool
Property, or (z) execute consents, approvals, or other agreements in form and
substance satisfactory to the Agent in connection with such other actions or
agreements as may be necessary in the ordinary course of Borrower’s business.
Section 12.0 Intercreditor Agreement.
     Borrower and the Lenders acknowledge that Agent has entered into the
Intercreditor Agreement. Borrower acknowledges that the existence of the
Intercreditor Agreement and the performance by Agent and the Lenders of their
obligations under the Intercreditor Agreement shall not affect, impair or
release the obligations of Borrower or Guarantors under the Loan Documents. The
Intercreditor Agreement is solely for the benefit of Agent and the Lenders and
not for the benefit of Borrower or Guarantors, and Borrower and Guarantors shall
have no rights thereunder or any right to insist on the performance thereof.
Agent is authorized by Lenders to perform its obligations under the
Intercreditor Agreement, and each Lender agrees to be bound thereby. In
addition, the Lenders acknowledge that in certain circumstances the Mezzanine
Lenders may purchase the Loans and the Loan Documents, and upon the exercise by
the Mezzanine Lenders of such rights, each Lender agrees to comply with the
applicable provisions of the Intercreditor Agreement in connection with the sale
of its interest in the Loans and the Loan Documents. Any Lender may be a
Mezzanine Lender, and the fact that any Lender is also a Mezzanine Lender shall
not expand or diminish the rights and obligations of such Lender hereunder.
ARTICLE XII. MISCELLANEOUS
Section 1.0 Notices.
     Unless otherwise provided herein, communications provided for hereunder
shall be in writing and shall be mailed, telecopied or delivered by hand or by
nationally-recognized overnight courier as follows:

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     If to the Borrower:
NNN Apartment REIT Holdings, L.P.
1606 Santa Rosa Road, Suite 109
Richmond, Virginia 23229
Attention: S. Jay Olander
Telecopy Number: (804) 285-1376
Telephone Number: (804) 285-1082
     If to the Agent:
Wachovia Bank, National Association
171 17th Street, N.W.
Atlanta, Georgia 30363
Attention: Cathy Casey
Telecopy Number: (404) 332-4066
Telephone Number: (404) 214-6335
     If to a Lender:
          To such Lender’s address or telecopy number, as applicable, set forth
on its signature page hereto or in the applicable Assignment and Acceptance
Agreement.
or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section. All such notices and other communications shall be effective (i) if
mailed, when received; (ii) if telecopied, when transmitted; or (iii) if hand
delivered or sent by overnight courier, when delivered. Notwithstanding the
immediately preceding sentence, all notices or communications to the Agent or
any Lender under Article II shall be effective only when actually received.
Neither the Agent nor any Lender shall incur any liability to the Borrower (nor
shall the Agent incur any liability to the Lenders) for acting upon any
telephonic notice referred to in this Agreement which the Agent or such Lender,
as the case may be, believes in good faith to have been given by a Person
authorized to deliver such notice or for otherwise acting in good faith
hereunder.
Section 2.0 Expenses.
     The Borrower agrees (a) to pay or reimburse the Agent for all of its
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation, negotiation, execution, administration and interpretation of, and
any amendment, supplement or modification to, any of the Loan Documents, the
addition or release of any Collateral or the protection or preservation of the
Collateral (including appraisal fees, environmental assessment fees, due
diligence expenses and travel expenses relating to closing), and the
consummation of the transactions contemplated thereby, including the reasonable
fees and disbursements of counsel to the Agent (such expenses to include ongoing
charges for Intralinks or any similar system), (b) to pay or reimburse Wachovia
Bank and Wachovia Capital Markets, LLC for their reasonable out-of-pocket costs
and expenses incurred in connection with the initial syndication of the Loans by
Wachovia Bank and Wachovia Capital Markets, LLC, (c) to pay or reimburse the
Agent and the Lenders for all their costs and expenses incurred in connection
with the enforcement or preservation of any rights under the Loan Documents,
including the reasonable fees and disbursements of their respective counsel
(including the allocated fees and expenses of in-house counsel) and any payments
in indemnification or otherwise payable by the Lenders to the Agent pursuant to
the Loan Documents, (d) to pay, and indemnify and hold harmless the Agent and
the Lenders from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any failure to pay or delay in
paying,

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documentary, intangible, stamp, excise and other similar taxes, if any, which
may be payable or determined to be payable in connection with the execution,
recording and delivery of any of the Loan Documents or consummation of any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, any Loan Document, (e) any taxes paid by Agent or the Lenders in
respect of taxes based on income or other taxes assessed by any State in which a
Collateral Pool Property or other Collateral is located, such indemnification to
be limited to taxes due solely on account of the granting of Collateral under
the Security Documents and to be net of any credit allowed to the indemnified
party from any other State on account of the payment or incurrence of such tax
by such indemnified party), and (f) to the extent not already covered by any of
the preceding subsections, to pay or reimburse the Agent and the Lenders for all
their costs and expenses incurred in connection with any bankruptcy or other
proceeding of the type described in Sections 10.1(f) or 10.1(g), including the
reasonable fees and disbursements of counsel to the Agent and any Lender,
whether such fees and expenses are incurred prior to, during or after the
commencement of such proceeding or the confirmation or conclusion of any such
proceeding. If the Borrower shall fail to pay any amounts required to be paid by
it pursuant to this Section, the Agent and/or the Lenders may pay such amounts
on behalf of the Borrower and either deem the same to be Loans outstanding
hereunder or otherwise Obligations owing hereunder.
Section 3.0 Setoff.
     Subject to Section 3.3 and in addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
the Agent and each Lender is hereby authorized by the Borrower, at any time or
from time to time during the continuance of an Event of Default, without prior
notice to the Borrower or to any other Person, any such notice being hereby
expressly waived, but in the case of a Lender subject to receipt of the prior
written consent of the Agent exercised in its sole discretion, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
the Agent, such Lender or any affiliate of the Agent or such Lender, to or for
the credit or the account of Borrower against and on account of any of the
Obligations, irrespective of whether or not any or all of the Loans and all
other Obligations have been declared to be, or have otherwise become, due and
payable as permitted by Section 10.2, and although such obligations shall be
contingent or unmatured. Promptly following any such set-off the Agent shall
notify the Borrower thereof and of the application of such set-off, provided
that the failure to give such notice shall not invalidate such set-off.
Section 4.0 Litigation; Jurisdiction; Other Matters; Waivers.
     (a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN
OR AMONG THE BORROWER, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON
DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND
EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE LENDERS, THE AGENT AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR
TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO
ARISING OUT OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENT OR BY
REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG
THE BORROWER, THE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE.
     (b) THE BORROWER, THE AGENT AND EACH LENDER HEREBY AGREES THAT THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION OR,
AT THE OPTION OF THE AGENT, ANY STATE COURT LOCATED IN ATLANTA, GEORGIA, SHALL
HAVE JURISDICTION TO HEAR AND DETERMINE ANY

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CLAIMS OR DISPUTES BETWEEN OR AMONG THE BORROWER, THE AGENT OR ANY OF THE
LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE LOANS AND
LETTERS OF CREDIT, THE NOTES OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING
HEREFROM OR THEREFROM. THE BORROWER AND EACH OF THE LENDERS EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS. EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND
EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH IN
THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE
AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE AGENT OR ANY LENDER OF ANY
JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.
     (c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY AFTER
CONSULTATION WITH COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL
CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER
AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE TERMINATION OR
EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS AGREEMENT.
Section 5.0 Successors and Assigns.
     (a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, except that Borrower may not assign or otherwise transfer any of its
rights or obligations under this Agreement without the prior written consent of
all Lenders and any such assignment or other transfer to which all of the
Lenders have not so consented shall be null and void.
     (b) Any Lender may make, carry or transfer Loans at, to or for the account
of any of its branch offices or the office of an affiliate of such Lender except
to the extent such transfer would result in increased costs to the Borrower.
     (c) Any Lender may at any time grant to one or more banks or other
financial institutions (each a “Participant”) participating interests in its
Commitment or the Obligations owing to such Lender; provided, however, (i) any
such participating interest must be for a constant and not a varying percentage
interest, (ii) no Lender may grant a participating interest in its Commitment,
or if any of the Commitments have been terminated, the aggregate outstanding
principal balance of Revolving Notes held by it, in an amount less than
$5,000,000 or integral multiples of $1,000,000 in excess thereof, and
(iii) after giving effect to any such participation by a Lender, the amount of
its Commitment, or if any of the Commitments have been terminated, the aggregate
outstanding principal balance of Revolving Notes held by it, in which it has not
granted any participating interests must be equal to $5,000,000 and integral
multiples of $1,000,000 in excess thereof. No Participant shall have any rights
or benefits under this Agreement or any other Loan Document. In the event of any
such grant by a Lender of a participating interest to a Participant, such Lender
shall remain responsible for the performance of its obligations hereunder, and
the Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement pursuant to which any Lender may grant such a
participating interest shall provide that such Lender shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided, however, such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) except as otherwise permitted in this Agreement,
increase, or

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extend the term or extend the time or waive any requirement for the reduction or
termination of, such Lender’s Commitment, (ii) extend the date fixed for the
payment of principal of or interest on the Loans or portions thereof owing to
such Lender, (iii) reduce the amount of any such payment of principal,
(iv) reduce the rate at which interest is payable thereon or (v) release any
Guarantor (except as otherwise permitted under Section 7.12(b)). An assignment
or other transfer which is not permitted by Section 12.5(d) or (e) below shall
be given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection (c). The
selling Lender shall notify the Agent and the Borrower of the sale of any
participation hereunder and, if requested by the Agent, certify to the Agent
that such participation is permitted hereunder.
     (d) Any Lender may with the prior written consent of the Agent and, so long
as no Default or Event of Default shall have occurred and be continuing, the
Borrower (which consent, in each case, shall not be unreasonably withheld or
delayed), assign to one or more Eligible Assignees (each an “Assignee”) all or a
portion of its Commitment and its other rights and obligations under this
Agreement and the Notes; provided, however, (i) no such consent by the Borrower
shall be required in the case of any assignment to (x) another Lender, any
affiliate of such Lender or of another Lender, and no such consent by the Agent
shall be required in the case of any assignment by a Lender to any affiliate of
such Lender; (ii) any partial assignment of a Commitment shall be in an amount
at least equal to $5,000,000 and integral multiples of $1,000,000 in excess
thereof and after giving effect to such partial assignment the assigning Lender
retains a portion of the Commitment so assigned, or if any of the Commitments
have been terminated, holds Revolving Notes having an aggregate outstanding
principal balance, of at least $5,000,000 and integral multiples of $1,000,000
in excess thereof (provided, however, the conditions set forth in this
subsection (ii) shall not apply to any full assignment by any Lender of its
Commitment); and (iii) each such assignment shall be effected by means of an
Assignment and Acceptance Agreement. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Lender of an amount
equal to the purchase price agreed between such transferor Lender and such
Assignee, such Assignee shall be deemed to be a Lender party to this Agreement
as of the effective date of the Assignment and Acceptance Agreement and shall
have all the rights and obligations of a Lender with a Commitment as set forth
in such Assignment and Acceptance Agreement, and the transferor Lender shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this subsection (d), the transferor Lender, the
Agent and the Borrower shall make appropriate arrangements so that new Notes are
issued to the Assignee and such transferor Lender, as appropriate. In connection
with any such assignment, the transferor Lender shall pay to the Agent an
administrative fee for processing such assignment in the amount of $3,500.
     (e) The Agent shall maintain at the Principal Office a copy of each
Assignment and Acceptance Agreement delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of each Lender from time to time (the “Register”). The Agent shall
give each Lender and the Borrower notice of the assignment by any Lender of its
rights as contemplated by this Section. The Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register and copies of each
Assignment and Acceptance Agreement shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice to the Agent. Upon its receipt of an Assignment and
Acceptance Agreement executed by an assigning Lender, together with each Note
subject to such assignment, the Agent shall, if such Assignment and Acceptance
Agreement has been completed and if the Agent receives the processing and
recording fee described in Section 12.5(d) above, (i) accept such Assignment and
Acceptance Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
     (f) In addition to the assignments and participations permitted under the
foregoing provisions of this Section, any Lender may assign and pledge all or
any portion of its Loans and its Notes

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to any Federal Reserve Bank as collateral security pursuant to Regulation A and
any Operating Circular issued by such Federal Reserve Bank, and such Loans and
Notes shall be fully transferable as provided therein. No such assignment shall
release the assigning Lender from its obligations hereunder.
     (g) A Lender may furnish any information concerning the Borrower, any other
Obligor or any of their respective Subsidiaries or Affiliates in the possession
of such Lender from time to time to Assignees and Participants (including
prospective Assignees and Participants) subject to compliance with Section 12.8.
     (h) Anything in this Section to the contrary notwithstanding, no Lender may
assign or participate any interest in any Loan held by it hereunder to the
Borrower, any other Obligor or any of their respective Affiliates or
Subsidiaries.
     (i) Each Lender agrees that, without the prior written consent of the
Borrower and the Agent, it will not make any assignment hereunder in any manner
or under any circumstances that would require registration or qualification of,
or filings in respect of, any Loan or Note under the Securities Act or any other
securities laws of the United States of America or of any other jurisdiction.
Section 6.0 Amendments.
     Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement or any other Loan Document to
be given by the Lenders may be given, and any term of this Agreement or of any
other Loan Document may be amended, and the performance or observance by the
Borrower or any other Obligor or any of their respective Subsidiaries of any
terms of this Agreement or such other Loan Document or the continuance of any
Default or Event of Default may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
written consent of the Requisite Lenders (and, in the case of an amendment to
any Loan Document, the written consent of the Borrower). Notwithstanding the
foregoing, no amendment, waiver or consent shall, unless in writing, and signed
by all of the Lenders (or the Agent at the written direction of the Lenders), do
any of the following: (i) increase the Commitments (or any component thereof) of
the Lenders (except as contemplated by Section 2.14) or subject the Lenders to
any additional obligations; (ii) reduce the principal of, or interest rates that
have accrued or that will be charged on the outstanding principal amount of, any
Loans or Fees or other Obligations; (iii) reduce the amount of any Fees payable
hereunder; (iv) except as provided in Section 2.16, postpone any date fixed for
any payment of any principal of, or interest on, any Loans or any other
Obligations, extend the expiration date of any Letter of Credit beyond the
Revolving Loan Termination Date; (v) change the Commitment Percentages (or any
component thereof) (except as a result of any increase in the aggregate amount
of the Commitments contemplated by Section 2.14, 3.11(b) or 4.5) or amend or
otherwise modify the provisions of Section 3.2; (vi) modify the definition of
the term “Requisite Lenders”, modify in any other manner the number or
percentage of the Lenders (including all of the Lenders) required to make any
determinations or waive any rights hereunder or to modify any provision hereof,
including without limitation, any modification of this Section if such
modification would have such effect; (vii) except as otherwise permitted in
Section 2.19, release any material Collateral; or (viii) release any Guarantor
from its obligations under the Guaranty (except as otherwise permitted under
Section 7.12(b)). Further, no amendment, waiver or consent unless in writing and
signed by the Agent, in addition to the Lenders required hereinabove to take
such action, shall affect the rights or duties of the Agent under this Agreement
or any of the other Loan Documents. Any amendment, waiver or consent relating to
Section 2.2 or the obligations of the Swingline Lender under this Agreement or
any other Loan Document shall, in addition to the Lenders required hereinabove
to take such action, require the written consent of the Swingline Lender. Any
amendment, waiver or consent relating to Section 2.3 or the obligations or
rights of the Issuing Lender under this Agreement or any other Loan Documents
shall, in addition to the Lenders required hereinabove to take such action,
require the written consent of the Issuing Lender. Any

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amendment of the Intercreditor Agreement or waiver of the terms thereof shall
require the written consent of the Requisite Lenders. No waiver shall extend to
or affect any obligation not expressly waived or impair any right consequent
thereon and any amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose set forth therein. No course of
dealing or delay or omission on the part of the Agent or any Lender in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. Except as otherwise explicitly provided for herein or in
any other Loan Document, no notice to or demand upon the Borrower shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances.
Section 7.0 Nonliability of Agent and Lenders.
     The relationship between the Borrower and the Lenders and the Agent shall
be solely that of borrower and lender. Neither the Agent nor any Lender shall
have any fiduciary responsibilities to the Borrower and no provision in this
Agreement or in any of the other Loan Documents, and no course of dealing
between or among any of the parties hereto, shall be deemed to create any
fiduciary duty owing by the Agent or any Lender to any Lender, the Borrower, any
other Obligor or any of their respective Subsidiaries. Neither the Agent nor any
Lender undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower’s business
or operations.
Section 8.0 Confidentiality.
     Except as otherwise provided by Applicable Law, the Agent and each Lender
shall utilize all non-public information obtained pursuant to the requirements
of this Agreement which has been identified as confidential or proprietary by
the Borrower in accordance with its customary procedure for handling
confidential information of this nature to prevent improper disclosure
(including disclosure to competitors of Borrower) and in accordance with safe
and sound banking practices but in any event may make disclosure: (a) to any of
their respective affiliates (provided they shall be notified of the obligation
to keep such information confidential in accordance with the terms of this
Section); (b) as reasonably requested by any bona fide Assignee, Participant or
other transferee in connection with the contemplated transfer of any Commitment
or participations therein as permitted hereunder (provided they shall be
notified of the obligation to keep such information confidential in accordance
with the terms of this Section); (c) as required or requested by any
Governmental Authority or representative thereof or pursuant to legal process or
in connection with any legal proceedings; (d) to the Agent’s or such Lender’s
independent auditors and other professional advisors (provided they shall be
notified of the confidential nature of the information); (e) after the happening
and during the continuance of an Event of Default, to any other Person, in
connection with the exercise by the Agent or the Lenders of rights hereunder or
under any of the other Loan Documents; and (f) to the extent such information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Agent or any Lender on a
nonconfidential basis from a source other than the Borrower, any other Obligor,
or any of their respective Subsidiaries or any of their respective Affiliates.
Section 9.0 Indemnification.
     (a) Borrower shall and hereby agrees to indemnify, defend and hold harmless
the Agent, any affiliate of the Agent and each of the Lenders and their
respective directors, officers, shareholders, agents, affiliates, employees and
counsel (each referred to herein as an “Indemnified Party”) from and against any
and all losses, costs, claims, damages, liabilities, deficiencies, judgments or
expenses of every kind and nature (including, without limitation, amounts paid
in settlement, court costs and the reasonable fees and disbursements of counsel
incurred in connection with any litigation, investigation, claim or proceeding
or any advice rendered in connection therewith, but excluding losses, costs,
claims, damages, liabilities, deficiencies, judgments or expenses
indemnification in respect of which is specifically covered by

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Section 3.12 or 4.1 or expressly excluded from the coverage of such Sections)
incurred by an Indemnified Party in connection with, arising out of, or by
reason of, any suit, cause of action, claim, arbitration, investigation or
settlement, consent decree or other proceeding (the foregoing referred to herein
as an “Indemnity Proceeding”) which is in any way related directly or indirectly
to: (i) this Agreement or any other Loan Document or the transactions
contemplated thereby; (ii) the making of any Loans or issuance of Letters of
Credit hereunder; (iii) any actual or proposed use by the Borrower of the
proceeds of the Loans or Letters of Credit; (iv) the Agent’s or any Lender’s
entering into this Agreement; (v) the fact that the Agent and the Lenders have
established the credit facility evidenced hereby in favor of the Borrower;
(vi) the fact that the Agent and the Lenders are creditors of the Borrower and
have or are alleged to have information regarding the financial condition,
strategic plans or business operations of the Borrower, the other Obligors, or
their respective Subsidiaries; (vii) the fact that the Agent and the Lenders are
material creditors of the Borrower and are alleged to influence directly or
indirectly the business decisions or affairs of the Borrower, the other Obligors
and their respective Subsidiaries or their financial condition; (viii) the
exercise of any right or remedy the Agent or the Lenders may have under this
Agreement or the other Loan Documents; (ix) any condition of a Collateral Pool
Property; (x) the IPO, including, without limitation, shareholder, investor or
other lawsuits threatened or filed, or investigations undertaken, as a result of
the consummation of the IPO, or (xi) any violation or non-compliance by the
Borrower, any other Obligor, or any of their respective Subsidiaries of any
Applicable Law (including any Environmental Law) including, but not limited to,
any Indemnity Proceeding commenced by (A) the Internal Revenue Service or state
taxing authority or (B) any Governmental Authority or other Person under any
Environmental Law, including any Indemnity Proceeding commenced by a
Governmental Authority or other Person seeking remedial or other action to cause
the Borrower, the Obligors or their respective Subsidiaries (or their respective
properties) (or the Agent and/or the Lenders as successors to the Borrower, any
other Obligor or their respective Subsidiaries) to be in compliance with such
Environmental Laws; provided, however, that the Borrower shall not be obligated
to indemnify any Indemnified Party for any acts or omissions of such Indemnified
Party that constitute gross negligence or willful misconduct, or for liabilities
of an Indemnified Party arising as a result of a breach of such Person’s
obligations under the Loan Documents as finally determined by a court of
competent jurisdiction after the expiration of all applicable appeal periods.
     (b) The Borrower’s indemnification obligations under this Section shall
apply to all Indemnity Proceedings arising out of, or related to, the foregoing
whether or not an Indemnified Party is a named party in such Indemnity
Proceeding. In this connection, this indemnification shall cover all reasonable
costs and expenses of any Indemnified Party in connection with any deposition of
any Indemnified Party or compliance with any subpoena (including any subpoena
requesting the production of documents). This indemnification shall, among other
things, apply to any Indemnity Proceeding commenced by other creditors of the
Borrower, any other Obligor, or any of their respective Subsidiaries, any
shareholder, partner or other equity holder of the Borrower, any other Obligor
or any of their respective Subsidiaries (whether such shareholder(s) or such
other Persons are prosecuting such Indemnity Proceeding in their individual
capacity or derivatively on behalf of such Person), any account debtor of the
Borrower, any other Obligor, or any of their respective Subsidiaries or by any
Governmental Authority.
     (c) This indemnification shall apply to any Indemnity Proceeding arising
during the pendency of any bankruptcy proceeding filed by or against Borrower
and/or an Obligor or any of their respective Subsidiaries.
     (d) All out-of-pocket fees and expenses of, and all amounts paid to
third-persons by, an Indemnified Party with respect to an Indemnified Proceeding
shall be advanced by the Borrower at the request of such Indemnified Party
notwithstanding any claim or assertion by the Borrower that such Indemnified
Party is not entitled to indemnification hereunder upon receipt of an
undertaking by such Indemnified Party that such Indemnified Party will reimburse
the Borrower if it is actually and finally

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determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.
     (e) An Indemnified Party may conduct its own investigation and defense of,
and may formulate its own strategy with respect to, any Indemnified Proceeding
covered by this Section and, as provided above, all costs and expenses incurred
by such Indemnified Party shall be reimbursed by the Borrower. No action taken
by legal counsel chosen by an Indemnified Party in investigating or defending
against any such Indemnified Proceeding shall vitiate or in any way impair the
obligations and duties of the Borrower hereunder to indemnify and hold harmless
each such Indemnified Party.
     (f) If and to the extent that the obligations of the Borrower hereunder are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under Applicable Law.
     (g) The Borrower’s obligations hereunder shall survive any termination of
this Agreement and the other Loan Documents and the payment in full in cash of
the Obligations, and are in addition to, and not in substitution of, any other
of their obligations set forth in this Agreement or any other Loan Document to
which it is a party.
Section 10.0 Termination; Survival.
     At such time as (a) all of the Commitments have been terminated, (b) all
Letters of Credit have terminated, (c) none of the Lenders, the Swingline Lender
nor the Issuing Lender is obligated any longer under this Agreement to make any
Loans or issue Letters of Credit and (d) all Obligations (other than obligations
which survive as provided in the following sentence) have been paid and
satisfied in full, this Agreement shall terminate. The indemnities to which the
Agent, the Lenders and the Swingline Lender are entitled under the provisions of
Sections 3.12, 4.1, 4.4, 11.7, 12.2 and 12.9 and any other provision of this
Agreement and the other Loan Documents, and the provisions of Section 12.4,
shall continue in full force and effect and shall protect the Agent, the Lenders
and the Swingline Lender (i) notwithstanding any termination of this Agreement,
or of the other Loan Documents, against events arising after such termination as
well as before and (ii) at all times after any such party ceases to be a party
to this Agreement with respect to all matters and events existing on or prior to
the date such party ceased to be a party to this Agreement.
Section 11.0 Severability of Provisions.
     Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 12.0 GOVERNING LAW.
     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.
Section 13.0 Counterparts.
     This Agreement and any amendments, waivers, consents or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so

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executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument.
Section 14.0 Obligations with Respect to Obligors and Subsidiaries.
     The obligations of the Borrower to direct or prohibit the taking of certain
actions by the other Obligors and the Subsidiaries of the Borrower and the other
Obligors as specified herein shall be absolute and not subject to any defense
the Borrower may have that the Borrower does not control such Obligors or
Subsidiaries.
Section 15.0 Limitation of Liability.
     Neither the Agent nor any Lender, nor any affiliate, officer, director,
employee, attorney, or agent of the Agent or any Lender shall have any liability
with respect to, and the Borrower hereby waives, releases, and agrees not to sue
any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by the Borrower in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents. The Borrower hereby waives, releases, and agrees
not to sue the Agent or any Lender or any of the Agent’s or any Lender’s
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or financed hereby.
Section 16.0 Entire Agreement.
     This Agreement, the Notes, and the other Loan Documents referred to herein
embody the final, entire agreement among the parties hereto and supersede any
and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof and thereof and
may not be contradicted or varied by evidence of prior, contemporaneous, or
subsequent oral agreements or discussions of the parties hereto. There are no
oral agreements among the parties hereto.
Section 17.0 Construction.
     The Agent, the Borrower and each Lender acknowledge that each of them has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with its legal
counsel and that this Agreement and the other Loan Documents shall be construed
as if jointly drafted by the Agent, the Borrower and each Lender.
Section 18.0 Time of the Essence.
     Time is of the essence with respect to each and every covenant, agreement
and obligation of the Borrower under this Agreement and the other Loan
Documents.
Section 19.0 Patriot Act.
     Each Lender and the Agent (for itself and not on behalf of any Lender)
hereby notifies Borrower and Guarantors that, pursuant to the requirements of
the Patriot Act, it is required to obtain, verify and record information that
identifies Borrower and Guarantors, which information includes names and
addresses and other information that will allow such Lender or the Agent, as
applicable, to identify Borrower and Guarantors in accordance with the Patriot
Act.
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     IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be executed under seal by their authorized officers all as of the day and year
first above written.

                      BORROWER:    
 
                    NNN APARTMENT REIT HOLDINGS, L.P., a Virginia limited
partnership    
 
                    By:   NNN Apartment REIT, Inc., a Maryland corporation, its
General Partner    
 
               
 
      By:   /s/ STANLEY J. OLANDER, JR.    
 
      Name:  
 
STANLEY J. OLANDER, JR.    
 
      Title:   CEO    
 
               
 
          [SEAL]    
 
                    Address:         1606 Santa Rosa Road, Suite 109        
Richmond, Virginia 23229         Attention: S. Jay Olander    

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[Signature Page to Credit Agreement - Wachovia/NNN Apartment REIT Holdings, L.
P. October 2006]

 

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                  WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent, as a Lender, as
Swingline Lender and as Issuing Lender    
 
           
 
  By:   /s/ CATHY A CASEY    
 
  Name:  
 
CATHY A CASEY    
 
  Title:   Managing Director    
 
                Commitment Amount:    
 
                $75,000,000.00    
 
                Lending Office (all Types of Loans):    
 
                Wachovia Bank, National Association         171 17th Street,
N.W.         Atlanta, Georgia 30363         Attention: Cathy Casey        
Telecopy Number: (404) 332-4066         Telephone Number: (404) 214-6335    

[Signatures Continued on Next Page]
[Signature Page to Credit Agreement - Wachovia/NNN Apartment REIT Holdings, L.
P. October 2006]