Exhibit 10.1

 

Execution Version

Loan Number:  1008764

 

 

 

 

 

TERM LOAN AGREEMENT

Dated as of January 22, 2013

by and among

TAU OPERATING PARTNERSHIP, L.P.,

                                                            as Borrower,

THE FINANCIAL INSTITUTIONS PARTY HERETO

AND THEIR ASSIGNEES UNDER SECTION 12.6.,

                                                         as Lenders,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

                                                                              as
Administrative Agent

 

 

WELLS FARGO SECURITIES, LLC

and

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

                                                                            as
Joint Lead Arrangers

                                           and

                                                                    Joint
Bookrunners,

 

 

 

 

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TABLE OF CONTENTS

 

Article I. Definitions

   1        

Section 1.1.  Definitions

   1        

Section 1.2.  General; References to Pacific Time

   17   

Article II. Credit Facility

   18      

Section 2.1.  Term Loan

   18      

Section 2.2.  Rates and Payment of Interest on Loans

   18      

Section 2.3.  Number of Interest Periods

   19      

Section 2.4.  Repayment of Loans

   19      

Section 2.5.  Prepayments

   19      

Section 2.6.  Late Charges

   19      

Section 2.7.  Continuation

   20      

Section 2.8.  Conversion

   20      

Section 2.9.  Notes

   21      

Section 2.10.  Funds Transfer Disbursements

   21   

Article III. Payments, Fees and Other General Provisions

   22      

Section 3.1.  Payments

   22      

Section 3.2.  Pro Rata Treatment

   23      

Section 3.3.  Sharing of Payments, Etc.

   23      

Section 3.4.  Several Obligations

   23      

Section 3.5.  Minimum Amounts

   24      

Section 3.6.  Fees

   24      

Section 3.7.  Computations

   24      

Section 3.8.  Usury

   24      

Section 3.9.  Statements of Account; Bill Lead Date Request

   24      

Section 3.10.  Defaulting Lenders

   25      

Section 3.11.  Taxes

   26   

Article IV. Yield Protection, Etc.

   28      

Section 4.1.  Additional Costs; Capital Adequacy

   28      

Section 4.2.  Suspension of LIBOR Loans

   30      

Section 4.3.  Illegality

   30      

Section 4.4.  Compensation

   30      

Section 4.5.  Treatment of Affected Loans

   31      

Section 4.6.  Change of Lending Office

   32      

Section 4.7.  Affected Lenders

   32      

Section 4.8.  Assumptions Concerning Funding of LIBOR Loans

   32   

Article V. Conditions Precedent

   33      

Section 5.1.  Initial Conditions Precedent

   33      

Section 5.2.  Conditions Precedent to All Loans

   35   

Article VI. Representations and Warranties

   35      

Section 6.1.  Representations and Warranties

   35      

Section 6.2.  Survival of Representations and Warranties, Etc.

   40   

Article VII. Affirmative Covenants

   40      

Section 7.1.  Preservation of Existence and Similar Matters

   40   

 

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Section 7.2.  Compliance with Applicable Law

   41      

Section 7.3.  Maintenance of Property

   41      

Section 7.4.  Conduct of Business

   41      

Section 7.5.  Insurance

   41      

Section 7.6.  Payment of Taxes and Claims

   41      

Section 7.7.  Books and Records; Inspections

   41      

Section 7.8.  Use of Proceeds

   42      

Section 7.9.  Environmental Matters

   42      

Section 7.10.  Further Assurances

   42      

Section 7.11.  Material Contracts

   43   

Article VIII. Information

   43      

Section 8.1.  Compliance Certificate

   43      

Section 8.2.  Other Information

   43      

Section 8.3.  Electronic Delivery of Certain Information

   45      

Section 8.4.  Public/Private Information

   46      

Section 8.5.  USA Patriot Act Notice; Compliance

   46   

Article IX. Negative Covenants

   46      

Section 9.1.  Financial Covenants

   46      

Section 9.2.  Restrictions on Intercompany Transfers

   47      

Section 9.3.  Merger, Consolidation, Sales of Assets and Other Arrangements

   47      

Section 9.4.  Plans

   48      

Section 9.5.  Fiscal Year

   48      

Section 9.6.  Modifications of Organizational Documents

   48      

Section 9.7.  Modifications to Material Contracts

   48      

Section 9.8.  Transactions with Affiliates

   48      

Section 9.9.  Derivatives Contracts

   49   

Article X. Default

   49      

Section 10.1.  Events of Default

   49      

Section 10.2.  Remedies Upon Event of Default

   52      

Section 10.3.  Marshaling; Payments Set Aside

   53      

Section 10.4.  Allocation of Proceeds

   53      

Section 10.5.  Performance by Administrative Agent

   54      

Section 10.6.  Rights Cumulative

   54   

Article XI. The Administrative Agent

   55      

Section 11.1.  Appointment and Authorization

   55      

Section 11.2.  Agent’s Reliance, Etc.

   55      

Section 11.3.  Notice of Defaults

   56      

Section 11.4.  Wells Fargo as Lender

   56      

Section 11.5.  Approvals of Lenders

   57      

Section 11.6.  Lender Credit Decision, Etc.

   57      

Section 11.7.  Indemnification of Agent

   58      

Section 11.8.  Successor Agent

   58      

Section 11.9.  Titled Agents

   59   

Article XII. Miscellaneous

   59      

Section 12.1.  Notices

   59      

Section 12.2.  Expenses

   60   

 

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Section 12.3.  Stamp, Intangible and Recording Taxes

  

61

     

Section 12.4.  Setoff

  

61

     

Section 12.5.  Litigation; Jurisdiction; Other Matters; Waivers

  

62

     

Section 12.6.  Successors and Assigns

  

63

     

Section 12.7.  Amendments and Waivers

  

67

     

Section 12.8.  Nonliability of Administrative Agent and Lenders

  

68

     

Section 12.9.  Confidentiality

  

68

     

Section 12.10.  Indemnification

  

69

     

Section 12.11.  Termination; Survival

  

71

     

Section 12.12.  Severability of Provisions

  

71

     

Section 12.13.  GOVERNING LAW

  

72

     

Section 12.14.  Counterparts

  

72

     

Section 12.15.  Obligations with Respect to Loan Parties

  

72

     

Section 12.16.  Independence of Covenants

  

72

     

Section 12.17.  Limitation of Liability

  

72

     

Section 12.18.  Entire Agreement

  

72

     

Section 12.19.  Construction

  

73

  

 

SCHEDULE I

  

Commitments

SCHEDULE 6.1.(b)

  

Ownership Structure

SCHEDULE 6.1.(f)

  

Litigation

SCHEDULE 6.1.(n)

  

Affiliate Transactions

EXHIBIT A

  

Form of Assignment and Assumption

EXHIBIT B-1

  

Form of Realty Income Corporation Guaranty

EXHIBIT B-2

  

Form of ARC Real Estate Partners, LLC Guaranty

EXHIBIT C

  

Form of Notice of Borrowing

EXHIBIT D

  

Form of Notice of Continuation

EXHIBIT E

  

Form of Notice of Conversion

EXHIBIT F

  

Form of Transfer Authorizer Designation Form

EXHIBIT G

  

Form of Term Loan Note

EXHIBIT H

  

Form of Opinion of Latham & Watkins LLP

EXHIBIT I

  

Form of Closing Certificate

EXHIBIT J

  

Form of Compliance Certificate

 

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TERM LOAN AGREEMENT

THIS TERM LOAN AGREEMENT (this “Agreement”) dated as of January 22, 2013 by and
among TAU OPERATING PARTNERSHIP, L.P., a limited partnership formed under the
laws of the State of Delaware and formerly known as American Realty Capital
Operating Partnership, L.P. (the “Borrower”), each of the financial institutions
initially a signatory hereto together with their successors and assignees under
Section 12.6. (the “Lenders”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Administrative Agent (the “Administrative Agent”), with WELLS FARGO SECURITIES,
LLC and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint Lead
Arrangers and Joint Bookrunners (in such capacities, the “Joint Lead
Arrangers”).

WHEREAS, the Lenders desire to make available to the Borrower a $70,000,000 term
loan facility, on the terms and conditions contained herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties hereto agree
as follows:

ARTICLE I. DEFINITIONS

Section 1.1.  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.

“Administrative Agent” means Wells Fargo Bank, National Association as
contractual representative of the Lenders under this Agreement, or any successor
Administrative Agent appointed pursuant to Section 11.8.

“Administrative Questionnaire” means the Administrative Questionnaire completed
by each Lender and delivered to the Administrative Agent in a form supplied by
the Administrative Agent to the Lenders from time to time.

“Affected Lender” has the meaning given that term in Section 4.7.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. In no event
shall the Administrative Agent or any Lender be deemed to be an Affiliate of the
Borrower.

“Agreement Date” means the date as of which this Agreement is dated.

“Applicable Law” means all applicable provisions of constitutions, statutes,
rules, regulations and orders of all governmental bodies and all orders and
decrees of all courts, tribunals and arbitrators.

“Applicable Margin” means the percentage rate set forth below corresponding to
the level (each a “Level”) into which the Credit Rating then falls. Any change
in the Credit Rating which would cause it to move to a different Level in the
table shall be effective as of the first day of the first calendar month
immediately following receipt by the Administrative Agent of written notice
delivered by, or caused to be

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delivered by, the Borrower in accordance with Section 8.2.(n) that the Credit
Rating has changed; provided, however, if the Borrower has not delivered, or has
not caused to be delivered, the notice required by such Section but the
Administrative Agent becomes aware that the Credit Rating has changed, then the
Administrative Agent shall give Borrower notice of its awareness of such change
(provided that failure to give such notice shall not limit the effectiveness of
any adjustment of the applicable Level by the Administrative Agent in accordance
with this definition) and may, in its sole discretion, adjust the Level
effective as of the first day of the first calendar month following the date the
Administrative Agent becomes aware that the Credit Rating has changed. The
Applicable Margin shall be determined based on the Level corresponding to the
lower of the highest two Credit Ratings; provided that if the highest two Credit
Ratings are from S&P and Moody’s, then the Applicable Margin shall be determined
based on the highest of such two Credit Ratings. During any period for which
Realty Income has received a Credit Rating from only one Rating Agency, then the
Applicable Margin shall be determined based on such Credit Rating so long as
such Credit Rating is from either S&P or Moody’s. In any other case, the
Applicable Margin shall be determined based on Level 5. The provisions of this
definition shall be subject to Section 2.2.(c).

 

    Level    

 

 

Borrower’s Credit Rating

(S&P/Moody’s/Fitch or equivalent)

 

 

Applicable    
Margin    

 

1  

A-/A3 or equivalent or higher

  1.10%     2  

BBB+/Baa1 or equivalent

  1.20%     3  

BBB/Baa2 or equivalent

  1.40%     4  

BBB-/Baa3 or equivalent

  1.70%     5  

Lower than BBB-/Baa3 or equivalent

  2.25%    

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender, or (c) an entity or an Affiliate of any entity
that administers or manages a Lender.

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

“Base Rate” means the LIBOR Market Index Rate; provided, that if for any reason
the LIBOR Market Index Rate is unavailable, Base Rate shall mean the per annum
rate of interest equal to the Federal Funds Rate plus one and one-half of one
percent (1.50%).

“Base Rate Loan” means any portion of 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.

“Bill Lead Date” has the meaning given that term in Section 3.9.(b).

“Borrower” has the meaning set forth in the introductory paragraph hereof and
shall include the Borrower’s successors and permitted assigns.

“Borrower Information” has the meaning given that term in Section 2.2.(c).

 

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“Business Day” means (a) a day of the week (but not a Saturday, Sunday or
holiday) on which the offices of the Administrative Agent in San Francisco,
California are open to the public for carrying on substantially all of the
Administrative Agent’s business functions, and (b) if such day relates to a
LIBOR Loan, any such day that is also a day on which dealings in Dollars are
carried on in the London interbank market. Unless specifically referenced in
this Agreement as a Business Day, all references to “days” shall be to calendar
days.

“Capitalization Rate” means 8.25%.

“Capitalized EBITDA” means, with respect to a Person and as of a given date,
(a) such Person’s EBITDA for the period of four consecutive fiscal quarters most
recently ended divided by (b) the Capitalization Rate. In determining
Capitalized EBITDA with respect to a Property owned by a Subsidiary that is not
a Wholly Owned Subsidiary, only the Borrower’s Ownership Share of the EBITDA of
such Property shall be used when determining Capitalized EBITDA.

“Capitalized Lease Obligation” means obligations under a lease that is 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 determined in accordance with GAAP.

“Commitment” means, as to each Lender, such Lender’s obligation to make its Loan
pursuant to Section 2.1., in an amount up to, but not exceeding the amount set
forth for such Lender on Schedule I as such Lender’s “Commitment Amount”.

“Compliance Certificate” has the meaning given that term in Section 8.1.

“Continue”, “Continuation” and “Continued” each refers to the continuation of a
LIBOR Loan from one Interest Period to another Interest Period pursuant to
Section 2.7.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Convert”, “Conversion” and “Converted” each refers to the conversion of a Loan
of one Type into a Loan of another Type pursuant to Section 2.8.

“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 Continuation of a LIBOR Loan.

“Credit Percentage” means, as to each Lender, the ratio, expressed as a
percentage of (x) the unpaid principal amount of the outstanding Loan owing to
such Lender as of such date to (y) the sum of the aggregate unpaid principal
amount of all outstanding Loans of all Lenders as of such date.

“Credit Rating” means the rating assigned by a Rating Agency to each series of
rated senior unsecured long term indebtedness of Realty Income.

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
Applicable Laws relating to the relief of debtors in the United States of
America or other applicable jurisdictions from time to time in effect.

 

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“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” means, subject to Section 3.10.(c), any Lender that (a) has
failed to (i) fund all or any portion of its Loan within 2 Business Days of the
date such Loan was required to be funded hereunder unless such Lender notifies
the Administrative Agent and the Borrower in writing that such failure is the
result of such Lender’s determination that one or more conditions precedent to
funding (each of which conditions precedent, together with any applicable
default, shall be specifically identified in such writing) has not been
satisfied, or (ii) pay to the Administrative Agent or any other Lender any other
amount required to be paid by it hereunder within 2 Business Days of the date
when due, (b) has notified the Borrower or the Administrative Agent in writing
that it does not intend to comply with its funding obligations hereunder, or has
made a public statement to that effect (unless such writing or public statement
relates to such Lender’s obligation to fund a Loan hereunder and states that
such position is based on such Lender’s determination that a condition precedent
to funding (which condition precedent, together with any applicable default,
shall be specifically identified in such writing or public statement) cannot be
satisfied), or (c) has, or has a direct or indirect parent company that has,
(i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had
appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets, including the Federal
Deposit Insurance Corporation or any other state or federal regulatory authority
acting in such a capacity; provided that a Lender shall not be a Defaulting
Lender solely by virtue of the ownership or acquisition of any equity interest
in that Lender or any direct or indirect parent company thereof by a
Governmental Authority so long as such ownership interest does not result in or
provide such Lender with immunity from the jurisdiction of courts within the
United States of America or from the enforcement of judgments or writs of
attachment on its assets or permit such Lender (or such Governmental Authority)
to reject, repudiate, disavow or disaffirm any contracts or agreements made with
such Lender. Any determination by the Administrative Agent that a Lender is a
Defaulting Lender under any one or more of clauses (a) through (c) above shall
be conclusive and binding absent manifest error, and such Lender shall be deemed
to be a Defaulting Lender (subject to Section 3.10.(c)) upon delivery of written
notice of such determination to the Borrower and each Lender.

“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 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

 

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readily available quotations provided by any recognized dealer in such
Derivatives Contracts (which may include the Administrative Agent or any
Lender).

“Dollars” or “$” means the lawful currency of the United States of America.

“EBITDA” means, with respect to a Person for any period and without duplication,
the sum of (a) net income (loss) of such Person for such period determined on a
consolidated basis excluding the following (but only to the extent included in
determining net income (loss) for such period): (i) depreciation and
amortization; (ii) interest expense; (iii) income tax expense;
(iv) extraordinary or nonrecurring items, including without limitation, gains
and losses from the sale of Properties (but not from the sale of Properties by
any Taxable REIT Subsidiary); and (v) equity in net income (loss) of its
Unconsolidated Affiliates; plus (b) such Person’s Ownership 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 above and below market rent intangibles pursuant to FASB ASC
805. For purposes of this definition, nonrecurring items shall be deemed to
include (w) gains and losses on early extinguishment of Indebtedness,
(x) non-cash severance and other non-cash restructuring charges, (y) transaction
costs of acquisitions not permitted to be capitalized pursuant to GAAP and
(z) non-cash impairment charges.

“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 in accordance with the provisions of
Section 12.7.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund and (d) any other Person (other than a natural person) approved by
the Administrative Agent (such approval not to be unreasonably withheld or
delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall
not include (i) the Borrower or any of the Borrower’s Affiliates or Subsidiaries
or (ii) any Defaulting Lender or any of its Subsidiaries, or any Person who upon
becoming a Lender hereunder, would constitute any of the foregoing Persons
described in this clause (ii).

“Environmental Laws” means any Applicable Law relating to environmental
protection or the manufacture, storage, remediation, 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, any applicable rule of common law and any judicial
interpretation thereof relating primarily to the environment or Hazardous
Materials, and any analogous or comparable state or local laws, regulations or
ordinances that concern Hazardous Materials or protection of the environment.

“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 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.

 

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

“ERISA Event” means, with respect to the ERISA Group, (a) any “reportable event”
as defined in Section 4043 of ERISA with respect to a Plan (other than an event
for which the 30-day notice period is waived); (b) the withdrawal of a member of
the ERISA Group from a Plan subject to Section 4063 of ERISA during a plan year
in which it was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA or a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) the incurrence by a member of the ERISA Group of
any liability with respect to the withdrawal or partial withdrawal from any
Multiemployer Plan; (d) the incurrence by any member of the ERISA Group of any
liability under Title IV of ERISA with respect to the termination of any Plan or
Multiemployer Plan; (e) the institution of proceedings by the PBGC to terminate
a Plan or Multiemployer Plan; (f) the failure by any member of the ERISA Group
to make when due required contributions to a Multiemployer Plan or Plan unless
such failure is cured within 30 days or the filing pursuant to Section 412(c) of
the Internal Revenue Code or Section 302(c) of ERISA of an application for a
waiver of the minimum funding standard; (g) any other event or condition that
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan
or Multiemployer Plan or the imposition of liability on any member of the ERISA
Group under Section 4069 or 4212(c) of ERISA; (h) the receipt by any member of
the ERISA Group of any notice or the receipt by any Multiemployer Plan from any
member of the ERISA Group of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is reasonably
expected to be, insolvent (within the meaning of Section 4245 of ERISA), in
reorganization (within the meaning of Section 4241 of ERISA), or in “critical”
status (within the meaning of Section 432 of the Internal Revenue Code or
Section 305 of ERISA); (i) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon any member of the ERISA Group or the imposition of any Lien upon any
member of the ERISA Group in favor of the PBGC under Title IV of ERISA; or (j) a
determination that a Plan is, or is reasonably expected to be, in “at risk”
status (within the meaning of Section 430 of the Internal Revenue Code or
Section 303 of ERISA).

“ERISA Group” means the Borrower, any Subsidiary 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 or any Subsidiary, 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.

“Excluded Subsidiary” means any Subsidiary (a) that either (i) holds title to
assets that are or are to become collateral for any Secured Indebtedness of such
Subsidiary or (ii) owns Equity Interests of another Excluded Subsidiary but has
no assets other than such Equity Interests and other assets of nominal value
incidental thereto, and (b) that is prohibited from Guarantying the Indebtedness
of any other Person pursuant to (i) any document, instrument, or agreement
evidencing such Secured Indebtedness or (ii) a provision of such Subsidiary’s
organizational documents which provision was included in such Subsidiary’s
organizational documents as a condition to the extension of (or pursuant to the
terms of) such Secured Indebtedness. In no event shall the Borrower be
considered to be an Excluded Subsidiary.

“FASB ASC”  means the Accounting Standards Codification of the Financial
Accounting Standards Board.

 

 

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

“Fees” means the fees and commissions provided for or referred to in
Section 3.6. and any other fees payable by the Borrower hereunder, under any
other Loan Document.

“Fitch” means Fitch, Inc., and its successors.

“Fixed Charges” means, with respect to a Person and for a given period, the sum
of (a) the Interest Expense of such Person for such period, plus (b) the
aggregate of all scheduled principal payments on Indebtedness made by such
Person during such period (excluding balloon, bullet or similar payments of
principal due upon the stated maturity of Indebtedness), plus (c) the aggregate
of all dividends paid or accrued by such Person on any Preferred Stock during
such period, plus (d) the Reserve for Replacements for such Person’s Properties.
The Borrower’s Ownership Share of the Fixed Charges of its Unconsolidated
Affiliates will be included when determining the Fixed Charges of the Borrower.

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States of America, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

“GAAP” means generally accepted accounting principles in the United States of
America 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
(including Statement of Financial Accounting Standards No. 168, “The FASB
Accounting Standards Codification”) or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession
in the United States of America, which are applicable to the circumstances as of
the date of determination.

“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, administrative, public or statutory
instrumentality, authority, body, agency, bureau, commission, board, department
or other 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.

“Gross Asset Value” means, at a given time, the sum (without duplication) of
(a) (i) Capitalized EBITDA of the Borrower and its Subsidiaries on a
consolidated basis at such time minus (ii) Capitalized EBITDA for any Property
acquired by the Borrower or any Subsidiary during the immediately preceding

 

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fiscal quarter of the Borrower, the purchase price of which Property the
Borrower has elected to add to Gross Asset Value in accordance with clause (e)
below, plus (b) all cash, cash equivalents (excluding tenant deposits and other
cash and cash equivalents the disposition of which is restricted) and marketable
securities of the Borrower and its Subsidiaries at such time, plus (c) the
current book value of all real property of the Borrower and its Subsidiaries
upon which construction is then in progress and all land held for development,
plus (d) the Borrower’s respective Ownership Shares of the current book values
of all real property of each Unconsolidated Affiliate upon which construction is
in progress, plus (e) the purchase price paid by the Borrower or any Subsidiary
(less any amounts paid to the Borrower or such Subsidiary as a purchase price
adjustment, held in escrow, retained as a contingency reserve, or in connection
with other similar arrangements) for any Property acquired by the Borrower or
such Subsidiary during the immediately preceding fiscal quarter of the Borrower
so long as the Capitalized EBITDA of such Property is subtracted from Gross
Asset Value in accordance with clause (a)(ii) above, plus (f) the contractual
purchase price of Properties of the Borrower and its Subsidiaries subject to
purchase obligations, repurchase obligations, forward commitments and unfunded
obligations to the extent such obligations and commitments are included in
determinations of Total Liabilities. No more than 5% of the Gross Asset Value
may be attributable to the current book value of land held for development.

“Guarantor” means any Person that is party to the Guaranty as a “Guarantor” and
shall in any event include Realty Income and ARC Real Estate Partners, LLC.

“Guaranty”, “Guaranteed” or to “Guarantee” as applied to any obligation means
and includes: (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, or (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 performance (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, 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. As the context
requires, “Guaranty” shall also mean the guaranty executed and delivered
pursuant to Section 5.1. and substantially in the form of Exhibit B-1, in the
case of Realty Income, and in the form of Exhibit B-2 in the case of ARC Real
Estate Partners, LLC.

“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 “hazardous substances”, “hazardous materials”, “hazardous
wastes”, “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) toxic mold; and (f) electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million.

 

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“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 (other
than trade debt incurred in the ordinary course of business), 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; (c) Capitalized Lease
Obligations of such Person; (d) all reimbursement obligations of such Person
under or in respect of 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) net obligations under any Derivative Contract in an amount
equal to the Derivatives Termination Value thereof; (g) 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; and (h) all Indebtedness of other
Persons which (i) such Person has Guaranteed or is otherwise recourse to such
Person or (ii) is secured by a Lien on any property of such Person.

“Indemnified Costs” has the meaning given that term in Section 12.10.(a).

“Indemnified Party” has the meaning given that term in Section 12.10.(a).

“Intellectual Property” has the meaning given that term in Section 6.1.(o).

“Interest Expense” means, with respect to a Person and for any period, (a) all
paid, accrued or capitalized interest expense (including, without limitation,
capitalized interest expense (other than capitalized interest funded from a
construction loan interest reserve account held by another lender and not
included in the calculation of cash for balance sheet reporting purposes) and
interest expense attributable to Capitalized Lease Obligations) of such Person
and all interest expense with respect to any Indebtedness in respect of which
such Person is wholly or partially liable whether pursuant to any repayment,
interest carry, performance Guarantee or otherwise, plus (b) to the extent not
already included in the foregoing clause (a) such Person’s Ownership Share of
all paid, accrued or capitalized interest expense for such period of
Unconsolidated Affiliates of such Person.

“Interest Period” means with respect to each LIBOR Loan, each period commencing
on the Effective Date, or in the case of the Continuation of a LIBOR Loan the
last day of the preceding Interest Period for such Loan, and ending on the
numerically corresponding day in the first, third or sixth calendar month
thereafter, as the Borrower may select in the Notice of Borrowing, or a 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 (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month.

Notwithstanding the foregoing: (i) if any Interest Period would otherwise end
after the Termination Date, such Interest Period shall end on the Termination
Date; and (ii) each Interest Period that would otherwise end on a day which is
not a Business Day shall end on the immediately following Business Day (or, if
such immediately following Business Day falls in the next calendar month, on the
immediately preceding Business Day).

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

 

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“Investment” means, with respect to any Person, any acquisition or investment
(whether or not of a controlling interest) by such Person, whether by means of
(a) the purchase or other acquisition of any Equity Interest in another Person,
(b) a loan, advance or extension of credit to, capital 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 or
option to make an Investment in any other Person shall constitute an Investment.
Except as expressly provided otherwise, for purposes of determining compliance
with any covenant contained in a Loan Document, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent
increases or decreases in the value of such Investment.

“Lender” means each financial institution from time to time party hereto as a
“Lender,” together with its respective successors and permitted assigns;
provided, however, that the term “Lender” shall exclude any Lender (or its
Affiliates) in its capacity as a Specified Derivatives Provider.

“Lending Office” means, for each Lender and for each Type of Loan, the office of
such Lender specified in such Lender’s Administrative Questionnaire or in the
applicable Assignment and Assumption, or such other office of such Lender as
such Lender may notify the Administrative Agent in writing from time to time.

“Level” has the meaning given that term in the definition of the term
“Applicable Margin”.

“LIBOR” means, for the Interest Period for any LIBOR Loan, the rate of interest,
rounded up to the nearest whole multiple of one-thousandth of one percent
(0.001%), obtained by dividing (i) the rate of interest, rounded upward to the
nearest whole multiple of one-thousandth of one percent (0.001%), referred to as
the BBA (British Bankers’ Association) LIBOR rate as set forth by any service
selected by the Administrative Agent that has been nominated by the British
Bankers’ Association as an authorized information vendor for the purpose of
displaying such rate for deposits in Dollars at approximately 9:00 a.m. Pacific
time, two (2) Business Days prior to the date of commencement of such Interest
Period for purposes of calculating effective rates of interest for loans or
obligations making reference thereto, for an amount approximately equal to the
applicable LIBOR Loan, as the case may be, and for a period of time
approximately equal to such Interest Period by (ii) a percentage equal to 1
minus the stated maximum rate (stated as a decimal) of all reserves, if any,
required to be maintained with respect to Eurocurrency funding (currently
referred to as “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 applicable category of extensions of credit
or other assets which includes loans by an office of any Lender outside of the
United States of America). Any change in such maximum rate shall result in a
change in LIBOR on the date on which such change in such maximum rate becomes
effective.

“LIBOR Loan” means any portion of a Loan (other than a Base Rate Loan) bearing
interest at a rate based on LIBOR.

“LIBOR Market Index Rate”  means, for any day, LIBOR as of that day that would
be applicable for a LIBOR Loan having a one-month Interest Period determined at
approximately 9:00 a.m. Pacific time on such day (or if such day is not a
Business Day, the immediately preceding Business Day). The LIBOR Market Index
Rate shall be determined on a daily basis.

“Lien” as applied to the property of any Person means: (a) any security
interest, encumbrance, mortgage, deed to secure debt, deed of trust, assignment
of leases and rents, pledge, lien, hypothecation,

 

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assignment, charge or lease constituting a Capitalized Lease Obligation,
conditional sale or other title retention agreement, or other security title or
encumbrance of any kind in respect of any property of such Person, or upon the
income, rents 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; (c) the filing of any financing
statement under the UCC or its equivalent in any jurisdiction, other than
filings, including without limitation, any precautionary filing, not otherwise
constituting or giving rise to a Lien, including without limitation, a financing
statement filed (i) 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 or its equivalent as in effect in an applicable jurisdiction or
(ii) in connection with a sale or other disposition of accounts or other assets
not prohibited by this Agreement; and (d) any agreement by such Person to grant,
give or otherwise convey any of the foregoing.

“Loan” means a loan made by a Lender to the Borrower pursuant to Section 2.1.

“Loan Document” means this Agreement, each Note, each Guaranty, and each other
document or instrument now or hereafter executed and delivered by a Loan Party
in connection with, pursuant to or relating to this Agreement (other than any
Specified Derivatives Contract).

“Loan Party” means each of the Borrower, the Guarantors and each other Person
who guarantees all or a portion of the Obligations and/or who pledges any
collateral to secure all or a portion of the Obligations.

“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 at the option of
the issuer of such Equity Interest), (b) is convertible into or exchangeable or
exercisable for Indebtedness or Mandatorily Redeemable Stock, or (c) is
redeemable at the option of the holder thereof, in whole or 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 date on
which all Loans are scheduled to be due and payable in full.

“Material Adverse Effect”  means a materially adverse effect on (a) the
business, assets, liabilities, financial condition or results of operations of
the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower or any other Loan Party to perform its obligations under any Loan
Document to which it is a party, (c) the validity or enforceability of any of
the Loan Documents, (d) the rights and remedies of the Lenders and the
Administrative Agent under any of the Loan Documents or (e) the timely payment
of the principal of or interest on the Loans or other amounts payable in
connection therewith.

“Material Contract” means any contract or other arrangement (other than Loan
Documents and Specified Derivatives Contracts), whether written or oral, to
which the Borrower, any Subsidiary or any other Loan Party (other than ARC Real
Estate Partners, LLC) 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.

“Moody’s” means Moody’s Investors Service, Inc., and its successors.

 

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“Mortgage” means a mortgage, deed of trust, deed to secure debt or similar
security instrument made or to be made by a Person owning an interest in real
estate granting a Lien on such interest in real estate as security for the
payment of Indebtedness.

“Multiemployer Plan” means at any time a multiemployer 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 six plan years made contributions, including for these purposes any
Person which ceased to be a member of the ERISA Group during such six year
period.

“Nonrecourse Indebtedness” means, with respect to a Person, Indebtedness for
borrowed money in respect of which recourse for payment (except for customary
exceptions for fraud, misapplication of funds, environmental indemnities, and
other similar customary exceptions to non-recourse liability in a form
reasonably acceptable to the Administrative Agent) is contractually limited to
specific assets of such Person encumbered by a Lien securing such Indebtedness.

“Note” has the meaning given that term in Section 2.9.(a).

“Notice of Borrowing” means a notice substantially in the form of Exhibit C (or
such other form reasonably acceptable to the Administrative Agent and containing
the information required in such Exhibit) to be delivered to the Administrative
Agent pursuant to Section 2.1.(b) evidencing the Borrower’s request for the
borrowing of the Loans.

“Notice of Continuation” means a notice substantially in the form of Exhibit D
(or such other form reasonably acceptable to the Administrative Agent and
containing the information required in such Exhibit) to be delivered to the
Administrative Agent pursuant to Section 2.7. evidencing the Borrower’s request
for the Continuation of a LIBOR Loan.

“Notice of Conversion” means a notice substantially in the form of Exhibit E (or
such other form reasonably acceptable to the Administrative Agent and containing
the information required in such Exhibit) to be delivered to the Administrative
Agent pursuant to Section 2.8. evidencing the Borrower’s request for the
Conversion of a Loan from one Type to another Type.

“Obligations” means, individually and collectively: (a) the aggregate principal
balance of, and all accrued and unpaid interest on, all Loans; and (b) all other
indebtedness, liabilities, obligations, covenants and duties of the Borrower and
the other Loan Parties owing to the Administrative Agent 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. For the avoidance of doubt,
“Obligations” shall not include any Specified Derivatives Obligations.

“OFAC” has the meaning given that term in Section 6.1.(t).

“Off-Balance Sheet Obligations”  means liabilities and obligations of the
Borrower, any Subsidiary or any other Person in respect of “off-balance sheet
arrangements” (as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated
under the Securities Act) which the Borrower would be required to disclose in
the “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” section of the Borrower’s report on Form 10-Q or Form 10-K (or their
equivalents) which the Borrower is required to file with the Securities and
Exchange Commission (or any Governmental Authority substituted therefor).

 

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“Ownership Share” means, with respect to any Subsidiary of a Person (other than
a Wholly Owned Subsidiary) or any Unconsolidated Affiliate of a Person, the
greater of (a) such Person’s relative nominal direct and indirect ownership
interest (expressed as a percentage) in such Subsidiary or Unconsolidated
Affiliate or (b) subject to compliance with Section 8.2.(m), such Person’s
relative direct and indirect economic interest (calculated as a percentage) in
such Subsidiary or Unconsolidated Affiliate determined in accordance with the
applicable provisions of the declaration of trust, articles or certificate of
incorporation, articles of organization, partnership agreement, joint venture
agreement or other applicable organizational document of such Subsidiary or
Unconsolidated Affiliate.

“Participant” has the meaning given that term in Section 12.6.(d).

“Participant Register” has the meaning given that term in Section 12.6.(d).

“Patriot Act” means The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

“PBGC” means the Pension Benefit Guaranty Corporation and any successor agency.

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

“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 six 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, the rate
otherwise applicable thereto plus an additional two percent (2.0%) per annum,
and with respect to any other Obligation, a rate per annum equal to the Base
Rate as in effect from time to time plus the Applicable Margin plus two percent
(2.0%).

“Preferred Stock” means, with respect to any Person, shares of capital stock of,
or other Equity Interests in, such Person that are entitled to preference or
priority over any other capital stock of, or other Equity Interest in, such
Person in respect of the payment of dividends or distribution of assets upon
liquidation or both.

“Principal Office” means the office of the Administrative Agent located at 608
Second Avenue S., 11th Floor, Minneapolis, Minnesota 55402-1916, or any other
subsequent office that the Administrative Agent shall have specified as the
Principal Office by written notice to the Borrower and the Lenders.

“Property” means, with respect to any Person, any parcel of real property,
together with any building, facility, structure, equipment or other asset
located on such parcel of real property, in each case owned by such Person.

 

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“Qualified Plan” means a Benefit Arrangement that is intended to be
tax-qualified under Section 401(a) of the Internal Revenue Code.

“Rating Agency” means S&P, Moody’s or Fitch.

“Recurring Capital Expenditures” means capital expenditures made in respect of a
Property for maintenance of such Property and replacement of items due to
ordinary wear and tear including, but not limited to, expenditures made for
maintenance or replacement of carpeting, roofing materials, mechanical systems,
electrical systems and other structural systems and expenditures relating to
tenant improvements and leasing commissions. “Recurring Capital Expenditures”
shall not include any of the following: (a) improvements to the appearance of
such Property or any other major upgrade or renovation of such Property not
necessary for proper maintenance or marketability of such Property; (b) capital
expenditures for seismic upgrades; or (c) capital expenditures for deferred
maintenance for such Property existing at the time such Property was acquired by
the Borrower or a Subsidiary.

“Register” has the meaning given that term in Section 12.6.(c).

“Regulatory Change” means, with respect to any Lender, any change effective
after the Agreement Date in Applicable Law (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. Notwithstanding
anything herein to the contrary, (a) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (b) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar
authority) or the United States or foreign regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Regulatory Change”,
regardless of the date enacted, adopted or issued.

“REIT” means a Person qualifying for treatment as a “real estate investment
trust” under the Internal Revenue Code.

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.

“Realty Income” means Realty Income Corporation, a Maryland corporation.

“Realty Income Credit Agreement” means that certain Amended and Restated Credit
Agreement dated as of May 10, 2012 by and among Realty Income, the financial
institutions party thereto and Wells Fargo Bank, National Association, as
Administrative Agent.

“Requisite Lenders” means, as of any date, Lenders holding more than 50.0% of
the principal amount of the aggregate outstanding Loans; provided that in
determining such percentage at any given time, all then existing Defaulting
Lenders will be disregarded and excluded.

“Reserve for Replacements” means, for any period and with respect to any
Property, an amount equal to the greater of (a)(i) the aggregate square footage
of all completed space of such Property times (ii) $.10 times (iii) the number
of days in such period divided by (iv) 365 and (b) the amount of Recurring
Capital Expenditures actually made in respect of such Property during such
period. If the term Reserve

 

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for Replacements is used without reference to any specific Property, then it
shall be determined on an aggregate basis with respect to all Properties and the
applicable Ownership Shares of all real property of all Unconsolidated
Affiliates.

“Secured Indebtedness” means, with respect to a Person as of any given date, the
aggregate principal amount of all Indebtedness of such Person outstanding at
such date and that is secured in any manner by any Lien, and in the case of the
Borrower, shall include (without duplication), the Borrower’s Ownership Share of
the Secured Indebtedness of its Unconsolidated Affiliates. Indebtedness of a
Subsidiary secured solely by a pledge of Equity Interests in such Subsidiary
which is also recourse to the Borrower or a Guarantor shall not be treated as
Secured Indebtedness but shall be treated as Unsecured Indebtedness.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
together with all rules and regulations issued thereunder.

“Significant Subsidiary” means a Subsidiary to which more than $20,000,000 of
Gross Asset Value is attributable.

“Solvent” means, when used with respect to any Person, that (a) the fair value
and the fair salable value of its assets (excluding any Indebtedness due from
any Affiliate of such Person) are each in excess of the fair valuation of its
total liabilities (including all contingent liabilities computed at the amount
which, in light of all 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 Ratings Services, a Standard & Poor’s Financial
Services LLC business, or any successor.

“Specified Derivatives Contract” means any Derivatives Contract, together with
any Derivatives Support Document relating thereto, that is made or entered into
at any time, or in effect at any time now or hereafter, whether as a result of
an assignment or transfer or otherwise, between the Borrower or any Subsidiary
and any Specified Derivatives Provider.

“Specified Derivatives Obligations” means all indebtedness, liabilities,
obligations, covenants and duties of the Borrower or its Subsidiaries under or
in respect of any Specified Derivatives Contract, whether direct or indirect,
absolute or contingent, due or not due, liquidated or unliquidated, and whether
or not evidenced by any written confirmation.

“Specified Derivatives Provider” means any Lender, or any Affiliate of a Lender,
that is a party to a Derivatives Contract at the time such Derivatives Contract
is entered into.

“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 individuals 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.

 

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“Substantial Amount” means, at the time of determination thereof, an amount in
excess of 10% of Gross Asset Value at such time.

“Tangible Net Worth” means, for any Person and as of a given date, such Person’s
total consolidated stockholders’ equity plus, in the case of the Borrower,
increases in accumulated depreciation and amortization accrued after January 22,
2013, minus (to the extent contained in determining stockholders’ equity of such
Person): (a) the amount of any write-up in the book value of any assets
reflected in any balance sheet resulting from revaluation thereof or any
write-up in excess of the cost of such assets acquired, and (b) the aggregate of
all amounts appearing on the assets side of any such balance sheet for
franchises, licenses, permits, patents, patent applications, copyrights,
trademarks, service marks, trade names, goodwill, treasury stock, experimental
or organizational expenses and other like assets which would be classified as
intangible assets under GAAP, all determined on a consolidated basis.

“Taxable REIT Subsidiary” means any corporation (other than a REIT) in which the
Borrower directly or indirectly owns stock and the Borrower and such corporation
jointly elect on IRS Form 8875 (or with respect to which IRS Form 8875 is
otherwise filed with the Internal Revenue Service) to have the corporation
treated as a taxable REIT subsidiary of Borrower under Section 856(l) of the
Internal Revenue Code. For purposes of this Agreement, any Subsidiary of a
Taxable REIT Subsidiary that is disregarded as an entity for United States
federal income tax purposes (a “Deemed Taxable REIT Subsidiary”) shall not be
treated as an entity separate from such Taxable REIT Subsidiary but shall
instead be deemed to be the same entity as such Taxable REIT Subsidiary.

“Taxes” has the meaning given that term in Section 3.11.

“Termination Date” means January 21, 2018.

“Titled Agent” has the meaning given that term in Section 11.9.

“Total Liabilities” means, as to any Person as of a given date, all liabilities
which would, in conformity with GAAP, be properly classified as a liability on a
consolidated balance sheet of such Person as of such date, and in any event
shall include (without duplication): (a) all Indebtedness of such Person
(whether or not Nonrecourse Indebtedness and whether or not secured by a Lien),
including without limitation, Capitalized Lease Obligations and reimbursement
obligations with respect to any letter of credit; (b) all accounts payable and
accrued expenses of such Person; (c) all purchase and repurchase obligations and
forward commitments of such Person to the extent such obligations or commitments
are evidenced by a binding purchase agreement (forward commitments shall include
without limitation (i) forward equity commitments and (ii) commitments to
purchase any real property under development, redevelopment or renovation);
(d) all unfunded obligations of such Person; (e) all lease obligations of such
Person (including ground leases) to the extent required under GAAP to be
classified as a liability on a balance sheet of such Person; (f) all contingent
obligations of such Person including, without limitation, all Guarantees of
Indebtedness by such Person; (g) all liabilities of any Unconsolidated Affiliate
of such Person, which liabilities such Person has Guaranteed or is otherwise
obligated on a recourse basis; and (h) such Person’s Ownership Share of the
Indebtedness of any Unconsolidated Affiliate of such Person, including
Nonrecourse Indebtedness of such Person. For purposes of clauses (c) and (d) of
this definition, the amount of Total Liabilities of a Person at any given time
in respect of (x) a contract to purchase or otherwise acquire unimproved or
fully developed real property shall be equal to (i) the total purchase price
payable by such Person under such contract if, at such time, the seller of such
real property would be entitled to specifically enforce such contract against
such Person, otherwise, (ii) the aggregate amount of due diligence deposits,
earnest money payments and other similar payments made by such Person under such
contract which, at such time, would be subject to forfeiture upon termination of
the

 

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contract and (y) a contract relating to the acquisition of real property which
the seller is required to develop or renovate prior to, and as a condition
precedent to, such acquisition, shall equal the maximum amount reasonably
estimated to be payable by such Person under such contract assuming performance
by the seller of its obligations under such contract, which amount shall
include, without limitation, any amounts payable after consummation of such
acquisition which may be based on certain performance levels or other related
criteria. For purposes of this definition, if the assets of a Subsidiary of a
Person consist solely of Equity Interests in one Unconsolidated Affiliate of
such Person and such Person is not otherwise obligated in respect of the
Indebtedness of such Unconsolidated Affiliate, then only such Person’s Ownership
Share of the Indebtedness of such Unconsolidated Affiliate shall be included as
Total Liabilities of such Person. Notwithstanding the use of GAAP, the
calculation of Total Liabilities shall not include any fair value adjustments to
the carrying value of liabilities to record such liabilities at fair value
pursuant to electing the fair value option election under FASB ASC 825-10-25
(formerly known as FAS 159, The Fair Value Option for Financial Assets and
Financial Liabilities) or other FASB standards allowing entities to elect fair
value option for financial liabilities.

“Transfer Authorizer Designation Form” means a form substantially in the form of
Exhibit F to be delivered to the Administrative Agent pursuant to
Section 5.1.(a)(x), as the same may be amended, restated or modified from time
to time with the prior written approval of the Administrative Agent.

“Type” with respect to any Loan, refers to whether such Loan or portion thereof
is a LIBOR Loan or a Base Rate Loan.

“UCC” means the Uniform Commercial Code as in effect in any applicable
jurisdiction.

“Unconsolidated Affiliate” means, with respect to any Person, any other Person
in whom such Person holds an Investment, which Investment is accounted for in
the financial statements of such Person on an equity basis of accounting and
whose financial results would not be consolidated under GAAP with the financial
results of such Person on the consolidated financial statements of such Person.

“Unsecured Indebtedness” means, with respect to a Person, all Indebtedness of
such Person that is not Secured Indebtedness.

“Wells Fargo” means Wells Fargo Bank, National Association, and its successors
and permitted assigns.

“Wholly Owned Subsidiary” means any Subsidiary of a Person in respect of which
all of the Equity Interests (other than, in the case of a corporation,
directors’ qualifying shares) are at the time directly or indirectly owned or
controlled by such Person or one or more other Subsidiaries of such Person or by
such Person and one or more other Subsidiaries of such Person.

“Withdrawal Liability” means any liability as a result of a complete or partial
withdrawal from a Multiemployer Plan as such terms are defined in Part 1 of
Subtitle E of Title IV of ERISA.

Section 1.2.  General; References to Pacific Time.

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

 

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hereby and (c) shall mean such document, instrument or agreement, or replacement
or predecessor thereto, as amended, supplemented, restated or otherwise modified
from time to time to the extent permitted 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. Unless explicitly set forth to the
contrary, a reference to “Subsidiary” means a Subsidiary of the Borrower or a
Subsidiary of such Subsidiary and a reference to an “Affiliate” means a
reference to an Affiliate of the Borrower. 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 Pacific time.

ARTICLE II. CREDIT FACILITY

Section 2.1.  Term Loan.

(a)         Making of Loans.   Subject to the terms and conditions set forth in
this Agreement, on the Effective Date each Lender severally and not jointly
agrees to make a Loan to the Borrower in a principal amount equal to such
Lender’s Commitment. Upon a Lender’s funding of its Loan, such Lender’s
Commitment shall terminate.

(b)         Requests for Loans. The Borrower shall give the Administrative Agent
notice pursuant to the Notice of Borrowing of the borrowing of the Loans no
later than 9:00 a.m. Pacific time at least three (3) Business Days prior to the
anticipated Effective Date. The Notice of Borrowing shall be irrevocable once
given and binding on the Borrower. Prior to delivering the Notice of Borrowing,
the Borrower may request that the Administrative Agent provide the Borrower with
the most recent LIBOR rate available to the Administrative Agent. The
Administrative Agent shall provide such quoted rate to the Borrower on the date
of such request or as soon as possible thereafter.

(c)         Funding of Loans.     Promptly after receipt of the Notice of
Borrowing under the immediately preceding subsection (b), the Administrative
Agent shall notify each Lender of the proposed borrowing. Each Lender shall
deposit an amount equal to the Loan to be made by such Lender to the Borrower
with the Administrative Agent at the Principal Office, in immediately available
funds not later than 9:00 a.m. Pacific time on the Effective Date. Subject to
fulfillment of all applicable conditions set forth herein, the Administrative
Agent shall make available to the Borrower in the account specified in the
Transfer Authorizer Designation Form, not later than 12:00 Noon Pacific time on
the Effective Date, the proceeds of such amounts received by the Administrative
Agent.

Section 2.2.  Rates and Payment of Interest on Loans.

(a)         Rates.    The Borrower promises to pay to the Administrative Agent
for the account of each Lender interest on the unpaid principal amount of the
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 such Loan is a Base Rate Loan, at the Base
Rate (as in effect from time to time), plus the Applicable Margin; and

(ii)         during such periods as such Loan is a LIBOR Loan, at LIBOR for such
Loan for the Interest Period therefor, plus the Applicable Margin.

 

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Notwithstanding the foregoing, (a) while an Event of Default specified in
Section 10.1.(a), Section 10.1.(e) or Section 10.1.(f) exists, or (b) at the
direction of the Requisite Lenders, while any other Event of Default exists, the
Borrower shall pay to the Administrative Agent for the account of each Lender,
interest at the Post-Default Rate on the outstanding principal amount of the
Loan made by such Lender and on any other amount payable by the Borrower
hereunder or under the Note 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. All accrued and unpaid interest on the
outstanding principal amount of each Loan shall be payable (i) on the first
Business Day of each month commencing with February 1, 2013, (ii) on the
Termination Date and (iii) on any other date on which the principal balance of
such Loan is due and payable in full. Interest payable at the Post-Default Rate
shall be payable from time to time on demand. All determinations by the
Administrative Agent of an interest rate hereunder shall be conclusive and
binding on the Lenders and the Borrower for all purposes, absent manifest error.

(c)         Borrower Information Used to Determine Applicable Interest
Rates.     The parties understand that the applicable interest rate for the
Obligations and certain fees set forth herein shall be determined and/or
adjusted from time to time based upon certain information to be provided or
certified to the Lenders by the Borrower or Realty Income (the “Borrower
Information”). If it is subsequently determined that any such Borrower
Information was incorrect (for whatever reason, including without limitation
because of a subsequent restatement of earnings by the Borrower) at the time it
was delivered to the Administrative Agent, and if the applicable interest rate
and/or fees calculated for any period were lower than they should have been had
the correct information been timely provided, then such interest rate for such
period and/or such fees shall be automatically recalculated using correct
Borrower Information. The Administrative Agent shall promptly notify the
Borrower in writing of any additional interest and fees due because of such
recalculation, and the Borrower shall pay such additional interest or fees due
to the Administrative Agent, for the account of each Lender, within 5 Business
Days of receipt of such written notice. Any recalculation of interest and fees
required by this provision shall survive the termination of this Agreement, and
this provision shall not in any way limit any of the Administrative Agent’s or
any Lender’s other rights under this Agreement.

Section 2.3.  Number of Interest Periods.

There may be no more than 3 different Interest Periods with respect to the LIBOR
Loans on a collective basis outstanding at the same time.

Section 2.4.  Repayment of Loans.

The Borrower shall repay the entire outstanding principal amount of, and all
accrued but unpaid interest on, the Loans on the Termination Date.

Section 2.5.  Prepayments.

Subject to Section 4.4., the Borrower may prepay any Loan (or any portion
thereof) at any time without premium or penalty. The Borrower shall give the
Administrative Agent at least 3 Business Days prior written notice of the
prepayment of any Loan.

Section 2.6.  Late Charges.

If any payment required under this Agreement is not paid within 10 days after
the Borrower has received notice from the Administrative Agent that such payment
has not been made, the Borrower shall

 

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pay a late charge for late payment to compensate the Lenders for the loss of use
of funds and for the expenses of handling the delinquent payment, in an amount
equal to two percent (2%) of such delinquent payment. Such late charge shall be
paid in any event not later than the due date of the next subsequent installment
of principal and/or interest. In the event the maturity of the Obligations
hereunder occurs or is accelerated pursuant to Section 10.2., this Section shall
apply only to payments overdue prior to the time of such acceleration. This
Section shall not be deemed to be a waiver of the Lenders’ right to accelerate
payment of any of the Obligations as permitted under the terms of this
Agreement. Notwithstanding anything to the contrary in this Agreement, no late
charge shall be assessed (and the Borrower shall not be required to pay any late
charge) under this provision if such late payment results from an error of the
Administrative Agent or any Lender in respect of the amount of the payment due,
including with respect to an error in invoicing.

Section 2.7.  Continuation.

So long as no Default or Event of Default exists, the Borrower may on any
Business Day, with respect to any LIBOR Loan, elect to maintain such LIBOR Loan
or any portion thereof as a LIBOR Loan by selecting a new Interest Period for
such 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 giving to the
Administrative Agent a Notice of Continuation not later than 9:00 a.m. Pacific
time on the third Business Day prior to the date of any such Continuation. Such
notice by the Borrower of a Continuation shall be by telecopy, electronic mail
or other similar form of transmission 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 Administrative
Agent shall notify each Lender by telecopy, electronic mail 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 LIBOR Loan in accordance
with this Section, such Loan will automatically, on the last day of the current
Interest Period therefor, Convert into a Base Rate Loan notwithstanding failure
of the Borrower to comply with Section 2.8.

Section 2.8.  Conversion.

The Borrower may on any Business Day, upon the Borrower’s giving of a Notice of
Conversion to the Administrative Agent, Convert all or a portion of a Loan of
one Type into a Loan of another Type; provided, however, a Base Rate Loan may
not be converted into a LIBOR Loan if a Default or Event of Default exists. Each
such Notice of Conversion shall be given not later than 9:00 a.m. Pacific time
three Business Days prior to the date of any proposed Conversion into LIBOR
Loans. Promptly after receipt of a Notice of Conversion, the Administrative
Agent shall notify each Lender by telecopy, electronic mail or other similar
form of transmission of the proposed Conversion. Subject to the restrictions
specified above, each Notice of Conversion shall be by telecopy, electronic mail
or other similar form of communication in the form of a Notice of Conversion
specifying (a) the requested date of such Conversion, (b) the Type of Loan to be
Converted, (c) the portion of such Type of Loan to be Converted, (d) the Type of
Loan such 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 LIBOR Loan.
Each Notice of Conversion shall be irrevocable by and binding on the Borrower
once given.

 

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Section 2.9.  Notes.

(a)        Notes.  Except in the case of a Lender that has requested not to
receive a promissory note, the Loan made by each Lender shall, in addition to
this Agreement, also be evidenced by a promissory note substantially in the form
of Exhibit G (each a “Note”), payable to such Lender in a principal amount equal
to the amount of its Commitment as originally in effect and otherwise duly
completed.

(b)        Records.    The date, amount, interest rate, Type and duration of
Interest Periods (if applicable) of the Loan made by each Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded in the Register and by such Lender on its books and such entries shall
be binding on the Borrower absent manifest error; provided, however, that
(i) the failure of a Lender to make any such record shall not affect the
obligations of the Borrower under any of the Loan Documents and (ii) if there is
a discrepancy between such records of a Lender and the statements of accounts
maintained by the Administrative Agent pursuant to Section 3.9. and
Section 12.6.(c), in the absence of manifest error, the statements of account
maintained by the Administrative Agent pursuant to Section 3.9. and
Section 12.6.(c) shall be controlling.

(c)        Lost, Stolen, Destroyed or Mutilated Notes.   Upon receipt by the
Borrower of (i) written notice from a Lender that the 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 2.10.  Funds Transfer Disbursements.

(a)        Generally.    The Borrower hereby authorizes the Administrative Agent
to disburse the proceeds of the Loans made by the Lenders pursuant to the Loan
Documents as requested by an authorized representative of the Borrower to any of
the accounts designated in the Transfer Authorizer Designation Form. The
Borrower agrees to be bound by any transfer request: (i) authorized or
transmitted by the Borrower; or (ii) made in the Borrower’s name and accepted by
the Administrative Agent in good faith and in compliance with these transfer
instructions, even if not properly authorized by the Borrower. The Borrower
further agrees and acknowledges that the Administrative Agent may rely solely on
any bank routing number or identifying bank account number or name provided by
the Borrower to effect a wire of funds transfer even if the information provided
by the Borrower identifies a different bank or account holder than named by the
Borrower. The Administrative Agent is not obligated or required in any way to
take any actions to detect errors in information provided by the Borrower. If
the Administrative Agent takes any actions in an attempt to detect errors in the
transmission or content of transfer requests or takes any actions in an attempt
to detect unauthorized funds transfer requests, the Borrower agrees that no
matter how many times the Administrative Agent takes these actions the
Administrative Agent will not in any situation be liable for failing to take or
correctly perform these actions in the future and such actions shall not become
any part of the transfer disbursement procedures authorized under this
provision, the Loan Documents, or any agreement between the Administrative Agent
and the Borrower. The Borrower agrees to notify the Administrative Agent of any
errors in the transfer of any funds or of any unauthorized or improperly
authorized transfer requests within fourteen (14) days after the Administrative
Agent’s confirmation to the Borrower of such transfer.

(b)        Funds Transfer.    The Administrative Agent will, in its sole
discretion, determine the funds transfer system and the means by which each
transfer will be made. The Administrative Agent may delay or refuse to accept a
funds transfer request if the transfer would: (i) violate the terms of this
authorization, (ii) require use of a bank unacceptable to the Administrative
Agent or any Lender or

 

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prohibited by any Governmental Authority, (iii) cause the Administrative Agent
or any Lender to violate any Federal Reserve or other regulatory risk control
program or guideline or (iv) otherwise cause the Administrative Agent or any
Lender to violate any Applicable Law or regulation.

(c)        Limitation of Liability.   None of the Administrative Agent or any
Lender shall be liable to the Borrower or any other parties for (i) errors, acts
or failures to act of others, including other entities, banks, communications
carriers or clearinghouses, through which the Borrower’s transfers may be made
or information received or transmitted, and no such entity shall be deemed an
agent of the Administrative Agent or any Lender, (ii) any loss, liability or
delay caused by fires, earthquakes, wars, civil disturbances, power surges or
failures, acts of government, labor disputes, failures in communications
networks, legal constraints or other events beyond Administrative Agent’s or any
Lender’s control, or (iii) any special, consequential, indirect or punitive
damages, whether or not (x) any claim for these damages is based on tort or
contract or (y) the Administrative Agent, any Lender or the Borrower knew or
should have known the likelihood of these damages in any situation. Neither the
Administrative Agent nor any Lender makes any representations or warranties
other than those expressly made in this Agreement.

ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS

Section 3.1.  Payments.

(a)        Payments by Borrower.  Except to the extent otherwise provided
herein, all payments of principal, interest and other amounts to be made by the
Borrower under this Agreement or any other Loan Document shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent at the Principal Office, not later
than 11:00 a.m. Pacific time on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day). Subject to Section 10.4., the
Borrower shall, at the time of making each payment under this Agreement or any
other Loan Document, specify to the Administrative Agent the amounts payable by
the Borrower hereunder to which such payment is to be applied. Each payment
received by the Administrative Agent for the account of a Lender under this
Agreement or any Note of such Lender shall be paid to such Lender, by wire
transfer of immediately available funds in accordance with the wiring
instructions provided by such Lender to the Administrative Agent from time to
time, for the account of such Lender at the applicable Lending Office of such
Lender. If the Administrative Agent fails to pay such amount to a Lender within
one Business Day of receipt thereof by the Administrative Agent, the
Administrative 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.

(b)        Presumptions Regarding Payments by Borrower.   Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may (but shall not be obligated to), in reliance
upon such assumption, distribute to the Lenders the amount due. In such event,
if the Borrower has not in fact made such payment, then each of the Lenders
severally agrees to repay to the Administrative Agent on demand that amount so
distributed to such Lender, with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

 

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Section 3.2.  Pro Rata Treatment.

Except to the extent otherwise provided herein: (a) the borrowing from the
Lenders under Section 2.1.(a), shall be made from the Lenders, and each payment
of the fees under Section 3.6.(a) shall be made for the account of the Lenders,
pro rata according to the amounts of their respective Commitments; (b) each
payment or prepayment of principal of Loans shall be made for the account of the
Lenders pro rata in accordance with the respective unpaid principal amounts of
the Loans held by them, provided that, subject to Section 3.10., if immediately
prior to giving effect to any such payment in respect of any Loans the
outstanding principal amount of the Loans shall not be held by the Lenders pro
rata in accordance with their respective Commitments in effect at the time such
Loans were made, then such payment shall be applied to the Loans in such manner
as shall result, as nearly as is practicable, in the outstanding principal
amount of the Loans being held by the Lenders pro rata in accordance with their
respective Commitments; (c) each payment of interest on Loans shall be made for
the account of the Lenders pro rata in accordance with the amounts of interest
on such Loans then due and payable to the respective Lenders; and (d) the
Conversion and Continuation of Loans of a particular Type (other than
Conversions provided for by Section 4.5.) shall be made pro rata among the
Lenders according to the amounts of their respective Loans and the then current
Interest Period for each Lender’s portion of each such Loan of such Type shall
be coterminous.

Section 3.3.  Sharing of Payments, Etc.

If a Lender shall obtain payment of any principal of, or interest on, its Loan
under this Agreement or shall obtain payment on any other Obligation owing by
the Borrower or any other Loan Party 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 or any other Loan Party to a Lender not in accordance with the terms of
this Agreement and such payment should be distributed to the Lenders in
accordance with Section 3.2. or Section 10.4., such Lender shall promptly
purchase from the other Lenders participations in (or, if and to the extent
specified by such Lender, direct interests in) the Loans made by the 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 Lenders shall share the benefit of such payment (net of any
reasonable expenses which may actually be incurred by such Lender in obtaining
or preserving such benefit) in accordance with the requirements of Section 3.2.
or Section 10.4., as applicable. To such end, all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored. 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.

Section 3.4.  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.

 

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Section 3.5.  Minimum Amounts.

(a)        Borrowings.    Each Continuation of, and each Conversion of Base Rate
Loans into, LIBOR Loans shall be in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess of that amount.

(b)        Prepayments.    Each voluntary prepayment of Loans (other than a
prepayment of all outstanding Loans) shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $100,000 in excess thereof.

Section 3.6.  Fees.

(a)        Closing Fee.   On the Effective Date, the Borrower agrees to pay to
the Administrative Agent for the benefit of the Lenders a closing fee in the
amount of 0.25% of the aggregate amount of the Commitments.

(b)        Administrative and Other Fees.   The Borrower agrees to pay the
administrative and other fees of the Administrative Agent as may be agreed to in
writing from time to time.

Section 3.7.  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 and the actual number of days elapsed.

Section 3.8.  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 any other Loan Party 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.
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.(a)(i) and (ii).
Notwithstanding the foregoing, the parties hereto further agree and stipulate
that all agency fees, syndication 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 Administrative Agent or any
Lender to third parties or for damages incurred by the Administrative Agent or
any Lender, are charges made to compensate the Administrative 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 Administrative Agent and
the Lenders in connection with this Agreement and shall under no circumstances
be deemed to be charges for the use of money. All charges other than charges for
the use of money shall be fully earned and nonrefundable when due.

Section 3.9.  Statements of Account; Bill Lead Date Request.

(a)        The Administrative Agent will account to the Borrower monthly with a
statement of Loans, accrued interest and Fees, charges and payments made
pursuant to this Agreement and the other Loan Documents, and such account
rendered by the Administrative Agent shall be deemed conclusive

 

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upon the Borrower absent manifest error. The failure of the Administrative Agent
to deliver such a statement of accounts shall not relieve or discharge the
Borrower from any of its Obligations.

(b)        By written notice to the Administrative Agent, the Borrower may
request to receive monthly billings on a date (the “Bill Lead Date”) that is
prior to the first day of a month. The Administrative Agent will submit to the
Borrower monthly billings, which will consist of the actual interest and
principal due through the Bill Lead Date plus projected interest and principal
due through the balance, if any, of such month. Any necessary adjustments in the
applicable interest rate and/or principal payments due or made between a Bill
Lead Date and the end of a month will be reflected as an additional charge (or
credit) in the billing for the next following month. Neither the failure of the
Administrative Agent to submit a Bill Lead Date billing nor any error in any
such billing will excuse the Borrower’s obligation to make full payment of all
amounts due under this Agreement. In its sole discretion, the Administrative
Agent may cancel or modify the terms of such request which cancellation or
modification will be effective upon written notification to the Borrower. Should
the Borrower request a Bill Lead Date, the Administrative Agent shall not be
required to prepare a month end invoice.

Section 3.10.  Defaulting Lenders.

Notwithstanding anything to the contrary contained in this Agreement, if any
Lender becomes a Defaulting Lender, then, until such time as such Lender is no
longer a Defaulting Lender, to the extent permitted by Applicable Law:

(a)        Waivers and Amendments.  Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of Requisite Lenders.

(b)        Defaulting Lender Waterfall.  Any payment of principal, interest,
Fees or other amounts received by the Administrative Agent for the account of
such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article XI. or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 12.4. shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, to the payment of any amounts owing to the Lenders as a
result of any judgment of a court of competent jurisdiction obtained by any
Lender against such Defaulting Lender as a result of such Defaulting Lender’s
breach of its obligations under this Agreement; third, so long as no Default or
Event of Default exists, to the payment of any amounts owing to the Borrower as
a result of any judgment of a court of competent jurisdiction obtained by the
Borrower against such Defaulting Lender as a result of such Defaulting Lender’s
breach of its obligations under this Agreement; and fourth, to such Defaulting
Lender or as otherwise directed by a court of competent jurisdiction. Any
payments, prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant
to this subsection shall be deemed paid to and redirected by such Defaulting
Lender, and each Lender irrevocably consents hereto.

(c)        Defaulting Lender Cure.  If the Borrower and the Administrative Agent
agree in writing that a Lender is no longer a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein, that Lender will, to the extent applicable, purchase at par that
portion of outstanding Loans of the other Lenders or take such other actions as
the Administrative Agent may determine to be necessary to cause the Loans to be
held pro rata by the Lenders in accordance with their respective Credit
Percentages, whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to Fees
accrued or payments made by or on behalf of the Borrower while that Lender was a
Defaulting Lender; and provided, further, that except to the extent otherwise
expressly

 

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agreed by the affected parties, no change hereunder from Defaulting Lender to
Lender will constitute a waiver or release of any claim of any party hereunder
arising from that Lender’s having been a Defaulting Lender.

Section 3.11.  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, (ii) any taxes (other than withholding taxes) that would
not be imposed but for a connection between the Administrative Agent or a Lender
and the jurisdiction imposing such taxes (other than a connection arising solely
by virtue of the activities of the Administrative Agent or such Lender pursuant
to or in respect of this Agreement or any other Loan Document), (iii) any taxes
imposed on or measured by the Administrative Agent’s or any Lender’s assets, net
income, receipts or branch profits, (iv) any taxes to the extent that such tax
would apply to the Administrative Agent or any Lender immediately prior to the
Agreement Date or, in the case of an Eligible Assignee that becomes a Lender
pursuant to Section 12.6., as of the date such Person becomes a Lender, (v) any
taxes arising after the Agreement Date solely as a result of or attributable to
a Lender changing its designated Lending Office after the date such Lender
becomes a party hereto, and (vi) any taxes imposed by Sections 1471 through 1474
of the Internal Revenue Code (including any current or future regulations or
official interpretations thereof and any agreements entered into pursuant to
Section 1471(b)(1) of the Internal Revenue Code, collectively, “FATCA”) on any
“withholdable payment” payable to such recipient as a result of the failure of
such recipient to satisfy the applicable requirements as set forth in FATCA
(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 Administrative Agent an official receipt, a
copy of the return reporting such payment or other documentation reasonably
satisfactory to the Administrative Agent evidencing such payment to such
Governmental Authority; and

(iii)       pay to the Administrative Agent for its account or the account of
the applicable Lender such additional amount or amounts as is necessary to
ensure that the net amount actually received by the Administrative Agent or such
Lender will equal the full amount that the Administrative Agent or such Lender
would have received had no such withholding or deduction been required.

(b)        Tax Indemnification.   If the Borrower fails to pay any Taxes when
due to the appropriate Governmental Authority or fails to remit to the
Administrative 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 Administrative Agent and the Lenders
for any incremental Taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. For purposes
of this Section, a distribution hereunder by the Administrative Agent or any
Lender to or for the account of any Lender shall be deemed a payment by the
Borrower.

(c)        Tax Forms.

 

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(i)         Prior to the date that any Lender or Participant organized under the
laws of a jurisdiction other than that in which the Borrower is a resident for
tax purposes becomes a party hereto, such Person shall deliver to the Borrower
and the Administrative Agent 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 or such other evidence satisfactory
to the Administrative Agent and the Borrower), properly completed, currently
effective and duly executed by such Lender or Participant establishing that
payments to it hereunder and under the Notes are (i) not subject to United
States Federal backup withholding tax and (ii) not subject to United States
Federal withholding tax under the Internal Revenue Code. Each such Lender or
Participant shall, to the extent it may lawfully do so, (x) deliver further
copies of such forms or other appropriate certifications on or before the date
that any such forms expire or become obsolete and after the occurrence of any
event requiring a change in the most recent form delivered to the Borrower or
the Administrative Agent and (y) obtain such extensions of the time for filing,
and renew such forms and certifications thereof, as may be reasonably requested
by the Borrower or the Administrative Agent. To the extent that amounts payable
under the last sentence of subsection (a) or pursuant to subsection (b) resulted
from the failure of any Lender or Participant that is organized under the laws
of a jurisdiction other than that in which the Borrower is a resident for tax
purposes or the Administrative Agent, if it is organized under the laws of a
jurisdiction other than that in which the Borrower is a resident for tax
purposes, if such Lender, Participant or the Administrative Agent, as
applicable, to comply with the requirements of this subsection, the Borrower
shall not be required to pay such amounts.

(ii)        The Administrative Agent each Lender and each Participant that is a
“United States person” within the meaning of Section 7701(a)(30) of the Internal
Revenue Code shall deliver to the Borrower and the Administrative Agent two duly
signed completed copies of IRS Form W-9 establishing that payments to it
hereunder and under the Notes are not subject to United States Federal backup
withholding tax. If the Administrative Agent any Lender or any Participant
required to deliver the completed forms described in the immediately preceding
sentence fails to deliver such forms, then the Borrower shall not be required to
pay any amount pursuant to the last sentence of subsection (a) or pursuant to
subsection (b) to the extent the amounts payable under such sentence or
subsection (a) or under subsection (b) resulted from such failure to deliver
such forms.

(iii)       If any Lender or Participant, to the extent it may lawfully do so,
fails to deliver the forms or other documentation described in the immediately
preceding subsections (c)(i) or (c)(ii), as applicable, then the Administrative
Agent may withhold from such payment to such Lender such amounts as are required
by the Internal Revenue Code, and such withheld amounts shall be deemed to have
been paid to such Lender. If any Governmental Authority asserts that the
Administrative Agent did not properly withhold or backup withhold, as the case
may be, any tax or other amount from payments made to or for the account of any
Lender, such Lender shall indemnify the Administrative Agent therefor, including
all penalties and interest, any taxes imposed by any jurisdiction on the amounts
payable to the Administrative Agent under this Section, and costs and expenses
(including all reasonable fees and disbursements of any law firm or other
external counsel and the allocated cost of internal legal services and all
disbursements of internal counsel) of the Administrative Agent. The obligation
of the Lenders under this Section shall survive the termination of the
Commitments, repayment of all Obligations and the resignation or replacement of
the Administrative Agent.

(d)        Each Lender shall promptly (A) notify the Borrower and the
Administrative Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction,

 

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and (B) take such steps as shall not be materially disadvantageous to it, in the
reasonable judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office) to avoid any requirement of
Applicable Laws of any jurisdiction that the Borrower or the Administrative
Agent make any withholding or deduction for taxes from amounts payable to such
Lender.

(e)      Notwithstanding anything to the contrary in this Agreement, the
Borrower shall not be obligated to make payment to the Administrative Agent or
any Lender (as the case may be) pursuant to this Section in respect of
penalties, interest and other liabilities attributable to any Taxes, if
(i) written demand therefor has not been made by the Administrative Agent or
such Lender within 60 days from the date on which the Administrative Agent or
such Lender received written notice of the imposition of Taxes by the relevant
taxing or Governmental Authority, but only to the extent such penalties,
interest and other similar liabilities are attributable to such failure or delay
by the Administrative Agent or such Lender in making such written demand,
(ii) such penalties, interest and other liabilities have accrued after the
Borrower had indemnified or paid an additional amount due as of the date of such
payment pursuant to this Section or (iii) such penalties, interest and other
liabilities are attributable to the gross negligence or willful misconduct of
the Administrative Agent or such Lender as determined by a court of competent
jurisdiction in a final, non-appealable judgment.

(f)       If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes as to which it has been
indemnified pursuant to this Section (including additional amounts paid by the
Borrower pursuant to this Section), it shall pay to the indemnifying party an
amount equal to such refund (but only to the extent of indemnity payments made
under this Section with respect to the Taxes giving rise to such refund), net of
all out-of-pocket expenses (including Taxes) of the Administrative Agent or such
Lender, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that such
indemnifying party, upon the request of the Administrative Agent or such Lender,
agrees to repay the amount paid over pursuant to this subsection (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. Notwithstanding anything to the contrary in this
subsection, in no event will the Administrative Agent or any Lender be required
to pay any amount to an indemnifying party pursuant to this subsection the
payment of which would place the Administrative Agent or such Lender in a less
favorable net after-Tax position than the Administrative Agent or such Lender
would have been in if the indemnification payments or additional amounts giving
rise to such refund had never been paid. This subsection shall not be construed
to require the Administrative Agent or any Lender to make available its Tax
returns (or any other information relating to its Taxes that it deems
confidential) to the Borrower or any other Person.

(g)      USA Patriot Act Notice; Compliance.   In order for the Administrative
Agent to comply with the Patriot Act, prior to any Lender or Participant that is
organized under the laws of a jurisdiction outside of the United States of
America becoming a party hereto, the Administrative Agent may request, and such
Lender or Participant shall provide to the Administrative Agent, its name,
address, tax identification number and/or such other identification information
as shall be necessary for the Administrative Agent to comply with federal law.

ARTICLE IV. YIELD PROTECTION, ETC.

Section 4.1.  Additional Costs; Capital Adequacy.

(a)      Capital Adequacy.   If any Lender or any Participant determines that
any Regulatory Change affects or would affect the amount of capital required or
expected to be maintained by such Lender or such Participant, or any corporation
controlling such Lender or such Participant, as a

 

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consequence of, or with reference to, such Lender’s or such Participant’s or
such corporation’s Commitment or its making or maintaining its Loan below the
rate which such Lender or such Participant or such corporation controlling such
Lender or such Participant could have achieved but for such Regulatory Change
(taking into account the policies of such Lender or such Participant or such
corporation with regard to capital), then the Borrower shall, from time to time,
within thirty (30) calendar days after written demand by such Lender or such
Participant, pay to such Lender or such Participant additional amounts
sufficient to compensate such Lender or such Participant or such corporation
controlling such Lender or such Participant to the extent that such Lender or
such Participant determines such increase in capital is allocable to such
Lender’s or such Participant’s obligations hereunder. Such Lender or such
Participant shall deliver to the Borrower, pursuant to Section 4.1.(d), a
written statement, setting forth the basis for the request for such additional
amounts under this subsection.

(b)       Additional Costs.   In addition to, and not in limitation of the
immediately preceding subsection (a), the Borrower shall promptly pay to the
Administrative 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
LIBOR Loans or such obligation or the maintenance by such Lender of capital in
respect of its LIBOR 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 LIBOR Loans or its Commitment (other than
taxes imposed on or measured by the overall net income of such Lender or of its
Lending Office for any of such LIBOR Loans by the jurisdiction in which such
Lender has its principal office or such Lending Office), 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
similar reserve requirement applicable to any other category of liabilities or
category of extensions of credit or other assets by reference to which the
interest rate on LIBOR Loans is determined to the extent utilized when
determining LIBOR for such Loans) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, or other credit
extended by, or any other acquisition of funds by such Lender (or its parent
corporation), or any commitment of such Lender (including, without limitation,
the Commitment 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).

(c)       Lender’s Suspension of LIBOR Loans.   Without limiting the effect of
the provisions of the immediately preceding subsections (a) and (b), 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
Administrative Agent), the obligation of such Lender to make or Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended until such
Regulatory Change ceases to be in effect (in which case the provision of
Section 4.5. shall apply).

(d)       Notification and Determination of Additional Costs.   Each of the
Administrative Agent and each Lender, as the case may be, agrees to notify the
Borrower of any event occurring after the Agreement Date entitling such Person
to compensation under any of the preceding subsections of this Section as
promptly as practicable; provided, however, that the failure of any such Person
to give such

 

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notice shall not release the Borrower from any of its obligations hereunder. The
Administrative Agent and each Lender, as the case may be, agrees to furnish to
the Borrower (and in the case of a Lender to the Administrative Agent as well) a
certificate setting forth the basis and amount of each request for compensation
under this Section. Determinations by the Administrative Agent or such Lender,
as the case may be, of the effect of any Regulatory Change shall be conclusive,
provided that such determinations are made on a reasonable basis and in good
faith.

Notwithstanding anything to the contrary contained in any of the preceding
subsections of this Section 4.1., the Borrower shall not be required to
compensate any Lender or Participant for any such increased costs or reduced
return incurred by such Lender or Participant more than six (6) months prior to
such Lender’s or Participant’s written request to the Borrower for such
compensation.

Section 4.2.  Suspension of LIBOR Loans.

Anything herein to the contrary notwithstanding, if, on or prior to the
determination of LIBOR for any Interest Period:

(a)        the Administrative Agent reasonably determines (which determination
shall be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of LIBOR are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining rates of
interest for LIBOR Loans as provided herein or is otherwise unable to determine
LIBOR, or

(b)        the Administrative Agent reasonably determines (which determination
shall be conclusive) that the relevant rates of interest referred to in the
definition of LIBOR upon the basis of which the rate of interest for LIBOR Loans
for such Interest Period is to be determined are not likely to adequately cover
the cost to any Lender of making or maintaining LIBOR Loans for such Interest
Period;

then the Administrative Agent shall give the Borrower and each Lender prompt
notice thereof and, so long as such condition remains in effect, the Lenders
shall be under no obligation to, and shall not Continue LIBOR Loans or Convert
Loans into LIBOR Loans.

Section 4.3.  Illegality.

Notwithstanding any other provision of this Agreement, if any Lender shall
determine (which determination shall be conclusive and binding) that it is
unlawful for such Lender to honor its obligation to maintain LIBOR Loans
hereunder, then such Lender shall promptly notify the Borrower thereof (with a
copy of such notice to the Administrative Agent) and such Lender’s obligation to
Continue, or to Convert Loans of any other Type into, LIBOR Loans shall be
suspended until such time as such Lender may again maintain LIBOR Loans (in
which case the provisions of Section 4.5. shall be applicable).

Section 4.4.  Compensation.

The Borrower shall pay to the Administrative Agent for the account of each
Lender, upon the request of such Lender through the Administrative Agent, such
amount or amounts as shall be sufficient to compensate such Lender for any loss,
cost or expense that the Administrative Agent reasonably determines is
attributable to:

 

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(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.

Not in limitation of the foregoing, such compensation shall include, without
limitation; (i) in the case of a LIBOR Loan, an amount equal to the then present
value of (A) the amount of interest that would have accrued on such LIBOR Loan
for the remainder of the Interest Period at the rate applicable to such LIBOR
Loan, less (B) the amount of interest that would accrue on the same LIBOR Loan
for the same period if LIBOR were set on the date on which such LIBOR Loan was
repaid, prepaid or Converted or the date on which the Borrower failed to borrow,
Convert or Continue such LIBOR Loan, as applicable, calculating present value by
using as a discount rate LIBOR quoted on such date. Upon Borrower’s request, the
Administrative Agent will provide to the Borrower, on behalf of any Lender
seeking compensation under this Section, a statement setting forth in reasonable
detail the basis for requesting such compensation and the method for determining
the amount thereof. Any such statement shall be conclusive absent manifest
error.

Section 4.5.  Treatment of Affected Loans.

If the obligation of any Lender to Continue, or to Convert Base Rate Loans into,
LIBOR Loans shall be suspended pursuant to Section 4.1.(c), 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.(c) or 4.2. on such earlier
date as such Lender may specify to the Borrower with a copy to the
Administrative Agent) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Section 4.1.(c), 4.2. 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)        any portion of such Lender’s Loan that would otherwise be Continued
by such Lender as LIBOR Loans shall be Continued instead as a Base Rate Loan,
and any Base Rate Loan of such Lender that would otherwise be Converted into a
LIBOR Loan shall remain as a Base Rate Loan.

If such Lender gives notice to the Borrower (with a copy to the Administrative
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 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 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 the respective unpaid principal amount of the Loan held by
each Lender.

 

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Section 4.6.  Change of Lending Office.

Each Lender agrees that it will use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate an alternate
Lending Office or take other measures with respect to its Loan affected by the
matters or circumstances described in Sections 3.11., 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 4.7.  Affected Lenders.

If (a) a Lender requests compensation pursuant to Section 3.11. or 4.1. or is a
Lender that sold a participation to a Participant that requests compensation
pursuant to Section 3.11. or 4.1., and the Requisite Lenders are not also doing
the same, (b) the obligation of any Lender to Continue, or to Convert Base Rate
Loans into, LIBOR Loans shall be suspended pursuant to Section 4.1., 4.2. or
4.3. but the obligation of the Requisite Lenders shall not have been suspended
under such Sections or (c) a Lender does not vote in favor of any amendment,
modification or waiver to this Agreement or any other Loan Document which,
pursuant to Section 12.6.(b), requires the vote of such Lender, and the
Requisite Lenders shall have voted in favor of such amendment, modification or
waiver, then, so long as there does not then exist any Default or Event of
Default, the Borrower may either (i) demand that such Lender, (the “Affected
Lender”), and upon such demand the Affected Lender shall promptly, assign its
Loan to an Eligible Assignee subject to and in accordance with the provisions of
Section 12.6.(b) for a purchase price equal to the principal balance of the Loan
then owing to the Affected Lender, plus any accrued but unpaid interest and
accrued but unpaid fees owing to the Affected Lender or (ii) pay to the Affected
Lender the aggregate principal balance of the Loans then owing to the Affected
Lender, plus any accrued but unpaid interest and accrued but unpaid fees owing
to the Affected Lender, and by written notice to such Affected Lender, terminate
such Affected Lender’s Commitment, 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 (but shall continue to be entitled to the benefits of
Sections 3.11., 4.1., 4.4., 12.2. and 12.10. and the other provisions of this
Agreement and the other Loan Documents as provided in Section 12.11. with
respect to facts and circumstances occurring prior to the effective date of such
payment). Each of the Administrative Agent, the Borrower and the Affected Lender
shall reasonably cooperate in effectuating the replacement of such Affected
Lender under this Section, but at no time shall the Administrative Agent, such
Affected Lender, any other Lender or any Titled Agent 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
Administrative Agent, the Affected Lender or any of the other Lenders; provided,
however, notwithstanding anything to the contrary in this Agreement, the
Borrower shall not be obligated to reimburse or otherwise pay an Affected
Lender’s administrative or legal costs incurred as a result of the Borrower’s
exercise of its rights under this Section. 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 this Agreement
(including, without limitation, pursuant to Sections 3.11., 4.1. or 4.4.) with
respect to any period up to the date of replacement.

Section 4.8.  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 Loans and having
a maturity comparable to the relevant Interest Period; provided, however, that

 

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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 5.1.  Initial Conditions Precedent.

The obligation of the Lenders to make their respective Loans, is subject to the
satisfaction or waiver of the following conditions precedent:

(a)        The Administrative Agent shall have received each of the following,
in form and substance satisfactory to the Administrative Agent:

(i)       counterparts of this Agreement executed by each of the parties hereto;

(ii)      the Notes executed by the Borrower, payable to all Lenders (other than
any Lender that has requested that it not receive a Note);

(iii)     the Guaranty executed by each of the Guarantors initially to be a
party thereto;

(iv)     (A) an opinion of Latham & Watkins LLP, counsel to the Borrower and
Realty Income, addressed to the Administrative Agent and the Lenders and
covering the matters set forth in Exhibit H-1, (B) an opinion of Ballard Spahr
LLP, special Maryland counsel to Realty Income, addressed to the Administrative
Agent and the Lenders and covering the matters set forth in Exhibit H-2, and
(C) an opinion of Realty Income’s general counsel addressed to the
Administrative Agent and the Lenders and covering the matters set forth in
Exhibit H-3;

(v)      copies of the certificate or articles of incorporation, articles of
organization, certificate of limited partnership, declaration of trust or other
comparable organizational instrument (if any) of each Loan Party, reflecting
such Loan Party’s name and certified as of a recent date by the Secretary of
State of the state of formation of such Person (or in the case of any Loan Party
other than the Borrower or Realty Income, any other date acceptable to the
Administrative Agent so long as such organizational documents are certified as
of the Effective Date by the Secretary or Assistant Secretary (or other
individual performing similar functions) of the applicable Loan Party);

(vi)     a certificate of good standing (or certificate of similar meaning) with
respect to each Loan Party issued as of a recent date by the Secretary of State
of the state of formation of each such Person;

(vii)    a certificate of incumbency signed by the Secretary or Assistant
Secretary (or other individual performing similar functions) of each Loan Party
with respect to each of the officers of such Person authorized to execute and
deliver the Loan Documents to which such Person is a party, and in the case of
the Borrower, authorized to execute and deliver on behalf of the Borrower the
Notice of Borrowing, and Notices of Conversion and Notices of Continuation;

(viii)   copies certified by the Secretary or Assistant Secretary of each Loan
Party (or other individual performing similar functions) of (i) the by-laws of
such Person, if a corporation, the operating agreement, if a limited liability
company, the partnership agreement, if a limited or general partnership, or
other comparable document in the case of any other form of legal entity

 

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and (ii) all corporate, partnership, member or other necessary action taken by
such Person to authorize the execution, delivery and performance of the Loan
Documents to which it is a party;

(ix)       a Closing Certificate substantially in form of Exhibit I, executed on
behalf of the Borrower by an authorized officer of the Borrower;

(x)        a Transfer Authorizer Designation Form effective as of the Agreement
Date;

(xi)       evidence satisfactory to the Administrative Agent that the Fees, if
any, then due and payable under Section 3.6., together with all other fees,
expenses and reimbursement amounts due and payable to the Administrative Agent
and any of the Lenders, including without limitation, the reasonable fees and
expenses of counsel to the Administrative Agent, have been paid;

(xii)      the “Merger” has defined in that certain Agreement and Plan of Merger
dated as of September 6, 2012 by and among Realty Income, Tau Acquisition LLC
and American Realty Capital Trust, Inc. has been consummated; and

(xiii)     such other documents and instruments as the Administrative Agent, or
any Lender through the Administrative Agent, may reasonably request; and

(b)        In the good faith judgment of the Administrative Agent:

(i)         There shall not have occurred or become known to the Administrative
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 and its
Subsidiaries delivered to the Administrative 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 is
reasonably likely to be adversely determined, and, if adversely determined,
could reasonably be expected to (A) result in a Material Adverse Effect or
(B) restrain or enjoin, impose materially burdensome conditions on, or otherwise
materially and adversely affect, the ability of Realty Income or the Borrower to
fulfill its obligations under the Loan Documents to which it is a party;

(iii)       The Borrower and Realty Income 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
(A) any Applicable Law or (B) any agreement, document or instrument to which the
Borrower or Realty Income 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, or the failure to make, give or
receive which, would not reasonably be likely to (1) have 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
Realty Income to fulfill its obligations under the Loan Documents to which it is
a party; and

(iv)       the Borrower and each other Loan Party shall have provided all
information requested by the Administrative Agent and each Lender in order to
comply with applicable

 

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“know your customer” and anti-money laundering rules and regulations, including
without limitation, the Patriot Act.

Section 5.2.  Conditions Precedent to All Loans.

The obligations of Lenders to make any Loans, are each subject to the further
conditions precedent that: (a) no Default or Event of Default shall exist as of
the date of the making of such Loan or would exist immediately after giving
effect thereto; and (b) the representations and warranties made or deemed made
by Realty Income and the Borrower in the Loan Documents to which any of them is
a party, shall be true and correct in all material respects (except to the
extent otherwise qualified by materiality, in which case such representation or
warranty shall be true and correct in all respects) on and as of the date of the
making of such Loan with the same force and effect as if made on and as of such
date except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties shall have been true and correct in all material respects (except to
the extent otherwise qualified by materiality, in which case such representation
or warranty shall be true and correct in all respects) on and as of such earlier
date) and except for changes in factual circumstances specifically and expressly
permitted hereunder or waived or consented to by Requisite Lenders in accordance
with the provisions of Section 12.7. 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 Administrative Agent prior to the
date of such Credit Event, as of the date of the occurrence of such Credit
Event).

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

Section 6.1.  Representations and Warranties.

In order to induce the Administrative Agent and each Lender to enter into this
Agreement and to make Loans, the Borrower represents and warrants to the
Administrative Agent and each Lender as follows:

(a)       Organization; Power; Qualification.   Each of the Borrower, Realty
Income and the Subsidiaries is a corporation, limited liability company,
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, limited liability company, partnership or other legal entity, and
authorized to do business, in each 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.  Part I of Schedule 6.1.(b) is, as of the
Agreement Date, a complete and correct list of all Subsidiaries setting forth
for each Subsidiary, (i) the jurisdiction of organization of such Person,
(ii) each Person holding any Equity Interest in such Person, (iii) the nature of
the Equity Interests held by each such Person and (iv) the percentage of
ownership of such Person represented by such Equity Interests. As of the
Agreement Date, except as disclosed in such Schedule (A) each of the Borrower
and its Subsidiaries owns, free and clear of all Liens, and has the unencumbered
right to vote, all outstanding Equity Interests in each Person shown to be held
by it on such Schedule, (B) all of the issued and outstanding capital stock of
each such Person organized as a corporation is validly issued, fully paid and
nonassessable and (C) there are no outstanding subscriptions, options, warrants,
commitments, preemptive rights or agreements of any kind (including, without
limitation, any stockholders’ or voting

 

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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 Equity Interests of any type in, any such
Person. Part II of Schedule 6.1.(b) correctly sets forth, as of the Agreement
Date, all Unconsolidated Affiliates of the 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 the Borrower.

(c)       Authorization of Agreement, Notes, Loan Documents and
Borrowings.   The Borrower has the right and power, and has taken all necessary
corporate action to authorize it, to borrow and obtain other extensions of
credit hereunder. Each of the Borrower and Realty Income 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 Realty Income is a
party have been duly executed and delivered by the duly authorized officers 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 contained herein or therein
and as may be limited by equitable principles generally (whether in a proceeding
in law or in equity).

(d)       Compliance of Agreement, Etc. with Laws.   The execution, delivery and
performance of this Agreement and the other Loan Documents to which the Borrower
or Realty Income is a party in accordance with their respective terms and the
borrowings and other extensions of credit hereunder do not and will not, by the
passage of time, the giving of notice, or both: (i) require any Governmental
Approval or violate any Applicable Law (including all Environmental Laws)
relating to the Borrower or Realty Income; (ii) conflict with, result in a
breach of or constitute a default under the certificate of limited partnership
or partnership agreement of the Borrower or the organizational documents of
Realty Income, or any material indenture, agreement or other instrument to which
the Borrower or Realty Income 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 Realty Income other than in favor of the
Administrative Agent for the benefit of the Lenders.

(e)       Compliance with Law; Governmental Approvals.   Each of the Borrower,
Realty Income and each Subsidiary is in compliance with each Governmental
Approval and all other Applicable Laws relating to it except for noncompliances
which, and Governmental Approvals the failure to possess which, could not,
individually or in the aggregate, reasonably be expected to cause an Event of
Default or have a Material Adverse Effect.

(f)       Litigation.   Except as set forth on Schedule 6.1.(f), there are no
actions, suits or proceedings pending (nor, to the knowledge of either the
Borrower or Realty Income, are there any actions, suits or proceedings
threatened) against or in any other way relating adversely to or affecting, the
Borrower, Realty Income, any Subsidiary or any of their respective property in
any court or before any arbitrator of any kind or before or by any other
Governmental Authority which, (i) is reasonably likely to be adversely
determined, and, if adversely determined, could reasonably be expected to have a
Material Adverse Effect or (ii) in any manner draws into question the validity
or enforceability of any Loan Document. There are no strikes, slow downs, work
stoppages or walkouts or other labor disputes in progress or threatened relating
to, the Borrower, Realty Income or any Subsidiary.

(g)       Taxes.   All federal, material state and other tax returns of the
Borrower, Realty Income and each Subsidiary required by Applicable Law to be
filed have been duly filed, and all material federal,

 

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state and other taxes, assessments and other governmental charges or levies
upon, the Borrower, Realty Income and each Subsidiary and their respective
properties, income, profits and assets which are due and payable have been paid,
except any such nonpayment or non-filing 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, Realty Income or any Subsidiary is under audit. All
charges, accruals and reserves on the books of the Borrower and each of its
Subsidiaries in respect of any taxes or other governmental charges are in
accordance with GAAP.

(h)        No Material Adverse Change.   Since December 31, 2011, there has been
no material adverse change in the consolidated financial condition or results of
operations of the Borrower and its consolidated Subsidiaries taken as a whole.
Each of Realty Income and its Subsidiaries, taken as a whole, and the Borrower
and its Subsidiaries taken as a whole, are Solvent.

(i)         ERISA.

(i)       Each Benefit Arrangement is in compliance with the applicable
provisions of ERISA, the Internal Revenue Code and other Applicable Laws in all
material respects. Except with respect to Multiemployer Plans, each Qualified
Plan (A) has received a favorable determination from the Internal Revenue
Service applicable to such Qualified Plan’s current remedial amendment cycle (as
defined in Revenue Procedure 2007-44 (“2007-44”)), (B) has timely filed for a
favorable determination letter from the Internal Revenue Service during its
staggered remedial amendment cycle (as defined in 2007-44) and such application
is currently being processed by the Internal Revenue Service, (C) had filed for
a determination letter prior to its “GUST remedial amendment period” (as defined
in 2007-44) and received such determination letter and the staggered remedial
amendment cycle first following the GUST remedial amendment period for such
Qualified Plan has not yet expired, or (D) is maintained under a prototype plan
and may rely upon a favorable opinion letter issued by the Internal Revenue
Service with respect to such prototype plan. To the best knowledge of the
Borrower, nothing has occurred which would cause the loss of its reliance on
each Qualified Plan’s favorable determination letter or opinion letter.

(ii)      With respect to any Benefit Arrangement that is a retiree welfare
benefit arrangement, all amounts have been accrued on the financial statements
of the applicable member of the ERISA Group in accordance with FASB ASC 715. The
“benefit obligation” of all Plans does not exceed the “fair market value of plan
assets” for such Plans by more than $10,000,000 all as determined by and with
such terms defined in accordance with FASB ASC 715.

(iii)     Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect: (i) no ERISA Event has occurred or
is expected to occur; (ii) there are no pending, or to the best knowledge of the
Borrower, threatened, claims, actions or lawsuits or other action against the
Borrower by any Governmental Authority, plan participant or beneficiary with
respect to a Benefit Arrangement; (iii) there are no violations of the fiduciary
responsibility rules by the Borrower or, to the knowledge of the Borrower, any
other fiduciary with respect to any Benefit Arrangement; and (iv) no member of
the ERISA Group has engaged in a non-exempt “prohibited transaction,” as defined
in Section 406 of ERISA and Section 4975 of the Internal Revenue Code, in
connection with any Plan, that would subject any member of the ERISA Group to a
civil penalty imposed by Section 502(i) of ERISA or an excise tax imposed by
Section 4975 of the Internal Revenue Code.

(j)         Absence of Defaults.   None of the Borrower, Realty Income or the
Subsidiaries is in default under its articles of incorporation, bylaws,
partnership agreement, limited liability company

 

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agreement or other similar organizational documents, and no event has occurred,
which has not been remedied, cured or 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, or both, would constitute, a default or event of
default by, the Borrower, Realty Income or any Subsidiary under any agreement
(other than this Agreement) or judgment, decree or order to which any such
Person is a party or by which any such Person or any of its respective
properties may be bound where such default or event of default could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(k)      Environmental Laws.  In the ordinary course of business, and from time
to time, each of the Borrower, Realty Income and each Subsidiary conducts
reviews of the effect of Environmental Laws on its respective business,
operations and properties. Each of the Borrower, Realty Income and each
Subsidiary: (i) is in compliance with all Environmental Laws applicable to its
business, operations and the Properties, (ii) has obtained all Governmental
Approvals which are required under Environmental Laws, and each such
Governmental Approval is in full force and effect, and (iii) is in compliance
with all terms and conditions of such Governmental Approvals, where with respect
to each of the immediately preceding clauses (i) through (iii) the failure to
obtain or to comply with could reasonably be expected to have a Material Adverse
Effect. Except for any of the following matters that could not reasonably be
expected to have a Material Adverse Effect, neither the Borrower nor Realty
Income has any knowledge of, or has received notice of, any past, present, or
pending releases, events, conditions, circumstances, activities, practices,
incidents, facts, occurrences, actions, or plans that, with respect to the
Borrower, Realty Income or any Subsidiary, their respective businesses,
operations or with respect to the Properties, may: (x) cause or contribute to an
actual or alleged violation of or noncompliance with Environmental Laws,
(y) cause or contribute to any other potential common-law or legal claim or
other liability, or (z) cause any of the Properties to become subject to any
restrictions on ownership, occupancy, use or transferability under any
Environmental Law or require the filing or recording of any notice, approval or
disclosure document under any Environmental Law and, with respect to the
immediately preceding clauses (x) through (z) is based on or related to the
on-site or off-site manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport, removal, clean up or handling, or the
emission, discharge, release or threatened release of any wastes or Hazardous
Material, or any other requirement under Environmental Law. There is no civil,
criminal, or administrative action, suit, demand, claim, hearing, notice, or
demand letter, mandate, order, lien, request, investigation, or proceeding
pending or, to the Borrower’s knowledge after due inquiry, threatened, against
the Borrower, Realty Income or any Subsidiary relating in any way to
Environmental Laws, which reasonably could be expected to have a Material
Adverse Effect.

(l)       Investment Company; Etc.  None of the Borrower, Realty Income or any
Subsidiary is (i) subject to regulation under 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 obtain other extensions of
credit or to consummate the transactions contemplated by this Agreement or to
perform its obligations under any Loan Document to which it is a party.

(m)     Margin Stock.   None of the Borrower, Realty Income or any Subsidiary 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” within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System.

(n)      Affiliate Transactions.   As of the Agreement Date, except as set forth
on Schedule 6.1.(n), and as permitted by Section 9.8., none of the Borrower,
Realty Income or any Subsidiary is a party to or bound by any agreement or
arrangement (whether oral or written) with any Affiliate.

 

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(o)       Intellectual Property.   Except for such instances as would not,
individually or in the aggregate, have a Material Adverse Effect: (1) each of
the Borrower, Realty Income and each Subsidiary owns or has the right to use,
under valid license agreements or otherwise, all patents, licenses, franchises,
trademarks, trademark rights, service marks, service mark rights, trade names,
trade name rights, trade secrets and copyrights (collectively, “Intellectual
Property”) necessary to the conduct of its businesses, without known conflict
with any patent, license, franchise, trademark, trademark right, service mark,
service mark right, trade secret, trade name, copyright, or other proprietary
right of any other Person; (2) all such Intellectual Property is fully protected
and/or duly and properly registered, filed or issued in the appropriate office
and jurisdictions for such registrations, filing or issuances and (3) no claim
has been asserted by any Person with respect to the use of any such Intellectual
Property, or challenging or questioning the validity or effectiveness of any
such Intellectual Property.

(p)       Business.  As of the Agreement Date, the Borrower, Realty Income and
the Subsidiaries are engaged primarily in the business of owning, funding the
development of, operating, buying, selling and managing completed retail
properties leased to third party tenants principally, but not exclusively, on a
net lease basis.

(q)       Broker’s Fees.  No broker’s or finder’s fee, commission or similar
compensation will be payable with respect to the transactions contemplated
hereby. No other similar fees or commissions will be payable by the Borrower or
Realty Income for any other services rendered to the Borrower or Realty Income
or any Subsidiaries ancillary to the transactions contemplated hereby.

(r)       Accuracy and Completeness of Information.  All written information,
reports and other papers and data (other than financial projections and other
forward looking statements) furnished to the Administrative Agent or any Lender
by, or at the direction of, the Borrower, Realty Income or any Subsidiary were,
at the time the same were so furnished and when taken as a whole, complete and
correct in all material respects, to the extent necessary to give the recipient
a true and accurate knowledge of the subject matter, or, in the case of
financial statements, 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
(subject, as to interim statements, to changes resulting from normal year end
audit adjustments and absence of full footnote disclosure). All financial
projections and other forward looking statements prepared by or on behalf of the
Borrower, Realty Income or any Subsidiary that have been or may hereafter be
made available to the Administrative Agent or any Lender were or will be
prepared in good faith based on reasonable assumptions. No fact is known to the
Borrower or Realty Income which has had, or may in the future have (so far as
the Borrower or Realty Income can reasonably foresee), a Material Adverse Effect
which has not been set forth in such information, reports or other papers or
data or otherwise disclosed in writing to the Administrative Agent and the
Lenders prior to the Agreement Date. No document furnished or written statement
made to the Administrative Agent or any Lender by, or at the direction of, the
Borrower, Realty Income or any Subsidiary in connection with the negotiation,
preparation or execution of, or pursuant to, this Agreement or any of the other
Loan Documents, when taken as a whole with all other such documents and
statements, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained therein not materially misleading.

(s)       Not Plan Assets; No Prohibited Transactions.  None of the assets of
the Borrower, Realty Income or any Subsidiary constitutes “plan assets” within
the meaning of ERISA, the Internal Revenue Code and the respective regulations
promulgated thereunder. Assuming that no Lender funds any amount payable by it
hereunder with “plan assets,” as that term is defined in 29 C.F.R. 2510.3-101,
the execution, delivery and performance of this Agreement and the other Loan
Documents, and the extensions of credit and repayment of amounts hereunder, do
not and will not constitute “prohibited transactions” under ERISA or the
Internal Revenue Code.

 

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(t)       OFAC.  None of the Borrower, Realty Income, any of the Subsidiaries,
or any other Affiliate of the Borrower: (i) is a person named on the list of
Specially Designated Nationals or Blocked Persons maintained by the U.S.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) available
at http://www.treas.gov/offices/enforcement/ofac/index.shtml or as otherwise
published from time to time; (ii) is (A) an agency of the government of a
country, (B) an organization controlled by a country, or (C) a person resident
in a country that is subject to a sanctions program identified on the list
maintained by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/index.shtml, or as otherwise
published from time to time, as such program may be applicable to such agency,
organization or person; or (iii) derives any of its assets or operating income
from investments in or transactions with any such country, agency, organization
or person; and none of the proceeds from any Loan will be used to finance any
operations, investments or activities in, or make any payments to, any such
country, agency, organization, or person.

Section 6.2.  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, Realty Income or any
Subsidiary to the Administrative 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 any amendment thereto or any
statement contained in any certificate, financial statement or other instrument
delivered by or on behalf of the Borrower, Realty Income or any Subsidiary,
prior to the Agreement Date and delivered to the Administrative 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 at and as of the date of the occurrence of each 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 correct in all material respects (except to
the extent otherwise qualified by materiality, in which case such representation
or warranty shall have been true and correct in all respects) on and as of such
earlier date) and except for changes in factual circumstances specifically
permitted hereunder or as waived or consented to by the Requisite Lenders in
accordance with Section 12.7. 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.

ARTICLE VII. AFFIRMATIVE COVENANTS

For so long as this Agreement is in effect, the Borrower shall comply with the
following covenants:

Section 7.1.  Preservation of Existence and Similar Matters.

Except as otherwise permitted under Section 9.3., the Borrower shall, and shall
cause Realty Income and each Subsidiary to, preserve and maintain its 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 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.

 

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Section 7.2.  Compliance with Applicable Law.

The Borrower shall, and shall cause Realty Income and each Subsidiary to, comply
with all Applicable Law, including the obtaining of all Governmental Approvals,
the failure with which to comply could reasonably be expected to have a Material
Adverse Effect.

Section 7.3.  Maintenance of Property.

In addition to the requirements of any of the other Loan Documents and as except
as may otherwise be expressly permitted herein, the Borrower shall, and shall
cause Realty Income and each Subsidiary to, (a) protect and preserve all of its
material properties, including, but not limited to, all material Intellectual
Property necessary to the conduct of its respective business, and maintain in
good repair, working order and condition all tangible properties, ordinary wear
and tear excepted, and (b) from time to time make or cause to be made all
reasonably 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 7.4.  Conduct of Business.

The Borrower shall, and shall cause Realty Income and each Subsidiary to, carry
on its respective businesses as described in Section 6.1.(p) and not enter into
any line of business not otherwise engaged in by such Person as of the Agreement
Date or not otherwise reasonably related thereto or reasonable extensions
thereof.

Section 7.5.  Insurance.

The Borrower shall, and shall cause Realty Income and each Subsidiary to,
maintain insurance (on a replacement cost basis) with financially sound and
reputable insurance companies against such risks and in such amounts as is
customarily maintained by Persons engaged in similar businesses or as may be
required by Applicable Law. The Borrower shall from time to time deliver to the
Administrative Agent upon request a detailed list, together with copies of all
policies of the insurance then in effect, 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.

Section 7.6.  Payment of Taxes and Claims.

The Borrower shall, and shall cause Realty Income and each Subsidiary to, pay
and discharge 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.

Section 7.7.  Books and Records; Inspections.

The Borrower will, and will cause Realty Income and each Subsidiary to, keep
proper books of record and account in which full, true and correct entries shall
be made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause Realty Income and each Subsidiary
to, permit representatives of the Administrative Agent or any Lender to visit
and inspect any

 

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of their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants (in the Borrower’s presence if an Event of Default does not then
exist), all at such reasonable times during business hours and as often as may
reasonably be requested and, so long as no Event of Default exists, with
reasonable prior notice. The Borrower shall be obligated to reimburse the
Administrative Agent and the Lenders for their reasonable costs and expenses
incurred in connection with the exercise of their rights under this Section only
if such exercise occurs while a Default or Event of Default exists. If requested
by the Administrative Agent, the Borrower shall execute an authorization letter
addressed to its accountants authorizing the Administrative Agent or any Lender
to discuss the financial affairs of the Borrower, Realty Income or any
Subsidiary with the Borrower’s accountants.

Section 7.8.  Use of Proceeds.

The Borrower will use the proceeds of Loans only (a) for the payment of
pre-development and development costs incurred in connection with Properties
owned by the Borrower or any Subsidiary; (b) to finance acquisitions and equity
investments otherwise permitted under this Agreement; (c) to finance capital
expenditures and the repayment of Indebtedness of the Borrower and its
Subsidiaries (including scheduled amortization payments on Indebtedness); and
(d) to provide for the general working capital needs of the Borrower and its
Subsidiaries and for other general corporate purposes of the Borrower and its
Subsidiaries (including distributions and stock repurchases otherwise permitted
under this Agreement). The Borrower shall not, and shall not permit Realty
Income or any Subsidiary to, use any part of such proceeds 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 Regulation U or Regulation 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 7.9.  Environmental Matters.

The Borrower shall, and shall cause Realty Income and each Subsidiary to, comply
with, and to include within all leases relating to any Property for which the
Borrower, Realty Income or any Subsidiary is the lessor terms requiring their
respective tenants to comply with, all Environmental Laws the failure with which
to comply could reasonably be expected to have a Material Adverse Effect. If the
Borrower, Realty Income or any Subsidiary shall (a) receive written notice that
any violation of any Environmental Law may have been committed or is about to be
committed by such Person, (b) receive written notice that any administrative or
judicial complaint or order has been filed or is about to be filed against any
such Person alleging violations of any Environmental Law or requiring any such
Person to take any action in connection with the release of Hazardous Materials
or (c) receive any written notice from a Governmental Authority or private party
alleging that any such Person 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, and such notices, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, the Borrower shall
provide the Administrative Agent with a copy of such notice within 10 days after
the receipt thereof by such Person or any of the Subsidiaries. The Borrower,
Realty Income and the Subsidiaries shall promptly take 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.

Section 7.10.  Further Assurances.

At the Borrower’s cost and expense and upon request of the Administrative Agent,
the Borrower shall, and shall cause Realty Income and each Subsidiary to, duly
execute and deliver or cause to be duly

 

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executed and delivered, to the Administrative 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
Administrative Agent to carry out more effectively the provisions and purposes
of this Agreement and the other Loan Documents.

Section 7.11.  Material Contracts.

The Borrower shall, and shall cause Realty Income and each Subsidiary to, duly
and punctually perform and comply with all terms and conditions of all Material
Contracts to which it is a party, the failure of which to comply would permit
any other party thereto to terminate such Material Contract. The Borrower shall
not, and shall not permit Realty Income or any Subsidiary to, do or knowingly
permit to be done anything to impair materially the value of any of the Material
Contracts.

ARTICLE VIII. INFORMATION

For so long as this Agreement is in effect, the Borrower shall furnish or shall
cause Realty Income to furnish, to the Administrative Agent for distribution to
each of the Lenders:

Section 8.1.  Compliance Certificate.

No later than 45 days (60 days in the case of the last fiscal quarter of each
fiscal year) after the end of each of the fiscal quarters of the Borrower, a
certificate substantially in the form of Exhibit J (a “Compliance Certificate”)
executed on behalf of the Borrower by the chief financial officer of Realty
Income (a) setting forth in reasonable detail as of the end of such quarterly
accounting period or fiscal year, as the case may be, the calculations required
to establish whether the Borrower was in compliance with the covenants contained
in Section 9.1.; 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 and the steps being taken by the Borrower with respect
to such event, condition or failure.

Section 8.2.  Other Information.

(a)       Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants including, without limitation, any management report;

(b)       Within 5 Business Days of the filing thereof, copies of all
registration statements (excluding the exhibits thereto and any registration
statements on Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K
(or their equivalents) and all other periodic reports which the Borrower, Realty
Income or any Subsidiary shall file with the Securities and Exchange Commission
(or any Governmental Authority substituted therefor) or any national securities
exchange;

(c)       Promptly upon the mailing thereof to the shareholders of the Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed and promptly upon the issuance thereof copies of all material press
releases issued by the Borrower, any Subsidiary or Realty Income;

(d)       If any ERISA Event shall occur that individually, or together with any
other ERISA Event that has occurred, could reasonably be expected to have a
Material Adverse Effect, a certificate of the chief executive officer or chief
financial officer of the Borrower 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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(e)       To the extent the Borrower, Realty Income or any Subsidiary 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, the Borrower,
Realty Income or any Subsidiary or any of their respective properties, assets or
businesses which, if determined or resolved adversely to such Person, could
reasonably be expected to have a Material Adverse Effect, and prompt notice of
the receipt of written notice that any United States income tax returns of the
Borrower, Realty Income or any Subsidiary are being audited;

(f)       A copy of any amendment to the articles of incorporation, bylaws,
partnership agreement or other similar organizational documents of the Borrower
or Realty Income within 5 Business Days of the effectiveness thereof;

(g)       Prompt notice of any change in the senior management of the Borrower,
any Subsidiary or Realty Income and any change in the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Borrower, Realty Income or any Subsidiary which has had or could reasonably
be expected to have a Material Adverse Effect;

(h)       Prompt notice of the occurrence of any Default or Event of Default or
any event constituting a breach of a Material Contract by the Borrower, Realty
Income or any Subsidiary, which breach (with the passage of time, the giving of
notice, or otherwise) would permit a counterparty to a Material Contract to
terminate such Material Contract;

(i)        Promptly upon entering into any Material Contract after the Agreement
Date, a copy of such Material Contract;

(j)        Prompt notice of any order, judgment or decree in excess of
$10,000,000 having been entered against the Borrower, Realty Income or any
Subsidiary or any of their respective properties or assets;

(k)       Prompt notice of any written notification of a material violation of
any law or regulation or any inquiry shall have been received by the Borrower,
Realty Income or any Subsidiary from any Governmental Authority;

(l)        Prompt notice of the acquisition, incorporation or other creation of
any Subsidiary, the purpose for such Subsidiary, the nature of the assets and
liabilities thereof and whether such Subsidiary is a Wholly Owned Subsidiary;

(m)      Promptly upon the reasonable request of the Administrative Agent,
evidence of the Borrower’s calculation of the Ownership Share with respect to a
Subsidiary or an Unconsolidated Affiliate, such evidence to be in form and
detail satisfactory to the Administrative Agent;

(n)       Promptly, upon either the Borrower or Realty Income becoming aware of
any change in the Credit Rating, a certificate stating that Realty Income’s
Credit Rating has changed and the new Credit Rating that is in effect;

(o)       Promptly, upon each request, information identifying the Borrower as a
Lender may request in order to comply with applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation, the
Patriot Act; and

 

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(p)       From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
any Property of the Borrower, Realty Income, any Subsidiary or any of the
Borrower’s Unconsolidated Affiliates, or the business, assets, liabilities,
financial condition, or results of operations of the Borrower or any of its
Subsidiaries as the Administrative Agent or any Lender through the
Administrative Agent may reasonably request.

Realty Income’s delivery of information pursuant to Section 9.4 of the Realty
Income Credit Agreement shall satisfy the delivery requirements of this Section
so long as (i) Wells Fargo is the Administrative Agent under this Agreement and
under the Realty Income Credit Agreement and (ii) the information delivered
under Section 9.4 of the Realty Income Credit Agreement is marked to identify
the specific requirement set forth in this Section that such delivery is
intended to satisfy.

Section 8.3.  Electronic Delivery of Certain Information.

(a)       Documents required to be delivered pursuant to the Loan Documents may
be delivered by electronic communication and delivery, including, the Internet,
e-mail or intranet websites to which the Administrative Agent and each Lender
have access (including a commercial, third-party website or a website sponsored
or hosted by the Administrative Agent or the Borrower) provided that the
foregoing shall not apply to (i) notices to any Lender pursuant to Article II.
(which delivery is covered by subsection (b) below) and (ii) any Lender that has
notified the Administrative Agent and the Borrower that it cannot or does not
want to receive electronic communications. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic delivery pursuant to procedures
approved by it for all or particular notices or communications. Documents or
notices delivered electronically (except as set forth in clause (b) below) shall
be deemed to have been delivered twenty-four (24) hours after the date and time
on which the Administrative Agent or the Borrower posts such documents or the
documents become available on a commercial website and the Administrative Agent
or Borrower notifies each Lender of said posting and provides a link thereto
provided, (x) if such notice or other communication is not sent or posted during
the normal business hours of the recipient, said posting date and time shall be
deemed to have commenced as of 9:00 a.m. Pacific time on the opening of business
on the next business day for the recipient and (y) if the deemed time of
delivery occurs on a day that is not a business day for the recipient, the
deemed time of delivery shall be 9:00 a.m. Pacific time on the next business day
of the recipient. Notwithstanding anything contained herein, in every instance
the Borrower shall be required to provide paper copies of the certificate
required by Section 8.1. (which for the avoidance of doubt may be delivered by
facsimile) to the Administrative Agent, and, at the request of the
Administrative Agent or any Lender, shall deliver paper copies (which for the
avoidance of doubt may be delivered by facsimile) of any other documents for
which the Administrative Agent or such Lender may request paper copies. Except
for the certificates required by Section 8.1. (which for the avoidance of doubt
may be delivered by facsimile), the Administrative Agent shall have no
obligation to request the delivery of or to maintain paper copies of the
documents delivered electronically, and in any event shall have no
responsibility to monitor compliance by the Borrower with any such request for
delivery. Each Lender shall be solely responsible for requesting delivery to it
of paper copies and maintaining its paper or electronic documents.

(b)       Notwithstanding anything to the contrary in the foregoing subsection
(a) and for the avoidance of doubt, (i) any documents required to be delivered
by any Loan Party pursuant to the Loan Documents may be delivered by electronic
means described above (other than certificates required to be delivered by
Section 8.1. (which may, for the avoidance of doubt, be delivered by
facsimile)), and for all purposes hereunder, including delivery of information
required under Article VIII., electronic delivery of such documents by any such
Loan Party to the Administrative Agent and the Lenders shall be deemed effective
when such documents are delivered to the Administrative Agent and such Loan
Party receives an acknowledgement from the Administrative Agent (such as by the
“return receipt requested” function,

 

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as available, return email or other written acknowledgement), or if posted to a
website as described in subsection (a) above, when notice of such posting is
given to the Administrative Agent (which notice may be given electronically and
deemed effective in accordance with this subsection); provided, that, in any
event, any documents or notices delivered electronically pursuant to this
subsection shall be deemed delivered twenty-four (24) hours after the Borrower
delivers such documents or posts such notice electronically to the
Administrative Agent; provided, further, however, that (x) if such documents are
not delivered or such notice of posting of documents to such a website is not
sent during normal business hours of the Administrative Agent, such documents or
notice shall be deemed to have been sent at the opening of the next Business Day
of the Administrative Agent and (y) if the deemed time of delivery occurs on a
day that is not a Business Day, the deemed time of delivery shall be 9:00 a.m.
Pacific time on the next Business Day; and (ii) documents required to be
delivered pursuant to Article II. may be delivered electronically to a website
provided for such purpose by the Administrative Agent pursuant to procedures
provided to the Borrower by the Administrative Agent.

Section 8.4.  Public/Private Information.

The Borrower shall cooperate with the reasonable requests of the Administrative
Agent in connection with the publication of certain materials and/or information
provided by or on behalf of the Borrower. Documents required to be delivered
pursuant to the Loan Documents shall be delivered by or on behalf of the
Borrower to the Administrative Agent and the Lenders (collectively, “Information
Materials”) pursuant to this Article and the Borrower shall designate
Information Materials (a) that are either available to the public or not
material with respect to the Borrower and its Subsidiaries or any of their
respective securities for purposes of United States federal and state securities
laws, as “Public Information” and (b) that are not Public Information as
“Private Information”.

Section 8.5.  USA Patriot Act Notice; Compliance.

The Patriot Act and federal regulations issued with respect thereto require all
financial institutions to obtain, verify and record certain information that
identifies individuals or business entities which open an “account” with such
financial institution. Consequently, a Lender (for itself and/or as a
non-fiduciary agent for all Lenders hereunder) may from time-to-time request,
and the Borrower shall, and shall cause the other Loan Parties to, provide
promptly upon any such request to such Lender, such Loan Party’s name, address,
tax identification number and/or such other identification information as shall
be necessary for such Lender to comply with federal law. An “account” for this
purpose may include, without limitation, a deposit account, cash management
service, a transaction or asset account, a credit account, a loan or other
extension of credit, and/or other financial services product.

ARTICLE IX. NEGATIVE COVENANTS

For so long as this Agreement is in effect, the Borrower shall comply with the
following covenants:

Section 9.1.  Financial Covenants.

(a)       Minimum Tangible Net Worth.  The Borrower shall not permit its
Tangible Net Worth determined on a consolidated basis at the end of any fiscal
quarter to be less than an amount equal to $750,000,000.

(b)       Ratio of EBITDA to Fixed Charges.  The Borrower shall not permit, for
any period of four consecutive fiscal quarters, the ratio of (i) EBITDA of the
Borrower and its Subsidiaries determined on a consolidated basis for such period
to (ii) Fixed Charges of the Borrower and its Subsidiaries

 

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determined on a consolidated basis for such period, to be less than 1.20 to 1.00
at the end of such fiscal quarter.

(c)       Ratio of Total Liabilities to Gross Asset Value.  The Borrower shall
not permit the ratio of (i) Total Liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis to (ii) Gross Asset Value to
exceed 0.75 to 1.00 at any time.

(d)       Ratio of Secured Indebtedness to Gross Asset Value.  The Borrower
shall not permit the ratio of (i) the aggregate principal amount of Secured
Indebtedness of the Borrower and its Subsidiaries determined on a consolidated
basis to (ii) Gross Asset Value, to exceed 0.75 to 1.00 at any time.

Section 9.2.  Restrictions on Intercompany Transfers.

Other than as expressly set forth in this Agreement and other than any
restrictions set forth in the Realty Income Credit Agreement, the Borrower shall
not, and shall not permit Realty Income or any Subsidiary (other than an
Excluded Subsidiary) to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary (other than an Excluded Subsidiary) to: (i) pay dividends or
make any other distribution on any of such Subsidiary’s capital stock or other
equity interests owned by the Borrower or any Subsidiary; (ii) pay any
Indebtedness owed to the Borrower or any Subsidiary; (iii) make loans or
advances to the Borrower or any Subsidiary; or (iv) transfer any of its property
or assets to the Borrower or any Subsidiary; provided, however, notwithstanding
the foregoing, the Borrower and its Subsidiaries may agree and be subject to
restrictions on their ability to transfer, directly or indirectly, Equity
Interests (and beneficial interest therein) in any Excluded Subsidiary pursuant
to the terms of any Secured Indebtedness of such Excluded Subsidiary.

Section 9.3.  Merger, Consolidation, Sales of Assets and Other Arrangements.

The Borrower shall not, and shall not permit any Subsidiary to, (a) enter into
any transaction of merger or consolidation; (b) liquidate, windup or dissolve
itself (or suffer any liquidation or dissolution); or (c) 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, or the
capital stock of or other Equity Interests in any of its Subsidiaries, whether
now owned or hereafter acquired; provided, however, that:

(i)       any Subsidiary may merge with the Borrower, Realty Income or any
Subsidiary of Realty Income (other than the Borrower), so long as the Borrower,
Realty Income or the Subsidiary of Realty Income, as applicable, is the
survivor;

(ii)      any Subsidiary may sell, transfer or dispose of its assets to the
Borrower or Realty Income or any other Subsidiary of Realty Income;

(iii)     a Subsidiary may convey, sell, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or any substantial part of its
business or assets, or the capital stock of or other Equity Interests in any of
its Subsidiaries, and immediately thereafter liquidate, provided that
immediately prior to any such conveyance, sale, transfer, disposition or
liquidation and immediately thereafter and after giving effect thereto, no
Default or Event of Default is or would be in existence; and

(iv)     the Borrower and any Subsidiary may, directly or indirectly, sell,
lease or otherwise transfer, whether by one or a series of transactions, assets
in an amount exceeding the Substantial Amount (including capital stock or other
securities of Subsidiaries) to any other

 

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Person, so long as, in each case, (1) the Borrower shall have given the
Administrative Agent and the Lenders at least 30 days prior written notice of
the completion of such sale, lease or other transfer; (2) immediately prior
thereto, and immediately thereafter and after giving effect thereto, no Default
or Event of Default is or would be in existence; and (3) at the time the
Borrower gives notice pursuant to clause (1) of this subsection, the Borrower
shall have delivered to the Administrative Agent and the Lenders a Compliance
Certificate, calculated on a pro forma basis, evidencing the continued
compliance by the Loan Parties with the terms and conditions of this Agreement
and the other Loan Documents, including without limitation, the financial
covenants contained in Section 9.1., after giving effect to such consolidation,
merger, acquisition, Investment, sale, lease or other transfer; and

(v)      the Borrower, Realty Income and the Subsidiaries may lease and sublease
their respective assets, as lessor or sublessor (as the case may be) in the
ordinary course of business, and may purchase and sell their respective assets
in the ordinary course of their business or because such assets have become
worn, obsolete and unnecessary.

Further, neither the Borrower nor any Subsidiary, shall enter into any
sale-leaseback transactions or other transaction by which such Person shall
remain liable as lessee (or the economic equivalent thereof) of any real or
personal property that it has sold or leased to another Person where the
transaction is in an amount which exceeds $10,000,000.

Section 9.4.  Plans.

The Borrower shall not, and shall not permit any Subsidiary 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 9.5.  Fiscal Year.

The Borrower shall not, and shall not permit Realty Income or Subsidiary to,
change its fiscal year from that in effect as of the Agreement Date.

Section 9.6.  Modifications of Organizational Documents.

The Borrower shall not enter into, and shall not permit any Subsidiary or Realty
Income to enter into, any amendment, supplement, restatement or other
modification of its certificate or articles of incorporation, articles of
organization, certificate of limited partnership, declaration of trust or other
comparable organizational instrument (if any) that could reasonably be expected
to have a Material Adverse Effect.

Section 9.7.  Modifications to Material Contracts.

The Borrower shall not, and shall not permit any Subsidiary or Realty Income to,
enter into any amendment or modification to any Material Contract which could
reasonably be expected to have a Material Adverse Effect.

Section 9.8.  Transactions with Affiliates.

The Borrower shall not permit to exist or enter into, and shall not permit
Realty Income or any Subsidiary 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 of the Borrower (other than
Realty

 

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Income or a Subsidiary of Realty Income) or with any director or senior officer
of Realty Income, except (a) as set forth on Schedule 6.1.(n) or
(b) transactions that are (i) in an amount less than $2,000,000 and are approved
by a majority of the members of the Borrower’s board of directors that are not
party to the applicable transaction (the “Disinterested Directors”) or (ii) in
the ordinary course of business and pursuant to the reasonable requirements of
the business of the Borrower or any of its Subsidiaries and upon fair and
reasonable terms which are no less favorable to the Borrower or such Subsidiary
than would be obtained in a comparable arm’s length transaction with a Person
that is not an Affiliate, as reasonably determined in good faith by the
Disinterested Directors. Notwithstanding the foregoing, no payments may be made
with respect to any items set forth on such Schedule if a Default or Event of
Default exists or would result from the making of such payment.

Section 9.9.  Derivatives Contracts.

The Borrower shall not, and shall not permit Realty Income or any Subsidiary to,
enter into or become obligated in respect of Derivatives Contracts, other than
Derivatives Contracts entered into by the Borrower, Realty Income or any
Subsidiary in the ordinary course of business and which establish an effective
hedge in respect of liabilities, commitments or assets held or reasonably
anticipated by the Borrower, Realty Income or such Subsidiary.

ARTICLE X. DEFAULT

Section 10.1.  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.   The Borrower shall, under this Agreement or any
other Loan Document, fail to pay (whether upon demand, at maturity, by reason of
acceleration or otherwise), (i) when due, the principal on any of the Loans or
(ii) within five days of the date the Borrower or Realty Income has received
notice of such failure from the Administrative Agent, any interest or fees on
any of the Loans or other payment Obligations owing by the Borrower under this
Agreement, any other Loan Document, or any other Loan Party shall fail to pay
when due any payment obligation owing by such Loan Party under any Loan Document
to which it is a party.

(b)        Default in Performance.

(i)        The Borrower or Realty Income shall fail to perform or observe any
term, covenant, condition or agreement on its part to be performed or observed
and contained in Section 8.2.(h), or Article IX. (excluding Section 9.8.); or

(ii)       The Borrower or Realty Income 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 in the case of this subsection (b)(ii) only, such failure shall continue for
a period of 30 calendar days after the earlier of (x) the date upon which the
Borrower or Realty Income obtains knowledge of such failure or (y) the date upon
which the Borrower has received written notice of such failure from the
Administrative Agent.

(c)        Misrepresentations.  Any written statement, representation or
warranty made or deemed made by or on behalf of the Borrower or Realty Income
under this Agreement or under any other Loan

 

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Document, or any amendment hereto or thereto, or in any other writing or
statement at any time furnished by, or at the direction of, the Borrower or
Realty Income to the Administrative Agent or any Lender, shall at any time prove
to have been incorrect or misleading in any material respect when furnished or
made or deemed made.

(d)        Indebtedness Cross-Default.

(i)        The Borrower or Realty Income shall fail to pay when due and payable
the principal of, or interest on, any Indebtedness (other than the Loans) having
an aggregate outstanding principal amount (or, in the case of any Derivatives
Contract, having, without regard to the effect of any close-out netting
provision, a Derivatives Termination Value) of $20,000,000 or more (“Material
Indebtedness”) and such failure shall continue beyond any applicable cure
periods; 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.

(e)        Voluntary Bankruptcy Proceeding.    The Borrower, Realty Income or
any other Significant Subsidiary shall: (i) commence a voluntary case under the
Bankruptcy Code of 1978, as amended, 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.

(f)        Involuntary Bankruptcy Proceeding.   A case or other proceeding shall
be commenced against the Borrower, Realty Income or any other Significant
Subsidiary in any court of competent jurisdiction seeking: (i) relief under the
Bankruptcy Code of 1978, as amended 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 in the case of
either clause (i) or (ii) such case or proceeding shall continue undismissed or
unstayed for a period of 60 consecutive calendar days, or an order granting the
remedy or other relief requested in such case or proceeding (including, but not
limited to, an order for relief under such Bankruptcy Code or such other federal
bankruptcy laws) shall be entered.

(g)        Revocation of Loan Documents.   The Borrower or Realty Income shall
(or shall attempt to) disavow, revoke or 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 or
enforceability of any Loan Document or any Loan Document shall cease to be in
full force and effect

 

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(except as of the result of the express terms thereof or the express written
agreement of the parties thereto).

(h)        Judgment.  A judgment or order for the payment of money or for an
injunction or other non-monetary relief shall be entered against the Borrower,
Realty Income or any Subsidiary, by any court or other tribunal and (i) such
judgment or order shall continue for a period of 60 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 judgments or orders entered against the Borrower, Realty Income
and all Subsidiaries, $20,000,000 or (B) in the case of an injunction or other
non-monetary relief, such injunction or such judgment or order could reasonably
be expected to have a Material Adverse Effect.

(i)         Attachment.  A warrant, writ of attachment, execution or similar
process shall be issued against any property of the Borrower, Realty Income or
any Subsidiary, which exceeds, individually or together with all other such
warrants, writs, executions and processes, $20,000,000 in amount and such
warrant, writ, execution or process shall not be paid, discharged, vacated,
stayed or bonded for a period of 60 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 Administrative
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 the Borrower or any
Subsidiary.

(j)         ERISA.

(i)       Any ERISA Event shall have occurred that results or could reasonably
be expected to result in liability to any member of the ERISA Group aggregating
in excess of $20,000,000; or

(ii)      The “benefit obligation” of all Plans exceeds the “fair market value
of plan assets” for such Plans by more than $20,000,000, all as determined, and
with such terms defined, in accordance with FASB ASC 715.

(k)        Loan Documents.  An Event of Default (as defined therein) shall occur
under any of the other Loan Documents;

(l)         Change of Control.  At any time, the general partner of the Borrower
is not (i) Realty Income, (ii) Tau Acquisition LLC or (iii) a Wholly Owned
Subsidiary of Realty Income.

(m)       Damage; Strike; Casualty.  Any material damage to, or loss, theft or
destruction of, any Property, whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty which causes, for more than 30 consecutive days beyond the coverage
period of any applicable business interruption insurance, the cessation or
substantial curtailment of revenue producing activities of the Borrower or its
Subsidiaries taken as a whole and only if any such event or circumstance could
reasonably be expected to have a Material Adverse Effect.

(n)        Material Adverse Effect.  There shall occur any event that has had a
Material Adverse Effect.

 

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Section 10.2.  Remedies Upon Event of Default.

Upon the occurrence of an Event of Default and so long as an Event of Default
exists 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.(e) or 10.1.(f), (A) the principal of, and all accrued interest
on, the Loans and the Notes at the time outstanding and (B) all of the other
Obligations, including, but not limited to, the other amounts owed to the
Lenders and the Administrative Agent under this Agreement, the Notes or any of
the other Loan Documents shall become immediately and automatically due and
payable without presentment, demand, protest, or other notice of any kind, all
of which are expressly waived by the Borrower on behalf of itself and the other
Loan Parties.

(ii)      Optional.  If any other Event of Default shall exist, the
Administrative Agent may, and at the direction of the Requisite Lenders shall:
declare (A) the principal of, and accrued interest on, the Loans and the Notes
at the time outstanding and (B) all of the other Obligations, including, but not
limited to, the other amounts owed to the Lenders and the Administrative 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 on behalf of itself and the other
Loan Parties.

(b)        Loan Documents.  The Requisite Lenders may direct the Administrative
Agent to, and the Administrative 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 Administrative
Agent to, and the Administrative 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 Administrative Agent and the Lenders shall be entitled to the
appointment of a receiver for the assets and properties of the Borrower and its
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 and its Subsidiaries and to exercise such power as
the court shall confer upon such receiver.

(e)        Specified Derivatives Contract Remedies.  Notwithstanding any other
provision of this Agreement or any other Loan Document, each Specified
Derivatives Provider shall have the right, with prompt notice to the
Administrative Agent, but without the approval or consent of or other action by
the Administrative Agent or the Lenders, and without limitation of other
remedies available to such Specified Derivatives Provider under contract or
Applicable Law, to undertake any of the following: (a) to declare an event of
default, termination event or other similar event under any Specified
Derivatives Contract and to create an “Early Termination Date” (as defined
therein) in respect thereof, (b) to determine net termination amounts in respect
of any and all Specified Derivatives Contracts in accordance with the terms
thereof, and to set off amounts among such contracts, (c) to set off or proceed
against deposit account balances, securities account balances and other property
and amounts held by such Specified Derivatives Provider, and (d) to prosecute
any legal action against the Borrower, any other Loan Party or

 

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any Subsidiary to enforce or collect net amounts owing to such Specified
Derivatives Provider pursuant to any Specified Derivatives Contract.

(f)        Rescission of Acceleration by Requisite Lenders.  If at any time
after acceleration of the maturity of the Loans and the other Obligations, the
Borrower shall pay all arrears of interest and all payments on account of
principal of the Obligations which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by
Applicable Law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Defaults (other than nonpayment of principal of
and accrued interest on the Obligations due and payable solely by virtue of
acceleration) shall become remedied or waived to the satisfaction of the
Requisite Lenders, then by written notice to the Borrower, the Requisite Lenders
may elect, in the sole discretion of such Requisite Lenders, to rescind and
annul the acceleration and its consequences. The provisions of the preceding
sentence are intended merely to bind all of the Lenders to a decision which may
be made at the election of the Requisite Lenders, and are not intended to
benefit the Borrower and do not give the Borrower the right to require the
Lenders to rescind or annul any acceleration hereunder, even if the conditions
set forth herein are satisfied.

Section 10.3.  Marshaling; Payments Set Aside.

None of the Administrative Agent, any Lender or any Specified Derivatives
Provider shall be under any obligation to marshal any assets in favor of any
Loan Party or any other party or against or in payment of any or all of the
Obligations or the Specified Derivatives Obligations. To the extent that any
Loan Party makes a payment or payments to the Administrative Agent, any Lender
or any Specified Derivatives Provider, or the Administrative Agent, any Lender
or any Specified Derivatives Provider enforce their security interests or
exercise their rights of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
recovery, the Obligations or Specified Derivatives Obligations, or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.

Section 10.4.  Allocation of Proceeds.

If an Event of Default exists, all payments received by the Administrative Agent
under any of the Loan Documents, 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 Administrative Agent and the Lenders in respect of
expenses due under Section 12.2. until paid in full, and then Fees;

(b)       payments of interest on all Loans, to be applied for the ratable
benefit of the Lenders;

(c)       payments of principal of all Loans and payments of the Derivatives
Termination Value in respect of any and all Specified Derivatives Contracts, to
be paid to the Lenders and the Specified Derivatives Providers equally and
ratably in accordance with the respective amounts thereof then due and owing to
such Persons;

(d)       amounts due to the Administrative Agent and the Lenders pursuant to
Sections 11.7. and 12.10.;

 

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(e)       payments of all other Obligations and other amounts due under any of
the Loan Documents and Specified Derivatives Contracts, if any, to be applied
for the ratable benefit of the Lenders and the applicable Specified Derivatives
Providers; and

(f)       any amount remaining after application as provided above, shall be
paid to the Borrower or whomever else may be legally entitled thereto.

Section 10.5.  Performance by Administrative Agent.

If the Borrower or any other Loan Party shall fail to perform any covenant, duty
or agreement contained in any of the Loan Documents, the Administrative Agent
may perform or attempt to perform such covenant, duty or agreement on behalf of
the Borrower or such other Loan Party after the expiration of any cure or grace
periods set forth herein. In such event, the Borrower shall, at the request of
the Administrative Agent, promptly pay any amount reasonably expended by the
Administrative Agent in such performance or attempted performance to the
Administrative Agent, together with interest thereon at the applicable
Post-Default Rate from the date of such expenditure until paid. Notwithstanding
the foregoing, neither the Administrative 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 10.6.  Rights Cumulative.

(a)        Generally.  The rights and remedies of the Administrative Agent and
the Lenders under this Agreement, 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 Administrative Agent and the Lenders may be selective and no
failure or delay by the Administrative 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.

(b)        Enforcement by Administrative Agent.    Notwithstanding anything to
the contrary contained herein or in any other Loan Document, the authority to
enforce rights and remedies hereunder and under the other Loan Documents against
the Loan Parties or any of them shall be vested exclusively in, and all actions
and proceedings at law in connection with such enforcement shall be instituted
and maintained exclusively by, the Administrative Agent in accordance with
Article X. for the benefit of all the Lenders; provided that the foregoing shall
not prohibit (i) the Administrative Agent from exercising on its own behalf the
rights and remedies that inure to its benefit (solely in its capacity as
Administrative Agent) hereunder and under the other Loan Documents, (ii) any
Specified Derivatives Provider from exercising the rights and remedies that
inure to its benefit (solely in its capacity as Specified Derivatives Provider)
hereunder, under the other Loan Documents or under any Specified Derivatives
Contract, as applicable, (iii) any Lender from exercising setoff rights in
accordance with Section 12.4. (subject to the terms of Section 3.3.), or
(iv) any Lender from filing proofs of claim or appearing and filing pleadings on
its own behalf during the pendency of a proceeding relative to any Loan Party
under any Debtor Relief Law; and provided, further, that if at any time there is
no Person acting as Administrative Agent hereunder and under the other Loan
Documents, then (x) the Requisite Lenders shall have the rights otherwise
ascribed to the Administrative Agent pursuant to Article X. and (y) in addition
to the matters set forth in clauses (ii), (iii) and (iv) of the preceding
proviso and subject to Section 3.3., any Lender may, with the consent of the
Requisite Lenders, enforce any rights and remedies available to it and as
authorized by the Requisite Lenders.

 

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ARTICLE XI. THE ADMINISTRATIVE AGENT

Section 11.1.  Appointment and Authorization.

Each Lender hereby irrevocably appoints and authorizes the Administrative Agent
to take such action as contractual representative on such Lender’s behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
specifically delegated to the Administrative Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto. Not in
limitation of the foregoing, each Lender authorizes and directs the
Administrative Agent to enter into the Loan Documents (other than this
Agreement) 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 shall be
construed to deem the Administrative Agent a trustee or fiduciary for any Lender
or to impose on the Administrative Agent duties or obligations other than those
expressly provided for herein. Without limiting the generality of the foregoing,
the use of the terms “Agent”, “Administrative Agent”, “agent” and similar terms
in the Loan Documents with reference to the Administrative Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any Applicable Law. Instead, use of such terms is merely a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties. The
Administrative Agent shall deliver to each Lender, promptly upon receipt thereof
by the Administrative Agent, copies of each of the financial statements,
certificates, notices and other documents delivered to the Administrative Agent
pursuant to Article VIII. that the Borrower is not otherwise required to deliver
directly to the Lenders. The Administrative Agent will also furnish to any
Lender, upon the request of such Lender, a copy (or, where appropriate, an
original) of any document, instrument, agreement, certificate or notice
furnished to the Administrative Agent by the Borrower, any other Loan Party or
any other Affiliate of the Borrower, pursuant to this Agreement or any other
Loan Document not already delivered to such Lender pursuant to the terms of this
Agreement or any such other Loan Document. As to any matters not expressly
provided for by the Loan Documents (including, without limitation, enforcement
or collection of any of the Obligations), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the 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 Administrative Agent shall not
be required to take any action which exposes the Administrative Agent to
personal liability or which is contrary to this Agreement or any other Loan
Document or Applicable Law. Not in limitation of the foregoing, the
Administrative Agent may 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 directed the Administrative Agent otherwise.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Administrative Agent as a result of the Administrative
Agent acting or refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of the Requisite Lenders, or
where applicable, all the Lenders.

Section 11.2.  Agent’s Reliance, Etc.

Notwithstanding any other provisions of this Agreement or any other Loan
Documents, neither the Administrative Agent nor any of its directors, officers,
agents, employees or counsel shall be liable for any action taken or not taken
by it under or in connection with this Agreement or any other Loan Document,
except for its or their own gross negligence or willful misconduct in connection
with its duties

 

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expressly set forth herein or therein as determined by a court of competent
jurisdiction in a final non-appealable judgment. Without limiting the generality
of the foregoing, the Administrative Agent: may consult with legal counsel
(including its own counsel or counsel for the Borrower or any other Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts. Neither the
Administrative Agent nor any of its directors, officers, agents, employees or
counsel: (a) makes any warranty or representation to any Lender or any other
Person and shall be responsible to any Lender or any other Person for any
statement, warranty or representation made or deemed made by the Borrower, any
other Loan Party or any other Person in or in connection with this Agreement or
any other Loan Document; (b) shall have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement or any other Loan Document or the satisfaction of any conditions
precedent under this Agreement or any Loan Document on the part of the Borrower
or other Persons or inspect the property, books or records of the Borrower or
any other Person; (c) shall be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Loan Document, any other instrument or document furnished
pursuant thereto or any collateral covered thereby or the perfection or priority
of any Lien in favor of the Administrative Agent on behalf of the Lenders in any
such collateral; (d) shall have any liability in respect of any recitals,
statements, certifications, representations or warranties contained in any of
the Loan Documents or any other document, instrument, agreement, certificate or
statement delivered in connection therewith; and (e) shall incur any liability
under or in respect of this Agreement or any other Loan Document by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telephone, telecopy or electronic mail) believed by it to be genuine and signed,
sent or given by the proper party or parties. The Administrative Agent may
execute any of its duties under the Loan Documents by or through agents,
employees or attorneys-in-fact and shall not be responsible for the negligence
or misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct.

Section 11.3.  Notice of Defaults.

The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Administrative 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 Administrative Agent) becomes aware of any
Default or Event of Default, it shall promptly send to the Administrative Agent
such a “notice of default”. Further, if the Administrative Agent receives such a
“notice of default,” the Administrative Agent shall give prompt notice thereof
to the Lenders.

Section 11.4.  Wells Fargo as Lender.

Wells Fargo, as a Lender, shall have the same rights and powers under this
Agreement and any other Loan Document as any other Lender and may exercise the
same as though it were not the Administrative Agent; and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated, include Wells Fargo in
each case in its individual capacity. Wells Fargo and its Affiliates may each
accept deposits from, maintain deposits or credit balances for, invest in, lend
money to, act as trustee under indentures of, serve as financial advisor to, and
generally engage in any kind of business with the Borrower, any other Loan Party
or any other Affiliate thereof as if it were any other bank and without any duty
to account therefor to the other Lenders. Further, the Administrative Agent and
any Affiliate 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. The Lenders acknowledge that,
pursuant to such activities, Wells Fargo or its Affiliates may receive
information regarding the Borrower,

 

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other Loan Parties, Subsidiaries and other Affiliates (including information
that may be subject to confidentiality obligations in favor of such Person) and
acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them.

Section 11.5.  Approvals of Lenders.

All communications from the Administrative Agent to any Lender requesting such
Lender’s determination, consent, approval or disapproval (a) shall be given in
the form of a written notice to such Lender, (b) shall be accompanied by a
description of the matter or issue as to which such determination, approval,
consent or disapproval is requested, or shall advise such Lender where
information, if any, regarding such matter or issue may be inspected, or shall
otherwise describe the matter or issue to be resolved, (c) shall include, if
reasonably requested by such Lender and to the extent not previously provided to
such Lender, written materials and, as appropriate, a brief summary of all oral
information provided to the Administrative Agent by the Borrower in respect of
the matter or issue to be resolved, and (d) shall include the Administrative
Agent’s recommended course of action or determination in respect thereof. Unless
a Lender shall give written notice to the Administrative Agent that it
specifically objects to the recommendation or determination of the
Administrative Agent (together with a written explanation providing in
reasonable detail the reasons behind such objection) within 10 Business Days (or
such other period as may be specifically required under the express terms of the
Loan Documents) of receipt of such communication, such Lender shall be deemed to
have conclusively approved of or consented to such recommendation or
determination.

Section 11.6.  Lender Credit Decision, Etc.

Each Lender expressly acknowledges and agrees that neither the Administrative
Agent nor any of its officers, directors, employees, agents, counsel,
attorneys-in-fact or other Affiliates has made any representations or warranties
to such Lender and that no act by the Administrative Agent hereafter taken,
including any review of the affairs of the Borrower, any other Loan Party or any
Subsidiary or Affiliate, shall be deemed to constitute any such representation
or warranty by the Administrative Agent to any Lender. Each Lender acknowledges
that it has made its own credit and legal analysis and decision to enter into
this Agreement and the transactions contemplated hereby, independently and
without reliance upon the Administrative Agent, any other Lender or counsel to
the Administrative Agent, or any of their respective officers, directors,
employees, agents or counsel, and based on the financial statements of the
Borrower, the other Loan Parties, the Subsidiaries and other Affiliates, and
inquiries of such Persons, its independent due diligence of the business and
affairs of the Borrower, the other Loan Parties, the Subsidiaries and other
Persons, its review of the Loan Documents, the legal opinions required to be
delivered to it hereunder, the advice of its own counsel and such other
documents and information as it has deemed appropriate. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Lender or counsel to the Administrative Agent or
any of their respective officers, directors, employees and agents, and based on
such review, advice, documents and information as it shall deem appropriate at
the time, continue to make its own decisions in taking or not taking action
under the Loan Documents. The Administrative Agent shall not be required to keep
itself informed as to the performance or observance by the Borrower or any other
Loan Party of the Loan Documents or any other document referred to or provided
for therein or to inspect the properties or books of, or make any other
investigation of, the Borrower, any other Loan Party or any Subsidiary. Except
for notices, reports and other documents and information expressly required to
be furnished to the Lenders by the Administrative Agent under this Agreement or
any of the other Loan Documents, the Administrative Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrower, any other Loan Party or any other Affiliate
thereof which may come into possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or other

 

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Affiliates. Each Lender acknowledges that the Administrative Agent’s legal
counsel in connection with the transactions contemplated by this Agreement is
only acting as counsel to the Administrative Agent and is not acting as counsel
to such Lender.

Section 11.7.  Indemnification of Agent.

Regardless of whether the transactions contemplated by this Agreement and the
other Loan Documents are consummated, each Lender agrees to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so) pro rata in accordance with
such Lender’s respective Credit Percentage, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against the Administrative
Agent (in its capacity as “Administrative Agent” but not as a “Lender”) in any
way relating to or arising out of the Loan Documents, any transaction
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under the Loan Documents (collectively, “Indemnifiable
Amounts”); provided, however, that no Lender shall be liable for any portion of
such Indemnifiable Amounts to the extent resulting from the Administrative
Agent’s gross negligence or willful misconduct as determined by a court of
competent jurisdiction in a final, non-appealable judgment provided, however,
that no action taken in accordance with the directions of the Requisite Lenders
(or all Lenders, if expressly required hereunder) shall be deemed to constitute
gross negligence or willful misconduct for purposes of this Section. Without
limiting the generality of the foregoing, each Lender agrees to reimburse the
Administrative Agent (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so) promptly upon demand for its
ratable share of any out-of-pocket expenses (including the reasonable fees and
expenses of the counsel to the Administrative Agent) incurred by the
Administrative Agent in connection with the preparation, negotiation, execution,
administration, or enforcement (whether through negotiations, legal proceedings,
or otherwise) of, or legal advice with respect to the rights or responsibilities
of the parties under, the Loan Documents, any suit or action brought by the
Administrative Agent to enforce the terms of the Loan Documents and/or collect
any Obligations, any “lender liability” suit or claim brought against the
Administrative Agent and/or the Lenders, and any claim or suit brought against
the Administrative Agent and/or the Lenders arising under any Environmental
Laws. Such out-of-pocket expenses (including counsel fees) shall be advanced by
the Lenders on the request of the Administrative Agent notwithstanding any claim
or assertion that the Administrative Agent is not entitled to indemnification
hereunder upon receipt of an undertaking by the Administrative Agent that the
Administrative Agent will reimburse the Lenders if it is actually and finally
determined by a court of competent jurisdiction that the Administrative Agent is
not so entitled to indemnification. The agreements in this Section shall survive
the payment of the Loans and all other amounts payable hereunder or under the
other Loan Documents and the termination of this Agreement. If the Borrower
shall reimburse the Administrative Agent for any Indemnifiable Amount following
payment by any Lender to the Administrative Agent in respect of such
Indemnifiable Amount pursuant to this Section, the Administrative Agent shall
share such reimbursement on a ratable basis with each Lender making any such
payment.

Section 11.8.  Successor Agent.

The Administrative Agent may resign at any time as Administrative Agent under
the Loan Documents by giving written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Requisite Lenders shall have the right
to appoint a successor Administrative Agent which appointment shall, provided no
Default or Event of Default exists, 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 any of its
Affiliates as a successor Administrative Agent). If no successor Administrative
Agent shall have been so appointed in accordance with the immediately

 

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preceding sentence, and shall have accepted such appointment, within 30 days
after the resigning Administrative Agent’s giving of notice of resignation, then
the resigning Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent, which shall be a Lender, if any Lender shall be
willing to serve, and otherwise shall be an Eligible Assignee. The current
Administrative Agent shall continue to act as Administrative Agent hereunder
until the earlier of (a) 30 days after the then current Administrative Agent’s
resignation of the Administrative Agent or (b) the date on which a successor
Administrative Agent is appointed by the Requisite Lenders. Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the current Administrative Agent, and the current Administrative Agent shall
be discharged from its duties and obligations under the Loan Documents. After
any Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of this Article XII. shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under the Loan Documents. Notwithstanding anything contained herein to the
contrary, the Administrative Agent may assign its rights and duties under the
Loan Documents to any of its Affiliates by giving the Borrower and each Lender
prior written notice.

Section 11.9.  Titled Agents.

The Joint Lead Arrangers and the Joint Bookrunners (each a “Titled Agent”) in
each such respective capacity, assume no responsibility or obligation hereunder,
including, without limitation, for servicing, enforcement or collection of any
of the Loans, nor any duties as an agent hereunder for the Lenders. The titles
given to the Titled Agents are solely honorific and imply no fiduciary
responsibility on the part of the Titled Agents to the Administrative Agent, any
Lender, the Borrower or any other Loan Party and the use of such titles does not
impose on the Titled Agents any duties or obligations greater than those of any
other Lender or entitle the Titled Agents to any rights other than those to
which any other Lender is entitled.

ARTICLE XII. MISCELLANEOUS

Section 12.1.  Notices.

Unless otherwise provided herein, communications provided for hereunder shall be
in writing and shall be mailed, telecopied or delivered as follows:

If to the Borrower:

 

Tau Operating Partnership, L.P. c/o Realty Income Corporation 600 La Terraza
Blvd. Escondido, California 92025 Attention:  General Counsel Telecopy Number:
       (760) 741-2235 Telephone Number:        (760) 741-2111

 

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If to the Administrative Agent:

 

Wells Fargo Bank, National Association 608 Second Avenue South, 11th Floor
Minneapolis, MN 55402 Attn:  Mark Nardi, Loan No. 1008764 Telecopier:     (612)
667-5381 Telephone:     (612) 316-0114

with a copy to:

 

Wells Fargo Bank, National Association 401 B Street, Suite 1100 San Diego,
California 92101 Attn:  Dale Northup Telecopier:     (619) 699-3105 Telephone:
    (619) 699-3025

If to any Lender:

To such Lender’s address or telecopy number as set forth in the applicable
Administrative Questionnaire

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; provided, a Lender shall only be required to give notice of any such
other address to the Administrative Agent and the Borrower. All such notices and
other communications shall be effective (i) if mailed, upon the first to occur
of receipt or the expiration of three (3) days after the deposit in the United
States Postal Service mail, postage prepaid and addressed to the address of the
Borrower or the Administrative Agent and/or Lenders, as applicable, at the
addresses specified; (ii) if telecopied, when transmitted; (iii) if hand
delivered or sent by overnight courier, when delivered; or (iv) if delivered in
accordance with Section 8.3., as described therein; provided, however, that, in
the case of the immediately preceding clauses (i), (ii) and (iii), non-receipt
of any communication as of the result of any change of address of which the
sending party was not notified or as the result of a refusal to accept delivery
shall be deemed receipt of such communication. Notwithstanding the immediately
preceding sentence, all notices or communications to the Administrative Agent or
any Lender under Article II. shall be effective only when actually received.
None of the Administrative Agent or any Lender shall incur any liability to any
Loan Party (nor shall the Administrative Agent incur any liability to the
Lenders) for acting upon any telephonic notice referred to in this Agreement
which the Administrative 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. Failure of a Person designated to
get a copy of a notice to receive such copy shall not affect the validity of
notice properly given to another Person.

Section 12.2.  Expenses.

The Borrower agrees (a) to pay or reimburse the Administrative Agent for all of
its reasonable out-of-pocket costs and reasonable expenses incurred in
connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, any of the Loan Documents (including
due diligence expense and reasonable travel expenses related to closing), and
the consummation of the transactions contemplated hereby and thereby, including
the reasonable fees and disbursements of counsel to the Administrative Agent and
all costs and expenses of the Administrative Agent in connection with

 

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the use of IntraLinks or other similar information transmission systems in
connection with the Loan Documents and the reasonable fees and disbursements of
counsel to the Administrative Agent relating to all such activities, (b) to pay
or reimburse the Administrative 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, limited in the case of counsel to the
reasonable fees and disbursements of one firm of counsel (including the
allocated fees and expenses of in-house counsel) to the Administrative Agent and
the Lenders and, if necessary, one firm of local counsel in each appropriate
jurisdiction (and, in the case of an actual or perceived conflict of interest
among the Administrative Agent and the Lenders, one additional counsel in each
relevant jurisdiction to each group of affected parties similarly situated) and
any payments in indemnification or otherwise payable by the Lenders to the
Administrative Agent pursuant to the Loan Documents, (c) to pay, and indemnify
and hold harmless the Administrative 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, documentary, stamp, excise
and other similar taxes, if any, which may be payable or determined to be
payable in connection with the execution 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 and (d) to the
extent not already covered by any of the preceding subsections, to pay or
reimburse the fees and disbursements of counsel (subject to the limitations set
forth in clause (b) above) to the Administrative Agent and any Lender incurred
in connection with the representation of the Administrative Agent or such Lender
in any matter relating to or arising out of any bankruptcy or other proceeding
of the type described in Sections 10.1.(e) or 10.1.(f) including, without
limitation (i) any motion for relief from any stay or similar order, (ii) the
negotiation, preparation, execution and delivery of any document relating to the
Obligations and (iii) the negotiation and preparation of any
debtor-in-possession financing or any plan of reorganization of the Borrower or
any other Loan Party, whether proposed by the Borrower, such Loan Party, the
Lenders or any other Person, and 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
Administrative Agent and/or the Lenders may pay such amounts on behalf of the
Borrower and such amounts shall be deemed to be Obligations owing hereunder.

Section 12.3.  Stamp, Intangible and Recording Taxes.

The Borrower will pay any and all stamp, excise, intangible, registration,
recordation and similar taxes, fees or charges and shall indemnify the
Administrative Agent and each Lender against any and all liabilities with
respect to or resulting from any delay in the payment or omission to pay any
such taxes, fees or charges, which may be payable or determined to be payable in
connection with the execution, delivery, recording, performance or enforcement
of this Agreement, the Notes and any of the other Loan Documents, the amendment,
supplement, modification or waiver of or consent under this Agreement, the Notes
or any of the other Loan Documents or the perfection of any rights or Liens
under this Agreement, the Notes or any of the other Loan Documents.

Section 12.4.  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
Borrower hereby authorizes the Administrative Agent, each Lender, each Affiliate
of the Administrative Agent or any Lender, and each Participant, at any time or
from time to time while an Event of Default exists, without notice to the
Borrower or to any other Person, any such notice being hereby expressly waived,
but in the case of a Lender, an Affiliate of a Lender, or a Participant, subject
to receipt of the prior written consent of the Requisite Lenders exercised in
their 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

 

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unmatured) and any other indebtedness at any time held or owing by the
Administrative Agent, such Lender, any Affiliate of the Administrative Agent or
such Lender, or such Participant, to or for the credit or the account of the
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.
Notwithstanding anything to the contrary in this Section, if any Defaulting
Lender shall exercise any such right of setoff, (x) all amounts so set off shall
be paid over immediately to the Administrative Agent for further application in
accordance with the provisions of Section 3.10. and, pending such payment, shall
be segregated by such Defaulting Lender from its other funds and deemed held in
trust for the benefit of the Administrative Agent and the Lenders and (y) the
Defaulting Lender shall provide promptly to the Administrative Agent a statement
describing in reasonable detail the Obligations owing to such Defaulting Lender
as to which it exercised such right of setoff.

Section 12.5.  Litigation; Jurisdiction; Other Matters; Waivers.

(a)       EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN
OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS WOULD BE
BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY
AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE LENDERS, THE ADMINISTRATIVE 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, ANY OTHER
LOAN DOCUMENT OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE
WHATSOEVER BETWEEN OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE
LENDERS OF ANY KIND OR NATURE RELATING TO ANY OF THE LOAN DOCUMENTS.

(b)       EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY
AGREES THAT THE FEDERAL DISTRICT COURT OF THE NORTHERN DISTRICT OF CALIFORNIA OR
ANY STATE COURT LOCATED IN SAN FRANCISCO, CALIFORNIA, SHALL HAVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE BORROWER, THE
ADMINISTRATIVE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO
THIS AGREEMENT, THE LOANS, THE NOTES, ANY OTHER LOAN DOCUMENT OR TO ANY MATTER
ARISING HEREFROM OR THEREFROM. THE BORROWER, EACH OF THE LENDERS EXPRESSLY
SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS. THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AT ITS ADDRESS
FOR NOTICES PROVIDED FOR HEREIN. SHOULD THE BORROWER FAIL TO APPEAR OR ANSWER
ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY DAYS AFTER THE
MAILING THEREOF, THE BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR
JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS,
COMPLAINT, PROCESS OR PAPERS. EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
FORUM AND EACH AGREES NOT TO

 

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PLEAD OR CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT
BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE ADMINISTRATIVE AGENT OR
ANY LENDER OR THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT OR ANY LENDER OF ANY
JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.

(c)        THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY
WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL
CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER
AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS AND THE TERMINATION
OF THIS AGREEMENT.

(d)        If, in any action or proceeding filed in a court of the State of
California by or against any party hereto in connection with any of the
transactions contemplated by this Agreement or any other Loan Document, the
waiver of jury trial set forth in Section 12.5.(a) is unenforceable, (i) the
court must, and is hereby directed to, make a general reference pursuant to
California Code of Civil Procedure Section 638 to a referee (who must be a
single active or retired judge) to hear and determine all of the issues in such
action or proceeding (whether of fact or of law) and to report a statement of
decision, provided that, at the option of any party to such proceeding, any such
issues pertaining to a “provisional remedy” as defined in California Code of
Civil Procedure Section 1281.8 may be heard and determined by the court, and
(ii) without limiting the generality of Section 12.2., the Borrower will be
solely responsible to pay all fees and expenses of any referee appointed in such
action or proceeding.

Section 12.6.  Successors and Assigns.

(a)        Successors and Assigns Generally.  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that neither the
Borrower nor any other Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder or under any other Loan Document without the
prior written consent of the Administrative Agent and each Lender, and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder
except (i) to an Eligible Assignee in accordance with the provisions of the
immediately following subsection (b), (ii) by way of participation in accordance
with the provisions of the immediately following subsection (d) or (iii) by way
of pledge or assignment of a security interest, subject to the restrictions of
the immediately following subsection (f) (and subject to the last sentence of
the immediately following subsection (b), any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in the immediately following subsection (d)
and, to the extent expressly contemplated hereby, the Related Parties of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

(b)        Assignments by Lenders.  Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided that any such assignment shall be subject to the
following conditions:

(i)         Minimum Amounts.

(A)      in the case of an assignment of the entire remaining amount of an
assigning Lender’s Commitment and the Loans at the time owing to it, or in the
case of

 

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an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and

(B)      in any case not described in the immediately preceding subsection (A),
the aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loans of the assigning Lender, subject
to each such assignment (in each case, determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $10,000,000, unless
each of the Administrative Agent and, so long as no Default or Event of Default
shall exist, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that if, after giving
effect to such assignment, the amount of the Commitment held by such assigning
Lender or the outstanding principal balance of the Loans of such assigning
Lender, as applicable, would be less than $10,000,000, then such assigning
Lender shall assign the entire amount of its Commitment and the Loans at the
time owing to it.

(ii)        Proportionate Amounts.  Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned.

(iii)       Required Consents.  No consent shall be required for any assignment
except to the extent required by clause (i)(B) of this subsection and, in
addition:

(A)      the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) a Default or Event of Default
shall exist at the time of such assignment or (y) such assignment is to a
Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower
shall be deemed to have consented to any such assignment unless it shall object
thereto by written notice to the Administrative Agent within 5 Business Days
after having received notice thereof; and

(B)      the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments in respect
of a Commitment if such assignment is to a Person that is not already a Lender
with a Commitment, an Affiliate of such a Lender or an Approved Fund with
respect to such a Lender.

(iv)        Assignment and Acceptance; Notes.    The parties to each assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $4,500 for each
assignment, and the assignee, if it is not a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Unless the transferor
Lender or the assignee Lender requests otherwise, upon the consummation of any
assignment, the transferor Lender, the Administrative Agent and the Borrower
shall make appropriate arrangements so that new Notes are issued to the assignee
Lender and such transferor Lender, as appropriate.

(v)         No Assignment to Certain Persons.  No such assignment shall be made
to (A) the Borrower or any of the Borrower’s Affiliates or Subsidiaries or
(B) to any Defaulting Lender or any of its Subsidiaries, or to any Person who,
upon becoming a Lender hereunder, would constitute any of the foregoing Persons
described in this clause (B).

 

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(vi)         No Assignment to Natural Persons.   No such assignment shall be
made to a natural person.

(vii)        Certain Additional Payments.  In connection with any assignment of
rights and obligations of any Defaulting Lender hereunder, no such assignment
shall be effective unless and until, in addition to the other conditions thereto
set forth herein, the parties to the assignment shall make such additional
payments to the Administrative Agent in an aggregate amount sufficient, upon
distribution thereof as appropriate (which may be outright payment, purchases by
the assignee of participations or subparticipations, or other compensating
actions, including funding, with the consent of the Borrower and the
Administrative Agent, the applicable pro rata share of Loans previously
requested but not funded by the Defaulting Lender, to each of which the
applicable assignee and assignor hereby irrevocably consent), to (x) pay and
satisfy in full all payment liabilities then owed by such Defaulting Lender to
the Administrative Agent and each other Lender hereunder (and interest accrued
thereon), and (y) acquire (and fund as appropriate) its full pro rata share of
all Loans in accordance with its Credit Percentage. Notwithstanding the
foregoing, in the event that any assignment of rights and obligations of any
Defaulting Lender hereunder shall become effective under Applicable Law without
compliance with the provisions of this paragraph, then the assignee of such
interest shall be deemed to be a Defaulting Lender for all purposes of this
Agreement until such compliance occurs.

(viii)       Assignments by Specified Derivatives Provider.  If the assigning
Lender (or its Affiliate) is a Specified Derivatives Provider and if after
giving effect to such assignment such Lender will hold no further Loans or
Commitments under this Agreement, such Lender shall undertake such assignment
only contemporaneously with an assignment by such Lender (or its Affiliate, as
the case may be) of all of its Specified Derivatives Contracts to the Assignee
or another Lender (or Affiliate thereof).

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to the immediately following subsection (c), from and after the effective date
specified in each Assignment and Acceptance, the assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.11., 4.1., 4.4., 12.2. and 12.10.
and the other provisions of this Agreement and the other Loan Documents as
provided in Section 12.11. with respect to facts and circumstances occurring
prior to the effective date of such assignment. Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with the
immediately following subsection (d).

(c)         Register.  The Administrative Agent, acting solely for this purpose
as an agent of the Borrower, shall maintain at the Principal Office a copy of
each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be
conclusive absent manifest error, and the Borrower, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding

 

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notice to the contrary. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

(d)       Participations.  Any Lender may at any time, without the consent of,
or notice to, the Borrower or the Administrative Agent, sell participations to
any Person (other than a natural person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative Agent
and the Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver of any provision of any Loan Document that
(i) increases such Lender’s Commitment if such Participant is directly and
adversely affected thereby, (ii) extends the date fixed for the payment of
principal on the Loans or portions thereof owing to such Lender, or
(iii) reduces the rate at which interest is payable thereon. Subject to the
immediately following subsection (e), the Borrower agrees that each Participant
shall be entitled to the benefits of Sections 3.11., 4.1. and 4.4. to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. To the extent permitted by Applicable
Law, each Participant also shall be entitled to the benefits of Section 12.4. as
though it were a Lender, provided such Participant agrees to be subject to
Section 3.3. as though it were a Lender. Each Lender that sells a participation
shall, acting solely for this purpose as a non-fiduciary agent of the Borrower,
maintain a register on which it enters the name and address of each Participant
and the principal amounts (and stated interest) of each Participant’s interest
in the Loans or other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any loans
or its other obligations under any Loan Document) to any Person except to the
extent that such disclosure is necessary to establish that such commitment, loan
or other obligation is in registered form under Section 5f.103-1(c) of the
United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary. For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.

(e)       Limitations upon Participant Rights.  A Participant shall not be
entitled to receive any greater payment under Sections 3.11. and 4.1. than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent and the
Borrower has expressly agreed to make any such greater payment. A Participant
shall not be entitled to the benefits of Section 3.11. unless the Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower and the Administrative Agent, to comply
with Section 3.11.(c) as though it were a Lender.

(f)        Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

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(g)         No Registration.  Each Lender agrees that, without the prior written
consent of the Borrower and the Administrative 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 12.7.  Amendments and Waivers.

(a)         Generally.  Except as otherwise expressly provided in this
Agreement, (i) any consent or approval required or permitted by this Agreement
or any other Loan Document to be given by the Lenders may be given, (ii) any
term of this Agreement or of any other Loan Document may be amended, (iii) the
performance or observance by the Borrower, any other Loan Party or any
Subsidiary of any terms of this Agreement or such other Loan Document may be
waived, and (iv) 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
(or the Administrative Agent at the written direction of the Requisite Lenders),
and, in the case of an amendment to any Loan Document, the written consent of
each Loan Party which is party thereto. Notwithstanding the previous sentence,
the Administrative Agent shall be authorized on behalf of all Lenders, without
the necessity of any notice to, or further consent from, any Lender, to waive
the imposition of the late fees provided in Section 2.6. up to a maximum of 3
times per year.

(b)         Consent of Lenders Directly Affected.  In addition to the foregoing
requirements, no amendment, waiver or consent shall, unless in writing, and
signed by each of the Lenders directly and adversely affected thereby (or the
Administrative Agent at the written direction of such Lenders), do any of the
following:

(i)         reduce the principal of, or interest that has accrued or the rates
of interest that will be charged on the outstanding principal amount of, any
Loans or other Obligations;

(ii)        reduce the amount of any Fees payable to the Lenders hereunder;

(iii)       modify the definition of “Termination Date”, or otherwise postpone
any date fixed for any payment of principal of, or interest on, any Loans or for
the payment of Fees or any other Obligations;

(iv)       modify the definition of “Credit Percentage” or amend or otherwise
modify the provisions of Section 3.2.;

(v)        amend this Section 12.7. or amend any of the other definitions of the
terms used in this Agreement or the other Loan Documents insofar as such
definitions affect the substance of this Section 12.7.;

(vi)       modify the definition of the term “Requisite Lenders” or modify in
any other manner the number or percentage of the Lenders required to make any
determinations or waive any rights hereunder or to modify any provision hereof;

(vii)      release any Guarantor from its obligations under the Guaranty; or

(viii)     waive a Default or Event of Default under Section 10.1.(a) except as
otherwise contemplated by Section 10.2.(f).

 

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(c)       Amendment of Administrative Agent’s Duties, Etc.  No amendment, waiver
or consent unless in writing and signed by the Administrative Agent, in addition
to the Lenders required hereinabove to take such action, shall affect the rights
or duties of the Administrative Agent under this Agreement or any of the other
Loan Documents. 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 Administrative Agent or any Lender in exercising any right shall operate
as a waiver thereof or otherwise be prejudicial thereto. Any Event of Default
occurring hereunder shall continue to exist until such time as such Event of
Default is waived in writing in accordance with the terms of this Section,
notwithstanding any attempted cure or other action by the Borrower, any other
Loan Party or any other Person subsequent to the occurrence of such Event of
Default. 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
other or further notice or demand in similar or other circumstances.

(d)       Amendments Relating to Change of Control.  If a Lender did not
affirmatively approve any amendment, modification or waiver of the provisions of
Section 10.1.(l) (including any Default or Event of Default resulting under such
Section) that has become effective, the Borrower (i) may cause such Lender to
assign (and such Lender shall assign) all of its rights, title and interest in
its Loans and Commitment to an Eligible Assignee subject to and in accordance
with the provisions of Section 12.6. or (ii) if the Borrower does not cause such
an assignment, the Borrower, upon demand of such Lender, shall pay to such
Lender the aggregate outstanding principal balance of the Loans then owing to
such Lender, plus any accrued but unpaid interest and accrued but unpaid fees
owing to such Lender, or such other amount as may be mutually agreed upon by
such Lender and Eligible Assignee, whereupon such Lender shall no longer be a
party hereto or have any rights or obligations hereunder or under any of the
other Loan Documents (but shall continue to be entitled to the benefits of
Sections 3.11., 4.1., 4.4., 12.2. and 12.10. and the other provisions of this
Agreement and the other Loan Documents as provided in Section 12.11. with
respect to facts and circumstances occurring prior to the effective date of such
payment). 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
Administrative Agent or any Lender.

Section 12.8.  Nonliability of Administrative Agent and Lenders.

The relationship between the Borrower, on the one hand, and the Lenders and the
Administrative Agent, on the other hand, shall be solely that of borrower and
lender. None of the Administrative Agent or 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
Administrative Agent or any Lender to any Lender, the Borrower, any Subsidiary
or any other Loan Party. None of the Administrative Agent or 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 12.9.  Confidentiality.

Except as otherwise provided by Applicable Law, the Administrative Agent and
each Lender shall maintain the confidentiality of all Information (as defined
below) in accordance with its customary procedure for handling confidential
information of this nature and in accordance with safe and sound banking
practices but in any event may make disclosure: (a) to its Affiliates and to its
and its Affiliates’ respective partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential, and if such
Persons do not

 

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otherwise have a duty to maintain the confidentiality of such information, such
Persons shall agree to maintain the confidentiality of such information as
required herein); (b) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any actual or proposed
assignee, Participant or other transferee in connection with a potential
transfer of any Loan or participation therein as permitted hereunder, or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations; (c) as
required or requested by any Governmental Authority or representative thereof or
pursuant to legal process or in connection with any legal proceedings, or as
otherwise required by Applicable Law; (d) to the Administrative 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) in
connection with the exercise of any remedies under any Loan Document (or any
Specified Derivatives Contract) or any action or proceeding relating to any Loan
Document (or any such Specified Derivatives Contract) or the enforcement of
rights hereunder or thereunder; (f) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section actually
known by the Administrative Agent or such Lender to be a breach of this Section
or (ii) becomes available to the Administrative Agent, any Lender or any
Affiliate of the Administrative Agent or any Lender on a nonconfidential basis
from a source other than the Borrower or any Affiliate of the Borrower; (g) to
the extent requested by, or required to be disclosed to, any nationally
recognized rating agency or regulatory or similar authority (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners) having or purporting to have jurisdiction over it; (h) to bank
trade publications, such information to consist of deal terms and other
information customarily found in such publications; (i) to any other party
hereto; and (j) with the consent of the Borrower or, with respect to any
Information regarding ARC Real Estate Partners, LLC, with the consent of ARC
Real Estate Partners, LLC. Notwithstanding the foregoing, the Administrative
Agent and each Lender may disclose any such confidential information, without
notice to the Borrower or any other Loan Party, to Governmental Authorities in
connection with any regulatory examination of the Administrative Agent or such
Lender or in accordance with the regulatory compliance policy of the
Administrative Agent or such Lender. As used in this Section, the term
“Information” means all information received from the Borrower, any other Loan
Party, any Subsidiary or Affiliate relating to any Loan Party or any of their
respective businesses, other than any such information that is available to, or
in the possession of, the Administrative Agent, any Lender on a nonconfidential
basis prior to disclosure by the Borrower, any other Loan Party, any Subsidiary
or any Affiliate, provided that, in the case of any such information received
from the Borrower, any other Loan Party, any Subsidiary or any Affiliate after
the date hereof, such information is clearly identified at the time of delivery
as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.

Section 12.10.  Indemnification.

(a)       The Borrower shall and hereby agrees to indemnify, defend and hold
harmless the Administrative Agent, the Lenders (other than, in each case, a
Defaulting Lender), all of the Affiliates of each of the Administrative Agent or
any of the Lenders (other than, in each case, a Defaulting Lender), and their
respective directors, officers, shareholders, agents, employees and counsel
(each referred to herein as an “Indemnified Party”) from and against any and all
of the following (collectively, the “Indemnified Costs”): losses, costs, claims,
penalties, damages, liabilities, deficiencies, judgments or expenses of every
kind and nature (including, without limitation, amounts paid in settlement and
court costs but in the case of legal counsel, limited to the reasonable fees and
disbursements of one firm of counsel (including the allocated fees and expenses
of in-house counsel) to the Administrative Agent and the Lenders and, if
necessary, one firm of local counsel in each appropriate jurisdiction (and, in
the case of an actual or perceived conflict of interest among the Administrative
Agent and the Lenders, one

 

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additional counsel in each relevant jurisdiction to each group of affected
parties similarly situated) incurred in connection with any litigation,
investigation, claim or proceeding or any advice rendered in connection
therewith, but excluding Indemnified Costs indemnification in respect of which
is specifically covered by Section 3.11. 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 hereunder;
(iii) any actual or proposed use by the Borrower of the proceeds of the Loans;
(iv) the Administrative Agent’s or any Lender’s entering into this Agreement;
(v) the fact that the Administrative Agent and the Lenders have established the
credit facility evidenced hereby in favor of the Borrower; (vi) the fact that
the Administrative 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 and the Subsidiaries; (vii) the
fact that the Administrative 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 and the Subsidiaries or their financial
condition; (viii) the exercise of any right or remedy the Administrative Agent
or the Lenders may have under this Agreement or the other Loan Documents;
(ix) any civil penalty or fine assessed by the OFAC against, and all costs and
expenses (including reasonable counsel fees and disbursements) incurred in
connection with defense thereof by, the Administrative Agent or any Lender as a
result of conduct of the Borrower, any other Loan Party or any Subsidiary that
violates a sanction administered or enforced by the OFAC; or (x) any violation
or non-compliance by the Borrower or any Subsidiary 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 or its Subsidiaries (or its respective properties) (or the
Administrative Agent and/or the Lenders as successors to the Borrower) 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 in connection with matters described in this
subsection to the extent arising from the gross negligence or willful misconduct
of such Indemnified Party, as determined by a court of competent jurisdiction in
a final, non-appealable judgment.

(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 Indemnified
Costs 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 or any Subsidiary, any shareholder of the Borrower or any Subsidiary
(whether such shareholder(s) are prosecuting such Indemnity Proceeding in their
individual capacity or derivatively on behalf of the Borrower), any account
debtor of the Borrower or any Subsidiary 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 the
Borrower and/or any Subsidiary.

(d)       All out-of-pocket fees and expenses of, and all amounts paid to
third-persons by, an Indemnified Party 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

 

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Indemnified Party will reimburse the Borrower if it is actually and finally
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 Indemnity Proceeding
covered by this Section and, as provided above, all Indemnified Costs 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 Indemnity 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; provided, however, that if (i) the Borrower is
required to indemnify an Indemnified Party pursuant hereto and (ii) the Borrower
has provided evidence reasonably satisfactory to such Indemnified Party that the
Borrower has the financial wherewithal to reimburse such Indemnified Party for
any amount paid by such Indemnified Party with respect to such Indemnity
Proceeding, such Indemnified Party shall not settle or compromise any such
Indemnity Proceeding without the prior written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed). Notwithstanding the
foregoing, with respect to claims against an Indemnified Party, an Indemnified
Party may settle or compromise any such Indemnity Proceeding without the prior
written consent of the Borrower where (x) no monetary relief is sought against
such Indemnified Party in such Indemnity Proceeding or (y) there is an
allegation of a violation of law by such Indemnified Party.

(f)        If and to the extent that the obligations of the Borrower under this
Section 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 under this Section 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 of the other obligations set forth in this Agreement or any other Loan
Document to which it is a party.

References in this Section to “Lender” or “Lenders” shall be deemed to include
such Persons (and their Affiliates) in their capacity as Specified Derivatives
Providers.

Section 12.11.  Termination; Survival.

This Agreement shall terminate at such time as all Obligations (other than
obligations which survive as provided in the following sentence) have been paid
and satisfied in full. The indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of Sections 3.11., 4.1., 4.4., 11.7.,
12.2. and 12.10. and any other provision of this Agreement and the other Loan
Documents, and the provisions of Section 12.5., shall continue in full force and
effect and shall protect the Administrative Agent and the Lenders
(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 12.12.  Severability of Provisions.

If any provision of this Agreement or the other Loan Documents shall be
determined by a court of competent jurisdiction to be invalid or unenforceable,
that provision shall be deemed severed from the Loan Documents, and the
validity, legality and enforceability of the remaining provisions shall remain
in full force as though the invalid, illegal, or unenforceable provision had
never been part of the Loan Documents.

 

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Section 12.13.  GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.

Section 12.14.  Counterparts.

To facilitate execution, this Agreement and any amendments, waivers, consents or
supplements may be executed in any number of counterparts as may be convenient
or required. It shall not be necessary that the signature of, or on behalf of,
each party, or that the signature of all persons required to bind any party,
appear on each counterpart. All counterparts shall collectively constitute a
single document. It shall not be necessary in making proof of this document to
produce or account for more than a single counterpart containing the respective
signatures of, or on behalf of, each of the parties hereto.

Section 12.15.  Obligations with Respect to Loan Parties.

The obligations of the Borrower to direct or prohibit the taking of certain
actions by the other Loan Parties as specified herein shall be absolute and not
subject to any defense the Borrower may have that the Borrower does not control
such Loan Parties.

Section 12.16.  Independence of Covenants.

All covenants hereunder shall be given in any jurisdiction independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.

Section 12.17.  Limitation of Liability.

None of the Administrative Agent or any Lender, or any Affiliate, officer,
director, employee, attorney, or agent of the Administrative 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, 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 Administrative Agent or any
Lender or any of the Administrative Agent’s or any Lender’s Affiliates,
officers, directors, employees, attorneys, or agents for punitive damages in
respect of any claim in connection with, arising out of, or in any way related
to, this Agreement, any of the other Loan Documents or any of the transactions
contemplated by this Agreement or financed hereby.

Section 12.18.  Entire Agreement.

This Agreement, the Notes, the other Loan Documents 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.

 

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Section 12.19.  Construction.

The Administrative 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 Administrative Agent, the
Borrower and each Lender.

 

 

[Signatures on Following Pages]

 

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

 

  

BORROWER:

  

TAU OPERATING PARTNERSHIP, L.P.

      By: Tau Acquisition LLC, its general partner

        By: Realty Income Corporation, its sole member

            By:          

       

      Name:

       

       

      Title:

       

 

 

 

 

[Signatures Continued on Next Page]

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[Signature Page to Term Loan Agreement of Tau Operating Partnership, L.P.]

 

  WELLS FARGO BANK, NATIONAL ASSOCIATION, as       Administrative Agent and as a
Lender  

By:

  

 

  

 

Name:

  

 

  

 

Title:

  

 

  

 

 

 

 

 

[Signatures Continued on Next Page]

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[Signature Page to Term Loan Agreement of Tau Operating Partnership, L.P.]

 

 

BANK OF AMERICA, N.A.

 

By:

 

 

 

   

   Name:

 

 

 

   

   Title:

 

 

 

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

SCHEDULE I

Commitments

 

Lender

  Commitment Amount

Wells Fargo Bank, National Association

  $35,000,000

Bank of America, N.A.

  $35,000,000

TOTAL

  $70,000,000