**Exhibit 10.3****SECOND AMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS**THIS SECOND AMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS (this “Amendment”) is made as of the6th day of July, 2005, by and among GLADSTONE COMMERCIAL CORPORATION and GLADSTONE COMMERCIALLIMITED PARTNERSHIP, as Borrowers (together, the “Borrowers”), the GUARANTORS signatory hereto, asguarantors (collectively, the “Guarantors”), and BRANCH BANKING AND TRUST COMPANY, asAdministrative Agent (the “Administrative Agent”) and a Bank, FIRST HORIZON BANK, as a Bank, andCOMPASS BANK, as a Bank (collectively, the “Banks”).RECITALS:          The Borrowers, the Guarantors, the Administrative Agent and the Banks have entered into acertain Credit Agreement dated as of February 28, 2005, as amended by the First Amendment to CreditAgreement and Waiver dated as of April 21, 2005 (as so amended, the “Credit Agreement”).Capitalized terms used in this Amendment which are not otherwise defined in this Amendment shallhave the respective meanings assigned to them in the Credit Agreement.          The Borrowers have requested the Administrative Agent and the Banks to further amend theCredit Agreement, the Notes and the Loan Documents to modify certain provisions thereof (i) toexercise the “accordion” to increase the aggregate Commitments from $50,000,000 to $60,000,000,(ii) to consolidate certain of the Loan Documents deliverable in connection with the addition ofnew Collateral and the joinder of new Guarantors to simplify document deliveries for new Collateralclosings and (iii) to permit Mortgages and related local counsel opinions for new Collateral to bedelivered up to 45 days following the closing with respect to the new Collateral and the increaseof the Borrowing Base related thereto (subject to a 20% Borrowing Base sublimit on such undeliveredmortgages and opinions), all as more fully set forth herein. The Administrative Agent, the Banks,the Borrowers and the Guarantors desire to amend the Credit Agreement, the Notes and certain otherLoan Documents upon the terms and conditions hereinafter set forth.          NOW, THEREFORE, in consideration of the Recitals and the mutual promises contained herein andfor other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the Borrowers, the Guarantors, the Administrative Agent and the Banks, intending tobe legally bound hereby, agree as follows:     SECTION 1. Recitals. The Recitals are incorporated herein by reference and shall bedeemed to be a part of this Amendment.     SECTION 2. Increase in Commitments; New Notes. Pursuant to Section 2.01(b) of theCredit Agreement, the total Commitments are hereby increased from $50,000,000 to $60,000,000. Thenew Commitment of each Bank shall be as set forth opposite the name of such Bank on the signaturepages hereof and the Borrowers shall execute and deliver new Notes identical to the existing Notesbut reflecting such increased Commitments and the Banks shall return the existing Notes to theCompany for cancellation.
 

 
     SECTION 3. Amendments. The Credit Agreement is hereby amended as set forth inthis Section 3.     SECTION 3.01. Addition to Section 1.01. Section 1.01 of the Credit Agreement isamended by:     (a) adding the following new definition of “Addition of New Collateral Agreement”:     “Addition of New Collateral Agreement” means one or more Addition of New CollateralAgreements in substantially the form of Exhibit S hereto executed and delivered by the LoanParties pursuant to Section 2.14(b) and 5.25 hereof.     (b) amending and restating the definitions of “Borrowing Base”, “Borrowing Base Asset”,“Borrowing Base Certification Report”, “Borrowing Base Value”, “Collateral Documents” and“Membership Pledge Agreement” to read in their entirety as follows:     “Borrowing Base” shall mean, based on the most recent Borrowing Base CertificationReport which as of the date of a determination of the Borrowing Base has been received bythe Administrative Agent, an amount equal to 65% of the sum of the Borrowing Base Values ofthe Borrowing Base Assets as determined and adjusted from time to time in accordance withSection 2.14; provided that: (1) to the extent (x) the sum of the Borrowing Base Values forall Mortgaged Properties included in the Borrowing Base as Borrowing Base Assets for whichMortgages or local counsel opinions have not yet been received by the Administrative Agentpursuant to the last sentence of Section 2.14(d) exceeds (y) 20% of the sum of the BorrowingBase Values of all Borrowing Base Assets (as (y) is determined after giving effect to the$19,230,000 limit on Mortgaged Properties contained in the definition of Borrowing BaseValue but before giving effect to the 15% limit on Mortgage Receivables in clause (2)immediately below), such excess of (x) over (y) shall be excluded from the Borrowing Baseand (2) to the extent that (x) the sum of the Borrowing Base Values of all Pledged MortgageReceivables exceeds (y) 15% of the sum of the Borrowing Base Value of all Borrowing BaseAssets, such excess of (x) over (y) shall be excluded from the Borrowing Base. TheAdministrative Agent shall also be entitled to hold and subtract any reserve against theBorrowing Base it deems reasonably necessary as security for payment of the Notes and theobligations of the Guarantors under Article X of this Agreement and the obligations of theBorrowers under the Letter of Credit Agreements.     “Borrowing Base Asset” means (i) a Mortgaged Property which is also an EligibleProperty or (ii) a Pledged Mortgage Receivable which is also an Eligible MortgageReceivable, in each case which is included in the Borrowing Base pursuant to Section 2.14.A Property, the value of which was previously included in the Borrowing Base calculation asa Borrowing Base Asset, shall cease to be a Borrowing Base Asset and shall be excluded fromsuch Borrowing Base calculation if at any time such Property shall cease to meet all therequirements of an Eligible Property contained in the definition thereof (including withoutlimitation time limits for inclusion as an Eligible Property) or
 

 
shall cease to be a Mortgaged Property or, if such Mortgaged Property is subject to the45 day extension for receipt of Mortgages and local counsel opinions post-closing asprovided in the last sentence of Section 2.14(d), then if either a Mortgage or local counselopinion, in each case satisfactory to the Administrative Agent, shall fail to be deliveredto the Administrative Agent during such 45 day period. A Mortgage Receivable, the value ofwhich was previously included in the Borrowing Base calculation as a Borrowing Base Asset,shall cease to be a Borrowing Base Asset if at any time such Mortgage Receivable shall ceaseto meet all the requirements of an Eligible Mortgage Receivable contained in the definitionthereof (including without limitation time limits for inclusion as an Eligible MortgageReceivable) or shall cease to be a Pledged Mortgage Receivable.     “Borrowing Base Certification Report” means a report in substantially the form attachedhereto as Exhibit N, and otherwise satisfactory to the Administrative Agent (or, if theBorrowers so elect and the Administrative Agent so agrees, an Excel or similar spreadsheetto substantially the same effect as Exhibit N), certified by the chief financial officer orother authorized officer of the Borrowers setting forth the calculations required toestablish the Borrowing Base Value for each Borrowing Base Asset and the Borrowing BaseValue for all Borrowing Base Assets as of a specified date, and, whether in Exhibit N orspreadsheet form, in form and detail satisfactory to the Administrative Agent.     “Borrowing Base Value” means, with respect to a Borrowing Base Asset for any date ofdetermination, an amount equal to: (A) in the case of Mortgaged Properties the least of (a)the Acquisition Cost of such Borrowing Base Asset; (b) the Appraised Value of such BorrowingBase Asset (determined at the time such Borrowing Base Asset is acquired by the EligibleProperty Owner or such subsequent time as the Administrative Agent or the Required Banks mayreasonably request, or Borrowers may elect to provide an updated appraisal (provided that nosuch updated appraisal provided by Borrowers shall be effective to increase the BorrowingBase Value of any Borrowing Base Asset unless at least six months have elapsed from the dateof inclusion of such Borrowing Base Asset in the Borrowing Base and the date of the updatedappraisal)) and (c) $19,230,000; and (B) in the case of Pledged Mortgage Receivables thelesser of: (a) the lesser of the face amount or the principal outstanding balance of thepromissory note evidencing the Pledged Mortgage Receivable; and (b) the Appraised Value ofthe Mortgage Receivable Property at the time of the granting of such Mortgage or suchsubsequent time as the Administrative Agent or the Required Banks may reasonably request, orBorrowers may elect to provide an updated appraisal (provided that no such updated appraisalprovided by Borrowers shall be effective to increase the Borrowing Base Value of anyBorrowing Base Asset unless at least six months have elapsed from the date of inclusion ofsuch Borrowing Base Asset in the Borrowing Base and the date of the updated appraisal).     “Collateral Documents” means, collectively, the Membership Pledge Agreement, theMortgages, the Mortgaged Property Security Documents, the Mortgage Receivables PledgeAgreement, the Pledged Mortgage Receivable Security Documents, the Addition of NewCollateral Agreements and all other agreements (including control agreements), instrumentsand other documents, whether now existing or hereafter in effect, pursuant to which theBorrowers or any Subsidiary shall grant or convey to the Secured Parties a
 

 
Lien in, or any other Person shall acknowledge any such Lien in, property as securityfor all or any portion of the Obligations, as any of them may be amended, modified orsupplemented from time to time.     “Membership Pledge Agreement” means collectively (or individually as the context mayindicate): (i) a Membership Pledge Agreement by the Operating Partnership in favor of theAdministrative Agent for the benefit of the Secured Parties dated the date hereof, (ii) anyjoinders or amendments thereto or any additional Equity Pledge Agreement (as such MembershipPledge Agreement was retitled pursuant to the First Amendment to Credit Agreement dated asof April 21, 2005) in substantially the form of Exhibit R to said First Amendment anddelivered to the Administrative Agent pursuant to Section 5.25 of the Credit Agreement and(iii) any Addition of New Collateral Agreement delivered to the Administrative Agentpursuant to Section 5.25 of the Credit Agreement .”          SECTION 3.02. Amendment to Section 2.14(d) and (e). Paragraphs (d) and (e) of Section2.14 of the Credit Agreement are amended and restated to read in their entirety as follows:     “(d) Documents with Respect to Guarantor and Property. Upon the approval of aProperty or Mortgage Receivable as a Borrowing Base Asset, the Borrowers shall deliver tothe Administrative Agent, to the extent not previously delivered to the AdministrativeAgent, the items that would have been delivered with respect to such Property or MortgageReceivable and such Guarantor under Sections 5.25 and 3.01(c), (e), (g), (h) and (l) as ifsuch Guarantor had been a Guarantor and such Property or Mortgage Receivable had been aBorrowing Base Asset on the Closing Date. Until such time as the Administrative Agent shallhave received the items referred to in the foregoing sentence with respect to any Guarantoror Property or Mortgage Receivable, the Borrowing Base Value of any such Borrowing BaseAsset shall be $0. Notwithstanding the foregoing, the Borrowers shall have an additional 45days following the date of the closing with respect to any addition of new Collateralhereunder to deliver any Mortgages or opinions of local counsel relating thereto, it beingunderstood that the Borrowing Base Value of such Mortgaged Properties shall be included inthe Borrowing Base during such 45 day period provided, however, if, at any time theBorrowing Base Value of all Borrowing Base Assets for which Mortgages or related opinionshave not yet been delivered exceeds twenty percent (20%) of the Borrowing Base Value of allBorrowing Base Assets, then any such excess over said twenty percent shall be excluded fromthe Borrowing Base Value during such period.     (e) Disqualification of Borrowing Base Assets. Except as otherwise provided inthe last sentence of paragraph (d) above, if at any time from or after the inclusion of aBorrowing Base Asset in the Borrowing Base, any event or occurrence, including the passageof time (and including the failure of Borrowers to deliver a Mortgage or related localcounsel opinion within 45 days of inclusion of a new Mortgaged Property as a Borrowing BaseAsset), causes any such Borrowing Base Asset to fail to meet the requirements of thedefinition of Eligible Property or Mortgaged Property, in the case of any MortgagedProperty, or Eligible Mortgage Receivable or Pledged Mortgage
 

 
Receivable, in the case of any Pledged Mortgage Receivable (including withoutlimitation by reason of any representation or warranty contained in any Collateral Documentwith respect to any Borrowing Base Asset failing to continue to be true and correct), or ifany Mortgage or local counsel opinion delivered pursuant to paragraph (d) above shall proveundeliverable or unsatisfactory to the Administrative Agent, then the Borrowing Base Valueof such Borrowing Base Asset shall immediately be deemed $0 and the Borrowing Base shall berecalculated accordingly. Borrowers shall promptly notify the Administrative Agent of anysuch event or occurrence and, to the extent so required, make any prepayment pursuant toSection 2.11(b).”          SECTION 3.03. Amendment to Section 3.01(c). Paragraph (c) of Section 3.01 of theCredit Agreement is amended and restated to read in its entirety as follows:     “(c) to the extent that an opinion of local counsel in the applicable state has notbeen previously provided with respect to another Property in the same state, receipt by theAdministrative Agent of an opinion of local counsel satisfactory to the Agent andsubstantially in the form of the opinion of local counsel set forth in Exhibit P hereto andcovering such additional matters relating to the transactions contemplated hereby as theAdministrative Agent or any Bank may reasonably request;”          SECTION 3.04. Amendment to Section 3.01(g). Paragraph (g) of Section 3.01 of theCredit Agreement is amended and restated to read in its entirety as follows:     (g) the Membership Pledge Agreement, or in the case of Collateral added after the datehereof, the Addition of New Collateral Agreement, and the other Collateral Documents andMortgage Property Support Documents applicable to the Borrowing Base Assets included in theBorrowing Base, each in form and content satisfactory to the Administrative Agent, shallhave been duly executed by the Borrowers and Guarantors and shall have been delivered to theAdministrative Agent and shall be in full force and effect (except to the extent delay indelivery of Mortgages is permitted pursuant to Section 2.14(d)) and each document (includingeach Uniform Commercial Code financing statement) required by law or reasonably requested bythe Administrative Agent to be filed, registered or recorded in order to create in favor ofthe Administrative Agent for the benefit of the Secured Parties, upon filing, recording orpossession by the Administrative Agent, as the case may be, a valid, legal and perfectedfirst-priority security interest in and lien on the Collateral described in the Mortgages,Membership Pledge Agreement, and Mortgage Receivables Pledge Agreement, or, in the case ofCollateral added after the date hereof, the Addition of New Collateral Agreement shall havebeen delivered to the Administrative Agent;          SECTION 3.05. Amendment to Section 5.25. Paragraphs (a) and (b) of Section 5.25 ofthe Credit Agreement are amended and restated to read in their entirety as follows:     (a) The Loan Parties shall cause any Person which becomes a Mortgaged Property Owner ora Pledged Mortgage Receivable Owner after the Closing Date to become a party to, and agreeto be bound by the terms of (i) this Agreement as a Guarantor pursuant to an Addition of NewCollateral Agreement, in substantially the
 

 
form attached hereto as Exhibit S and (ii) the Collateral Documents, in each casesatisfactory to the Administrative Agent in all respects and executed and delivered to theAdministrative Agent before such Mortgaged Property or Pledged Mortgage Receivable isincluded in the calculation of the Borrowing Base, except as otherwise provided in Section2.14(d). The Borrowers shall also, except as otherwise provided in Section 2.14(d), causethe items specified in Section 3.01(c), (e), (g), (h) and (l) to be delivered to theAdministrative Agent concurrently with the instruments referred to above, modifiedappropriately to refer to such instruments and such Mortgaged Property Owner or PledgedMortgage Receivable Owner.     (b) The Borrowers shall, and shall cause any Person owning membership or limitedpartnership interests in a Mortgaged Property Owner or Pledged Mortgage Receivable Owner andeach Person owning stock in a corporate general partner of a Mortgaged Property Owner orPledged Mortgage Receivable Owner that is a limited partnership (each, a “Pledgor Owner”)to: (i) to the extent not already a Borrower or Guarantor hereunder, join this Agreement asa Guarantor by executing an Addition of New Collateral Agreement in the form attached heretoas Exhibit S; (ii) pledge 100% of the membership or limited partnership interests of anyPerson which becomes a Mortgaged Property Owner or Pledged Mortgage Receivable Owner afterthe Closing Date and, in the case of a Mortgaged Property Owner or Pledged MortgageReceivable Owner that is a limited partnership, also pledge 100% of the stock of thecorporate general partner thereof, in each case pursuant to an Addition of New CollateralAgreement in substantially the form attached hereto as Exhibit S executed and delivered bythe Borrower or such Pledgor Owner to the Administrative Agent within ten (10) DomesticBusiness Days after the day on which such Person became a Mortgaged Property Owner orPledged Mortgage Receivable Owner; and (iii) deliver to the Administrative Agent suchCertificates evidencing such membership interests, limited partnership interests or stocktogether with transfer powers executed in blank. The Borrowers shall also cause the itemsspecified in Section 3.01(c), (e), (g), (h) and (l) to be delivered to the AdministrativeAgent concurrently with the Addition of New Collateral Agreement referred to above, modifiedappropriately to refer to such Addition of New Collateral Agreement, Pledgor Owner and suchMortgaged Property Owner or Pledged Mortgage Receivable Owner.          SECTION 4. Amendment of Exhibit N — Borrowing Base Certification Report. Exhibit N tothe Credit Agreement is hereby amended and restated to read in its entirety as set forth on ExhibitN hereto.          SECTION 5. Addition of New Exhibit S — Addition of New Collateral Agreement. TheExhibits to the Credit Agreement are hereby amended to add a new Exhibit S as set forth on ExhibitS hereto.          SECTION 6. Conditions to Effectiveness. The effectiveness of this Amendment and theobligations of the Administrative Agent and the Banks hereunder are subject to the followingconditions, unless the Required Banks waive such conditions:
 

 
          (a) receipt by the Administrative Agent from each of the parties hereto of a duly executedcounterpart of this Amendment signed by such party;          (b) the fact that the representations and warranties of the Borrower contained in Section 6 ofthis Amendment shall be true on and as of the date hereof; and          (c) receipt by each Bank of new Notes reflecting the new Commitment levels;          (d) receipt of an opinion of Borrowers’ counsel, in form and substance satisfactory to theAdministrative Agent, with respect to the due authorization, execution, delivery and enforceabilityof this Amendment, the new Notes and the Addition of New Collateral Agreement and with respect tosuch other matters as the Administrative Agent may reasonably request.     SECTION 7. No Other Amendment or Waiver. Except for the amendments set forth above,the text of the Credit Agreement shall remain unchanged and in full force and effect. ThisAmendment is not intended to effect, nor shall it be construed as, a novation. The CreditAgreement and this Amendment shall be construed together as a single agreement. Nothing hereincontained shall waive, annul, vary or affect any provision, condition, covenant or agreementcontained in the Credit Agreement, except as herein amended, nor affect nor impair any rights,powers or remedies under the Credit Agreement as hereby amended. The Banks and the AdministrativeAgent do hereby reserve all of their rights and remedies against all parties who may be or mayhereafter become secondarily liable for the repayment of the Obligations. The Borrower promisesand agrees to perform all of the requirements, conditions, agreements and obligations under theterms of the Credit Agreement, as heretofore and hereby amended, the Credit Agreement, as amended,and the other Loan Documents being hereby ratified and affirmed. The Borrower hereby expresslyagrees that the Credit Agreement, as amended, and the other Loan Documents are in full force andeffect.     SECTION 8. Representations and Warranties. The Borrowers and the Guarantors herebyrepresent and warrant to the Administrative Agent and each of the Banks as follows:          (a) No Default or Event of Default, nor any act, event, condition or circumstance which withthe passage of time or the giving of notice, or both, would constitute an Event of Default, underthe Credit Agreement or any other Loan Document has occurred and is continuing.          (b) The Borrowers and the Guarantors each have the power and authority to enter into thisAmendment, the New Notes and the Addition of New Collateral Agreement and to do all acts and thingsas are required or contemplated hereunder or thereunder to be done, observed and performed by them.          (c) Each of this Amendment, the new Notes and the Addition of New Collateral Agreement hasbeen duly authorized, validly executed and delivered by one or more authorized officers or managersof the Borrowers and the Guarantors and constitutes the legal, valid and binding obligation of theBorrowers and the Guarantors enforceable against each of them in accordance with its terms,provided that such enforceability is subject to general principles of equity.
 

 
          (d) The execution and delivery of this Amendment, the new Notes and the Addition of NewCollateral Agreement and the performance by the Borrowers and the Guarantors hereunder andthereunder do not and will not require the consent or approval of any regulatory authority orgovernmental authority or agency having jurisdiction over the Borrowers or the Guarantors nor be incontravention of or in conflict with the articles of incorporation, bylaws, operating agreement orother organizational documents of the Borrower or the Guarantors or the provision of any statute,or any judgment, order or indenture, instrument, agreement or undertaking, to which the Borrowersor the Guarantors is party or by which the assets or properties of the Borrower or the Guarantorsare or may become bound.     SECTION 9. Counterparts. This Amendment may be executed in multiple counterparts,each of which shall be deemed to be an original and all of which, taken together, shall constituteone and the same agreement.     SECTION 10. Governing Law. This Amendment shall be construed in accordance with andgoverned by the laws of the State of North Carolina.     SECTION 11. Effective Date. This Amendment shall be effective as of the date hereof.
 

 
          IN WITNESS WHEREOF, the parties hereto have executed and delivered, or have caused theirrespective duly authorized officers or representatives to execute and deliver, this Amendment as ofthe day and year first above written.       **GLADSTONE COMMERCIAL CORPORATION**       By:                                                                                 (SEAL)         George Stelljes III         Executive Vice President         and Chief Investment Officer       **GLADSTONE COMMERCIAL LIMITED PARTNERSHIP**       **By:** **Gladstone Commercial Partners, LLC**    **its General Partner**       **By:** **Gladstone Commercial Corporation**              **its Manager**       By:                                                                                 (SEAL)         George Stelljes III         Executive Vice President         and Chief Investment Officer       **EE, 208 SOUTH ROGERS LANE, RALEIGH, NC LLC**       **By:** **Gladstone Commercial Limited Partnership**    **its Manager**       **By:** **Gladstone Commercial Partners, LLC**    **its General Partner**       **By:** **Gladstone Commercial Corporation**              **its Manager**       By:                                                                                 (SEAL)         George Stelljes III         Executive Vice President         and Chief Investment Officer
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       **LITTLE ARCH CHARLOTTE NC LLC**       **By:** **Gladstone Commercial Limited Partnership**    **its Manager**       **By:** **Gladstone Commercial Partners, LLC**    **its General Partner**       **By:** **Gladstone Commercial Corporation**    **its Manager**       By:                                                                                 (SEAL)         George Stelljes III         Executive Vice President         and Chief Investment Officer       **OB CRENSHAW PA GLADSTONE COMMERCIAL LLC**       **By:** **Gladstone Commercial Limited Partnership**