exv10w18w1



      


Exhibit
10.18.1




MODIFICATION AGREEMENT




          THIS MODIFICATION AGREEMENT, dated as of July 31, 2007 (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this “Agreement”), between COLUMN FINANCIAL,
INC., having an address at 11 Madison Avenue, New York, New York 10010 (“Lender”) and the entities
set forth on Schedule I annexed hereto and made a part hereof, each having its principal place of
business at 4445 Willard Avenue, 12th Floor, Chevy Chase, MD 20815 (collectively, and
jointly and severally, “Borrower”).




RECITALS




     A. Lender made a loan (the “Loan”) to Borrower in the original principal amount
of $287,182,422.00 subject to and in accordance with the terms of that certain Amended and
Restated Loan Agreement dated as of March 29, 2007 (the “Existing Loan Agreement”).



     B. The Loan is evidenced by that certain amended and restated promissory note
dated as of March 29, 2007 in the principal amount of $287,182,422.00 (the “Existing
Note”).



     C. Concurrently with the execution and delivery of this Agreement, (1) Lender is
making a $36,140,981.00 mezzanine loan to CSE Casablanca Holdings II, LLC, the owner,
directly or indirectly, of 100% of the ownership interests in Borrower; (2) CSE Casablanca
Holdings II, LLC is contributing the proceeds of said mezzanine loan to Borrower; (3)
Borrower is prepaying $36,140,981.00 of principal of the Loan and Lender is accepting such
prepayment without requiring the payment of any prepayment fee or premium; and (4)
Borrower is executing and delivering to Lender that certain second amended and restated
promissory note dated as of the date hereof in the original principal amount of
$250,000,000.00 (the “Second AR Note”) which amends and restates in its entirety the
Existing Note.



     D. Lender and Borrower desire to modify the Existing Loan Agreement and the
other Loan Documents (as such term is defined in the Existing Loan Agreement) subject to
and in accordance with the terms and provisions of this Agreement.



AGREEMENT




     1. Definitions. All capitalized terms used but not defined in this Agreement
shall have the meanings given to them in the Existing Loan Agreement.



     2. Partial Prepayment of Note. Concurrently with the execution of this
Agreement, Borrower has made a voluntary partial prepayment of the principal amount of the
Note in the amount of $36,140,981.00. Lender hereby accepts such voluntary partial
prepayment and waives the payment of the Prepayment Premium or any other prepayment
fee or premium. The parties hereby stipulate that, as of the date hereof, the outstanding
principal amount of the Note is $250,000,000.00.



     3. Modifications to Existing Loan Agreement.



 









 





          (a) Article I of the Existing Loan Agreement is hereby amended as follows:





          (i) The following new definitions are hereby added to Article I of the Existing Loan
Agreement:




     “Approved Mezzanine Lender” shall mean (i) Column; (ii) a Qualified
Transferee, (iii) any person to whom Column transfers the Mezzanine Loan;
or (iv) a successor holder of the Mezzanine Loan that (A) has been
approved by Lender acting reasonably and (B) after the occurrence of a
Securitization, has obtained a Rating Comfort Letter with respect to the
transfer of the Mezzanine Loan to such holder or (iv) the lender under
any other Approved Mezzanine Loan that has been approved by Lender acting
reasonably and the applicable Rating Agencies.




     “Approved Mezzanine Loan” shall mean (i) the Mezzanine Loan and (ii)
a loan from an Approved Mezzanine Lender to Mezzanine Loan Borrower, the
proceeds of which are used to refinance the Mezzanine Loan, provided
that: (i) such loan shall be secured by the same collateral as the
Mezzanine Loan; (ii) the loan documents evidencing and securing such loan
shall be substantially similar in form and substance to the Mezzanine
Loan Documents or shall have been approved by Lender in its reasonable
discretion; (iii) such loan shall be in an amount that does not exceed
the original principal amount of the Mezzanine Loan, and shall otherwise
be on terms and conditions that are not materially less favorable to the
Mezzanine Loan Borrower than the terms and conditions of the Mezzanine
Loan; (iv) the term of such Approved Mezzanine Loan shall expire no
earlier than the Maturity Date; (v) the Approved Mezzanine Lender shall
enter into an intercreditor agreement on terms and conditions that are
reasonably satisfactory to the Approved Mezzanine Lender and the Senior
Lender, and (vi) if such refinancing of the Mezzanine Loan occurs after a
Securitization, no such refinancing shall be permitted which would result
in a downgrade, qualification or withdrawal of any of the ratings of any
of the Securities issued in such Securitization.




     “Column” shall mean Column Financial Inc.




     “Eligibility Requirements” means, with respect to any Person, that
such Person (i) has total assets (in name or under management) in excess
of $600,000,000 and (except with respect to a pension advisory firm or
similar fiduciary) capital/statutory surplus or shareholder’s equity of
$250,000,000 and (ii) is regularly engaged in the business of



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making or owning commercial real estate loans or operating commercial mortgage properties.




     “Mezzanine Loan” shall mean that certain mezzanine loan in the principal amount of
$36,140,981.00 made on the date hereof by Column to Mezzanine Loan Borrower, and evidenced and
secured by the Mezzanine Loan Documents.




     
“Mezzanine Loan Borrower” shall mean CSE Casablanca Holdings II, LLC, a Delaware limited
liability company.




     “Mezzanine Loan Documents” shall mean (i) that certain Mezzanine Loan Agreement of even date
herewith (the “Mezzanine Loan Agreement”) between Column and Mezzanine Loan Borrower, (ii) that
certain Promissory Note of even date herewith (the “Mezzanine Note”) in the original principal
amount of the Mezzanine Loan made by Mezzanine Loan Borrower and payable to Column (and any
successor holder of the Mezzanine Loan), (iii) that certain Pledge and Security Agreement of even
date herewith (the “Mezzanine Pledge”) made by Mezzanine Loan Borrower in favor of Column, (iv)
each UCC Financing Statement executed by Mezzanine Loan Borrower in favor of Column in connection
with the foregoing and (v) any other “Loan Document”, as defined in the Mezzanine Loan Agreement
referred to in clause (i) above, as each of the foregoing may be modified, amended and restated
from time to time with the consent of Lender. Without limiting the foregoing, the term Mezzanine
Loan Documents shall also include all documents, agreements or instruments evidencing, securing or
delivered to an Approved Mezzanine Lender in connection with any Approved Mezzanine Loan.




     “Mezzanine Loan Liens” shall mean (i) the Liens in favor of the holder of the Mezzanine Loan
created pursuant to the Mezzanine Loan Documents and (ii) Liens on the membership interests held
by Mezzanine Loan Borrower in Borrower pursuant to any other Approved Mezzanine Loan.




     “Monthly Debt Service Payment Amount” shall mean as to each Payment Date, an amount equal to
the scheduled payment of principal and interest payable by Borrower to Lender under this
Agreement.




     “Monthly Mezzanine Debt Service Payment” shall mean as to each Payment Date, an amount equal
to the scheduled payment of principal and interest payable by



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     Mezzanine Loan Borrower pursuant to the terms of the Mezzanine Loan
Documents.




     “Qualified Transferee” shall mean one or more of the following:




               (A) a real estate investment trust, bank, saving and loan association,
investment bank, insurance company, trust company, commercial credit corporation,
pension plan, pension fund or pension advisory firm, mutual fund, government entity
or plan, provided that any such Person referred to in this clause (A) satisfies the
Eligibility Requirements;




               (B) an investment company, money management firm or “qualified
institutional buyer” within the meaning of Rule 144A under the Securities Act of
1933, as amended, or an institutional “accredited investor” within the meaning of
Regulation D under the Securities Act of 1933, as amended, provided that any such
Person referred to in this clause (B) satisfies the Eligibility Requirements;




               (C) an institution substantially similar to any of the foregoing entities
described in clauses (A) or (B) that satisfies the Eligibility Requirements;




               (D) any entity Controlled by any of the entities described in clauses
(A) (B) or (C) above;




               (E) a Qualified Trustee in connection with a securitization of, the
creation of collateralized debt obligations (“CDO”) secured by or financing through
an “owner trust” of, the Mezzanine Loan (collectively, “Securitization Vehicles”), so
long as (A) the special servicer or manager of such Securitization Vehicle has the
Required Special Servicer Rating and (B) the entire “controlling class” of such
Securitization Vehicle, other than with respect to a CDO Securitization Vehicle, is
held by one or more entities that are otherwise Qualified Transferees under clauses
(A), (B), (C), or (D) of this definition; provided that the operative
documents of the
related Securitization Vehicle require that (1) in the case of a CDO Securitization
Vehicle, the “equity interest” in such Securitization Vehicle is owned by one or more
entities that are Qualified Transferees under clauses (A), (B), (C) or
(D) of this
definition and (2) if any of the relevant trustee, special servicer, manager fails to meet
the requirements of this clause (E), such Person must be replaced by a Person meeting
the requirements of this clause (E) within thirty (30) days; or




               (F) an investment fund, limited liability company, limited partnership
or general partnership where a Permitted Fund Manager or an entity that is otherwise
a Qualified Transferee under clauses (A), (B), (C), or (D) of
this definition acts as the
general partner, managing member or fund manager and at least 50% of the equity
interests in such investment vehicle are owned, directly or indirectly, by one or more
entities that are otherwise Qualified Transferees under clauses (A), (B),
(C), or (D) of
this definition.



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For the purposes of this definition, the term “Control” means the ownership, directly or
indirectly, in the aggregate of more than fifty percent (50%) of the beneficial ownership
interests of an entity and the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of an entity, whether through the ability to exercise
voting power, by contract or otherwise and “controlled by,” “controlling” and “under common
control with” shall have the respective correlative meaning thereto.




     “Permitted Fund Manager” means any Person that on the date of determination is (i) a
nationally recognized manager of investment funds investing in debt or equity interests
relating to commercial real estate (ii) investing through a fund with committed capital of
at least $250,000,000 and (iii) not subject to a Bankruptcy Action.




     “Qualified Trustee” means (i) a corporation, national bank, national banking
association or a trust company, organized and doing business under the laws of any state
or the United States of America, authorized under such laws to exercise corporate trust
powers and to accept the trust conferred, having a combined capital and surplus of at
least $100,000,000 and subject to supervision or examination by federal or state authority
(ii) an institution insured by the Federal Deposit Insurance Corporation or (iii) an
institution whose long-term senior unsecured debt is rated either of the then in effect
top two rating categories of each of the Rating Agencies.




     “Rating Comfort Letter” shall mean a letter issued by each of the applicable Rating
Agencies which confirms that the taking of the action referenced to therein will not
result in any qualification, withdrawal or downgrading of any existing ratings of
Securities created in a Securitization.




          (ii) The definition of “Cash Management Agreement” is modified by adding the following at the
end thereof: “The term “Cash Management Agreement” shall not include the Mezzanine Cash Management
Agreement.”




          (iii) The definition of “Debt Service Coverage Ratio” is deleted and the following inserted
in its place:




     “Debt Service Coverage Ratio” shall mean a ratio for the applicable
period in which:




	 	(a)	 	the numerator is the Net Cash Flow
(excluding
interest on credit accounts) for such period as
set forth in the financial statements required
hereunder; and
	 
	 	(b)	 	the denominator is the sum of (i) the
Debt
Service due and payable under the Note for such
period and (ii) the scheduled principal and/or




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	 	 	 	interest payments due and payable with respect to the
Mezzanine Loan for such period.






          (iv) The definition of “Environmental Indemnity” is modified by adding the following at the
end thereof: “The term “Environmental Indemnity” shall not include the Mezzanine Loan
Environmental Indemnity.”




          (v) The definition of “Guaranty” is modified by adding the following at the end thereof: “The
term “Guaranty” shall not include the Mezzanine Guaranty.”




          (vi) The definition of “Indebtedness” is modified by adding the following at the end thereof:
“For the purposes hereof, the term “Indebtedness” does not include the obligations secured by the
Assignment of Title Proceeds executed by Borrower on or about the date hereof.”




          (vii) The definition of “Lease Debt Service Coverage Ratio” is deleted and the following is
inserted in its place:




     “Lease Debt Service Coverage Ratio” shall mean a ratio for the
applicable period in which:




	 	(a)	 	the numerator is the Rents (without
duplication)
payable to Borrower under the Operating Leases
for such period; and
	 
	 	(b)	 	the denominator is the sum of (i) the
Debt
Service due and payable under the Note for such
period and (ii) the scheduled principal and/or
interest payable due and payable with respect to
the Mezzanine Loan for such period.






          (viii) The definition of “Lender” is deleted and the following inserted in its place:
“Lender” shall have the meaning set forth in the introductory paragraph hereto, in its capacity as
holder of the Note and the other Loan Documents, together with its successors and assigns in such
capacity.”




          (ix) The definition of “Loan Documents” is modified by adding the following at the end
thereof: “Notwithstanding anything to the contrary in any of the Loan Documents, the term “Loan
Documents” shall not include either (A) the Mezzanine Loan Documents or (B) any intercreditor
agreement, or similar agreement, to which Borrower is not a signatory, it being the intention of
the parties that the rights and obligations of Lender, on one hand, and Borrower and each Affiliate
of Borrower which has any obligations under the Loan Documents, on the other hand, solely as to
each other under each and every one of the Loan Documents shall be unaffected by the existence or
contents of any such agreement, as if such agreement did not exist.”



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          (x) The definition of “Note” is modified by adding the following at the end thereof:
“The term ‘Note’ shall not include Mezzanine Note.”




          (xi) The definition of “Operating Expenses” is modified by the adding the following
immediately after term “Debt Service”; “and debt service on the Mezzanine Loan.”




          (xii) The definition of “Permitted Encumbrances” is modified by adding the following
at the end thereof: “and (g) the Mezzanine Loan Liens”.




          (xiii) The definition of “Spread” is deleted and the following is inserted in its
place:




          “Spread” shall mean 1.5391875634%



          (b) All references in the Existing Loan Agreement to the “Interest Rate Cap
Agreement” shall have the meaning ascribed to the term in the Collateral Assignment of
Interest Rate Cap Agreement (Senior Loan) dated as of the date hereof by CSE Mortgage
LLC (“CSE Mortgage”) in favor of Lender. As of the date hereof, the Collateral Assignment
of Interest Rate Cap Agreement dated as of March 29, 2007 by CSE Mortgage in favor of
Lender and the security interests created thereby, are hereby released. CSE Mortgage is
hereby authorized to file in such place or places as it deems appropriate a termination of the
financing statement previously filed in connection with such Collateral Assignment of
Interest Rate Cap Agreement dated as of March 29, 2007.



          (c) Section 2.5.l(f) of the Existing Loan Agreement is hereby modified by
deleting the words “10% of the original principal amount of the Loan” at the end thereof and
inserting the amount “$25,000,000” in its place.



          (d) Section 2.6.2(b) of the Existing Loan Agreement is hereby modified by
renumbering existing clause (vii) as clause (ix) and inserting the following clauses (vii) and
(viii):




     (vii) If the Mezzanine Loan or any portion thereof is
outstanding, to make payments in the amount of the Monthly
Mezzanine Debt Service Payment into the subordinate cash
management account established under the Mezzanine Loan Agreement;




     (viii) If the Mezzanine Loan or any portion thereof is
outstanding and it is then not a Cash Trap Period, to make payments
in such amounts as shall be stated in a notice from Approved
Mezzanine Lender to Cash Management Bank into the subordinate cash
management account established under the Mezzanine Loan Agreement;
and



          (e) Section 2.8(1) is hereby amended by inserting the word “Mezzanine”
immediately prior to the word “Loan”.



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          (f) Section 2.10 of the Existing Loan Agreement is hereby modified by
adding the following new clause (f) at the end thereof:




     (f) As long as the Mezzanine Loan is outstanding, Mezzanine Borrower has
either (A) properly and timely extended the maturity date of the Mezzanine Loan so
that the extended maturity date of the Mezzanine Loan is the same date as the
applicable Extended Maturity Date; or (B) paid the Mezzanine Loan in full, through
re-financing or otherwise.



          (g) Section 5.2.10(e) of the Existing Loan Agreement is hereby amended by
deleting the word “or” between clauses (i) and (j) and inserting the word “and” in its place.



          (h) The following new Section 7.8 is hereby added to the end of Article VII of the Existing
Loan Agreement:




          Section 7.8 Required Environmental Remediation Funds.




          7.8.1 Deposit. On the Initial Closing Date Borrower deposited with
Lender the amount of $144,950.00 for deposit by Lender into an account (the
“Required Environmental Remediation Account”).




          7.8.2 Required Environmental Remediation Work. Lender
acknowledges that, prior to the date hereof, (a) other than covenants with respect
to
the Gateway Nursing Center, the Pilot Point Countryside Manor and the Amarillo
Country Club Manor, Borrower timely performed and satisfied all covenants made
in Schedule VIII, and (b) no amount in the Required Environmental Remediation
Account have been expended by Lender. Notwithstanding anything to the contrary
in said Schedule VIII, Borrower will perform and satisfy the remaining covenants
set forth on Schedule VIII on or before September 15, 2007. Schedule VIII is
hereby amended to provide, (a) with respect to the Pilot Countryside Manor
facility, “Repair and provide secondary containment for damaged 50-gallon diesel
AST, if legally required, $500”; (b) with respect to the Amarillo Country Club
Manor facility, “Remove or label two (2) unlabeled 55-gallon drums, $500”.




          7.8.3 Disbursement. Provided that there is no uncured Event of
Default, upon Borrower completing the environmental remediation work set forth
in Schedule VIII and providing to Lender the required documentation described
therein, Lender will disburse all monies then in the Required Environmental
Remediation Account promptly after Borrower submits to Lender a written request
for the disbursement of such monies.



          (i) Section 8.1(c) of the Existing Loan Agreement is hereby amended by deleting the words
“10% of the original principal amount of the Loan” in the last two lines thereof and inserting the
amount “$25,000,000” in its place.



          (j) Section 8.1(e) of the Existing Loan Agreement is hereby amended by deleting the amount
“$30 Million” in line 15 thereof and inserting the amount “$26,132,500.00” in its place.



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          (k) Section 8.2(c) of the Existing Loan Agreement is hereby amended by (1) deleting the words
“At any time (whether before or during the occasions of an Event of Default)” at beginning thereof
and inserting the words “At any time during the continuance of an Event of Default” in their place;
(2) inserting the words “during the continuance of an Event of Default” immediately following the
words “from time to time” in the second sentence thereof; and (3) inserting the words “during the
continuance of an Event of Default” at the end of the third sentence thereof.



          (1) Section 9.7 of the Existing Loan Agreement is hereby deleted.



          (m) Schedule I to the Existing Loan Agreement is hereby deleted and Schedule I attached
hereto is inserted in its place.



          (n) Schedule IX of the Existing Loan Agreement is hereby deleted and Schedule IX attached
hereto is inserted in its place.



          (o) All references in the Existing Loan Agreement to the Cash Management Agreement shall mean
the Cash Management Agreement (as such term is defined in the Existing Loan Agreement), as
modified by this Agreement.



          (p) All references in the Existing Loan Agreement to the Loan Agreement shall mean the
Existing Loan Agreement, as modified by this Agreement, but shall not include the Mezzanine Loan
Agreement.



          (q) Clause D of the final flush paragraph of Section 9.4 of the Loan Agreement is hereby
amended by inserting the following immediately after the word “Transfer”: “(other than a
foreclosure, or acceptance of a deed in lieu of foreclosure, with respect to one or more of the
Properties by Lender, or a foreclosure by Mezzanine Lender of or Mezzanine Lender’s acceptance of
an assignment in lieu of foreclosure with respect to all or part of the Pledged Collateral)”.



          (r) Section 9.4 is further modified by adding the following new flush paragraph at the end of
Section 9.4:



          Notwithstanding anything to the contrary in any of the Loan Documents including, without
limitation, anything to the contrary in the immediately preceding paragraphs or elsewhere in this
Loan Agreement, Borrower shall not have any obligations or liabilities hereunder for any loss,
damage, cost, expense, liability, claim or other obligation incurred by Lender (including
reasonable attorneys’ fees and costs reasonably incurred) arising out of or in connection with (i)
any action or inaction of any Pledged Company or any entity owned or controlled by any Pledged
Company but only to the extent such action or inaction results from the exercise of control over
any such Pledged Company or such entity owned or controlled by any Pledged Company by Lender, (ii)
any action or omission which occurs after the completion of a private or public sale of the
Pledged Company Interests (as defined in the Pledge Agreement) or after acceptance of an
assignment in lieu of foreclosure with respect to the Pledged Company Interests or (iii) any act
or omission relating to any Individual Property which occurs after Lender completes a foreclosure
with respect to such



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Individual Property or accepts a deed in lieu of foreclosure with respect to such Individual
Property.




          (s) Lender acknowledges that, pursuant to Section 6.1(g) of the Existing Loan Agreement, as
of the date hereof, to Lender’s actual knowledge, (1) Borrower is maintaining such Policies and
coverages as it is obligated to maintain pursuant to the Loan Agreement; and (2) Borrower has
provided to Lender such certificates and information with respect to the Policies as Borrower is
required to provide to Lender.



          (t) To the extent Lender’s consent is necessary, Lender hereby consents to the execution,
delivery and performance of the Mezzanine Loan Documents and to the transactions contemplated
thereby, including, without limitation,




          (1) The restatement of the limited liability company agreements in the
form executed and delivered on or about the date hereof of (i) some or all of the
Borrower Entities, (ii) the Maryland Guarantors and (iii) the Principals;




          (2) the formation of the Mezzanine Borrower by CSE Casablanca
Holdings LLC (“Holdings”) as a wholly-owned subsidiary of Holdings;




          (3) the pledge and assignment by Holdings to the Mezzanine Borrower
of 100% of its ownership interest in the Pledged Companies;




          (4) the creation and perfection by Mezzanine Lender of its security
interests in the Pledged Collateral;




          (5) the granting of liens by the Mezzanine Borrower in the proceeds of
Rents and other cash flow on the terms and conditions set forth in Mezzanine Cash
Management Agreement; and perfection by Mezzanine Lender of its security interest
in such Rents and other cash flow;




          (6) the granting of liens by Borrower in title insurance proceeds to
which Borrower and its Affiliates may be entitled, and the perfection by Mezzanine
Lender of its security interest in such proceeds; and




          (7) the termination of the original Interest Rate Cap Agreement and
replacement thereby with two new interest rate cap agreements, and the execution of
the respective collateral assignments thereof on the terms and conditions set forth
therein, and the perfection by Mezzanine Lender of its security interests in such
interest rate cap agreements.


Lender represents that no Securitization has occurred prior to the date hereof, and that no
consent of any Rating Agency or Person claiming under or through Lender is required in connection
with the transactions contemplated by this Agreement and the Mezzanine Loan Documents, other than
consents which have been obtained.




          (u) Section 2.6.2(b) of the Existing Loan Agreement is hereby amended by renumbering existing
clause (viii) as clause (x) and inserting the following new clauses (vii) through (ix);



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     (vii) If the Mezzanine Loan (or any portion thereof) is
outstanding, to make payment in the amount of the Monthly
Mezzanine Debt Service Payment into the cash management account
established under the Mezzanine Loan Agreement;




     (viii) If Mezzanine Lender has delivered the Deposit Notice to
the Cash Management Bank as described in Section 3(a) of the
Mezzanine Cash Management Agreement, to make payment in the amount
set forth in the Deposit Notice into the cash management account
established under the Mezzanine Loan Agreement;




     (ix) If Mezzanine Lender has delivered the ED-CTP Notice to
the Cash Management Bank as described in Section 3(a) of the
Mezzanine Cash Management Agreement, to make payment in the amount
set forth in the ED-CTP Notice into the cash management account
established under the Mezzanine Loan Agreement.



          (v) Section 2.8(d) of the Existing Loan Agreement is hereby amended by deleting the phrase
“25% of the number of properties” and replacing it with the phrase “25% of the total number of
properties in all states”.




          (w) Section 4.1.34 of the Existing Loan Agreement is hereby amended by deleting clause (a)
thereof and replacing it with the following, effective as of the Closing Date, “(a) required to be
registered as an “investment company” or a company “controlled” by a Person required to be
registered as an “investment company”, within the meaning of the Investment Company Act of 1940, as
amended.”




     4. Modifications to Cash Management Agreement.



          (a) Section 3(k) of the Cash Management Agreement is hereby amended by
adding the following at the end thereof: “provided that the cash management bank under the
cash management agreement for the Mezzanine Loan is given notice of such replacement.”




          (b) Section 4(a) of the Cash Management Agreement is hereby amended by
renumbering existing clause (viii) as clause (xii) and inserting the following new clauses
(viii) through (x):





     (viii) If the Mezzanine Loan (or any portion thereof) is
outstanding, to make payment in the amount of the Monthly Mezzanine
Debt Service Payment into the cash management account established
under the Mezzanine Loan Agreement;




     (ix) If Mezzanine Lender has delivered the Deposit Notice to
the Cash Management Bank as described in Section 3(a) of the
Mezzanine Cash Management Agreement, to make payment in the amount
set forth in the Deposit Notice into the cash management account
established under the Mezzanine Loan Agreement;



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     (x) If Mezzanine Lender has delivered the ED-CTP Notice to the
Cash Management Bank as described in Section 3(a) of the Mezzanine
Cash Management Agreement, to make payment in the amount set forth
in the ED-CTP Notice into the cash management account established
under the Mezzanine Loan Agreement;



     5. Modifications to Guaranty Agreement.



          (a) Clause (D) of the final flush paragraph of Section 1.2 of the Guaranty
Agreement is hereby amended by inserting the following immediately after the words
“Transfer”: “(other than a foreclosure, or acceptance of a deed in lieu of foreclosure, with
respect to one or more of the Properties by Lender, or a foreclosure by Mezzanine Lender of
or Mezzanine Lender’s acceptance of an assignment in lieu of foreclosure with respect to all
or part of the Pledged Collateral)”;




          (b) Section 1.2 is further modified by adding the following new subsection
(c):




          “(c) Notwithstanding anything to the contrary in any of the Loan Documents, including without
limitation anything to the contrary in the immediately preceding paragraphs or elsewhere in this
Guaranty, Guarantor shall not have any obligations or liabilities hereunder for any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender (including reasonable
attorneys’ fees and costs reasonably incurred) arising out of or in connection with (i) any action
or inaction of any Pledged Company, or any entity owned or controlled by any Pledged Company, but
only to the extent such action or inaction results from the exercise of control over any such
Pledged Company or such entity owned or controlled by any Pledged Company by Lender, (ii) any
action or omission which occurs after the completion of a private or public sale of the Pledged
Company Interests (as defined in the Pledge Agreement) or after acceptance of an assignment in lieu
of foreclosure with respect to the Pledged Company Interests or (iii) any act or omission relating
to any Individual Property which occurs after Lender completes a foreclosure with respect to such
Individual Property or accepts a deed in lieu of foreclosure with respect to such Individual
Property.




     6. Representations and Warranties. Without limiting in any way any
representation or warranty in any Loan Document, Borrower represents and warrants to
Lender as follows:



          (a) The execution and delivery by Borrower of this Agreement and Borrower’s performance of its
obligations hereunder provided for in this Agreement (i) have been duly authorized by all requisite
action on the part of Borrower, (ii) will not violate any provision of any applicable legal
requirements, any order, writ, decree, injunction or demand of any court or other governmental
authority, any organizational document of Borrower or any indenture or agreement or other
instrument to which Borrower is a party or by which the Borrower is bound, (iii) will not be in
conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a
default under, or result in the creation or imposition of any lien of any nature whatsoever upon
any of the property or assets of the Borrower pursuant to, any indenture or agreement or instrument
and (iv) have been duly executed and






12









 







delivered by Borrower. Except for those obtained or filed on or prior to the date hereof, the
Borrower is not required to obtain any consent, approval or authorization from, or to file any
declaration or statement with, any governmental authority or other agency in connection with or as
a condition to the execution, delivery or performance of this Agreement. This Agreement has been
duly authorized, executed and delivered by Borrower.





               (b) This Agreement is a legal, valid and binding obligation of
Borrower, enforceable against the Borrower in accordance with its terms, subject to
bankruptcy, insolvency and other limitations on creditors’ rights generally and to equitable
principles.




               (c) There are no existing claims or causes of action by Borrower
against Lender relating to or arising out of the Existing Loan, and the Loan Documents and
there are no offsets or defenses by Borrower to the payment of any amounts required to be
paid by Borrower under the Loan Documents, or otherwise to the enforcement by Lender of
the Loan Documents.



     7. Miscellaneous.



          (a) All references in the Loan Documents to the “Loan Agreement” shall
hereafter mean the Existing Loan Agreement, as modified by this Agreement, and as it may
be amended, modified, restated, consolidated or supplemented from time to time after the
date hereof, but shall not include the Mezzanine Loan Agreement.




          (b) At any time and from time to time, Mezzanine Borrower may refinance
the Mezzanine Loan with an Approved Mezzanine Loan. At any time and from time to time,
Mezzanine Borrower and those of its Affiliates who have obligations under the Mezzanine
Loan may amend or modify the Mezzanine Loan with Lender’s prior consent, which consent
shall not be reasonably withheld, conditioned or delayed provided that the Mezzanine Loan
remains an Approved Mezzanine Loan.




          (c) All references in the Loan Documents to the “Note” shall hereafter
mean the Second AR Note, as it may be amended, modified, restated, consolidated or
supplemented from time to time after the date hereof, but shall not include the Mezzanine
Note. Lender hereby represents to Borrower that the original of that certain Promissory Note
dated December 1, 2006 by Borrower in the original principal amount of $287,182,422 has
been endorsed by Lender with the following legend on the face and signature pages thereof:
“This Promissory Note has been amended and restated in its entirety by that certain Amended
and Restated Promissory Note made by Borrower to Lender dated March 29, 2007.” Lender
covenants that, within 10 Business Days of the date hereof, Lender shall cause (1) the
original of the Existing Note to be endorsed by Lender with the following legend on the face
and signature pages thereof: “This Promissory Note has been amended and restated in its
entirety by that certain Second Amended and Restated Promissory Note made by Borrower
to Lender dated as of July 31, 2007”, and (2) a true and complete copy thereof, including
such endorsement, to be delivered to Borrower




          (d) This Agreement constitutes the entire agreement among the parties
concerning its subject matter. This Agreement shall inure to the benefit of and be binding




          
13









 








upon the parties and their respective heirs, successors and assigns. This Agreement may be
executed in two or more counterparts and by facsimile each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.




          (e) Borrower and Lender confirm and ratify the terms and provisions of the
Loan Documents, as modified hereby, and agree that the Loan Documents, as so modified,
remain in full force and effect as of the date hereof, and nothing herein contained shall be
construed to impair the security or affect the first priority of the lien of any mortgage, nor
impair any rights or powers which Lender or its successors may have for nonperformance of
any term of any of the Loan Documents. Borrower and Lender further reaffirm and ratify
their respective obligations to be bound by and perform all of the terms of the Loan
Documents.




          (f) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (without giving effect to New York’s principles of conflict
of law).




          (g) Borrower confirms and acknowledges that concurrently with the
execution and delivery of this Agreement, Lender has paid to Borrower all costs and
expenses (including reasonable attorneys’ fees) incurred by Borrower in connection with the
negotiation, execution and delivery of this Agreement, the Mezzanine Loan Documents and
the other instruments and agreements contemplated hereby or thereby (including all actual
costs incurred by any Rating Agencies, the Cap Provider, the Cash Management Bank, the
Lockbox Bank and the Title Company in connection with the transactions contemplated by
this Agreement, the Mezzanine Loan Documents and the other instruments and agreements
contemplated hereby or thereby).




     8. Intercreditor Agreement.



     Borrower hereby acknowledges and agrees that any intercreditor agreement or other agreement
entered into between Lender and Mezzanine Lender will be solely for the benefit of, and solely
bind, Lender and Senior Lender, and that Borrower and Owner shall not be intended third-party
beneficiaries of any of the provisions therein, shall have no rights thereunder and shall not be
entitled to rely on any of the provisions contained therein, and such agreement shall not bind
Borrower or Owner.



(Signatures on following page)




14









 








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




BORROWER:




	 	 	 
	CSE Albany LLC,

	 	CSE Green Bay LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Amarillo LLC, d/b/a CapitalSource
	 	 
	Amarillo LLC,

	 	CSE Hilliard LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Augusta LLC,

	 	CSE Huntsville LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Bedford LLC,

	 	CSE Indianapolis — Continental LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Cambridge LLC,

	 	CSE Indianapolis — Greenbriar LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Canton LLC,

	 	CSE Issaquah LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Cedar Rapids LLC,

	 	CSE Jeffersonville — Hillcrest Center LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Chelmsford LLC,

	 	CSE Jeffersonville — Jennings House LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Chesterton LLC,

	 	CSE Kingsport LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Claremont LLC, d/b/a CapitalSource
	 	 
	Claremont LLC,

	 	CSE Lake City LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Denver LLC,

	 	CSE Lake Worth LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Douglas LLC,

	 	CSE Lakewood LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Dumas LLC,

	 	CSE Las Vegas LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Elkton LLC,

	 	CSE Lawrenceburg LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Fort Wayne LLC,

	 	CSE Lexington Park LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Frankston LLC, d/b/a CapitalSource
	 	 
	Frankston LLC,

	 	CSE Ligonier LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Georgetown LLC,

	 	CSE Live Oak LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Logansport LLC,

	 	CSE Shawnee LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Lowell LLC,

	 	CSE Stillwater LLC,






 









 






	 	 	 
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Mobile LLC,

	 	CSE Taylorsville LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	 

	 	CSE Texarkana LLC, d/b/a CapitalSource
	CSE Moore LLC,

	 	Texarkana LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	 

	 	CSE Texas City LLC, d/b/a CapitalSource Texas
	CSE Omro LLC,

	 	City LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Orange Park LLC,

	 	CSE Upland LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Orlando — Pinar Terrace Manor LLC,

	 	CSE West Point LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Orlando — Terra Vista Rehab LLC,

	 	CSE Wichita LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Piggott LLC,

	 	CSE Winter Haven LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Pilot Point LLC, d/b/a CapitalSource Pilot
	 	 
	Point LLC,

	 	CSE Yorktown LLC,
	a Delaware limited liability company

	 	a Delaware limited liability company
	CSE Pittsburg LLC, d/b/a CapitalSource
	 	 
	Pittsburg LLC,

	 	CSE Arden L.P.,
	a Delaware limited liability company

	 	a Delaware limited partnership
	 
	CSE Ponca City LLC,

	 	By: CSE North Carolina Holdings I LLC

a Delaware limited liability company, its

general partner

	a Delaware limited liability company
	 	 
	CSE Port St. Lucie LLC,

	 	CSE King L.P.,
	a Delaware limited liability company

	 	a Delaware limited partnership
	 
	CSE Richmond LLC,

	 	By: CSE North Carolina Holdings I LLC

a Delaware limited liability company, its

general partner

	a Delaware limited liability company
	 	 
	CSE Safford LLC,

	 	CSE Knightdale L.P.,
	a Delaware limited liability company

	 	a Delaware limited partnership
	CSE Salina LLC,
	 	 
	a Delaware limited liability company 

CSE Seminole LLC,

	 	By: CSE North Carolina Holdings I LLC

a Delaware limited liability company, its

general partner

	a Delaware limited liability company
	 	 






 









 






	 	 	 	 	 
	CSE Lenoir L.P.,

a Delaware limited partnership



By: CSE North Carolina Holdings I LLC 

       a Delaware
limited liability company, its
         general partner




CSE Walnut Cove L.P.,

a Delaware limited partnership




By: CSE North Carolina Holdings I LLC 

       a Delaware
limited liability company, its
         general partner




CSE Woodfin L.P.,

a Delaware limited partnership




By: CSE North Carolina Holdings I LLC 

       a Delaware
limited liability company, its
         general partner
 	 


	 	 	 	 	 
	 	By:  	/s/ Jeffrey A. Lipson
 	 
	 	 	Name:  	Jeffrey A. Lipson  	 
	 	 	Title:  	Vice President & Treasurer 	 
	 



	 	 	 	 	 
	[Signatures continue on following page] 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	CSE Cambridge Realty LLC,

a Delaware limited liability company

 	 
	 	By:  	/s/ Jeffrey A. Lipson
 	 
	 	 	Name:  	Jeffrey A. Lipson 	 
	 	 	Title:  	Vice President & Treasurer 	 
	 
	 	CSE Elkton Realty LLC,

a Delaware limited liability company

 	 
	 	By:  	/s/
Jeffrey A. Lipson
 	 
	 	 	Name:  	Jeffrey A. Lipson 	 
	 	 	Title:  	Vice President & Treasurer 	 
	 
	 	CSE Lexington Park Realty LLC,

a Delaware limited liability company

 	 
	 	By:  	/s/ Jeffrey A. Lipson
 	 
	 	 	Name:  	Jeffrey A. Lipson 	 
	 	 	Title:  	Vice President & Treasurer 	 
	 



[Signatures continue on following page]




 









 








	 	 	 	 	 
	 	COLUMN FINANCIAL, INC.

 	 
	 	By:  	/s/ Susana Iannicelli
 	 
	 	 	Name:  	Susana Iannicelli 	 
	 	 	Title:  	Vice President	 



 









 






	 	 	 	 	 



CONSENT AND CONFIRMATION OF GUARANTOR





     CAPITALSOURSE INC.,
a Delaware corporation (“Guarantor”), as guarantor of the obligations of the
borrowers listed above (collectively, “Borrower”), with respect to a loan made by Column
Financial, Inc. (“Lender”) to Borrower in the original principal amount of $287,182,422.00 (the
“Loan”) pursuant to a certain guaranty
agreement dated as of March 29, 2007, in favor of Lender
(said guaranty, the “Guaranty”), hereby (a) consents to the execution and delivery by Borrower of
the modification agreement dated as of the date hereof (the “Modification Agreement”) by and
between Borrower and Lender to which this consent and confirmation is attached, which Modification
Agreement modifies certain of the obligations of Borrower guarantied by Guarantor pursuant to the
Guaranty; and (b) confirms and agrees that the execution and delivery by Borrower of the
Modification Agreement, shall not affect the obligations of Guarantor under the Guaranty, which
obligations of Guarantor under the Guaranty are unmodified and in full force and effect, except as
provided in the Modification Agreement and except that all references in the Guaranty to the
obligations of Borrower to Lender or to the Loan Agreement, shall mean such obligations or the
Existing Loan Agreement (as such term is defined in the Modification Agreement), as modified by
the Modification Agreement.



Dated: as
of July 31, 2007




	 	 	 	 	 
	 	CAPITALSOURCE INC.

 	 
	 	By:  	/s/ Jeffrey Lipson
 	 
	 	 	Name:  	Jeffrey Lipson 	 
	 	 	Title:  	Treasurer 	 



 









 






	 	 	 	 	 



CONSENT AND CONFIRMATION OF GUARANTOR





     CSE CAMBRIDGE REALTY LLC, a Delaware limited liability company (“Guarantor”), as guarantor of
the obligations of the borrowers listed above (collectively, “Borrower”), with respect to a loan
made by Column Financial, Inc. (“Lender”) to Borrower in the original principal amount of
$287,182,422.00 (the “Loan”) pursuant to a certain amended and restated guaranty agreement dated as
of March 29, 2007, in favor of Lender (said guaranty, the “Guaranty”), hereby (a) consents to the
execution and delivery by Borrower of the modification agreement dated as of the date hereof (the
“Modification Agreement”) by and between Borrower and Lender to which this consent and confirmation
is attached, which Modification Agreement modifies certain of the obligations of Borrower
guarantied by Guarantor pursuant to the Guaranty; and (b) confirms and agrees that the execution
and delivery by Borrower of the Modification Agreement, shall not affect the obligations of
Guarantor under the Guaranty, which obligations of Guarantor under the Guaranty are unmodified and
in full force and effect, except that all references in the Guaranty to the obligations of Borrower
to Lender or to the Loan Agreement, shall mean such obligations or the Existing Loan Agreement (as
such term is defined in the Modification Agreement), as modified by the Modification Agreement.



Dated: as of July 31, 2007




	 	 	 	 	 
	 	CSE CAMBRIDGE REALTY LLC

a Delaware limited liability company

 	 
	 	By:  	/s/  Jeffrey A. Lipson
 	 
	 	 	Name:  	Jeffrey A. Lipson 	 
	 	 	Title:  	Vice President & Treasurer 	 



 









 






	 	 	 	 	 



CONSENT AND CONFIRMATION OF GUARANTOR





     
CSE ELKTON REALTY LLC, a Delaware limited liability company (“Guarantor”),
as guarantor of the obligations of the borrowers listed above (collectively, “Borrower”), with
respect to a loan made by Column Financial, Inc. (“Lender”) to Borrower in the original principal
amount of $287,182,422.00 (the “Loan”) pursuant to a certain amended and restated agreement dated
as of March 29, 2007, in favor of Lender (said guaranty, the “Guaranty”), hereby (a) consents to
the execution and delivery by Borrower of the modification agreement dated as of the date hereof
(the “Modification Agreement”) by and between Borrower and Lender to which this consent
and confirmation is attached, which Modification Agreement modifies certain of the obligations of
Borrower guarantied by Guarantor pursuant to the Guaranty; and (b) confirms and agrees that the
execution and delivery by Borrower of the Modification Agreement, shall not affect the obligations
of Guarantor under the Guaranty, which obligations of Guarantor under the Guaranty are unmodified
and in full force and effect, except that all references in the Guaranty to the obligations of
Borrower to Lender or to the Loan Agreement, shall mean such obligations or the Existing Loan
Agreement (as such term is defined in the Modification Agreement) as modified by the Modification
Agreement.



Dated: as of July 31, 2007




	 	 	 	 	 
	 	CSE ELKTON REALTY LLC

a Delaware limited liability company

 	 
	 	By:  	/s/ Jeffrey A. Lipson
 	 
	 	 	Name:  	Jeffrey A. Lipson 	 
	 	 	Title:  	Vice President & Treasurer 	 



 









 






	 	 	 	 	 



CONSENT AND CONFIRMATION OF GUARANTOR





     CSE LEXINGTON PARK REALTY LLC, a Delaware limited liability company
(“Guarantor”), as
guarantor of the obligations of the borrowers listed above
(collectively, “Borrower”), with
respect to a loan made by Column Financial, Inc. (“Lender”) to Borrower in the original
principal amount of $287,182,422.00 (the Loan”) pursuant to a certain amended and restated
guaranty agreement dated as of March 29, 2007, in favor of Lender (said guaranty, the Guaranty”),
hereby (a) consents to the execution and delivery by Borrower of the modification agreement dated
as of the date hereof (the Modification Agreement”) by and between Borrower and Lender to which
this consent and confirmation is attached, which Modification Agreement modifies certain of the
obligations of Borrower guarantied by Guarantor pursuant to the Guaranty; and (b) confirms and
agrees that the execution and delivery by Borrower of the Modification Agreement, shall not affect
the obligations of Guarantor under the Guaranty, which obligations of Guarantor under the Guaranty
are unmodified and in full force and effect, except mat all references in the Guaranty to the
obligations of Borrower to Lender or to the Loan Agreement, shall mean such obligations or the
Existing Loan Agreement (as such term is defined in the Modification Agreement), as modified by the
Modification Agreement.



Dated: as of July 31, 2007




	 	 	 	 	 
	 	CSE LEXINGTON PARK REALTY LLC

a Delaware limited liability company

 	 
	 	By:  	/s/ Jeffrey A. Lipson
 	 
	 	 	Name:  	Jeffrey A. Lipson 	 
	 	 	Title:  	Vice President & Treasurer 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	The provisions of Section 4 are hereby consented to:


KEY BANK, N.A.

 	 
	 	By:  	/s/ Diane Haislip 	 
	 	 	Name:  	Diane Haislip 	 
	 	 	Title:  	VICE PRESIDENT