Document:

exv10w3

 

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 the
6th day of July, 2005, by and among GLADSTONE COMMERCIAL CORPORATION and GLADSTONE COMMERCIAL
LIMITED PARTNERSHIP, as Borrowers (together, the “Borrowers”), the GUARANTORS signatory hereto, as
guarantors (collectively, the “Guarantors”), and BRANCH BANKING AND TRUST COMPANY, as
Administrative Agent (the “Administrative Agent”) and a Bank, FIRST HORIZON BANK, as a Bank, and
COMPASS BANK, as a Bank (collectively, the “Banks”).

RECITALS:

          The Borrowers, the Guarantors, the Administrative Agent and the Banks have entered into a
certain Credit Agreement dated as of February 28, 2005, as amended by the First Amendment to Credit
Agreement 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 shall
have the respective meanings assigned to them in the Credit Agreement.

          The Borrowers have requested the Administrative Agent and the Banks to further amend the
Credit Agreement, the Notes and the Loan Documents to modify certain provisions thereof (i) to
exercise 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 of
new Collateral and the joinder of new Guarantors to simplify document deliveries for new Collateral
closings and (iii) to permit Mortgages and related local counsel opinions for new Collateral to be
delivered up to 45 days following the closing with respect to the new Collateral and the increase
of the Borrowing Base related thereto (subject to a 20% Borrowing Base sublimit on such undelivered
mortgages 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 other
Loan Documents upon the terms and conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the Recitals and the mutual promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Guarantors, the Administrative Agent and the Banks, intending to
be legally bound hereby, agree as follows:

     SECTION 1. Recitals. The Recitals are incorporated herein by reference and shall be
deemed to be a part of this Amendment.

     SECTION 2. Increase in Commitments; New Notes. Pursuant to Section 2.01(b) of the
Credit Agreement, the total Commitments are hereby increased from $50,000,000 to $60,000,000. The
new Commitment of each Bank shall be as set forth opposite the name of such Bank on the signature
pages hereof and the Borrowers shall execute and deliver new Notes identical to the existing Notes
but reflecting such increased Commitments and the Banks shall return the existing Notes to the
Company for cancellation.

 

 

     SECTION 3. Amendments. The Credit Agreement is hereby amended as set forth in
this Section 3.

     SECTION 3.01. Addition to Section 1.01. Section 1.01 of the Credit Agreement is
amended 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 Collateral
Agreements in substantially the form of Exhibit S hereto executed and delivered by the Loan
Parties 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 Certification
Report which as of the date of a determination of the Borrowing Base has been received by
the Administrative Agent, an amount equal to 65% of the sum of the Borrowing Base Values of
the Borrowing Base Assets as determined and adjusted from time to time in accordance with
Section 2.14; provided that: (1) to the extent (x) the sum of the Borrowing Base Values for
all Mortgaged Properties included in the Borrowing Base as Borrowing Base Assets for which
Mortgages or local counsel opinions have not yet been received by the Administrative Agent
pursuant to the last sentence of Section 2.14(d) exceeds (y) 20% of the sum of the Borrowing
Base 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 Base
Value 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 Base
and (2) to the extent that (x) the sum of the Borrowing Base Values of all Pledged Mortgage
Receivables exceeds (y) 15% of the sum of the Borrowing Base Value of all Borrowing Base
Assets, such excess of (x) over (y) shall be excluded from the Borrowing Base. The
Administrative Agent shall also be entitled to hold and subtract any reserve against the
Borrowing Base it deems reasonably necessary as security for payment of the Notes and the
obligations of the Guarantors under Article X of this Agreement and the obligations of the
Borrowers under the Letter of Credit Agreements.

     “Borrowing Base Asset” means (i) a Mortgaged Property which is also an Eligible
Property or (ii) a Pledged Mortgage Receivable which is also an Eligible Mortgage
Receivable, 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 as
a Borrowing Base Asset, shall cease to be a Borrowing Base Asset and shall be excluded from
such Borrowing Base calculation if at any time such Property shall cease to meet all the
requirements of an Eligible Property contained in the definition thereof (including without
limitation time limits for inclusion as an Eligible Property) or

 

 

shall cease to be a Mortgaged Property or, if such Mortgaged Property is subject to the
45 day extension for receipt of Mortgages and local counsel opinions post-closing as
provided in the last sentence of Section 2.14(d), then if either a Mortgage or local counsel
opinion, in each case satisfactory to the Administrative Agent, shall fail to be delivered
to the Administrative Agent during such 45 day period. A Mortgage Receivable, the value of
which 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 cease
to meet all the requirements of an Eligible Mortgage Receivable contained in the definition
thereof (including without limitation time limits for inclusion as an Eligible Mortgage
Receivable) or shall cease to be a Pledged Mortgage Receivable.

     “Borrowing Base Certification Report” means a report in substantially the form attached
hereto as Exhibit N, and otherwise satisfactory to the Administrative Agent (or, if the
Borrowers so elect and the Administrative Agent so agrees, an Excel or similar spreadsheet
to substantially the same effect as Exhibit N), certified by the chief financial officer or
other authorized officer of the Borrowers setting forth the calculations required to
establish the Borrowing Base Value for each Borrowing Base Asset and the Borrowing Base
Value for all Borrowing Base Assets as of a specified date, and, whether in Exhibit N or
spreadsheet form, in form and detail satisfactory to the Administrative Agent.

     “Borrowing Base Value” means, with respect to a Borrowing Base Asset for any date of
determination, 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 Borrowing
Base Asset (determined at the time such Borrowing Base Asset is acquired by the Eligible
Property Owner or such subsequent time as the Administrative Agent or the Required Banks may
reasonably request, or Borrowers may elect to provide an updated appraisal (provided that no
such updated appraisal provided by Borrowers shall be effective to increase the Borrowing
Base Value of any Borrowing Base Asset unless at least six months have elapsed from the date
of inclusion of such Borrowing Base Asset in the Borrowing Base and the date of the updated
appraisal)) and (c) $19,230,000; and (B) in the case of Pledged Mortgage Receivables the
lesser of: (a) the lesser of the face amount or the principal outstanding balance of the
promissory note evidencing the Pledged Mortgage Receivable; and (b) the Appraised Value of
the Mortgage Receivable Property at the time of the granting of such Mortgage or such
subsequent time as the Administrative Agent or the Required Banks may reasonably request, or
Borrowers may elect to provide an updated appraisal (provided that no such updated appraisal
provided by Borrowers shall be effective to increase the Borrowing Base Value of any
Borrowing Base Asset unless at least six months have elapsed from the date of inclusion of
such Borrowing Base Asset in the Borrowing Base and the date of the updated appraisal).

     “Collateral Documents” means, collectively, the Membership Pledge Agreement, the
Mortgages, the Mortgaged Property Security Documents, the Mortgage Receivables Pledge
Agreement, the Pledged Mortgage Receivable Security Documents, the Addition of New
Collateral Agreements and all other agreements (including control agreements), instruments
and other documents, whether now existing or hereafter in effect, pursuant to which the
Borrowers 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 security
for all or any portion of the Obligations, as any of them may be amended, modified or
supplemented from time to time.

     “Membership Pledge Agreement” means collectively (or individually as the context may
indicate): (i) a Membership Pledge Agreement by the Operating Partnership in favor of the
Administrative Agent for the benefit of the Secured Parties dated the date hereof, (ii) any
joinders or amendments thereto or any additional Equity Pledge Agreement (as such Membership
Pledge Agreement was retitled pursuant to the First Amendment to Credit Agreement dated as
of April 21, 2005) in substantially the form of Exhibit R to said First Amendment and
delivered 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 Agent
pursuant to Section 5.25 of the Credit Agreement .”

          SECTION 3.02. Amendment to Section 2.14(d) and (e). Paragraphs (d) and (e) of Section
2.14 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 a
Property or Mortgage Receivable as a Borrowing Base Asset, the Borrowers shall deliver to
the Administrative Agent, to the extent not previously delivered to the Administrative
Agent, the items that would have been delivered with respect to such Property or Mortgage
Receivable and such Guarantor under Sections 5.25 and 3.01(c), (e), (g), (h) and (l) as if
such Guarantor had been a Guarantor and such Property or Mortgage Receivable had been a
Borrowing Base Asset on the Closing Date. Until such time as the Administrative Agent shall
have received the items referred to in the foregoing sentence with respect to any Guarantor
or Property or Mortgage Receivable, the Borrowing Base Value of any such Borrowing Base
Asset shall be $0. Notwithstanding the foregoing, the Borrowers shall have an additional 45
days following the date of the closing with respect to any addition of new Collateral
hereunder to deliver any Mortgages or opinions of local counsel relating thereto, it being
understood that the Borrowing Base Value of such Mortgaged Properties shall be included in
the Borrowing Base during such 45 day period provided, however, if, at any time the
Borrowing Base Value of all Borrowing Base Assets for which Mortgages or related opinions
have not yet been delivered exceeds twenty percent (20%) of the Borrowing Base Value of all
Borrowing Base Assets, then any such excess over said twenty percent shall be excluded from
the Borrowing Base Value during such period.

     (e) Disqualification of Borrowing Base Assets. Except as otherwise provided in
the last sentence of paragraph (d) above, if at any time from or after the inclusion of a
Borrowing Base Asset in the Borrowing Base, any event or occurrence, including the passage
of time (and including the failure of Borrowers to deliver a Mortgage or related local
counsel opinion within 45 days of inclusion of a new Mortgaged Property as a Borrowing Base
Asset), causes any such Borrowing Base Asset to fail to meet the requirements of the
definition of Eligible Property or Mortgaged Property, in the case of any Mortgaged
Property, or Eligible Mortgage Receivable or Pledged Mortgage

 

 

Receivable, in the case of any Pledged Mortgage Receivable (including without
limitation by reason of any representation or warranty contained in any Collateral Document
with respect to any Borrowing Base Asset failing to continue to be true and correct), or if
any Mortgage or local counsel opinion delivered pursuant to paragraph (d) above shall prove
undeliverable or unsatisfactory to the Administrative Agent, then the Borrowing Base Value
of such Borrowing Base Asset shall immediately be deemed $0 and the Borrowing Base shall be
recalculated accordingly. Borrowers shall promptly notify the Administrative Agent of any
such event or occurrence and, to the extent so required, make any prepayment pursuant to
Section 2.11(b).”

          SECTION 3.03. Amendment to Section 3.01(c). Paragraph (c) of Section 3.01 of the
Credit 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 not
been previously provided with respect to another Property in the same state, receipt by the
Administrative Agent of an opinion of local counsel satisfactory to the Agent and
substantially in the form of the opinion of local counsel set forth in Exhibit P hereto and
covering such additional matters relating to the transactions contemplated hereby as the
Administrative Agent or any Bank may reasonably request;”

          SECTION 3.04. Amendment to Section 3.01(g). Paragraph (g) of Section 3.01 of the
Credit 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 date
hereof, the Addition of New Collateral Agreement, and the other Collateral Documents and
Mortgage Property Support Documents applicable to the Borrowing Base Assets included in the
Borrowing Base, each in form and content satisfactory to the Administrative Agent, shall
have been duly executed by the Borrowers and Guarantors and shall have been delivered to the
Administrative Agent and shall be in full force and effect (except to the extent delay in
delivery of Mortgages is permitted pursuant to Section 2.14(d)) and each document (including
each Uniform Commercial Code financing statement) required by law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to create in favor of
the Administrative Agent for the benefit of the Secured Parties, upon filing, recording or
possession by the Administrative Agent, as the case may be, a valid, legal and perfected
first-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 of
Collateral added after the date hereof, the Addition of New Collateral Agreement shall have
been delivered to the Administrative Agent;

          SECTION 3.05. Amendment to Section 5.25. Paragraphs (a) and (b) of Section 5.25 of
the 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 or
a Pledged Mortgage Receivable Owner after the Closing Date to become a party to, and agree
to be bound by the terms of (i) this Agreement as a Guarantor pursuant to an Addition of New
Collateral Agreement, in substantially the

 

 

form attached hereto as Exhibit S and (ii) the Collateral Documents, in each case
satisfactory to the Administrative Agent in all respects and executed and delivered to the
Administrative Agent before such Mortgaged Property or Pledged Mortgage Receivable is
included in the calculation of the Borrowing Base, except as otherwise provided in Section
2.14(d). The Borrowers shall also, except as otherwise provided in Section 2.14(d), cause
the items specified in Section 3.01(c), (e), (g), (h) and (l) to be delivered to the
Administrative Agent concurrently with the instruments referred to above, modified
appropriately to refer to such instruments and such Mortgaged Property Owner or Pledged
Mortgage Receivable Owner.

     (b) The Borrowers shall, and shall cause any Person owning membership or limited
partnership interests in a Mortgaged Property Owner or Pledged Mortgage Receivable Owner and
each Person owning stock in a corporate general partner of a Mortgaged Property Owner or
Pledged 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 as
a Guarantor by executing an Addition of New Collateral Agreement in the form attached hereto
as Exhibit S; (ii) pledge 100% of the membership or limited partnership interests of any
Person which becomes a Mortgaged Property Owner or Pledged Mortgage Receivable Owner after
the Closing Date and, in the case of a Mortgaged Property Owner or Pledged Mortgage
Receivable Owner that is a limited partnership, also pledge 100% of the stock of the
corporate general partner thereof, in each case pursuant to an Addition of New Collateral
Agreement in substantially the form attached hereto as Exhibit S executed and delivered by
the Borrower or such Pledgor Owner to the Administrative Agent within ten (10) Domestic
Business Days after the day on which such Person became a Mortgaged Property Owner or
Pledged Mortgage Receivable Owner; and (iii) deliver to the Administrative Agent such
Certificates evidencing such membership interests, limited partnership interests or stock
together with transfer powers executed in blank. The Borrowers shall also cause the items
specified in Section 3.01(c), (e), (g), (h) and (l) to be delivered to the Administrative
Agent concurrently with the Addition of New Collateral Agreement referred to above, modified
appropriately to refer to such Addition of New Collateral Agreement, Pledgor Owner and such
Mortgaged Property Owner or Pledged Mortgage Receivable Owner.

          SECTION 4. Amendment of Exhibit N — Borrowing Base Certification Report. Exhibit N to
the Credit Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit
N hereto.

          SECTION 5. Addition of New Exhibit S — Addition of New Collateral Agreement. The
Exhibits to the Credit Agreement are hereby amended to add a new Exhibit S as set forth on Exhibit
S hereto.

          SECTION 6. Conditions to Effectiveness. The effectiveness of this Amendment and the
obligations of the Administrative Agent and the Banks hereunder are subject to the following
conditions, unless the Required Banks waive such conditions:

 

 

          (a) receipt by the Administrative Agent from each of the parties hereto of a duly executed
counterpart of this Amendment signed by such party;

          (b) the fact that the representations and warranties of the Borrower contained in Section 6 of
this 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 the
Administrative Agent, with respect to the due authorization, execution, delivery and enforceability
of this Amendment, the new Notes and the Addition of New Collateral Agreement and with respect to
such 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. This
Amendment is not intended to effect, nor shall it be construed as, a novation. The Credit
Agreement and this Amendment shall be construed together as a single agreement. Nothing herein
contained shall waive, annul, vary or affect any provision, condition, covenant or agreement
contained 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 Administrative
Agent do hereby reserve all of their rights and remedies against all parties who may be or may
hereafter become secondarily liable for the repayment of the Obligations. The Borrower promises
and agrees to perform all of the requirements, conditions, agreements and obligations under the
terms 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 expressly
agrees that the Credit Agreement, as amended, and the other Loan Documents are in full force and
effect.

     SECTION 8. Representations and Warranties. The Borrowers and the Guarantors hereby
represent 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 with
the passage of time or the giving of notice, or both, would constitute an Event of Default, under
the 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 this
Amendment, the New Notes and the Addition of New Collateral Agreement and to do all acts and things
as 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 has
been duly authorized, validly executed and delivered by one or more authorized officers or managers
of the Borrowers and the Guarantors and constitutes the legal, valid and binding obligation of the
Borrowers 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 New
Collateral Agreement and the performance by the Borrowers and the Guarantors hereunder and
thereunder do not and will not require the consent or approval of any regulatory authority or
governmental authority or agency having jurisdiction over the Borrowers or the Guarantors nor be in
contravention of or in conflict with the articles of incorporation, bylaws, operating agreement or
other 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 Borrowers
or the Guarantors is party or by which the assets or properties of the Borrower or the Guarantors
are 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 constitute
one and the same agreement.

     SECTION 10. Governing Law. This Amendment shall be construed in accordance with and
governed 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 their
respective duly authorized officers or representatives to execute and deliver, this Amendment as of
the 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

9

 

	 	 	 	 	 
	 	 	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

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

10

 

	 	 	 	 	 
	 	 	OB MIDWAY NC GLADSTONE COMMERCIAL 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
	 
	 	 	 	 
	 	 	GCC POCONO 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

11

 

	 	 	 	 	 
	 	 	GCC NORFOLK 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
	 
	 	 	 	 
	 	 	FIRST PARK TEN COCO SAN ANTONIO, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	GCC COCO, Inc.
	 

	 	 	 	its General Partner
	 
	 	 	 	 
	 

	 	By:
	 	                                                                                (SEAL)
	 

	 	 	 	     Arthur S. Cooper, President
	 
	 	 	 	 
	 

	 	TUSCANY
	 	AUSTIN GCC L.P.
	 
	 	 	 	 
	 

	 	By:
	 	GCC COCO, Inc.
	 

	 	 	 	its General Partner
	 
	 	 	 	 
	 

	 	By:
	 	                                                                                (SEAL)
	 

	 	 	 	     Arthur S. Cooper, President

[Remainder of this page intentionally left blank]

12

 

	 	 	 	 	 
	COMMITMENTS:	 	BRANCH BANKING AND TRUST COMPANY,
	 	 	as Administrative Agent and as a Bank
	 
	$30,000,000

	 	By:
	 	                                                                                (SEAL)
	 

	 	 	 	     James C. Stallings III
	 

	 	 	 	     Vice President

[Remainder of this page intentionally left blank]

13

 

	 	 	 	 	 
	COMMITMENTS:	 	FIRST HORIZON BANK,
	 	 	a Division of First Tennessee Bank, NA
	 
	 	 	 	 
	$15,000,000

	 	By:
	 	                                                                                (SEAL)
	 

	 	 	 	     Susan L. Springfield
	 

	 	 	 	     Senior Vice President

[Remainder of this page intentionally left blank]

14

 

	 	 	 	 	 
	COMMITMENTS:	 	COMPASS BANK
	 
	 	 	 	 
	$15,000,000

	 	By:
	 	                                                                                (SEAL)
	 

	 	 	 	     T. Ray Sandefur
	 

	 	 	 	     Senior Vice President

[Remainder of this page intentionally left blank]

15

 

EXHIBIT N

[FORM OF BORROWING BASE CERTIFICATION]

16

 

GLADSTONE COMMERCIAL CORPORATION

GLADSTONE COMMERCIAL LIMITED PARTNERSHIP

Borrowing Base Certification Report

___________ ___, 20__

BORROWING BASE ASSETS

	 	 	 	 	 
	A. Mortgaged Properties with Delivered Mortgages:
	 	 	 	 
	 
	 	 	 	 
	1.
	 	 	 	 
	(a) Name of Mortgaged Property:
	 	 
	 	 
	 
	 	 	 	 
	(b) Does it Meet All Requirements of Definitions of Eligible
	 	 
	 	 
	Property and Mortgaged Property including a delivered Mortgage?
(If no, then enter $0 in line (f))
	 	 	 	 
	 
	 	 	 	 
	(c) Acquisition Cost of Mortgaged Property:
	 	 
	 	 
	 
	 	 	 	 
	(d) Applicable Appraised Value of Mortgaged Property (Based on
	 	 
	 	 
	Applicable Appraisal under definition of Borrowing Base Value):
	 	 	 	 
	 
	 	 	 	 
	(e) Potential Borrowing Base Value (Lesser of (c) and (d)
	 	 
	 	 
	above):
	 	 	 	 
	 
	 	 	 	 
	(f) Actual Borrowing Base Value (Lesser of (e) and $19,230,000):
	 	 
	 	 
	 
	 	 	 	 
	2.
	 	 	 	 
	(a) Name of Mortgaged Property:
	 	 
	 	 
	 
	 	 	 	 
	(b) Does it Meet All Requirements of Definitions of Eligible
	 	 
	 	 
	Property and Mortgaged Property including a delivered Mortgage?
(If no, then enter $0 in line (f))
	 	 	 	 
	 
	 	 	 	 
	(c) Acquisition Cost of Mortgaged Property:
	 	 
	 	 
	 
	 	 	 	 
	(d) Applicable Appraised Value of Mortgaged Property (Based on
	 	 
	 	 
	Applicable Appraisal under definition of Borrowing Base Value):
	 	 	 	 
	 
	 	 	 	 
	(e) Potential Borrowing Base Value (Lesser of (c) and (d)
	 	 
	 	 
	above):
	 	 	 	 
	 
	 	 	 	 
	(f) Actual Borrowing Base Value (Lesser of (e) and $19,230,000):
	 	 
	 	 
	 
	 	 	 	 
	3.
	 	 	 	 
	(a) Name of Mortgaged Property:
	 	 
	 	 

17

 

	 	 	 	 	 
	(b) Does it Meet All Requirements of Definitions of Eligible
	 	 
	 	 
	Property and Mortgaged Property including a Delivered Mortgage?
(If no, then enter $0 in line (f))
	 	 	 	 
	 
	 	 	 	 
	(c) Acquisition Cost of Mortgaged Property:
	 	 
	 	 
	 
	 	 	 	 
	(d) Applicable Appraised Value of Mortgaged Property (Based on
	 	 
	 	 
	Applicable Appraisal under definition of Borrowing Base Value):
	 	 	 	 
	 
	 	 	 	 
	(e) Potential Borrowing Base Value (Lesser of (c) and (d)
	 	 
	 	 
	above):
	 	 	 	 
	 
	 	 	 	 
	(f) Actual Borrowing Base Value (Lesser of (e) and $19,230,000):
	 	 
	 	 
	 
	 	 	 	 
	B. Mortgaged Properties with Pending Mortgages:
	 	 	 	 
	 
	 	 	 	 
	1.
	 	 	 	 
	 
	 	 	 	 
	(a) Name of Mortgaged Property:
	 	 
	 	 
	 
	 	 	 	 
	(b) Does it Meet All Requirements of Definitions of Eligible
	 	 
	 	 
	Property and Mortgaged Property except that a Mortgage has not
yet been delivered and less than 45 days have elapsed since the
inclusion of the Mortgaged Property in the Borrowing Base?
(If no, then enter $0 in line (f))
	 	 	 	 
	 
	 	 	 	 
	(c) Acquisition Cost of Mortgaged Property:
	 	 
	 	 
	 
	 	 	 	 
	(d) Applicable Appraised Value of Mortgaged Property (Based on
	 	 
	 	 
	Applicable Appraisal under definition of Borrowing Base Value):
	 	 	 	 
	 
	 	 	 	 
	(e) Potential Borrowing Base Value (Lesser of (c) and (d)
	 	 
	 	 
	above):
	 	 	 	 
	 
	 	 	 	 
	(f) Actual Borrowing Base Value (Lesser of (e) and $19,230,000):
	 	 
	 	 
	 
	 	 	 	 
	2.
	 	 	 	 
	 
	 	 	 	 
	(a) Name of Mortgaged Property:
	 	 
	 	 
	 
	 	 	 	 
	(b) Does it Meet All Requirements of Definitions of Eligible
	 	 
	 	 
	Property and Mortgaged Property except that a Mortgage has not
yet been delivered and less than 45 days have elapsed since the
inclusion of the Mortgaged Property in the Borrowing Base?
(If no, then enter $0 in line (f))
	 	 	 	 
	 
	 	 	 	 
	(c) Acquisition Cost of Mortgaged Property:
	 	 
	 	 
	 
	 	 	 	 
	(d) Applicable Appraised Value of Mortgaged Property (Based on
	 	 
	 	 
	Applicable Appraisal under definition of Borrowing Base Value):
	 	 	 	 

18

 

	 	 	 	 	 
	(e) Potential Borrowing Base Value (Lesser of (c) and (d)
	 	 
	 	 
	above):
	 	 	 	 
	 
	 	 	 	 
	(f) Actual Borrowing Base Value (Lesser of (e) and $19,230,000):
	 	 
	 	 
	 
	 	 	 	 
	C. Pledged Mortgage Receivables:
	 	 	 	 
	 
	 	 	 	 
	1.
	 	 	 	 
	(a) Name of Pledged Mortgage Receivable:
	 	 
	 	 
	 
	 	 	 	 
	(b) Does it Meet All Requirements of Definitions of Eligible
	 	 
	 	 
	Mortgage Receivable and Pledged Mortgage Receivable? (If no,
then enter $0 in line (g))
	 	 	 	 
	 
	 	 	 	 
	(c) Face Amount of Pledged Mortgage Receivable:
	 	 
	 	 
	 
	 	 	 	 
	(d) Outstanding Principal Balance of Pledged Mortgage
	 	 
	 	 
	Receivable:
	 	 	 	 
	 
	 	 	 	 
	(e) Lesser of (c) and (d):
	 	 
	 	 
	 
	 	 	 	 
	(f) Applicable Appraised Value of Mortgage Receivable Property:
	 	 
	 	 
	(Based on Applicable Appraisal under definition of Borrowing
Base Value):
	 	 	 	 
	 
	 	 	 	 
	(g) Borrowing Base Value (lesser of (e) and (f)):
	 	 
	 	 
	 
	 	 	 	 
	2.
	 	 	 	 
	(a) Name of Pledged Mortgage Receivable:
	 	 
	 	 
	 
	 	 	 	 
	(b) Does it Meet All Requirements of Definitions of Eligible
	 	 
	 	 
	Mortgage Receivable and Pledged Mortgage Receivable? (If no,
then enter $0 in line (g))
	 	 	 	 
	 
	 	 	 	 
	(c) Face Amount of Pledged Mortgage Receivable:
	 	 
	 	 
	 
	 	 	 	 
	(d) Outstanding
Principal Balance of Pledged Mortgage Receivable:
	 	 
	 	 
	 
	 	 	 	 
	(e) Lesser of (c) and (d):
	 	 
	 	 
	 
	 	 	 	 
	(f) Applicable Appraised Value of Mortgage Receivable Property:
	 	 
	 	 
	(Based on Applicable Appraisal under definition of Borrowing
Base Value):
	 	 	 	 
	 
	 	 	 	 
	(g) Borrowing Base Value (lesser of (e) and (f)):
	 	 
	 	 
	 
	 	 	 	 
	3.
	 	 	 	 
	(a) Name of Pledged Mortgage Receivable:
	 	 
	 	 
	 
	 	 	 	 
	(b) Does it Meet All Requirements of Definition of Eligible
	 	 
	 	 
	Mortgage Receivable and Pledged Mortgage Receivable? (If no,
then enter $0
	 	 	 	 

19

 

	 	 	 	 	 
	in line (g))
	 	 	 	 
	 
	 	 	 	 
	(c) Face Amount of Pledged Mortgage Receivable:
	 	 
	 	 
	 
	 	 	 	 
	(d) Outstanding Principal Balance of Pledged Mortgage
	 	 
	 	 
	Receivable:
	 	 	 	 
	 
	 	 	 	 
	(e) Lesser of (c) and (d):
	 	 
	 	 
	 
	 	 	 	 
	(f) Applicable Appraised Value of Mortgage Receivable Property:
	 	 
	 	 
	(Based on Applicable Appraisal under definition of Borrowing
Base Value):
	 	 	 	 
	 
	 	 	 	 
	(g) Borrowing Base Value (lesser of (e) and (f)):
	 	 
	 	 
	 
	 	 	 	 
	D. Sum of All Line (f)s in Section A:
	 	 
	 	 
	 
	 	 	 	 
	E. Sum of All Line (f)s in Section B:
	 	 
	 	 
	 
	 	 	 	 
	F. Sum of All Line (g)s in Section C:
	 	 
	 	 
	 
	 	 	 	 
	G. AGGREGATE
BORROWING BASE VALUES BEFORE CAPS
(Sum of Lines D, E and F):
	 	 
	 	 
	 
	 	 	 	 
	H. 20% of G
	 	 
	 	 
	 
	 	 	 	 
	I. 15% of G
	 	 
	 	 
	 
	 	 	 	 
	J. Lesser of Lines E or H (PENDING MORTGAGE SUBLIMIT):
	 	 
	 	 
	 
	 	 	 	 
	K. Lesser of Lines F or I (MORTGAGE RECEIVABLE SUBLIMIT):
	 	 
	 	 
	 
	 	 	 	 
	L. TOTAL
INCLUDABLE BORROWING BASE VALUES (AFTER 2 SUBLIMITS) (Sum of Lines D, J and K):
	 	 
	 	 
	 
	 	 	 	 
	M. BORROWING BASE AMOUNT
	 	 
	 	 
	(65% of Line L)
	 	 	 	 

20

 

EXHIBIT S

[FORM OF ADDITION OF NEW COLLATERAL AGREEMENT]

21

 

Execution Version

ADDITION OF NEW COLLATERAL AGREEMENT

     THIS ADDITION OF NEW COLLATERAL AGREEMENT (the “Agreement”), dated as of this 6th
day of July, 2005, is among Gladstone Commercial Corporation, a Maryland corporation (the
“Company”), Gladstone Commercial Limited Partnership, a Delaware limited partnership (the
“Operating Partnership” and together with the Company, the “Borrowers”), Gladstone Lending LLC, a
Delaware limited liability company as an existing guarantor and pledgor of a new Mortgage
Receivable, Corning Big Flats, LLC, a Delaware limited liability company (“Corning”), SLEE Grand
Prairie, L.P., a Delaware limited partnership (“SLEE”), 2525 N Woodlawn Vstrm Wichita, KS, LLC, a
Delaware limited liability company (“Voicestream”) and together with Corning and SLEE, the “New
Guarantors”), and Branch Banking and Trust Company, a national banking association, acting as
Administrative Agent (in such capacity, the “Administrative Agent”) for itself and other Secured
Parties (as defined in the Credit Agreement referred to below). Capitalized terms used in this
Agreement which are not otherwise defined in this Agreement shall have the respective meanings
assigned to them in the Credit Agreement (as hereinafter defined).

RECITALS:

     1. Reference is made to: (i) that certain Credit Agreement dated as of February 28, 2005, as
amended (referred to herein as the “Credit Agreement”) among the Borrowers, the Guarantors, the
Administrative Agent and the Banks, (ii) a certain Equity Pledge Agreement dated as of April 21,
2005 (referred to herein as the “Equity Pledge Agreement”) by the Company and the Operating
Partnership in favor of the Agent, (iii) a certain Mortgage Receivables Pledge Agreement dated as
of April 21, 2005 (the “Receivables Pledge Agreement”) by Gladstone Lending LLC in favor of the
Agent.

     2. The Borrowers have requested pursuant to Section 2.14(b) of the Credit Agreement that three
additional Mortgaged Properties located in Chemung County, New York, Tarrant County, Texas and
Sedgwick County, Kansas (the “New Mortgaged Properties”) and one additional Mortgage Receivable for
property located in Fairfax County, Virginia and more fully described on Schedule C hereto
(the “New Mortgage Receivable, and, together with the New Mortgaged Properties, the “New
Collateral”) be included in calculations of the Borrowing Base and as Collateral under the Credit
Agreement and the Loan Documents and the Administrative Agent and the Required Banks have accepted
the New Collateral as Borrowing Base Assets, subject to the execution and delivery hereof and the
various other deliveries and requirements under the Credit Agreement and Loan Documents.

     3. Pursuant to and as required by Section 5.25 of the Credit Agreement, the New Guarantors
desire to join the Credit Agreement as Guarantors thereunder.

     4. Pursuant to and as required by Section 5.25 of the Credit Agreement, the Operating
Partnership desires to pledge all of its equity interests in the three New Guarantors as Collateral
for the Loans by amending the Equity Pledge Agreement to add the equity interests in the three New
Guarantors to Exhibit A thereto.

22

 

     5. Pursuant to and as required by Section 5.25 of the Credit Agreement, Gladstone Lending LLC
desires to pledge the New Mortgage Receivable as Collateral for the Obligations by amending the
Receivable Pledge Agreement to add the New Mortgage Receivable to the list of Pledged Mortgage
Receivables set forth in Exhibit A thereto.

     Accordingly, in consideration of the Recitals and the premises and mutual covenants herein
contained, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

     1. Joinder and Reaffirmation of Credit Agreement. Each New Guarantor and each
Borrower hereby acknowledges and agrees that, by its execution of this Agreement, each New
Guarantor will be deemed to be a party to the Credit Agreement and a “Guarantor” for all purposes
of the Credit Agreement, the Notes and the other Loan Documents, and shall have all of the
obligations of a Guarantor thereunder as if it had executed the Credit Agreement and the other Loan
Documents. Each New Guarantor assumes and agrees to be bound by and comply with, all of the terms,
provisions and conditions contained in the Credit Agreement and the other Loan Documents, and all
duties and obligations thereunder, as fully and completely as all other Guarantors thereunder,
jointly and severally, individually and collectively, with all other Guarantors, including without
limitation (i) all of the representations, warranties, covenants, undertakings and obligations set
forth in the Credit Agreement and the other Loan Documents, and (ii) all waivers set forth in the
Credit Agreement and the other Loan Documents. Each New Guarantor has received a copy of the
Credit Agreement and the Schedules and Exhibits thereto and the other Loan Documents. The
information on the Exhibits and Schedules to the Credit Agreement are amended to provide the
information shown on the attached Schedule A. Each New Guarantor hereby waives
presentment, demand, protest, acceptance, notice of demand, protest and nonpayment and any other
notice required by law relative to the Credit Agreement, the Obligations, the Notes and the other
Loan Documents. To induce the Administrative Agent and Banks to enter into this Addition of New
Collateral Agreement, the Borrowers, New Guarantors and Existing Guarantors hereby (a) restate and
renew each and every representation and warranty heretofore made by them under, or in connection
with the execution and delivery of, the Credit Agreement and the other Loan Documents; (b) restate,
ratify and reaffirm each and every term and condition set forth in the Credit Agreement and in the
Loan Documents, effective as of the date hereof; (c) acknowledge and agree that, as of the date
hereof, there exists no right of offset, defense, counterclaim or objection in favor of any
Borrower or any Loan Party as against the Administrative Agent or any Bank with respect to the
payment or performance of its Obligations; and (d) certify that no Default or Event of Default
exists. Borrowers and New Guarantors agree to pay upon request the actual costs and expenses of
the Administrative Agent and Banks reasonably incurred in connection with the preparation,
execution, delivery and enforcement of this Addition of New Collateral Agreement and all other Loan
Documents executed in connection herewith, the closing hereof, and any other transactions
contemplated hereby, including the reasonable fees and out-of-pocket expenses of Administrative
Agent’s legal counsel.

     2. Amendment to Equity Pledge Agreement. Exhibit A of the Equity Pledge Agreement is
hereby amended to read in its entirety as set forth in Schedule B hereto. By its execution
hereof, the Operating Partnership hereby pledges, hypothecates, delivers and assigns and grants
unto Administrative Agent, as Administrative Agent for itself and the Secured Parties,

23

 

a security interest (which security interest shall constitute a first priority security
interest), in all of the Pledgor’s membership interests of Corning and Voicestream, all of the
limited partnership interests of SLEE and all of the membership interests of GCC Acquisition
Holdings LLC, the general partner of SLEE, as described on said Schedule B and confirms all
the terms and conditions, representations, warranties, covenants and other provisions of the Equity
Pledge Agreement as fully as if set forth herein.

     3. Amendment to Receivables Pledge Agreement. Exhibit A of the Receivables Pledge
Agreement is hereby amended to read in its entirety as set forth in Schedule C hereto. By
its execution hereof, Gladstone Lending LLC hereby pledges, hypothecates, delivers and assigns and
grants to the Administrative Agent, as agent for the Secured Parties, a lien and continuing
security interest in all of the Pledgors’ right, title and interest in, to and under (but none of
the obligations under) the New Mortgage Receivable described on said Schedule C and
confirms all the terms and conditions, representations, warranties, covenants and other provisions
of the Receivables Pledge Agreement as fully as if set forth herein.

     4. Power of Attorney. Each of the New Guarantors hereby irrevocably constitutes and
appoints Branch Banking and Trust Company, as Administrative Agent under the Credit Agreement
(hereinafter referred to as “Attorney”) (and all officers, employees or agents designated by
Attorney), with full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in its place and stead and in its name or in Attorney’s own name,
from time to time in Attorney’s discretion, to take any and all appropriate action and to execute
and deliver any and all documents and instruments that may be necessary or desirable to accomplish
the purposes of the Agreement and other Loan Documents, and, without limiting the generality of the
foregoing, hereby grants to Attorney the power and right, on its behalf, without notice to or
assent by it, upon the occurrence and during the continuance of any Event of Default, to do the
following: (a) open mail for the New Guarantors, and ask, demand, collect, give acquittances and
receipts for, take possession of, or endorse and receive payment of, any checks, drafts, notes,
acceptances, or other instruments for the payment of moneys due, and sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, and notices in connection with any of the New Guarantors’ property; (b)
effect any repairs to any of the New Guarantors’ assets, or continue or obtain any insurance and
pay all or any part of the premiums therefor and costs thereof, and make, settle and adjust all
claims under such policies of insurance, and make all determinations and decisions with respect to
such policies; (c) pay or discharge any taxes, Liens, or other encumbrances levied or placed on or
threatened against the New Guarantors or the New Guarantors’ property; (d) defend any suit, action
or proceeding brought against the New Guarantors if the New Guarantors do not defend such suit,
action or proceeding or if Attorney believes that it is not pursuing such defense in a manner that
will maximize the recovery to Attorney, and settle, compromise or adjust any suit, action, or
proceeding described above and, in connection therewith, give such discharges or releases as
Attorney may deem appropriate; (e) file or prosecute any claim, litigation, suit or proceeding in
any court of competent jurisdiction or before any arbitrator, or take any other action otherwise
deemed appropriate by Attorney for the purpose of collecting any and all such moneys due to the New
Guarantors whenever payable and to enforce any other right in respect of the New Guarantors’
property; (f) sell, transfer, pledge, make any agreement with respect to, or otherwise deal with,
any of the New Guarantors’ property, and execute, in connection with such sale or action, any

24

 

endorsements, assignments or other instruments of conveyance or transfer in connection
therewith; and (g) cause the certified public accountants then engaged by the New Guarantors to
prepare and deliver to Attorney at any time and from time to time, promptly upon Attorney’s
request, any reports required to be prepared by or on behalf of the New Guarantors under the
Agreement or any other Loan Document, all as though Attorney were the absolute owner of its
property for all purposes, and to do, at Attorney’s option and the New Guarantors’ expense, at any
time or from time to time, all acts and other things that Attorney reasonably deems necessary to
perfect, preserve, or realize upon its property or assets and the Liens of the Administrative Agent
as agent for the Secured Parties thereon, all as fully and effectively as it might do. Each of the
New Guarantors hereby ratifies, to the extent permitted by law, all that said Attorney shall
lawfully do or cause to be done by virtue hereof. No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated hereby, shall
inquire into or seek confirmation from any of the New Guarantors as to the authority of Attorney to
take any action described below, or as to the existence of or fulfillment of any condition to this
Power of Attorney, which is intended to grant to Attorney unconditionally the authority to take and
perform the actions contemplated herein, and each of the New Guarantors irrevocably waives any
right to commence any suit or action, in law or equity, against any person or entity that acts in
reliance upon or acknowledges the authority granted under this Power of Attorney. The power of
attorney granted hereby is coupled with an interest and may not be revoked or canceled by the New
Guarantors until their respective Obligations under the Loan Documents have been indefeasibly paid
in full and Attorney has provided its written consent thereto.

     5. No Other Amendments. Except as set forth expressly herein, all terms of the Credit
Agreement, the Equity Pledge Agreement, the Receivables Pledge Agreement and the other Loan
Documents, shall be and remain in full force and effect, and such documents are hereby ratified and
affirmed. This Agreement and each of the documents amended herein shall be construed together as a
single agreement. Nothing herein contained shall waive, annul, vary or affect any provision,
condition, covenant or agreement contained in the Credit Agreement, the Equity Pledge Agreement,
the Receivables Pledge Agreement and the other Loan Documents except as herein amended, nor affect
nor impair any rights, powers, or remedies available under the Credit Agreement, the Equity Pledge
Agreement, the Receivables Pledge Agreement and the other Loan Documents except as herein amended,
nor affect nor impair any rights, powers or remedies under the Credit Agreement, the Equity Pledge
Agreement, the Receivables Pledge Agreement and the other Loan Documents as hereby amended. The
Banks and the Administrative Agent do hereby reserve all their rights and remedies against all
parties who may be or may hereafter become secondarily liable for the repayment of the Obligations.

     6. Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which, taken together, shall constitute one and the
same agreement.

     7. Governing Law. This Agreement shall be construed in accordance with and governed
by the laws of the State of North Carolina.

25

 

	 	 	 	 	 
	 	 	NEW GUARANTORS:
	 
	 	 	 	 
	 	 	CORNING BIG FLATS, 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
	 
	 	 	 	 
	 	 	SLEE GRAND PRAIRIE, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	GCC Acquisition Holdings, LLC
	 

	 	 	 	its General Partner
	 
	 	 	 	 
	 

	 	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

26

 

	 	 	 	 	 
	 	 	2525 N WOODLAWN VSTRM, WICHITA, KS, 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
	 
	 	 	 	 
	 	 	BORROWERS:
	 
	 	 	 	 
	 	 	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

27

 

	 	 	 	 	 
	 	 	NEW MORTGAGE RECEIVABLE PLEDGOR:
	 
	 	 	 	 
	 	 	GLADSTONE LENDING 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

28

 

	 	 	 	 	 
	 	 	BANKS:
	 
	 	 	 	 
	 	 	BRANCH BANKING AND TRUST COMPANY, as
	 	 	Administrative Agent and as a Bank
	 
	 	 	 	 
	 

	 	By:
	 	                                                                                (SEAL)
	 

	 	Title:
	 	                                                                                
	 
	 	 	 	 
	 	 	FIRST HORIZON BANK, a Division of First Tennessee Bank, NA
	 
	 	 	 	 
	 

	 	By:
	 	                                                                                (SEAL)
	 

	 	 	 	     Susan L. Springfield
	 

	 	 	 	     Senior Vice President
	 
	 	 	 	 
	 	 	COMPASS BANK
	 
	 	 	 	 
	 

	 	By:
	 	                                                                                (SEAL)
	 

	 	 	 	     T. Ray Sandefur
	 

	 	 	 	     Senior Vice President

 

 

Schedule A

[Provide information here to update Schedules and Exhibits to the Credit Agreement and other Loan
Documents]

2

 

Schedule B

Exhibit A

NAMES, ADDRESSES, PLEDGED EQUITY INTERESTS AND STATES OF

ORGANIZATION OF PLEDGED SUBSIDIARIES

	 	 	 	 	 	 	 
	Pledged Subsidiary	 	Address	 	Equity Interest	 	State of Organization
	Tuscany Austin GCC L.P.

	 	1521 Westbranch Road, Suite 200
McLean, VA 22102

Attn: George Stelljes III
	 	100% of Limited
Partnership
Interests
(Uncertificated)
	 	Delaware
	 
	 	 	 	 	 	 
	GCC Norfolk LLC

	 	1521 Westbranch Road, Suite 200
McLean, VA 22102

Attn: George Stelljes III
	 	100% of Membership
Interests
(Uncertificated)
	 	Delaware
	 
	 	 	 	 	 	 
	First Park Ten Coco San
Antonio, L.P.

	 	1521 Westbranch Road, Suite 200
McLean, VA 22102

Attn: George Stelljes III
	 	100% of Limited
Partnership
Interests
(Uncertificated)
	 	Delaware
	 
	 	 	 	 	 	 
	Gladstone Lending LLC

	 	1521 Westbranch Road, Suite 200
McLean, VA 22102

Attn: George Stelljes III
	 	100% of Membership
Interests
(Uncertificated)
	 	Delaware
	 
	 	 	 	 	 	 
	GCC COCO, Inc.

	 	1521 Westbranch Road, Suite 200
McLean, VA 22102

Attn: George Stelljes III
	 	100% of Common
Stock, no par value
	 	Delaware
	 
	 	 	 	 	 	 
	Corning Big Flats, LLC

	 	1521 Westbranch Road, Suite 200
McLean, VA 22102

Attn: George Stelljes III
	 	100% of Membership
Interests
(Uncertificated)
	 	Delaware
	 
	 	 	 	 	 	 
	SLEE Grand Prairie, L.P.

	 	1521 Westbranch Road, Suite 200
McLean, VA 22102

Attn: George Stelljes III
	 	100% of Limited
Partnership
Interests
(Uncertificated)
	 	Delaware
	 
	 	 	 	 	 	 
	GCC Acquisition

Holdings LLC

	 	1521 Westbranch Road, Suite 200
McLean, VA 22102

Attn: George Stelljes III
	 	100% of Membership
Interests
(Uncertificated)
	 	Delaware
	 
	 	 	 	 	 	 
	2525 N Woodlawn Vstrm

Wichita, KS, LLC

	 	1521 Westbranch Road, Suite 200
McLean, VA 22102

Attn: George Stelljes III
	 	100% of Membership
Interests
(Uncertificated)
	 	Delaware

3

 

Schedule C

Exhibit A

PLEDGORS’
NAMES, ADDRESSES and STATES OF ORGANIZATION AND DESCRIPTION 

OF PLEDGED MORTGAGE
RECEIVABLES

	 	 	 	 	 
	 	 	State of	 	Description of Pledged
	Name/Address	 	Organization	 	Mortgage Receivables
	Gladstone
Lending LLC

1521 Westbranch Drive, Suite 200

McLean, VA 22102

Attn: George Stelljes III

	 	Delaware
	 	Mortgage: $11,170,000.00

Interest Rate: 10.00%

Maturity Date: 02/18/2014
	 
	 	 	 	 
	 

	 	 	 	Mortgagor:
	 

	 	 	 	Mayco Property Holdings
LLC 

(Stonebridge
Industries)

42400 Merrill Road

Sterling Heights (Macomb

County), MI
	 
	 	 	 	 
	Gladstone
Lending LLC

1521 Westbranch Drive, Suite 200

McLean, VA 22102

Attn: George Stelljes III

	 	Delaware
	 	Mortgage: $10,000,000.00

Interest Rate: Greater of
7.5% or 600 basis points
over the LIBOR Rate

Maturity Date: 05/30/2017

Mortgagor:
	 

	 	 	 	West*Stone, LLC

1600 Anderson Road

McLean, (Fairfax County),
VA

4exv10w20

 

EXHIBIT 10.20

NONQUALFIED STOCK OPTION AGREEMENT

     THIS AGREEMENT (this “Agreement”), dated as of August 1, 2005, is made and entered into
between International Wire Group, Inc., a Delaware corporation (“Group” or “Corporation”), and
William Lane Pennington (the “Holder”).

WITNESSETH:

     WHEREAS, the Holder is Vice-Chairman of Group, and Group desires to grant the Holder an Option
to purchase shares of Stock (hereafter defined) of Group, and Holder desires to accept the Option
upon the terms, conditions and covenants set forth herein.

     NOW, THEREFORE, in consideration of these premises, the parties agree that the following shall
constitute the agreement between the Corporation and the Holder:

     1. Definitions. For purposes of this Agreement, the following terms shall have the
meanings specified below:

     1.1 “Board of Directors” shall mean the board of directors of Group.

     1.2 “Code” shall mean the Internal Revenue Code of 1986, as amended.

     1.3 “Committee” shall mean the Compensation Committee of the Board of Directors of the
Company.

     1.4 “Confidential Information” shall mean information about the Corporation, including its
respective businesses, products and practices, disclosed to or known by the Holder directly or
indirectly through the Corporation. However, Confidential Information shall not include under any
circumstances any information with respect to the foregoing matters which is (i) available to the
public from a source other than Holder, (ii) released in writing by the Corporation to the public
or (iii) the subject of a written waiver executed by the Corporation for the benefit of Holder.

     1.5 “Fair Market Value” shall mean the closing price of the Stock on the date of calculation
(or on the last preceding trading date if the Stock was not traded on such date) if the Stock is
readily tradable on a national securities exchange or other market system, and if the Stock is not
readily tradable, Fair Market Value shall mean the amount determined in good faith by the Committee
as the fair market value of the Stock.

     1.6 “Securities Act” shall mean the Securities Act of 1933, as amended.

     1.7 “Stock” shall mean Group’s authorized par value $0.01 per share Common Stock together with
any other securities with respect to which Options (hereinafter defined) or other rights granted
hereunder may become exercisable.

     2. Grant of Nonqualified Option. Subject to the terms and conditions set forth
herein, Group grants to the Holder an Option (the “Option”) to purchase from Group at a price

 

 

per share (the “Exercise Price”) the number of shares of Stock (the “Option Shares”) as both
are set out on the signature page hereof subject to adjustments as provided in Paragraph 9
hereof. The Option is not intended to be an incentive option within the meaning of Section 422(a)
of the Code.

     3. Notice of Exercise. This Option may be exercised, in accordance with Paragraph
8, to purchase all or a portion of the applicable number of Option Shares exercisable by
written notice to Group as provided in Paragraph 12, which notice shall:

          (a) specify the number of shares of Stock to be purchased at the Exercise Price;

          (b) if the person exercising this Option is not the named Holder, contain or be accompanied by
evidence satisfactory to the Committee of such person’s right to exercise this Option; and

          (c) be accompanied by payment in full of the Exercise Price in the form of a certified or
cashier’s check payable to the order of Group, or, in the discretion of the Committee, by the
delivery of shares of Stock of the Company then owned by Holder, by the withholding of shares of
Stock for which this Option is exercisable or by a combination of these methods. In the discretion
of the Committee, payment also may be made by delivering a properly executed exercise notice to the
Company together with a copy of irrevocable instructions to a broker to deliver promptly to the
Company the amount of sale or loan proceeds to pay the exercise price. To facilitate the foregoing,
the Company may enter into agreements for coordinated procedures with one or more brokerage firms.

     4. Investment Letter. Unless there is in effect a registration statement under the
Securities Act with respect to the issuance of the Option Shares (and, if required, there is
available for delivery a prospectus meeting the requirements of Section 10(a)(3) of the Securities
Act), the Holder (or, in the event of his death, the person exercising the Option) shall, as an
absolute condition to his right to exercise the Option, deliver to Group an agreement or
certificate containing such representations, warranties, and covenants as Group may deem necessary
or appropriate to ensure that the issuance of shares of Stock pursuant to such exercise is not
required to be registered under the Securities Act or any applicable state securities law. It is
understood and agreed that under no circumstance shall Group be obligated to file any registration
statement under the Securities Act or any applicable state securities law to permit exercise of the
Option or to issue any Stock in violation of the Securities Act or any applicable state securities
law.

     5. Transfer and Exercise of Nonqualified Option. The Option is not transferable by
the Holder otherwise than by operation of law or by will or the laws of descent and distribution,
and is exercisable, during the Holder’s lifetime, only by the Holder. The Option may not be
assigned, transferred (except by operation of law or by will or the laws of descent and
distribution), pledged, or hypothecated in any way and shall not be subject to execution,
attachment, or similar proceeding. Any attempted assignment, transfer, pledge, hypothecation, or
other disposition of the Option or any rights hereunder or thereto contrary to the provisions
hereof, and the levy of any attachment or similar proceeding upon the Option, shall be null and

2

 

void and without effect. Notwithstanding the foregoing, the Option may be transferred by the
Holder solely to the Holder’s spouse, siblings, parents, children and grandchildren or trusts for
the benefit of such persons or partnerships, corporations, limited liability companies or other
entities owned solely by such persons, including trusts for such persons.

     6. Status of Holder. The Holder shall not be deemed a stockholder of Group with
respect to any of the shares of Stock subject to this Option, except to the extent that such shares
shall have been purchased and issued. Group shall not be required to issue or transfer any
certificates for shares of Stock purchased upon exercise of this Option until there is compliance
with all applicable requirements of law and this Agreement. This Agreement is not a contract of
employment and the terms of the Holder’s employment shall not be affected hereby or by any
agreement referred to herein except to the extent specifically so provided herein or therein.
Nothing herein shall be construed to impose any obligation on the Corporation to continue the
Holder’s employment.

     7. No Effect on Capital Structure. This Option shall not affect the right of Group to
reclassify, recapitalize or otherwise change its capital or debt structure or to merge,
consolidate, convey any or all of its assets, dissolve, liquidate, windup, or otherwise reorganize
and, by acceptance of this Agreement, Holder agrees that Holder has no standing before any court to
object to or contest any such action.

     8. Conditions and Schedule for Exercise. Except as otherwise provided herein, all
Options shall expire no later than ten (10) years from the date of this Agreement (the “Expiration
Date”). Holder shall be entitled to exercise the Options granted herein in accordance with the
vesting schedule set forth on the signature page hereof. Notwithstanding the provisions of the
immediately preceding sentence, all Option Shares shall become exercisable immediately prior to a
Change in Control (as defined herein) subject, however, to the consummation of the Change in
Control.

          If Holder’s service as a director of the Company terminates, the Option granted to Holder
shall, to the extent not theretofore exercised, terminate and become null and void;
provided, however, that:

          (a) if the service of Holder terminates by reason of Holder’s death or disability (as
described in Section 22(e)(3) of the Code), the Option shall immediately vest and become
exercisable, and to the extent not theretofore exercised, remain exercisable at any time up to and
including the earlier of (x) five (5) years after the date of such termination of service and (y)
the Expiration Date; and

          (b) if the service of Holder terminates by reason of (i) Holder’s voluntary resignation from
service as a director of the Company, or (ii) failure of the Company to nominate Holder for
re-election if otherwise eligible to serve, except if such failure to nominate for re-election is
due to any act of (A) fraud or intentional misrepresentation or (B) embezzlement, misappropriation
or conversion of assets or opportunities of the Company or any subsidiary corporation or parent
corporation of the Company (in which case, such Option shall terminate and no longer be
exercisable), the Option shall continue to vest (pursuant to its vesting schedule) and, to the
extent not theretofore exercised, remain exercisable at any time up to and including

3

 

the earlier of (x) five (5) years after the date of such termination of service and (y) the
Expiration Date.

     If an Option granted hereunder shall be exercised by the legal representative of Holder after
Holder is deceased, or by a person who acquired an Option granted hereunder by bequest or
inheritance or by reason of the death, written notice of such exercise shall be accompanied by a
certified copy of letters testamentary or equivalent proof of the right of such legal
representative or other person to exercise such Option.

     9. Adjustments Upon Changes in Capitalization, Merger, Etc. and Acceleration of
Exercisability. In the event that, by reason of any merger, consolidation, combination,
liquidation, reorganization, recapitalization, stock dividend, stock split, split-up, split-off,
spin-off, combination of shares, exchange of shares or other like change in capital structure of
Group (each, a “Reorganization”), the Stock is substituted, combined, or changed into any cash,
property, or other securities, or the shares of Stock are changed into a greater or lesser number
of shares of Stock, the number and/or kind of shares and/or interests subject to an Option and the
Exercise Price or value thereof shall be appropriately adjusted by the Committee to give
appropriate effect to such Reorganization. Any fractional shares or interests resulting from such
adjustment shall be eliminated.

     All of the provisions of this paragraph to the contrary notwithstanding, Group shall have the
right to grant stock appreciation right agreements to others and/or issue additional stock options,
if such options are to others out of authorized but unissued shares, even though the result of such
stock appreciation right agreements and/or stock options dilute either the percentage of ownership
of the Holder or the value per share of any Stock or Option herein granted and, in any such event,
Holder’s rights hereunder shall not be increased in any way.

     10. Committee Authority. Any question concerning the interpretation of this
Agreement, any adjustments required to be made under Paragraph 9 of this Agreement, and any
controversy which may arise under this Agreement and/or any paragraph hereof shall be finally
determined by the Committee in its sole and absolute discretion.

     11. Change of Control. The Committee, in its discretion, may determine that, upon the
occurrence of a Change in Control of the Company, the Option outstanding hereunder shall terminate
within a specified number of days after notice to the Holder and, in the event the Holder does not
exercise his Option prior to such date of termination, the Holder shall receive, with respect to
each share of Common Stock subject to the Option, an amount equal to the excess of the Fair Market
Value of such shares of Common Stock immediately prior to the occurrence of such Change in Control
over the exercise price per share of such Stock Option, such amount to be payable in cash, in one
or more kinds of property (including the property, if any, payable in the transaction) or in a
combination thereof, as the Committee, in its discretion, shall determine.

          A “Change in Control” of the Company shall be deemed to have occurred if, subsequent to the
date hereof, (A) any person (as such term is used in section 13(d) of the Exchange Act) becomes the
“beneficial owner” (as determined pursuant to Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than fifty percent (50%) of the combined
voting power of the Company’s then outstanding securities, (B) a

4

 

majority of the Board of Directors shall consist of persons who are not Continuing Directors
(as defined below), (C) the Company shall merge with or consolidate into any other corporation,
other than a merger or consolidation which would result in the holders of the voting securities of
the Company outstanding immediately prior thereto holding immediately thereafter securities
representing more than fifty percent (50%) of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger or consolidation or
(D) the stockholders of the Company approve and effect a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or substantially all of
the Company’s assets.

          For purposes of this Agreement, a “Continuing Director” shall mean, as of the date of
determination, any Person who (i) was a member of the Board of Directors of the Company as of the
date hereof or (ii) was nominated for election or elected to the Board of Directors of the Company
with the affirmative vote of a majority of the Continuing Directors who were members of such Board
of Directors at the time of such nomination or election.

     12. Notice. Whenever any notice is required or permitted hereunder, such notice must
be in writing and personally delivered, sent by mail or sent by overnight courier. Any notice
required or permitted to be delivered hereunder shall be deemed to be delivered on the date which
it is personally delivered, or, whether actually received or not, on the third business day after
it is deposited in the United States mail, certified or registered, postage prepaid or next
business day after it is sent by overnight courier, addressed to the person who is to receive it at
the address which such person has theretofore specified by written notice delivered in accordance
herewith. Group or Holder may change, at any time and from time to time, by written notice to the
other, the address previously specified for receiving notices. Until changed in accordance
herewith, Group and the Holder specify their respective addresses as set forth below on the
signature lines on the last page hereof.

     13. Right to Terminate Service. This Agreement shall not impose any obligation on the
Company or on any subsidiary corporation or parent corporation thereof to continue the service of
Holder and shall not impose any obligation on the part of Holder to remain in the service of the
Company or of any subsidiary corporation or parent corporation thereof.

     14. Tax Withholding. By acceptance hereof, Holder hereby (i) agrees to reimburse the
Corporation by which Holder is employed for any federal, state, or local taxes required by any
government to be withheld or otherwise deducted by such Corporation in respect of Holder’s exercise
of all or a portion of the Option; (ii) authorizes the Corporation is employed to withhold from any
cash compensation paid to the Holder or on the Holder’s behalf, an amount sufficient to discharge
any federal, state, and local taxes imposed on the Corporation by which the Holder is employed, in
respect of the Holder’s exercise of all or a portion of the Option; and (iii) agrees that Group
may, in its discretion, hold the stock certificate to which Holder is entitled upon exercise of the
Option as security for the payment of the aforementioned withholding tax liability, until cash
sufficient to pay that liability has been accumulated, and may, in its discretion, effect such
withholding by retaining shares issuable upon the exercise of the Option having a Fair Market Value
on the date of exercise which is equal (in the judgment of such Corporation) to the amount to be
withheld.

5

 

     15. Confidential Information. As partial consideration of the granting of this
Option, the Holder agrees that, irrespective of the time, manner or cause of the termination of
this Agreement, Holder will not directly or indirectly reveal, divulge, disclose or communicate to
any person or entity, other than authorized officers, directors and employees of the Corporation,
in any manner whatsoever, any Confidential Information of the Corporation or any direct or indirect
subsidiary of the Corporation without the prior written consent of the Chairman of the Board of
Group. Given the nature of the Confidential Information, the Corporation may be irreparably
damaged by any unauthorized disclosure of any Confidential Information. Without prejudice to the
rights and remedies otherwise available to the Corporation, Holder agrees that the Corporation
shall be entitled to seek equitable relief, including an injunction or specific performance, in the
event of any breach of this Paragraph 15.

     16. Successors. Except as otherwise provided herein, this Agreement is binding on and
enforceable by the heirs, successors, and assigns of the parties.

     17. Governing Law. This Agreement shall be governed by the laws of the State of
Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of
conflict of laws), except to the extent that Delaware law is preempted by Federal law.

     18. Restriction on Shares. Holder acknowledges and agrees that upon exercise of the
Option, if required in the opinion of counsel to Group, the certificates for Common Stock, when
issued, will have substantially the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES OR “BLUE SKY”
LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT
WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144
UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT.

     19. Enforceability; Binding Effect. If any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such ruling shall not invalidate
or render unenforceable the other provisions of this Agreement, unless the result of such
invalidation or unenforceability shall be to deprive a party of the essential benefit of its
bargain under this Agreement, in which event either adversely affected party may immediately
terminate this Agreement. If any provision of this Agreement is found to be unenforceable, the
unenforceable provision shall be deemed modified to the extent required to permit its enforcement
in a manner most closely representing the intent of the parties as expressed herein and all other
provisions shall be and remain in full force and effect. Subject to the prohibition on
assignments, this Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their legal representatives, successors and assigns.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

6

 

     IN WITNESS WHEREOF, Group has caused this Nonqualified Stock Option Agreement to be
executed and the Holder has hereunto set Holder’s hand as of the date first set forth above.

	 	 	 	 	 
	GROUP:	 	INTERNATIONAL WIRE GROUP, INC.
	 	 	101 South Hanley, Suite 1050
	 	 	St. Louis, Missouri 63105
	 
	 	 	 	 
	 

	 	By:
	 	/s/ RODNEY D. KENT
	 

	 	 	 	 
	 

	 	Name:
	 	Rodney D. Kent
	 

	 	 	 	 
	 

	 	Title:
	 	CEO
	 

	 	 	 	 
	 
	 	 	 	 
	HOLDER:	 	/s/ WILLIAM LANE PENNINGTON
	 	 	 
	 	 	William Lane Pennington
	 
	 	 	 	 
	 

	 	Address:
	 	c/o Whiterock Affiliates LLC
	 

	 	 	 	 
	 	 	2431 E. 61st Street, Suite 260
	 	 	 
	 	 	Tulsa, OK 74136
	 	 	 
	OPTION TERMS:
	 	 	 	 
	 
	 	 	 	 
	Number of Option Shares:

	 	 	 	25,000 
	 	 	 
	 
	 	 	 	 
	Exercise Price:

	 	$11.00
	 	per share
	 
	 	 	 	 
	Date of Grant:

	 	 	 	August 1, 2005
	 	 	 
	 
	 	 	 	 
	Vesting Schedule:	 	1/3 of the Option Shares shall be exercisable on
or after the Date of Grant, an additional 1/3 of
the Option Shares shall be exercisable on or
after the first anniversary of the Date of Grant,
and the remaining 1/3 of the Option Shares shall
be exercisable on or after the second anniversary
of the Date of Grant.
	 
	 	 	 	 
	Expiration Date:	 	10 years from the Date of Grant

SIGNATURE PAGE TO NONQUALIFIED STOCK OPTION AGREEMENT

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