Document:

exv10w1

 

Exhibit 10.1

PROMISSORY NOTE

LOAN TERMS TABLE

		
	Lender: 	KeyBank National Association, a national banking association, its successors and
assigns

Loan No.: 10026291

Lender’s Address: 911 Main Street, Suite #1500, Kansas City, Missouri 64105

Lender’s Facsimile No.: (816) 221-8848

Borrower: CMI04 CANTON NC LLC, a Delaware limited liability company

Borrower’s Address: c/o Gladstone Commercial Corporation, 1616 Anderson Road, Second
Floor, McLean, Virginia, 22102

Borrower’s Facsimile No.: (973) 993-1954

Borrower’s Tax Identification Number: 91-2198700

		
	Property: 	Real property located at 171 Great Oak Drive, Canton, North Carolina 28716, in
Haywood County, North Carolina and certain personal property

Note Date: March 14, 2005

Original Principal Amount: $3,150,000.00

Maturity Date: April 1, 2030

Anticipated Repayment Date: April 1, 2010

Interest Rate: See Section 25.2

Initial Interest Payment Per Diem: $553.88

Monthly Payment: $ 20,935.63

Monthly Payment Date: May 1, 2005 and on the first day of each successive month thereafter

Financial Statement Reporting Deposit: $130.00

     1. Loan Amount and Rate. FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender,
the Original Principal Amount (or so much thereof as is outstanding from time to time, which is
referred to herein as the “Outstanding Principal Balance” or “OPB”), with interest on the unpaid
OPB from the date of disbursement of the Loan (as hereinafter defined) evidenced by this Promissory
Note (“Note”) at the Interest Rate. Interest shall be calculated based on the daily rate which is
produced assuming a three hundred sixty (360) day year multiplied by the actual number of days
elapsed. The loan evidenced by this Note will sometimes hereinafter be called the “Loan”. The
above Loan Terms Table (hereinafter referred to as the “Table”) is a part of the Note and all terms
used in this Note that are defined in the Table shall have the meanings set forth therein.

     2. Principal and Interest Payments. Payments of principal and interest shall be made as
follows:

     (a) An interest payment on the date of disbursement of the Loan proceeds in an amount
calculated by multiplying the Initial Interest Payment Per Diem by the number of days
from (and including) the date of the disbursement of the Loan proceeds through the last day of the
calendar month in which the disbursement was made;

 

 

     (b) A Monthly Payment on each Monthly Payment Date until the Maturity Date, each of such
payments to be applied: (i) to the payment of interest computed at the Interest Rate; and (ii) the
balance applied toward the reduction of the principal balance of the Loan; and

     (c) If not sooner paid, the balance of the principal amount of the Loan, all unpaid interest
thereon, and all other amounts owed to Lender pursuant to this Note or any other Loan Document (as
hereinafter defined) or otherwise in connection with the Loan or the security for the Loan shall be
due and payable on the Maturity Date.

     3. Security for Note. This Note is secured by a first deed of trust, mortgage, or deed to
secure debt (which is herein called the “Security Instrument”) encumbering the Property. This
Note, the Security Instrument, and all other documents and instruments existing now or after the
date hereof that evidence, secure or otherwise relate to the Loan, including any assignments of
leases and rents, other assignments, security agreements, financing statements, guaranties,
indemnity agreements (including environmental indemnity agreements), letters of credit, or
escrow/holdback or similar agreements or arrangements, together with all amendments, modifications,
substitutions or replacements thereof, are sometimes herein collectively referred to as the “Loan
Documents” or individually as a “Loan Document”. All amounts that are now or in the future become
due and payable under this Note, the Security Instrument, or any other Loan Document, including any
Prepayment Consideration (as hereinafter defined) and all applicable expenses, costs, charges, and
fees, will be referred to herein as the “Debt.” The remedies of Lender as provided in this Note,
any other Loan Document, or under applicable law shall be cumulative and concurrent, may be pursued
singularly, successively, or together at the discretion of Lender, and may be exercised as often as
an occasion shall occur. The failure to exercise any right or remedy shall not be construed as a
waiver or release of the right or remedy respecting the same or any subsequent default.

     4. Financial Statement Reporting Deposit; Rebate of Deposit. In order to further protect the
collateral for the Loan and to secure payment thereof, in addition to and concurrently with each
Monthly Payment, Borrower shall also pay to Lender a constant monthly amount equal to the Financial
Statement Reporting Deposit. On the first day of the fourteenth (14th) month following the date of
the initial disbursement of funds under this Note (the “Disbursement Date”), and on an annual basis
thereafter during the term of this Note, Lender shall remit to Borrower a portion of the Financial
Statement Reporting Deposit then held by Lender in an amount equal to the aggregate amount of the
Financial Statement Reporting Deposit actually received by Lender during the twelve (12) month
period ending upon the immediately prior annual anniversary of the Disbursement Date (the “Annual
Compliance Period”) provided that no Event of Default (as hereinafter defined), including any
failure by Borrower to strictly comply with the financial reporting requirements set forth in the
Security Instrument, is currently existing or has occurred in the Annual Compliance Period.

     5. Payments. All amounts payable hereunder shall be payable in lawful money of the United
States of America to Lender at Lender’s Address or such other place as the holder hereof may
designate in writing. Each payment made hereunder shall be made in immediately

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available funds and must state the Borrower’s Loan Number. If any payment of principal or interest
on this Note is due on a day other than a Business Day (as hereinafter defined), such payment shall
be made on the next succeeding Business Day. Any payment on this Note received after 2:00 o’clock
p.m. local time at the place then designated as the place for receipt of payments hereunder shall
be deemed to have been made on the next succeeding Business Day. All amounts due under this Note
shall be payable without set off, counterclaim, or any other deduction whatsoever. All payments
from Borrower to Lender following the occurrence of an Event of Default shall be applied in such
order and manner as Lender elects in reduction of costs, expenses, charges, disbursements and fees
payable by Borrower hereunder or under any other Loan Document, in reduction of interest due on
unpaid principal, or in reduction of principal. Lender may, without notice to Borrower or any
other person, accept one or more partial payments of any sums due or past due hereunder from time
to time while an uncured Event of Default exists hereunder, after Lender accelerates the
indebtedness evidenced hereby, and/or after Lender commences enforcement of its remedies under any
Loan Document or applicable law, without thereby waiving any Event of Default, rescinding any
acceleration, or waiving, delaying, or forbearing in the pursuit of any remedies under the Loan
Documents. Lender may endorse and deposit any check or other instrument tendered in connection
with such a partial payment without thereby giving effect to or being bound by any language
purporting to make acceptance of such instrument an accord and satisfaction of the indebtedness
evidenced hereby. As used herein, the term “Business Day” shall mean a day upon which commercial
banks are not authorized or required by law to close in the city designated from time to time as
the place for receipt of payments hereunder.

     6. Late Charge. If any sum payable under this Note or any other Loan Document is not received
by Lender by close of business on the fifth (5th) day after the date on which it was due, Borrower
shall pay to Lender an amount (the “Late Charge”) equal to the lesser of (a) five percent (5%) of
the full amount of such sum or (b) the maximum amount permitted by applicable law in order to help
defray the expenses incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such Late Charge shall
be secured by the Security Instrument and other Loan Documents. The collection of any Late Charge
shall be in addition to, and shall not constitute a waiver of or limitation of, a default or Event
of Default hereunder or a waiver of or limitation of any other rights or remedies that Lender may
be entitled to under any Loan Document or applicable law.

     7. Default Rate. Upon the occurrence of an Event of Default (including the failure of
Borrower to make full payment on the Maturity Date), Lender shall be entitled to receive and
Borrower shall pay interest on the Outstanding Principal Balance at the rate of five percent (5%)
per annum above the Interest Rate (“Default Rate”) but in no event greater than the maximum rate
permitted by applicable law. Interest shall accrue and be payable at the Default Rate from the
occurrence of an Event of Default until all Events of Default have been fully cured. Such accrued
interest shall be added to the Outstanding Principal Balance, and interest shall accrue thereon at
the Default Rate until fully paid. Such accrued interest shall be secured by the Security
Instrument and other Loan Documents. Borrower agrees that Lender’s right to collect interest at
the Default Rate is given for the purpose of compensating Lender at reasonable amounts for Lender’s
added costs and expenses that occur as a result of Borrower’s default and that are difficult to
predict in amount, such as increased general overhead, concentration of

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management resources on problem loans, and increased cost of funds. Lender and Borrower agree that
Lender’s collection of interest at the Default Rate is not a fine or penalty, but is intended to be
and shall be deemed to be reasonable compensation to Lender for increased costs and expenses that
Lender will incur if there occurs an Event of Default hereunder. Collection of interest at the
Default Rate shall not be construed as an agreement or privilege to extend the Maturity Date or to
limit or impair any rights and remedies of Lender under any Loan Documents. If judgment is entered
on this Note, interest shall continue to accrue post-judgment at the greater of (a) the Default
Rate or (b) the applicable statutory judgment rate.

     8. Origination, Administration, Enforcement, and Defense Expenses. Borrower shall pay Lender,
on demand, all Administration and Enforcement Expenses (as hereinafter defined) now or hereafter
incurred by Lender, together with interest thereon at the Default Rate, from the date paid or
incurred by Lender until such fees and expenses are paid by Borrower, whether or not an Event of
Default or Default then exists. For the purpose of this Note, “Administration and Enforcement
Expenses” shall mean all fees and expenses incurred at any time or from time to time by Lender,
including legal (whether for the purpose of advice, negotiation, documentation, defense,
enforcement or otherwise), accounting, financial advisory, auditing, rating agency, appraisal,
valuation, title or title insurance, engineering, environmental, collection agency, or other expert
or consulting or similar services, in connection with: (a) the origination of the Loan, including
the negotiation and preparation of the Loan Documents and any amendments or modifications of the
Loan or the Loan Documents, whether or not consummated; (b) the administration, servicing or
enforcement of the Loan or the Loan Documents, including any request for interpretation or
modification of the Loan Documents or any matter related to the Loan or the servicing thereof
(which shall include the consideration of any requests for consents, waivers, modifications,
approvals, lease reviews or similar matters and any proposed transfer of the Property or any
interest therein), (c) any litigation, contest, dispute, suit, arbitration, mediation, proceeding
or action (whether instituted by or against Lender, including actions brought by or on behalf of
Borrower or Borrower’s bankruptcy estate or any indemnitor or guarantor of the Loan or any other
person) in any way relating to the Loan or the Loan Documents including in connection with any
bankruptcy, reorganization, insolvency, or receivership proceeding; (d) any attempt to enforce any
rights of Lender against Borrower or any other person that may be obligated to Lender by virtue of
any Loan Document or otherwise whether or not litigation is commenced in pursuance of such rights;
and (e) protection, enforcement against, or liquidation of the Property or any other collateral for
the Loan, including any attempt to inspect, verify, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Loan, the Property or any other collateral for the Loan.
All Administration and Enforcement Expenses shall be additional Debt hereunder secured by the
Property, and may be funded, if Lender so elects, by Lender paying the same to the appropriate
persons and thus making an advance on Borrower’s behalf.

     9. Prepayment; Defeasance.

     (a) Restrictions. Voluntary prepayment of this Note is prohibited except during the last
ninety (90) days of the term when prepayment may be made in whole, but not in part, without payment
of any Prepayment Consideration (as hereinafter defined), on any Monthly Payment Date.
Notwithstanding anything contained in this Article 9 to the contrary, provided no Default (as
hereinafter defined) or Event of Default has occurred, no Prepayment Consideration

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shall be due in connection with a complete or partial prepayment resulting from: (i) the
application of insurance proceeds or condemnation awards pursuant to the Security Instrument; or
(ii) changes in tax or debt credit laws as may be required pursuant to the Security Instrument, but
Borrower shall be required to pay all other sums due hereunder together with all interest accrued
thereon. Any such partial prepayments shall reduce the Outstanding Principal Balance, but shall
not reduce the amount of the Monthly Payment.

     (b) Defeasance.

          (i) Provided that as of the Release Date (as hereinafter defined) the Debt has not been
accelerated, no Event of Default exists, and no event has occurred that with the passage of time,
giving of notice, or modification or termination of the automatic stay of Section 362 of the United
States Bankruptcy Code may become an Event of Default (“Default”), Borrower may cause the release
of the Property from the lien of the Security Instrument and the other Loan Documents
(“Defeasance”) on any Monthly Payment Date following the date that is two (2) years and fifteen
(15) days after the “startup day” within the meaning of Section 860G(a)(9) of the Internal Revenue
Code of 1986, as amended (together with any successor statute and the related Treasury Department
Regulations including temporary regulations, the “Code”) of any “real estate mortgage investment
conduit” within the meaning of Section 860D of the Code (“REMIC”) that holds this Note upon
Borrower’s satisfaction of the following conditions:

     (A) Borrower shall provide Lender not less than thirty (30) days prior written notice
specifying a Monthly Payment Date (such Date, or any extended date upon which Borrower and
Lender may mutually agree is referred to herein as the “Release Date”) on which the
Defeasance Collateral (as hereinafter defined) is to be delivered;

     (B) On the Release Date Borrower shall pay in full all accrued and unpaid interest and
all other sums due under this Note and under the other Loan Documents up to the Release
Date, including all costs and expenses (including attorneys’ fees) incurred by Lender or its
servicers or other agent(s) or to or on behalf of any rating agencies or other third parties
in connection with such release and related transactions (including the review of the
proposed Defeasance Collateral and the preparation of the Defeasance Security Agreement (as
hereinafter defined) and related documentation), together with a defeasance processing fee
in an amount equal to one-half of one percent (0.5%) of the then Outstanding Principal
Balance but in no event less than (A) $7,500 or greater than (B) $20,000; and

     (C) Borrower shall deliver the following, all of which must be satisfactory to Lender,
at or prior to the release of the Property and substitution of the Defeasance Collateral:

          (1) Direct, non-callable and non-redeemable securities evidencing an obligation to pay
principal and interest in a full and timely manner that are direct obligations of the United
States of America for the payment of which its full faith and credit is pledged (the
“Defeasance Collateral”) in amounts sufficient to pay all scheduled principal and interest
payments required under this Note, which securities provide for payments prior, but as close
as possible, to the Business Day prior to each

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successive Monthly Payment Date occurring after the Release Date, with each such payment
being equal to or greater than the amount of the corresponding Monthly Payment required to
be made hereunder for the balance of the term hereof plus the amount required to be paid on
the Maturity Date (the “Scheduled Defeasance Payments”), each of which shall be duly
endorsed by the holder thereof as directed by Lender or accompanied by a written instrument
of transfer in form and substance satisfactory to Lender (including such instruments as may
be required by the depository institution or other entity holding such securities or the
issuer thereof, as the case may be, to effectuate book-entry transfers and pledges through
the book-entry facilities of such institution) in order to perfect upon the delivery of the
Defeasance Security Agreement (as hereinafter defined) a valid, first priority lien and
security interest therein in favor of Lender in conformity with all applicable state and
federal laws governing granting of such security interest;

          (2) any and all agreements, certificates, opinions, documents or instruments required
by Lender in connection with the Defeasance including (a) a pledge and security agreement,
in form and substance satisfactory to Lender, creating a first priority security interest in
favor of Lender in the Defeasance Collateral (the “Defeasance Security Agreement”), and (b)
any and all agreements, certificates, opinions, documents, or instruments required by Lender
that affect or relate in any way to the maintenance by any REMIC that holds this Note of its
qualification and status for tax purposes as a REMIC;

          (3) a certificate of Borrower certifying that (a) all of the requirements set forth in
this Section 9(b) have been satisfied, (b) the transactions that are being carried out
pursuant to this Section 9(b) (including specifically the release of the lien of the
Security Instrument) are being effected to facilitate the disposition of the Property or any
other customary commercial transaction and not as part of an arrangement to collateralize a
REMIC offering with obligations that are not real estate mortgages, and (c) the amounts of
the Defeasance Collateral comply with all the requirements of this section including the
requirement that the Defeasance Collateral shall generate monthly amounts equal to or
greater than the Scheduled Defeasance Payments required to be paid under this Note through
the Maturity Date;

          (4) an opinion of counsel for Borrower, delivered by counsel acceptable to Lender,
stating, among other things but without substantive qualification, that (a) Lender has a
valid, duly perfected, first priority security interest in the Defeasance Collateral and
that the Defeasance Security Agreement is enforceable against Borrower in accordance with
its terms, (b) neither the Defeasance nor any other transaction that occurs pursuant to the
provisions of this Section 9(b) has caused or will cause the Loan (including for this
purpose the Loan Documents) to cease to be a “qualified mortgage” within the meaning of
Section 860G of the Code, either under the provisions of Treasury Regulation Sections
1.860G-2(a)(8) or 1.860G-2(b) (as such regulations may be amended or superseded from time to
time) or under any other provision of the Code or otherwise, and (c) the tax qualification
and status of any REMIC or any other entity that holds this Note will not be adversely
impaired or affected as a result of the Defeasance and/or any other transaction that occurs
pursuant to the
provisions of this Section 9(b). The opinions set forth in clauses (b) and (c) above may,
in Lender’s discretion, be rendered by counsel to Lender at Borrower’s sole cost and
expense;

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          (5) a certificate and opinion delivered by an independent certified public accounting
firm acceptable to Lender certifying that the amounts of the Defeasance Collateral comply
with all the requirements of this Section including the requirement that the Defeasance
Collateral shall generate monthly amounts equal to or greater than the Scheduled Defeasance
Payments required to be paid under this Note through the Maturity Date. Upon Lender’s
request, such accounting firm shall also certify the change in the yield of the Loan that
results from the Defeasance and any other transactions that occur pursuant to the provisions
of this Section 9(b), including supporting computations which shall be made in a manner that
is consistent with the provisions of Treasury Regulation Sections 1.1001-3(e)(1) and (2);

          (6) Upon Lender’s request, written confirmation from the rating agencies that have
rated any of the securities issued by any REMIC that holds this Note to the effect that the
Defeasance will not result in a downgrading, withdrawal or qualification of the respective
ratings in effect immediately prior to such Defeasance for any rated securities then
outstanding or a waiver from any such rating agency stating that it has declined to review
the Defeasance. If required by any rating agency or Lender, a non-consolidation opinion
with respect to the Defeasance Obligor (as hereinafter defined) in form and substance
satisfactory to Lender and such rating agency; and

          (7) Borrower shall (unless otherwise agreed to in writing by Lender), at Borrower’s
expense, assign all of its obligations under this Note, together with the Defeasance
Collateral, to a successor entity (“Defeasance Obligor”) designated by Lender (which may
include an entity that is owned and/or controlled by Lender) that is a single purpose,
bankruptcy remote entity as determined by Lender in its discretion. The Defeasance Obligor
shall execute an assumption agreement pursuant to which it shall assume Borrower’s
obligations under this Note, the Loan Documents, and the Defeasance Security Agreement. As
conditions to such assignment and assumption, Borrower shall (a) deliver to Lender an
opinion of counsel delivered by counsel acceptable to Lender stating, among other things,
that such assumption agreement has been duly authorized and is enforceable against Borrower
and the Defeasance Obligor in accordance with its terms, that the Note, the Defeasance
Security Agreement and the other Loan Documents, as so assumed, have been duly authorized
and are enforceable against the Defeasance Obligor in accordance with their respective
terms, and that the delivery of the Defeasance Collateral to the Defeasance Obligor does not
constitute a fraudulent transfer, preferential payment, or other voidable transfer under
applicable bankruptcy law and (b) pay all costs and expenses including attorneys’ fees
incurred by Lender or its servicer or other agent(s) in connection with such assignment and
assumption (including the review of the proposed transferee and the preparation of the
assumption agreement and related documentation). Upon such assumption, Borrower shall be
relieved of its obligations under this Note, the Defeasance Security Agreement and the other
Loan Documents, other than those obligations which are specifically intended to survive the
payment of this Note and the termination, satisfaction or assignment of this Note, the
Defeasance Security
Agreement or the other Loan Documents or the exercise of Lender’s rights and remedies under
any of such documents and instruments.

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          (ii) Upon compliance with the requirements of this Section, Lender shall release the Property
from the lien of the Security Instrument and the other Loan Documents, and the Defeasance
Collateral shall secure this Note and all other obligations under the Loan Documents. Lender will,
at Borrower’s expense, execute and deliver any agreements reasonably requested by Borrower to
release the lien of the Security Instrument from the Property. Borrower, pursuant to the
Defeasance Security Agreement, shall authorize and direct that the payments received from
Defeasance Collateral be made directly to Lender and applied to satisfy the obligations of Borrower
under this Note.

          (iii) Upon the release of the Property in accordance with this Section 9(b), Borrower shall
have no further right to prepay this Note. Borrower shall pay all costs and expenses incurred or
to be incurred in connection with the Defeasance and related transactions, including all charges
imposed by any rating agencies and any revenue, documentary stamp or intangible taxes or any other
tax or charge due in connection with the transfer of this Note or otherwise required to accomplish
the Defeasance and related transactions.

          (iv) If any notice of defeasance is given pursuant to Section 9(b)(i)(A), Borrower shall be
required to defease the Loan on the Release Date (unless such notice is revoked by Borrower prior
to the Release Date in which event Borrower shall immediately reimburse Lender for any and all
reasonable costs and expenses incurred by Lender in connection with Borrower’s giving of such
notice and revocation).

          (v) At Borrower’s request, Lender may agree that Lender or its servicer or other agent, acting
on Borrower’s behalf as Borrower’s agent and attorney-in-fact, shall purchase the Defeasance
Collateral that Borrower is required to deliver to Lender pursuant to Section 9(b)(i)(C)(1). If
such an agreement is made then Borrower shall deposit with Lender or Lender’s servicer or other
agent, as directed by Lender or Lender’s agent(s), on or prior to the Release Date a sum of money
sufficient to purchase the Defeasance Collateral. By making such deposit Borrower shall thereby
appoint Lender or Lender’s servicer or other agent as Borrower’s agent and attorney-in-fact, with
full power of substitution, for the purpose of purchasing the Defeasance Collateral with the funds
so provided and delivering the Defeasance Collateral to Lender pursuant to Section 9(b)(i)(C)(1).

          (vi) Notwithstanding any release of the Security Instrument or any Defeasance hereunder, the
Defeasance Obligor shall be bound by and obligated under Sections 3.1 (Payment of Debt), 7.2
(Further Acts Etc.), 7.4(a) (Estoppel Certificates), 11.2 (Application of Proceeds), 11.7 (Other
Rights Etc.) and 14.2 (Marshalling and Other Matters) and Article 13 (Indemnification) of the
Security Instrument; provided, however, that all references therein to “Property” or “Personal
Property” shall be deemed to refer only to the Defeasance Collateral delivered to Lender.

     (c) Default Prepayment. If a Default Prepayment (as hereinafter defined) occurs, such Default
Prepayment shall be deemed to be a voluntary prepayment under this Note and in such case the
applicable Prepayment Consideration (as hereinafter defined) shall be due and

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payable to Lender in connection with such Default Prepayment (unless Lender voluntarily and
expressly waives in writing the right to collect such Prepayment Consideration). The Prepayment
Consideration shall be secured by all security and collateral for the Loan and shall, after it
becomes due and payable, be treated as if it were added to the Outstanding Principal Balance for
all purposes including accrual of interest, judgment on the Note, foreclosure (whether through
power of sale, judicial proceeding, or otherwise) (“Foreclosure Sale”), redemption, and bankruptcy
(including pursuant to Section 506 of the United States Bankruptcy Code or any successor
provision); without limiting the generality of the foregoing, it is understood and agreed that the
Prepayment Consideration may be added to Lender’s bid at any Foreclosure Sale. If Prepayment
Consideration is due hereunder, Lender shall deliver to Borrower a statement setting forth the
amount and determination of the Prepayment Consideration, and, provided that Lender shall have in
good faith applied the formula described below, Borrower shall not have the right to challenge the
calculation or the method of calculation set forth in any such statement in the absence of manifest
error, which calculation may be made by Lender on any day during the thirty (30) day period
preceding the date of such prepayment.

     The term “Default Prepayment” shall mean a prepayment of any portion of the principal amount
of this Note made after occurrence of a Default or Event of Default under any circumstances
including a prepayment in connection with (i) reinstatement of the Security Instrument provided by
statute under foreclosure proceedings or exercise of power of sale, (ii) any statutory right of
redemption exercised by Borrower or any other party having a statutory right to redeem or prevent
foreclosure or power of sale, (iii) any sale in foreclosure or under exercise of a power of sale or
otherwise (including pursuant to a credit bid made by Lender in connection with such sale), (iv)
any other collection action by Lender, or (v) exercise by any governmental authority of any civil
or criminal forfeiture action with respect to any collateral for the Loan. Prepayment
Consideration shall be due and payable upon acceleration of the Loan in accordance with the terms
of this Note, and the “Prepayment Date”, for the purpose of computing Prepayment Consideration,
shall be the date of acceleration of the Loan in accordance with the terms of this Note. Exchange
of this Note for a different instrument or modification of the terms of this Note, including
classification and treatment of Lender’s claim (other than non-impairment under Section 1124 of the
United States Bankruptcy Code or any successor provision) pursuant to a plan of reorganization in
bankruptcy shall also be deemed to be a Default Prepayment hereunder.

     The “Prepayment Consideration” (as the term is used in this Note) shall mean the present
value, as of the date of the occurrence of the Default, of the remaining scheduled payments of
principal and interest from the date of the occurrence of the Default through the Maturity Date
(including any balloon payment), which shall be determined by discounting such payments at the
Discount Rate (hereinafter defined) less the amount of principal being prepaid. The term “Discount
Rate” shall mean the rate that, when compounded monthly, is equivalent to the Treasury Rate
(hereinafter defined) when compounded semi-annually. The term “Treasury Rate” shall mean the yield
calculated by the linear interpolation of the yields, as reported in Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading U.S. Government Securities/Treasury Constant
Maturities for the week ending prior to the Prepayment Date, of U.S. Treasury constant maturities
with maturity dates (one longer and one shorter) most nearly approximating the Maturity Date. (If
Release H.15 is no longer published, Lender shall select a comparable publication to determine the
Treasury Rate.).

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     Borrower acknowledges that: (i) Lender has made the Loan to Borrower in reliance on, and the
Loan has been originated for the purpose of selling the Loan in the secondary market to investors
who will purchase the Loan or direct or indirect interests therein in reliance on, the actual
receipt over time of the stream of payments of principal and interest agreed to by Borrower herein;
and (ii) Lender or any subsequent investor in the Loan will incur substantial additional costs and
expenses in the event of a prepayment of the Loan; and (iii) the Prepayment Consideration is
reasonable and is a bargained for consideration and not a penalty and the terms of the Loan are in
various respects more favorable to Borrower than they would have been absent Borrower’s agreement
to pay Prepayment Consideration as provided herein. Borrower agrees that Lender shall not, as a
condition to receiving the Prepayment Consideration, be obligated to actually reinvest the amount
prepaid in any treasury obligation or in any other manner whatsoever. Nothing contained herein
shall be deemed to be a waiver by Lender of any right it may have to require specific performance
of any obligation of Borrower hereunder including to make payments hereunder strictly according to
the terms hereof or to furnish Defeasance Collateral.

     In addition to Prepayment Consideration, Borrower shall pay all hedging and breakage costs of
any kind and in any amount incurred by Lender due to any prepayment (including a Default
Prepayment).

     10. Maximum Rate Permitted by Law. All agreements in this Note and all other Loan Documents
are expressly limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount agreed
to be paid hereunder for the use, forbearance, or detention of money exceed the highest lawful rate
permitted under applicable usury laws. If, from any circumstance whatsoever, fulfillment of any
provision of this Note or any other Loan Document at the time performance of such provision shall
be due shall involve exceeding any usury limit prescribed by law that a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be fulfilled
shall be reduced to allow compliance with such limit, and if, from any circumstance whatsoever,
Lender shall ever receive as interest an amount that would exceed the highest lawful rate, the
receipt of such excess shall be deemed a mistake and shall be canceled automatically or, if
theretofore paid, such excess shall be credited against the principal amount of the indebtedness
evidenced hereby to which the same may lawfully be credited, and any portion of such excess not
capable of being so credited shall be refunded immediately to Borrower.

     11. Events of Default; Acceleration of Amount Due. Lender may in its discretion, without
notice to Borrower, declare the entire Debt, including the principal balance of the Loan, all
accrued interest, all costs, expenses, charges and fees payable under any Loan Document, and
Prepayment Consideration immediately due and payable, and Lender shall have all remedies available
to it at law or equity for collection of the amounts due, if any of the following (the “Events of
Default”) occurs:

          (a) Borrower fails to make full and punctual payment of any Monthly Payment or any other
amount payable on a monthly basis under this Note, the Security Instrument or any other Loan
Document within five (5) days of the date on which such payment was due; or

10

 

          (b) Borrower fails to make full payment of the Debt when due, whether on the Maturity Date,
upon acceleration or prepayment, or otherwise; or

          (c) Borrower fails to make full and punctual payment of any Late Charges, costs and expenses
due hereunder, or any other sum of money required to be paid to Lender under this Note, the
Security Instrument or under any other Loan Document (other than any payment described in
subclauses (a) and (b) immediately above), which failure is not cured on or before the fifth (5th)
day after Lender’s written notice to Borrower that such payment is required.

          (d) an Event of Default occurs under the Security Instrument or any other Loan Document that
has continued beyond any applicable cure period therefor.

     12. Time of Essence. Time is of the essence with regard to each provision contained in this
Note.

     13. Transfer and Assignment. This Note may be freely transferred and assigned by Lender.
Borrower’s right to transfer its rights and obligations with respect to the Debt, and to be
released from liability under this Note, shall be governed by the Security Instrument.

     14. Authority of Persons Executing Note. Borrower warrants and represents that the persons or
officers who are executing this Note and the other Loan Documents on behalf of Borrower have full
right, power and authority to do so, and that this Note and the other Loan Documents constitute
valid and binding documents, enforceable against Borrower in accordance with their terms, and that
no other person, entity, or party is required to sign, approve, or consent to, this Note.

     15. Severability. The terms of this Note are severable, and should any provision be declared
by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions
shall, at the option of Lender, remain in full force and effect and shall in no way be impaired.

     16. Borrower’s Waivers. Borrower and all others liable hereon hereby waive presentation for
payment, demand, notice of dishonor, protest, and notice of protest, notice of intent to
accelerate, and notice of acceleration, stay of execution and all other suretyship defenses to
payment generally. No release of any security held for the payment of this Note, or extension of
any time periods for any payments due hereunder, or release of collateral that may be granted by
Lender from time to time, and no alteration, amendment or waiver of any provision of this Note or
of any of the other Loan Documents, shall modify, waive, extend, change, discharge, terminate or
affect the liability of Borrower and any others that may at any time be liable for the payment of
this Note or the performance of any covenants contained in any of the Loan Documents.

     17. Governing Law. This Note shall be governed and construed generally according to the laws
of the jurisdiction in which the real property collateral for this Note is located without regard
to the conflicts of law provisions thereof (“Governing State”).

11

 

     18. JURISDICTION AND VENUE. BORROWER HEREBY CONSENTS TO PERSONAL JURISDICTION IN THE
GOVERNING STATE. VENUE OF ANY ACTION
BROUGHT TO ENFORCE THIS NOTE OR ANY OTHER LOAN DOCUMENT OR ANY ACTION RELATING TO THE LOAN OR THE
DEBT OR THE RELATIONSHIPS CREATED BY OR UNDER THE LOAN DOCUMENTS (“ACTION”) SHALL, AT THE ELECTION
OF LENDER, BE IN (AND IF ANY ACTION IS ORIGINALLY BROUGHT IN ANOTHER VENUE, THE ACTION SHALL AT THE
ELECTION OF LENDER BE TRANSFERRED TO) A STATE OR FEDERAL COURT OF APPROPRIATE JURISDICTION LOCATED
IN THE GOVERNING STATE. BORROWER HEREBY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF THE
STATE COURTS OF THE GOVERNING STATE AND OF FEDERAL COURTS LOCATED IN THE GOVERNING STATE IN
CONNECTION WITH ANY ACTION AND HEREBY WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY
OTHER STATE TO OBJECT TO JURISDICTION WITHIN SUCH STATE FOR PURPOSES OF ANY ACTION. Borrower
hereby waives and agrees not to assert, as a defense to any Action or a motion to transfer venue of
any Action, (i) any claim that it is not subject to such jurisdiction, (ii) any claim that any
Action may not be brought against it or is not maintainable in those courts or that this Note or
any of the other Loan Documents may not be enforced in or by those courts, or that it is exempt or
immune from execution, (iii) that the Action is brought in an inconvenient forum, or (iv) that the
venue for the Action is in any way improper.

     19. Notices. Any notice required or permitted to be given hereunder must be in writing and
given (a) by depositing same in the United States mail, addressed to the party to be notified,
postage prepaid and registered or certified with return receipt requested; (b) by delivering the
same in person to such party; (c) by transmitting a facsimile copy to the correct facsimile phone
number of the intended recipient (with a second copy to be sent to the intended recipient by any
other means permitted under this Section 19); or (d) by depositing the same into the custody of a
nationally recognized overnight delivery service addressed to the party to be notified. In the
event of mailing, notices shall be deemed effective three (3) days after posting; in the event of
overnight delivery, notices shall be deemed effective on the next Business Day following deposit
with the delivery service; in the event of personal service or facsimile transmissions, notices
shall be deemed effective when delivered. For purposes of notice, the addresses of the parties
shall be as set forth in the Table. From time to time either party may designate another address
than the address set forth for all purposes of this Note by giving the other party no less than ten
(10) days advance notice of such change of address in accordance with the notice provisions hereof.
A copy of any notice sent, transmitted or delivered to Lender shall also be delivered to Daniel
Flanigan, Esq., Polsinelli Shalton Welte Suelthaus, 700 W. 47th Street, Suite 1000,
Kansas City, Missouri 64112, facsimile number: (816) 753-1536.

     20. Avoidance of Debt Payments. To the extent that any payment to Lender and/or any payment
or proceeds of any collateral received by Lender in reduction of the Debt is subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, to Borrower (or Borrower’s successor) as a debtor in possession, or to a receiver,
creditor, or any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then the portion of the Debt intended to have been satisfied by such payment or
proceeds shall remain due and payable hereunder, be evidenced by this Note, and shall continue in
full force and effect as if such payment or proceeds had never been received by Lender whether or
not this Note has been marked “paid” or otherwise cancelled or satisfied and/or has been delivered
to Borrower, and in such event Borrower shall be immediately
obligated to return the original Note to Lender and any marking of “paid” or other similar marking
shall be of no force and effect.

12

 

     21. Nonrecourse.

          (a) Subject to the provisions of subsections (b) and (c) of this Section 21, Lender shall not
be entitled to recover any deficiency judgment against Borrower or any general partner (if any) of
Borrower on this Note, provided, however, the foregoing shall not be interpreted to: (i) impair or
affect the right of Lender to enforce any of its rights or remedies (other than any right to a
deficiency judgment) provided for in any of the Loan Documents or under applicable law in full
accordance with the terms thereof including the right of Lender to name Borrower or any general
partner of Borrower as a party defendant in any action or suit for specific performance,
foreclosure, or sale (or similar remedy) under the Security Instrument or any other Loan Document;
(ii) impair or affect the validity or enforceability of any guaranty, indemnity agreement
(including any environmental indemnity agreement), letter of credit, or other similar third party
agreement or undertaking made in connection with this Note, the Security Instrument, or any other
Loan Document; (iii) impair or affect Lender’s right to offset any and all amounts outstanding
under any of the Loan Documents against any claim or amount that may be asserted against Lender by
Borrower or any partners, members, shareholders, or other owners of legal or beneficial interests
in Borrower; or (iv) affect the validity or enforceability of or impair the right of Lender to
bring suit and obtain specific performance or personal, recourse judgment to enforce the liability
of Borrower or any other person or entity to the extent of, and Borrower hereby agrees to be
personally liable for, any loss, damage, cost, expense or liability incurred by Lender (including
all attorneys’ fees and expenses and other collection and litigation expenses) arising out of or in
connection with any of the following:

          (A) Borrower or any affiliate, agent, or employee of Borrower misappropriates any rents
or other Property income or collateral proceeds including insurance or condemnation proceeds
or awards;

          (B) Borrower or any affiliate, agent, or employee of Borrower fails to apply or pay
over any tenant security deposits or other refundable deposits in accordance with the terms
of the applicable lease or other agreement or the Security Instrument or any other Loan
Document;

          (C) Borrower or any affiliate, agent, or employee of Borrower receives rents or other
payments from tenants more than one month in advance and fails to apply them in accordance
with the Loan Documents;

          (D) following the occurrence of an Event of Default, Borrower or any affiliate, agent,
or employee of Borrower (including Borrower in its capacity as a debtor or debtor in
possession in a bankruptcy proceeding) fails either to apply rents or other Property income,
whether collected before or after such Event of Default, to the ordinary, customary, and
necessary expenses of operating the Property or, upon demand, to deliver such rents or other
Property income to Lender;

13

 

          (E) waste is committed on the Property during a period while Borrower or any affiliate,
agent, or employee of Borrower is in possession thereof (“waste” meaning the diminution in
the Property’s value resulting from Borrower’s negligent or willful failure to manage,
maintain, repair and otherwise operate the Property in a commercially reasonable manner);

          (F) any damage to the Property or the Lender is caused as a result of the intentional
misconduct or gross negligence of Borrower or any affiliate, agent, or employee of Borrower;

          (G) any Property is removed in violation of the terms of the Loan Documents;

          (H) Borrower fails, in accordance with the terms of the Loan Documents, to maintain
insurance or to pay taxes, assessments, or other liens or claims that could create liens
affecting the Property (unless Lender is escrowing funds therefor and fails to make such
payments or has taken possession of the Property following an Event of Default, has received
all rents from the Property applicable to the period for which such insurance, taxes or
other items are due, and thereafter fails to make such payments);

          (I) there is any fraud or material misrepresentation by Borrower or any of its
affiliates, any guarantor, any indemnitor or any agent, employee, or other person with
actual or apparent authority to make statements or representations on behalf of Borrower,
any affiliate of Borrower, or any guarantor or indemnitor (“apparent authority” meaning such
authority as the principal knowingly or negligently permits the agent to assume, or which he
holds the agent out as possessing); or

          (J) Borrower fails, following an Event of Default, to deliver to Lender on demand all
security deposits, books and records relating to the Property and in the possession or
control of Borrower or any affiliate, agent, or employee of Borrower.

          (b) Notwithstanding anything to the contrary in the provisions of subsection (a) of this
Section, subsection (a) of this Section shall not apply and Borrower and any general partner of
Borrower shall be personally liable for the Debt if (i) there shall be any violation of the
due-on-sale or due-on-encumbrance provisions of the Security Instrument, (ii) Borrower shall at any
time hereafter make an assignment for the benefit of its creditors, or (iii) the Property or any
part thereof shall at any time hereafter become property of the estate or an asset in (a) a
voluntary bankruptcy, insolvency, receivership, liquidation, winding up, or other similar type of
proceeding, or (b) an involuntary bankruptcy or insolvency proceeding (other than one filed by
Lender) that is not dismissed within sixty (60) days of filing.

          (c) Nothing herein shall be deemed to constitute a waiver by Lender of any right Lender may
have under Sections 506(a), 506(b), 1111(b) or any other provision of the United States Bankruptcy
Code to file a claim for the full amount of the Debt (as defined in the Security Instrument) or to
require that all collateral shall continue to secure all of the Debt.

14

 

     22. Miscellaneous. Neither this Note nor any of the terms hereof, including the provisions of
this Section, may be terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing executed by the party against which enforcement of the termination,
amendment, supplement, waiver or modification is sought, and the parties hereby: (a) expressly
agree that it shall not be reasonable for any of them to rely on any alleged, non-written amendment
to this Note; (b) irrevocably waive any and all right to enforce any alleged, non-written amendment
to this Note; and (c) expressly agree that it shall be beyond the scope of authority (apparent or
otherwise) for any of their respective agents to agree to any non-written modification of this
Note. This Note may be executed in several counterparts, each of which counterpart shall be deemed
an original instrument and all of which together shall constitute a single Note. The failure of
any party hereto to execute this Note, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder. If Borrower consists of more than one person or
entity, then the obligations and liabilities of each person or entity shall be joint and several
and in such case, the term “Borrower” shall mean individually and collectively, jointly and
severally, each Borrower. As used in this Note, (i) the terms “include,” “including” and similar
terms shall be construed as if followed by the phrase “without being limited to,” (ii) any pronoun
used herein shall be deemed to cover all genders, and words importing the singular number shall
mean and include the plural number, and vice versa, (iii) all captions to the Sections hereof are
used for convenience and reference only and in no way define, limit or describe the scope or intent
of, or in any way affect, this Note, (iv) no inference in favor of, or against, Lender or Borrower
shall be drawn from the fact that such party has drafted any portion hereof or any other Loan
Document, (v) the words “Lender” and “Borrower” shall include their respective successors
(including, in the case of Borrower, any subsequent owner or owners of the Property or any part
thereof or any interest therein and Borrower in its capacity as debtor-in-possession after the
commencement of any bankruptcy proceeding), assigns, heirs, personal representatives, executors and
administrators, (vi) the term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or”, (vii) the words “hereof”, “herein”, “hereby”, “hereunder”, and
similar terms in this Note refer to this Note as a whole and not to any particular provision or
section of this Note, and (viii) an Event of Default shall “continue” or be “continuing” until such
Event of Default has been waived in writing by Lender. Wherever Lender’s judgment, consent,
approval or discretion is required under this Note or Lender shall have an option, election, or
right of determination or any other power to decide any matter relating to the terms of this Note,
including any right to determine that something is satisfactory or not (“Decision Power”), such
Decision Power shall be exercised in the sole and absolute discretion of Lender except as may be
otherwise expressly and specifically provided herein. Such Decision Power and each other power
granted to Lender upon this Note or any other Loan Document may be exercised by Lender or by any
authorized agent of Lender (including any servicer and/or attorney-in-fact), and Borrower hereby
expressly agrees to recognize the exercise of such Decision Power by such authorized agent. In the
event of a conflict between or among the terms, covenants, conditions or provisions of the Loan
Documents, the term(s), covenant(s), condition(s) and/or provision(s) that Lender may elect to
enforce from time to time so as to enlarge the interest of Lender in its security, afford Lender
the maximum financial benefits or security for the Debt, and/or provide Lender the maximum
assurance of payment of the Debt in full shall control. BORROWER ACKNOWLEDGES AND AGREES THAT IT

HAS BEEN PROVIDED WITH SUFFICIENT AND NECESSARY TIME AND OPPORTUNITY TO REVIEW THE TERMS OF THIS
NOTE, THE SECURITY
INSTRUMENT, AND EACH OF THE LOAN DOCUMENTS, WITH ANY AND ALL COUNSEL IT DEEMS APPROPRIATE, AND THAT
NO INFERENCE IN FAVOR OF, OR AGAINST, LENDER OR BORROWER SHALL BE DRAWN FROM THE FACT THAT EITHER
SUCH PARTY HAS DRAFTED ANY PORTION HEREOF, OR THE SECURITY INSTRUMENT, OR ANY OF THE LOAN
DOCUMENTS.

15

 

     23. Waiver of Counterclaim and Jury Trial. BORROWER HEREBY KNOWINGLY WAIVES THE RIGHT TO
ASSERT ANY COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT
AGAINST BORROWER BY LENDER OR ITS AGENTS. ADDITIONALLY, BORROWER AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON THE LOAN OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE LOAN, THIS NOTE,
THE SECURITY INSTRUMENT, OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENT (WHETHER VERBAL OR WRITTEN), OR ACTION OF BORROWER OR LENDER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDER’S MAKING OF THE LOAN.

     24. Local Law Provisions. In the event of any inconsistencies between the terms and
conditions of this Section and any other terms and conditions of this Note (other than the terms
and conditions of Section 25), the terms and conditions of this Section shall be binding.

     24.1 Business Purpose. This Loan is intended to be for commercial or business
purposes.

     24.2 Late Charge. The first sentence of Section 6 is modified by adding the
following between “due”, and “Borrower”: “or on a later date if required by
applicable law,”.

     24.3 Waiver of Counterclaim and Jury Trial. The second sentence of Section 23
is hereby modified by adding the following to the beginning thereof: “TO THE EXTENT
PERMITTED BY APPLICABLE LAW,”.

     25. Additional Provisions. In the event of any inconsistencies between the terms and
conditions of this Section and any other terms and conditions of this Note, the terms and
conditions of this Section shall be binding.

     25.1 Financial Statement Reporting Deposit; Rebate of Deposit. Borrower’s obligation
under Section 4 to pay the monthly Financial Statement Reporting Deposit stated in the Loan
Terms Table is hereby waived so long as Gladstone Commercial Corporation, a Maryland
corporation, is a publicly traded company.

     25.2 Interest Rate. From the date of disbursement of the Loan proceeds, until the
Anticipated Repayment Date (as hereinafter defined) interest shall accrue on the OPB
at a rate of 6.33 percent (6.33%) per annum (“Initial Interest Rate”). From and after the
Anticipated Repayment Date (as hereinafter defined), interest shall accrue on the OPB at a
rate equal to the greater of: (i) Initial Interest Rate plus two (2) percent per annum; or
(ii) the Treasury Rate for the week ending prior to the Anticipated Repayment Date plus two
(2) percent per annum (“Adjusted Interest Rate”). As used in this Note, the term “Interest
Rate” shall mean the Initial Interest Rate or the Adjusted Interest Rate, as applicable.

16

 

     25.3 Prepayment Restrictions. The first sentence of Section 9(a) is amended in its
entirety to provide as follows: Voluntary prepayment of this Note is prohibited except
during the period commencing on June 23, 2009 and ending on the Maturity Date when
prepayment may be made in whole, but not in part, without payment of any Prepayment
Consideration (as hereinafter defined) on any Monthly Payment Date.

          The fifth line of Section 9(a) is hereby modified by adding “and is continuing” between
“occurred” and “,”.

          The following is added to the end of Section 9(a): “Borrower’s right to cause a
Defeasance (as hereinafter defined) in accordance with Section 9(b) shall end on the
Anticipated Repayment Date (as hereinafter defined).” In the tenth line of Section
9(b)(i)(C)(1), and the final line of Section 9(b)(i)(C)(3), and the sixth line of Section
9(b)(i)(C)(5), and the fourth line of the third paragraph of Section 9(c), and the second to
last line of the third paragraph of Section 9(c) the phrase “Maturity Date” is deleted and
the phrase “Anticipated Repayment Date” is substituted therefor.

          The third line of Section 9(b)(i)(B) is hereby modified by inserting “reasonable”
between “including” and “attorneys’”.

          The second line of Section 9(b)(i)(C)(2) is hereby modified by inserting “reasonably”
between “instruments” and “required”.

          The seventeenth line of the first paragraph of Section 9(b)(i)(C)(7) is hereby modified
by inserting “reasonable” between “including” and “attorneys’”.

          The second and third lines of the second paragraph of Section 9(b)(i)(C)(7) is hereby
modified by deleting the words “under any circumstances” and substituting “that has not been
waived in writing by Lender” therefor.

     25.4 Hyperamortization. In the event that Borrower does not pay to Lender on or before
the Anticipated Repayment Date, the outstanding principal balance of this Note together with
all unpaid interest thereon and all other amounts owed to Lender pursuant to this Note or
any other Loan Document, the following provisions shall apply:

          (a) From and after the Anticipated Repayment Date, interest shall accrue on the OPB at
the Adjusted Interest Rate. Interest accrued at the Adjusted Interest Rate and not paid
pursuant to this Section 25.4 shall be deferred and added to the OPB of this Note (together
with all accrued interest thereon) and shall earn interest at the Adjusted Interest Rate to
the extent permitted by applicable law (such accrued interest,
together with any interest accrued thereon is hereinafter defined as “Accrued Interest”).
All of the OPB, including any Accrued Interest, shall be due and payable on the Maturity
Date.

17

 

          (b) Contemporaneously herewith, Borrower has executed a Collection and Disbursement
Agreement (the “Disbursement Agreement”) pursuant to which Borrower has agreed that,
commencing on the first day of the month preceding the Anticipated Repayment Date, Borrower
shall cause all rents and all other income, proceeds and other revenues generated or
otherwise derived from or attributable to the Property (collectively, “Rents and Profits”)
to be deposited in a deposit account with a financial institution named by Lender (the
“Disbursement Account”). The Disbursement Agreement provides that all sums deposited in the
Disbursement Account shall be applied as set forth therein. From and after the Anticipated
Repayment Date, provided no Event of Default has occurred and no event has occurred which,
with the passage of time, notice or both, would constitute an Event of Default, all funds in
the Disbursement Account shall be disbursed, unless Lender in its sole discretion determines
otherwise, by Lender from such account for the payment of the following items in the
specified order of payment:

          (i) First, payments to be made to the tax and insurance escrow funds in
accordance with the terms and conditions of the Security Instrument;

          (ii) Second, payment of the Monthly Payment (plus, if applicable, interest at
the Default Rate and any other charges then due to Lender under the Loan Documents)
to be applied first to the payment of interest computed at the Initial Interest Rate
with the remainder applied to the reduction of the OPB of this Note;

          (iii) Third, payments required to be made to any other escrow or reserve funds
established pursuant to any of the Loan Documents;

          (iv) Fourth, payments of the monthly operating expenses incurred for the
Property (“Monthly Operating Expenses”), pursuant to the terms of the approved
Annual Budget (as hereinafter defined), but excluding any Affiliate Expenses (as
hereinafter defined);

          (v) Fifth, payment of Extraordinary Expenses (as hereinafter defined) approved
in writing by Lender, if any;

          (vi) Sixth, payment of any other amounts due under any of the Loan Documents,
including, without limitation, any advances made by Lender thereunder for the
protection of the Property or Lender’s liens and security interests;

          (vii) Seventh, payment to Lender to be applied against the OPB of this Note
(but not including any Accrued Interest) until such principal amount (not including
any Accrued Interest) is paid in full;

18

 

          (viii) Eighth, payment of Accrued Interest;

          (ix) Ninth, payment of Affiliate Expenses; and

          (x) Tenth, payment to Borrower of any remaining funds.

          (c) Nothing provided above with respect to the Disbursement Account shall limit, reduce
or otherwise affect Borrower’s obligations under the Loan Documents including, without
limitation, the obligations of Borrower to: (i) operate and maintain (and to pay currently
all expenses to operate and maintain) the Property; (ii) make the Monthly Payments; (iii)
fund all escrows or reserves established or required under the Loan Documents; and (iv)
pay all other amounts due at any time under this Note, the Security Instrument, and the
other Loan Documents, even though the sums available in the Disbursement Account may be
insufficient at any time to make such payments.

          (d) For each fiscal year commencing with the fiscal year in which the Anticipated
Repayment Date occurs, Borrower shall submit to Lender for Lender’s written approval an
operating budget for the next succeeding fiscal year, on a month by month basis, including
cash flow projections and all proposed capital replacements and improvements and other
expenses of the Property (the “Annual Budget”) not later than sixty (60) days prior to the
commencement of such fiscal year, in form and substance satisfactory to Lender. Lender
shall have the right to approve such Annual Budget and in the event that Lender objects to
the proposed Annual Budget submitted by Borrower, Lender shall advise Borrower of such
objections and Borrower shall within five (5) days after receipt of notice of any such
objections, revise such Annual Budget and resubmit the same to Lender. This procedure shall
be repeated until Lender approves an Annual Budget. Until such time as Lender approves a
proposed Annual Budget, the most recently approved Annual Budget shall apply; provided that
such approved Annual Budget shall be adjusted to reflect actual increases in real estate
taxes, insurance premiums, and utility expenses and to defer any management fees, leasing
commissions, or other payments to, or any personal expenses of, Borrower or any person or
entity which is directly or indirectly controlling, controlled by, or under common control
with, Borrower or any guarantor or indemnitor with respect to the Loan (“Affiliate
Expenses”). In the event that Borrower proposes to incur an extraordinary operating expense
or capital expense not set forth in the approved Annual Budget then in effect (an
“Extraordinary Expense”), then Borrower shall promptly deliver to Lender a reasonably
detailed explanation of such proposed Extraordinary Expense for Lender’s written approval.
Borrower covenants and agrees to incur costs only in accordance with the approved Annual
Budget.

     25.5 Notices. In addition to the requirements of Section 19 hereof, Lender shall use
reasonable efforts to provide a courtesy copy of any notice required or permitted to be
given by Lender to Borrower hereunder to the following addressee: James D. Kelly, Esq.,
Dickstein Shapiro Marin & Oshinsky LLP, 2101 L Street N.W., Washington, D.C. 20037,
facsimile number (202) 887-0689.

19

 

     Lender’s failure to send such courtesy copies shall not impair the effect of the notice
sent to Borrower.

     25.6 Nonrecourse. The second and seventh lines of Section 21(a), and the second line
of Section 21(b) are hereby modified by inserting the words “member or” between “any” and
“general”. The third line of Section 21(a) is hereby modified by inserting the phrase “or
any person or entity having an ownership and/or equity, or legal and/or beneficial interest
in any member or general partner of Borrower” between “Note” and “,”.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

20

 

     Intending to be fully bound, Borrower has executed this Note under seal effective as of the
day and year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	Borrower:	 	By:	 	CMI04 CANTON NC
LLC,  (SEAL)
	 	 	 	 	a Delaware limited liability company
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	GLADSTONE COMMERCIAL
LIMITED  (SEAL)
	 	 	 	 	 	 	PARTNERSHIP, a Delaware limited
	 	 	 	 	 	 	Partnership, its managing member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	GLADSTONE
COMMERCIAL  (SEAL) 
	 	 	 	 	 	 	 	 	PARTNERS, LLC, a Delaware limited
	 	 	 	 	 	 	 	 	liability company, its General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	GLADSTONE
COMMERCIAL  (SEAL)
	

	 	 	 	 	 	 	 	CORPORATION, a Maryland
	

	 	 	 	 	 	 	 	corporation, its manager
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	By:	 
	

	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	Name: Robert J. Corry
	

	 	 	 	 	 	 	 	 	 	Title: Principal
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[CORPORATE SEAL]

	 	 	 	 	 
	Pay to the order of

	 	 	 	, without recourse.
	

	 	 

	 	 	 	 	 	 	 
	 	 	KEYBANK NATIONAL ASSOCIATION,
	 	 	a national banking association
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	 
	 	 	Print Name:	 	 
	

	 	 	 	 	 	 
	 	 	Print Title:	 	 
	

	 	 	 	 	 	 

21

 

STATE OF                                         

COUNTY OF                                        

     I,                                                             , a Notary Public of the County and State aforesaid, certify that Robert J. Corry
personally came before me this day and acknowledged that he is the Principal of GLADSTONE
COMMERCIAL CORPORATION, a Maryland corporation, who is the Manager of GLADSTONE COMMERCIAL
PARTNERS, LLC, a Delaware limited liability company, who is the General Partner of GLADSTONE
COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited partnership, who is the Managing Member of CMI04
CANTON NC LLC, a Delaware limited liability company, and that by authority duly given and as the
act of the corporation, in its capacity as Manager of GLADSTONE COMMERCIAL PARTNERS, LLC, the
General Partner of GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, which in turn is the Managing Member
of CMI04 CANTON NC LLC, the foregoing instrument was signed in its name by the said Robert J. Corry
in such capacity sealed with its corporate seal and attested by him as its principal.

     Witness my hand and official stamp or seal, this                      day of March, 2005.

	 	 	 
	

	 	 
	

	 	Notary Public

My Commission Expires:

	 	 	 
	 	 	 
	(Affix official seal or stamp)exv10w2

 

Exhibit 10.2

FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER

     THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this “Amendment”) is made as of the
21st day of April, 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”).

R E C I T A L S:

          The Borrowers, the Guarantors, the Administrative Agent and the Banks have entered into a
certain Credit Agreement dated as of February 28, 2005 (referred to herein as 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 amend the Credit
Agreement and the Membership Pledge Agreement to modify certain provisions thereof (i) to permit
certain subleases of Eligible Properties, (ii) to permit certain of Borrowers’ Subsidiaries which
own Borrowing Base Assets or prospective Borrowing Base Assets to be organized as limited
partnerships and (iii) to permit certain limited guaranties by Gladstone Commercial Corporation of
Long Term Limited Recourse Mortgage Loans by its Subsidiaries, all as more fully set forth herein.
The Borrowers have further requested the Administrative Agent and the Banks to waive the provision
of the Credit Agreement requiring immediate delivery of tenant estoppel and subordination and
nondisturbance agreements to allow the Borrowers an additional forty-five (45) days to obtain such
documents. The Administrative Agent, the Banks, the Borrowers and the Guarantors desire to amend
and waive the Credit Agreement 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. Amendments. The Credit Agreement is hereby amended as set forth in this
Section 2.

          SECTION 2.01. Amendment to Section 1.01. Section 1.01 of the Credit Agreement is
amended by amending and restating the definitions of “Eligible Property,” “Eligible Property Owner”
or “Eligible Mortgage Owner,” “Eligible Tenant,” “Membership

 

 

Pledge Agreement” and “Mortgaged Property Support Documents” to read in their entirety as
follows:

          “Eligible Property” means a Property which satisfies all of the following requirements:

     (a) such Property is located in one of the 48 contiguous states of the
United States of America or in the District of Columbia;

     (b) neither such Property, nor any interest of the Company or any
Subsidiary thereof (including without limitation any Eligible Property
Owner) therein, is subject to any Lien (other than Permitted Liens) or any
Negative Pledge;

     (c) such Property is owned by an Eligible Property Owner and is a
Wholly Owned Property;

     (d) none of the Company’s direct or indirect ownership interest in such
Eligible Property Owner is subject to any Lien or any Negative Pledge (other
than any Liens pursuant to the Loan Documents);

     (e) the Company directly, or indirectly through a Wholly Owned
Subsidiary, has the right to take the following actions without the need to
obtain the consent of any Person: (A) to create Liens on such Property as
security for Debt of the Company, any Loan Parties or such Subsidiary, as
applicable and (B) to sell, transfer or otherwise dispose of such Property;

     (f) such Property is free of all structural defects or architectural
deficiencies, title defects, environmental conditions or other adverse
matters except for defects, deficiencies, conditions or other matters
individually or collectively which are fully insured against (subject to
reasonable and customary deductibles) or are not material to the profitable
operation of such Property;

     (g) such Property was acquired: (1) except for Properties proposed to
be included as Borrowing Base Assets within ninety (90) days after the
Closing Date, by the Eligible Property Owner within three months of the date
such Property is proposed to be included as a Borrowing Base Asset; (2) by
the Eligible Property Owner in accordance with the terms of the Acquisition,
Credit and Collection Policy; and (3) in the ordinary course of the
Company’s business through a sale-leaseback transaction;

     (h) good and indefeasible fee simple title to such Property is owned by
the Eligible Property Owner free and clear of any liens (other than
Permitted Liens) and 100% of the membership interests of such

 

 

Eligible Property Owner have been pledged pursuant to the Membership
Pledge Agreement;

     (i) the tenant (or, in the case of a Property which has been subleased
and the Company has underwritten the subtenant in lieu of the tenant, the
subtenant): (a) has an internal risk rating of 4 or higher on the Company’s
10 point risk rating scale set forth in the Acquisition, Credit and
Collection Policy and (b) is otherwise deemed an Eligible Tenant;

     (j) substantially all of the Property is leased or subleased to an
Eligible Tenant pursuant to a lease or sublease substantially in the form
previously approved by the Administrative Agent and the Required Lenders,
except with respect to Properties acquired by an Eligible Property Owner
subject to an existing lease that has not been entered into in contemplation
of such sale to the Eligible Property Owner and which is in compliance with
the Acquisition, Credit and Collection Policy and except for subleases of
nonmaterial portions of the Property which shall not be subject to the
requirements of this paragraph;

     (k) each Eligible Tenant is in material compliance with the terms of
the lease or sublease and related documents;

     (l) such property has been a Borrowing Base Asset for less than 12
months;

     (m) lease and sublease payments on such Property are in U.S. Dollars;
and

     (n) all of the representations and warranties set forth in the Mortgage
with respect to such Property are true and correct.

     “Eligible Property Owner” or “Eligible Mortgage Owner” means (i) any limited liability
company which is a Domestic Subsidiary and a Wholly Owned Subsidiary, all of the membership
interests (and all other ownership interests) of which are pledged to the Secured Parties
pursuant to the Membership Pledge Agreement or (ii) any limited partnership which is a
Domestic Subsidiary and a Wholly Owned Subsidiary, and whose general partner is a
corporation and a Domestic Subsidiary and a Wholly Owned Subsidiary, all of the limited
partnership interests of which limited partnership and all of the stock of the corporate
general partner of which limited partnership are pledged to the Secured Parties pursuant to
the Membership Pledge Agreement.

     “Eligible Tenant” means on any day with respect to a Mortgaged Property, the tenant
(or, in the case of a Property which has been subleased and the Company has underwritten the
subtenant in lieu of the tenant, the subtenant): obligated to make payments pursuant to a
lease or sublease of all or any portion of such Mortgaged Property (which lease or sublease
shall be in form and content satisfactory to the Administrative Agent), including any
guarantor thereof that satisfies each of the following requirements at all times: (i) such
tenant or subtenant is not a natural person and is a legal operating

 

 

entity, duly organized and validly existing under the laws of its jurisdiction of
organization; (ii) the business of such tenant or subtenant has a Operating History of at
least twenty-four (24) months from the date of its incorporation or formation; (iii) such
tenant or subtenant is not the subject of any Insolvency Event and such tenant or subtenant
has not experienced a material adverse change, in its business, financial condition,
operations, properties or prospects since the date of the lease or sublease; (iv) no
default, event of default or event which with the giving of notice or the expiration of time
would constitute a default or event of default has occurred with respect to any other lease
or sublease included within the Collateral to which such tenant or subtenant is a party; (v)
such tenant or subtenant is not a Governmental Authority; (vi) such tenant or subtenant is
in compliance with all material terms and conditions of such lease or sublease; (vii) such
tenant’s or subtenant’s principal office is located in the United States; and (viii) such
tenant or subtenant has an internal risk rating of 4 or higher on the Company’s 10 point
risk rating scale set forth in the Acquisition, Credit and Collection Policy.

     “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 and (ii)
any joinders thereto or any additional Equity Pledge Agreement (as such Membership Pledge
Agreement has been retitled pursuant to the First Amendment to Credit Agreement dated as of
April 21, 2005) in substantially the form of Exhibit R hereto delivered to the
Administrative Agent pursuant to Section 5.25.”

     “Mortgaged Property Support Documents” means, for each Mortgaged Property, (i) the
Title Policy pertaining thereto, (ii) such appraisals, surveys, flood hazard certifications
and environmental assessments thereof as the Administrative Agent may require prepared by
recognized experts in their respective fields selected by the Administrative Agent, (iii) as
to Mortgaged Properties located in a flood hazard area, such flood hazard insurance as the
Administrative Agent may require, (iv) with respect to facilities leased or subleased to
third parties, such lessees’ or sublessees’ (in the case of sublessees of any material
portion of the Property) estoppel, waiver and consent certificates and subordination,
nondisturbance and attornment agreements, (v) such owner’s or lessee’s or sublessees’ (in
the case of sublessees of any material portion of the Property) affidavits as the
Administrative Agent may require, (vi) such opinions of local counsel with respect to the
Mortgages or leasehold mortgages, as applicable, as the Administrative Agent may require,
and (vii) such other documentation as the Administrative Agent may reasonably require, in
each case as shall be in form and substance reasonably acceptable to the Administrative
Agent.

          SECTION 2.02. 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) receipt by the Administrative Agent of an opinion (together with any opinions of
local counsel relied on therein, 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) of Cooley Godward LLP, counsel for the Borrowers and Guarantors,

 

 

dated as of the Closing Date (or in the case of an opinion delivered pursuant to
Section 2.14(d) such later date as specified by the Administrative Agent), substantially in
the form of 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 2.03. Amendment to Section 4.01. Section 4.01 of the Credit Agreement is
amended and restated to read in its entirety as follows:

     “SECTION 4.01. Existence and Power. The Company is a corporation, the
Operating Partnership is a limited partnership and each Guarantor is a limited liability
company or limited partnership duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, as the case may be, is
duly qualified to transact business in every jurisdiction where, by the nature of its
business, such qualification is necessary, and has all organizational powers and all
governmental licenses, authorizations, consents and approvals required to carry on its
business as now conducted.”

          SECTION 2.04. Amendment to Section 4.08. Section 4.08 of the Credit Agreement is
amended and restated to read in its entirety as follows:

     “SECTION 4.08. Subsidiaries. Each of the Subsidiaries is a limited liability
company or limited partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is necessary,
and has all organizational powers and all governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted. Each Subsidiary other
than the Operating Partnership is organized and governed pursuant to Organizational
Documents, the form and contents of which are attached hereto as Exhibit G. No Loan Party
has any Subsidiaries except those Subsidiaries listed on Schedule 4.08 and as set
forth in any Compliance Certificate provided to the Administrative Agent and Banks pursuant
to Section 5.01(c) after the Closing Date, which accurately sets forth each such
Subsidiary’s complete name and jurisdiction of organization.”

          SECTION 2.05. Amendment to Section 5.12. Section 5.12 of the Credit Agreement is
amended and restated to read in its entirety as follows:

     “SECTION 5.12. Maintenance of Existence, etc. Each Loan Party shall, and
shall cause each Subsidiary of a Loan Party to, maintain its organizational existence and
carry on its business in substantially the same manner and in substantially the same fields
as such business is now carried on and maintained. The Operating Partnership shall at all
times remain a limited partnership and meet all requirements to maintain its tax
qualification as such. Any Subsidiary pledging Collateral hereunder shall be organized as a
limited liability company or limited partnership pursuant to Organizational Documents in
substantially the form attached hereto as Exhibits G-1 or G-2, respectively.”

 

 

          SECTION 2.06. Amendment to Sections 5.25(b) and (c). Sections 5.25(b) and (c) of the
Credit Agreement are amended and restated to read in their entirety as follows:

     “(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 a Joinder Agreement in the form attached hereto as Exhibit Q; (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 a Membership Pledge Agreement in the form attached hereto as
Exhibit R 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 Joinder Agreement and
Membership Pledge Agreement referred to above, modified appropriately to refer to such
Membership Pledge Agreement, Pledgor Owner and such Mortgaged Property Owner or Pledged
Mortgage Receivable Owner.

     (c) Once any Subsidiary becomes a Mortgaged Property Owner or Pledged Mortgage
Receivable Owner and therefore becomes a party to this Agreement and a Guarantor in
accordance with Section 5.25(a) or any membership or limited partnership interests of a
Mortgaged Property Owner or Pledged Mortgage Receivable Owner are pledged by the Pledgor
Owner thereof to the Administrative Agent in accordance with Section 5.25(b) and such
Pledgor Owner becomes a party to this Agreement and a Guarantor in accordance with Section
5.25(b), (and, in the case of a Mortgaged Property Owner or Pledged Mortgage Receivable
Owner which is a limited partnership, the common stock of the corporate general partner is
pledged by the Pledgor Owner thereof pursuant to paragraph (b) above and such Pledgor Owner
becomes a party to this Agreement and a Guarantor in accordance with Section 5.25(b)) such
Subsidiary or Pledgor Owner (including, without limitation, all Initial Guarantors)
thereafter shall remain a party to this Agreement and a Guarantor hereunder and the
membership or limited partnership interests in such Mortgaged Property Owner or Pledged
Mortgage Receivable Owner (including, without limitation, all initial Mortgaged Property
Owners and all initial Pledged Mortgage Receivable Owners) and the common stock of any
corporate general partner of a limited partnership pledged hereunder shall remain subject to
the pledge to the Administrative Agent, as the case may be, even if such Mortgaged Property
Owner or Pledged Mortgage Receivable Owner ceases to be a Mortgaged Property Owner or
Pledged Mortgage Receivable Owner, as the case may be; provided that if a Mortgaged Property
Owner or Pledged Mortgage Receivable Owner ceases to be

 

 

a Subsidiary of the Borrowers as a result of a Borrower’s transfer or sale of one
hundred percent (100%) of the Capital Securities of such Subsidiary in accordance with and
to the extent permitted by the terms of Section 5.14, the Administrative Agent and the Banks
agree to release such Subsidiary from the Guaranty and release the membership or limited
partnership interests of such Subsidiary from the Membership Pledge Agreement, and, in the
case of a corporate general partner of a Mortgaged Property Owner or Pledged Mortgage
Receivable Owner which is a limited partnership, release the common stock of such corporate
general partner, provided, however, that, notwithstanding the foregoing, if the corporate
general partner is also a corporate general partner in another Mortgaged Property Owner or
Pledged Mortgage Receivable Owner, the Collateral of which is not required to be released,
then the common stock of such corporate general partner shall remain subject to the
Membership Pledge Agreement and shall not be released.”

          SECTION 2.07. Amendment to Section 5.27. Section 5.27 of the Credit Agreement is
amended and restated to read in its entirety as follows:

     “SECTION 5.27. Partnerships and Joint Ventures. No Loan Party shall become a
general partner in any general or limited partnership or a joint venturer in any joint
venture except that (i) the Company shall remain the indirect general partner in the
Operating Partnership and (ii) corporate Loan Parties which are Wholly Owned Subsidiaries
may be general partners in Subsidiaries which are limited partnerships.”

          SECTION 2.08. Amendment to Section 5.28. Section 5.28 of the Credit Agreement is
amended to substitute a comma for the word “and” immediately preceding clause (d) thereof and to
add the following new clause (e) at the end of said Section:

“(e) unsecured Guarantees by the Company of Long Term Limited Recourse Mortgage Loans to
its Subsidiaries so long as (i) the scope of the Guarantee is limited to a “make-whole” for
specifically enumerated (A) acts of malfeasance by the Subsidiary borrower of the Long Term
Limited Recourse Mortgage Loan or its Affiliates or (B) intentional or negligent acts or
omissions by such Subsidiary borrower or its affiliates resulting in a breach of such
borrower’s obligations under such mortgage loan documents and (ii) the amount of the
Guarantee is limited to the actual damages, losses, costs, liabilities or expenses of the
mortgage lender resulting from such malfeasance or breach, provided that, notwithstanding
the foregoing, said Guarantees may have full recourse to the Company in the event of any
violation of the due on sale or due on encumbrance clauses of the applicable mortgage or
upon the voluntary or involuntary bankruptcy of the Subsidiary borrower (other than an
involuntary bankruptcy initiated by the mortgage lender), so long as the aggregate principal
amount of Long Term Limited Recourse Mortgage Loans guaranteed by Guarantees which contain
any full recourse provision upon the voluntary or involuntary bankruptcy of the Subsidiary
borrower shall at no time exceed fifty (50) percent of the aggregate principal amount of all
Long Term Limited Recourse Mortgage Loans.”

          SECTION 2.09. Amendment to Section 6.01(r). Paragraph (r) of Section 6.01 of the
Credit Agreement is amended and restated to read in its entirety as follows:

 

 

     “(r) if (i) the Company or the Operating Partnership at any time fails to own (directly
or indirectly, through Wholly Owned Subsidiaries) 100% of the outstanding shares of the
voting stock (in the case of a corporation ) or membership interests (in the case of a
limited liability company) or general and limited partnership interests (in the case of a
limited partnership) (or equivalent equity interests) of each Subsidiary of the Company or
the Operating Partnership or (ii) the Company, or any Wholly Owned Subsidiary of the
Company, shall cease to be the sole general partner of the Operating Partnership with full
power and discretion to manage and control the business of the Operating Partnership or
(iii) any other holder of any interest (limited partnership or otherwise) in the Operating
Partnership shall acquire the right (a) to remove the general partner for reasons other than
bankruptcy or dissolution of the general partner or (b) to participate in the management or
control of, transact business for, or sign for or bind, the Operating Partnership.”

          SECTION 2.10. Exhibit G – Organizational Documents for Subsidiaries. Exhibit G to the
Credit Agreement is hereby amended (i) to add a new first page to such exhibit as set forth on
Exhibit G hereto, (ii) to retitle the existing Exhibit G as “Exhibit G-1” and (iii) to add a new
Exhibit G-2 as set forth on Exhibit G-2 hereto.

          SECTION 2.11. Exhibit R – Membership Pledge Agreement. Exhibit R to the Credit
Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit R hereto.

     SECTION 3. Waiver of SNDA and Tenant Estoppel Delivery Deadline. The requirements of
Section 3.01(g) of the Credit Agreement are hereby waived to the extent necessary to extend the
deadline by which the Borrowers must deliver executed tenant estoppel certificates and
Subordination Nondisturbance and Attornment Agreements from the date hereof to not later than
forty-five (45) days from the date hereof.

     SECTION 4. 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.

     SECTION 5. No Other Amendment or Waiver. Except for the amendments and waiver 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 or waived, nor affect nor impair any
rights, powers or remedies under the Credit Agreement as hereby amended and waived. 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 and waived, 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 6. 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 and to do all acts and things as are required or contemplated hereunder to be done,
observed and performed by them.

          (c) This Amendment 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 obligations 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 and the performance by the Borrowers and the
Guarantors hereunder 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 7. 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 8. Governing Law. This Amendment shall be construed in accordance with and
governed by the laws of the State of North Carolina.

     SECTION 9. 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	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	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	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	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	 	 

[Remainder of this page intentionally left blank]

 

 

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

	 	By:
	 	 	 	 	 	(SEAL)
	 	 	 	 	 	 	 
	

	 	 	 	 	 	James C. Stallings III

Vice President	 	 

[Remainder of this page intentionally left blank]

 

 

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

	 	By:
	 	 	 	 	 	(SEAL)
	 	 	 	 	 	 	 
	

	 	 	 	 	 	J. Jordan O’Neill, III,

Senior Vice President	 	 

[Remainder of this page intentionally left blank]

 

 

	 	 	 	 	 	 	 	 	 
	 	 	COMPASS BANK
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	 	 	 	 	(SEAL)
	 	 	 	 	 	 	 
	

	 	 	 	 	 	T. Ray Sandefur

Senior Vice President	 	 

[Remainder of this page intentionally left blank]

 

 

EXHIBIT G

[FORM OF ORGANIZATIONAL DOCUMENTS FOR NEW SUBSIDIARIES]

EXHIBIT G-1  —  ORGANIZATIONAL DOCUMENTS FOR LLC SUBSIDIARIES

EXHIBIT G-2  —  ORGANIZATIONAL DOCUMENTS FOR LIMITED PARTNERSHIP SUBSIDIARIES

 

 

EXHIBIT G-2

AGREEMENT OF LIMITED PARTNERSHIP

OF

[GLADSTONE ENTITY], L.P.

     THIS AGREEMENT OF LIMITED PARTNERSHIP (“Agreement”) is made and effective for all purposes as
of the ___day of ___, 200_, by and between [Gladstone Entity], INC., a Delaware corporation
(the “General partner”), and GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited
partnership (the “Limited Partner”, and together with the General Partner, the “Partners”).

     WHEREAS, the Partners desire to join together and form a limited partnership under and
pursuant to the Act (as hereinafter defined), and other relevant laws of the State of Delaware, for
the purposes and upon the terms and conditions hereinafter set forth.

     NOW THEREFORE, the Partners, intending to be legally bound, hereby agree as follows.

SECTION 1

DEFINITIONS

     Capitalized words and phrases used in this Operating Agreement have the following meanings:

     “Act” means the Delaware Revised Uniform Limited Partnership Act, Title 6, Chapter 17 of the
Annotated Code of Delaware, as such act may from time to time be amended, including any successor
statute.

     “Affiliate” means, with respect to any Person (i) any individual, corporation, limited
liability company, partnership, trust or other legal entity directly or indirectly controlling,
controlled by or under common control with such Person, (ii) any officer, director, general
partner, member or trustee of such Person or (iii) any individual who is an officer, director,
general partner, member or trustee of any Person described in clauses (i) or (ii) of this sentence.
For purposes of this definition, the terms “controlling,” “controlled by” or “under common control
with” shall mean the possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, or the power to elect at least 50% of the directors, general partners,
members or persons exercising similar authority with respect to such Person.

     “Agreement” means this Agreement of Limited Partnership of [GLADSTONE ENTITY], L.P., as
amended from time to time, which shall constitute the limited partnership agreement of the
Partnership for all purposes of the Act. Words such as “herein,” “hereinafter,” “hereof,” “hereto”
and “hereunder” refer to this Agreement as a whole, unless the context otherwise requires.

 

 

     “Bankruptcy” means, with respect to any Person, a “Voluntary Bankruptcy” or an “Involuntary
Bankruptcy.” A “Voluntary Bankruptcy” means, with respect to any Person (i) the inability of such
Person generally to pay its debts as such debts become due, or an admission in writing by such
Person of its inability to pay its debts generally or a general assignment by such Person for the
benefit of creditors, (ii) the filing of any petition or answer by such Person seeking to
adjudicate itself as bankrupt or insolvent, or seeking for itself any liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of such Person or its
debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking, consenting to, or acquiescing in the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for such Person or for any substantial part
of its property or (iii) corporate or other action taken by such Person to authorize any of the
actions set forth above. An “Involuntary Bankruptcy” means, with respect to any Person, without the
consent or acquiescence of such Person, (i) the entering of an order for relief or approving a
petition for relief or reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any
present or future bankruptcy, insolvency or similar statute, law or regulation, (ii) the filing of
any such petition against such Person which petition shall not be dismissed within ninety (90)
days, or (iii) without the consent or acquiescence of such’ Person, the entering of an order
appointing a trustee, custodian, receiver or liquidator of such Person or of all or any substantial
part of the property of such Person which order shall not be dismissed within ninety (90) days.

     “Certificate” means the certificate of formation for the Partnership filed in the office of
the Secretary of State of Delaware pursuant to the Act, as originally executed and as amended,
modified, supplemented or restated from time to time, as the context requires.

     “General Partner” means [Gladstone Entity], INC., a Delaware corporation, or any Person who is
admitted as a General Partner pursuant to the terms of this Agreement.

     “Indemnified Person” means the General Partner, any officer of the Partnership appointed by
the General Partner, and any Affiliate which performs services for the benefit of the Partnership,
each of their respective partners, officers, directors, shareholders, members or employees and such
other Persons as the General Partner may designate from time to time, in its sole and absolute
discretion.

     “Limited Partner” means GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited
partnership, or such other Person who is admitted as a limited partner pursuant to the terms of
this Agreement.

     “Liquidator” means the General Partner or such other Person appointed by the Partners acting
in the capacity of liquidating trustee of the Partnership.

     “Partners” means General Partner(s) and Limited Partner(s).

     “Partnership” means the limited partnership, known as [GLADSTONE ENTITY], L.P., formed
pursuant to this Agreement and the Certificate.

     “Person” means any individual, partnership (whether general or limited), limited liability
company, corporation, trust, estate, association, nominee or other entity.

 

 

     “Property” means all real, and if any, personal property acquired by the Partnership and shall
include both tangible and intangible property.

SECTION 2

THE PARTNERSHIP

     2.1 Name.

The name of the Partnership is [GLADSTONE ENTITY], L.P., and all business of the Partnership shall
be conducted in such name or in such other name as the General Partner may designate.

     2.2 Purpose; Powers.

          (a) The purpose and nature of the business to be conducted by the Partnership is to
acquire, own, hold, maintain, manage, operate, improve, develop, construct, finance, pledge,
encumber, mortgage, sell, exchange, lease, dispose of and otherwise deal with the Property.

          (b) The Partnership shall have the power to do any and all acts necessary,
appropriate, proper, advisable, incidental or convenient to or in furtherance of the purposes of
the Partnership set forth in this Section 2.2 and has, without limitation, any and all powers that
may be exercised on behalf of the Partnership by the General Partner pursuant to Section 6 hereof.

     2.3 Principal Place of Business; Agent for Service of Process.

          (a) The principal place of business of the Partnership shall be located at such
place as determined by the General Partner.

          (b) The registered agent for service of process on the Partnership in the State of
Delaware shall be Corporation Service Company or any successor as appointed by the General Partner
in accordance with the Act. The address for the registered agent shall be

Corporation Service Company

2711 Centerville Road, Suite 400

Wilmington, Delaware 19808

          (c) The initial registered office of the Partnership in the State of Delaware is:

[GLADSTONE ENTITY], L.P.

c/o Corporation Service Company

2711 Centerville Road, Suite 400

Wilmington, Delaware 19808

          (d) The Partnership may maintain other offices, as determined by the General
Partner.

     2.4 Term.

The term of the Partnership commenced on the date the Certificate was filed in the Office of the
Secretary of State of State of Delaware in accordance with the Act. The Partners intend that the

 

 

existence of the Partnership shall continue until the earlier to occur of (i) winding up and
liquidation of the Partnership and the completion of its business following a Dissolution Event, as
provided in Section 7.1 hereof or (ii) December 31, 2073.

     2.5 Title to Property.

All Property owned by the Partnership shall be owned by the Partnership as an entity, and no
Partner shall have any ownership interest in such Property in its individual name, and each
Partner’s interest in the Partnership shall be personal property for all purposes. The Partnership
shall hold title to its Property in the name of the Partnership and not in the name of any Partner.

     2.6 Payments of Individual Obligations.

The Partnership’s credit and assets shall be used solely for the benefit of the Partnership, and no
asset of the Partnership shall be transferred or encumbered for, or in payment of, any individual
obligation of any Partner.

SECTION 3

CAPITAL CONTRIBUTIONS AND OTHER MATTERS

     3.1 Capital Contributions.

The General Partner shall not make any capital contribution to the Partnership and shall receive no
ownership interest in the Partnership. The Limited Partnership has or will cause the Property to be
deeded to the Partnership as an initial capital contribution. In consideration of such capital
contribution, the Limited Partner has received 100% of the partnership interest in the Partnership.
Upon the request of the General Partner, the Limited Partner may, but shall not be required to,
make subsequent capital contributions to the Partnership.

     3.2 Other Matters.

          (a) No Partner shall receive any interest, salary or drawing with respect to its
capital contribution or for services rendered on behalf of the Partnership or otherwise, in its
capacity as a Partner, except as otherwise provided in this Agreement.

          (b) The Limited Partner shall not be liable for the debts or any other obligations
of the Partnership, nor shall any Partner be required to guarantee any debts, liabilities,
contracts or obligations of the Partnership.

          (c) No Partner shall be required to lend any funds to the Partnership.

          (d) No Partner shall receive any salary or other compensation for services rendered
on behalf of the Partnership. Notwithstanding the foregoing, the Partnership may enter into a
property management agreement or other services agreement with a Partner or an Affiliate of a
Partner.

 

 

SECTION 4

PROFIT, LOSS, INCOME AND DEDUCTIONS; DISTRIBUTIONS

     4.1 Determination of Profit and Loss. The profit and loss of the Partnership shall be
determined in accordance with the accounting methods followed for federal income tax purposes and
otherwise in accordance with sound accounting principles and procedures applied in a consistent
manner. An accounting shall be made for each taxable year by the accountants employed by the
Partnership as soon as possible after the close of each such taxable year to determine the profit
or loss of the Partnership, which shall be credited or debited, as the case may be, 100% to the
Limited Partner.

     4.2 Allocation of Profits, Losses, Income and Deductions; Distributions.

          (a) One hundred percent (100%) of the profits, losses, income and deductions of the
Partnership shall be allocated to the Limited Partner. One hundred percent (100%) of all cash of
the Partnership available for distribution shall be distributed to the Limited Partner. The General
Partner may make distributions of available cash or other assets to the Limited Partner from time
to time in its discretion, and shall make a distribution of available cash or other assets to the
Limited Partner upon any written request therefor from the Limited Partner.

          (b) It is the intent of the Partners that the Partnership shall be treated as a
disregarded entity for income tax purposes, with all items of profit, loss, income and deduction of
the Partnership allocated to and reported by the Limited Partner. In the event that the Partnership
is treated as a partnership for income tax purposes, the provisions of Section 4.2(c) below shall
apply.

          (c) In the event that the Partnership is treated as a partnership for income tax
purposes, the following provision shall apply:

	 	(i)  	Subject to (ii) through (v) below, one hundred
percent (100%) of the profits, losses, income and deductions of the
Partnership shall be allocated to the Limited Partner.
	 
	 	(ii)  	Notwithstanding anything to the contrary
contained in this Section 4.2(c), the Partnership shall comply with
Treasury Regulation section 1.704-2, as amended, with respect to the
allocation of deductions and the charge back of minimum gain on
nonrecourse debts of the Partnership.
	 
	 	(iii)  	Notwithstanding anything to the contrary
contained in this Section 4.2(c), no Partner shall be allocated a net
loss which would cause or increase a deficit balance in its capital
account in excess of any actual or deemed obligation of such Partner to
restore deficits (as defined in Treasury Regulation Section
1.704-1(b)(2)(ii)(c) and the penultimate sentences of Treasury
Regulation Sections 1.704-2(g)(1) and 1.704 2(i)(5)). If any Partner
shall receive with respect to the Partnership an adjustment, allocation
or distribution in the

 

 

	 	   	nature described in Treasury Regulation section
1.704-1(b)(2)(ii)(d)(4)-(6), as amended, which causes or increases a
deficit in such Partner’s capital account, such Partner shall be
allocated items of income and gain in an amount and manner as will
eliminate such deficit balance as quickly as possible. It is intended
that this Section 4.2(c)(iii) shall constitute a “qualified income
offset” within the meaning of Treasury Regulation section
1.704-1(b)(2)(ii)(d)(3), as amended.
	 
	 	(iv)  	Any allocations required pursuant to Section
4.2(c)(iii) above shall be taken into account in allocating profits,
losses, income and deductions pursuant to Section 4.2(c)(i) above, so
that, to the extent possible, the cumulative amount of such allocations
shall be equal to the cumulative amount that would have been allocated
to the Limited Partner if the allocations pursuant to Section
4.2(c)(iii) above had not occurred.
	 
	 	(v)  	Notwithstanding anything to the contrary
contained in this Section 4.2(c), any portion of any income, gain, loss
or deduction with respect to property contributed to the Partnership by
a Partner shall be allocated among the Partners in accordance with
Internal Revenue Code section 704(c) and Treasury Regulation section
1.704-3, as amended, so as to take account of the variation, if any,
between the adjusted tax basis of such property to the Partnership and
its fair market value at the time of the contribution, provided,
however, that allocation to Partners under this Section 4.2(c)(v) shall
not affect a Partner’s capital account to the extent such amounts have
previously been reflected in such capital account.
	 
	 	(vi)  	A capital account (which shall be a book
account) shall be established and maintained for each Partner in a
manner determined by the General Partner to be in compliance with
Treasury Regulation section 1.704-1(b)(2)(iv), as amended. All
distributions to the Partners made in connection with a liquidation of
the Partnership shall be made to the Partners based on their respective
positive capital account balances, after such balances have been
adjusted to reflect all allocations and distributions for all periods
(and the Partners hereby acknowledge that it is their intent that all
such distributions in liquidation shall be made solely to the Limited
Partner).
	 
	 	(vii)  	The General Partner shall be the Tax Matters
Partner of the Partnership as provided in section 6231 of the Internal
Revenue Code. The Partnership shall reimburse the Tax Matters Partner
for any expenses incurred by the Tax Matters Partner in connection with
the performance of its duties as Tax Matters Partner. The General
Partner shall have the power to make such elections under

 

 

	 	   	the tax laws of the United States, the several states and other
relevant jurisdictions as to the treatment of items of Partnership
income, gain, loss, deduction and credit, and to all other relevant
matters, as it deems necessary or desirable.

SECTION 5

ADMISSION OF ADDITIONAL OR SUBSTITUTE PARTNERS

     5.1 Admission of Additional or Substitute Partners. No additional or substitute
General or Limited Partner may be admitted to the Partnership without the consent of all Partners.
Each additional or substitute Partner shall, upon its admission as a Partner, agree in writing to
be bound by all of the terms, provisions and conditions of this Agreement.

SECTION 6

MANAGEMENT AND INDEMNIFICATION.

     6.1 Actions by the Limited Partner. The Limited Partner, in its capacity as a Limited
Partner, shall not have authority to act for or on behalf of the Partnership, or to bind the
Partnership in any way solely by virtue of being a partner of the Partnership.

     6.2 Authority of the General Partner.

          (a) The General Partner shall manage the business and affairs of the Partnership.
The General Partner shall have full, exclusive and complete discretion, power and authority,
subject in all cases to the provisions of this Agreement and the requirements of applicable law, to
manage, control, administer and operate the business and affairs of the Partnership for the
purposes herein stated, to make all decisions affecting such business and affairs, to adopt such
accounting rules and procedures as it deems appropriate in the conduct of the business and affairs
of the Partnership and to do all things it deems necessary or desirable in the conduct of the
business and affairs of the Partnership. The General Partner has full power and discretion to cause
the Partnership to borrow money, pledge, mortgage, and assign the Property and to enter into
guarantees. The General Partner may appoint and delegate responsibilities to such officers and
other agents, as it deems appropriate in its sole discretion.

          (b) Any Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority to encumber, sell or otherwise use in any manner any
and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitle to deal with the General Partner as if it were the Partnership’s sole
party in interest, both legally and beneficially. In no event shall any Person dealing with the
General Partner or its representatives be obligated to ascertain that the terms of this Agreement
have been complied with or to inquire into the necessity or expedience of any act or action of the
General Partner or its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that
(i) at the time of the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (ii) the Person executing

 

 

and delivering such certificate, document or instrument was duly authorized and empowered to
do for and on behalf of the Partnership, and (iii) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this Agreement and is
binding upon the Partnership.

     6.3 Indemnification of Indemnified Persons. The Partnership shall defend, indemnify,
and save harmless each Indemnified Person for all loss, liability, damage, cost, or expense
(including reasonable attorneys’ fees) incurred by reason of any demands, claims, suits, actions,
or proceedings arising out of (a) the Indemnified Person’s relationship to the Partnership or (b)
such Indemnified Person’s capacity as the General Partner or an officer, except for such loss,
liability, damage, cost, or expense as arises out of the theft, fraud, willful misconduct, or gross
negligence by such Indemnified Person. Expenses incurred in defending a civil or criminal action,
suit or proceeding shall be paid by the Partnership in advance of the final disposition of such
action, suit or proceeding, and not less often than monthly upon receipt of an undertaking by and
on behalf of the. Indemnified Person to repay such amount if it shall be ultimately determined that
he or she is not entitled to be indemnified by the Partnership.

SECTION 7

DISSOLUTION AND WINDING UP

     7.1 Dissolution Events. The Partnership shall be dissolved and its affairs wound up
upon the expiration of the term of the Partnership as provided in Section 2.4 or upon the happening
of any of the following:

          (a) the sale or disposition of all or substantially all of the Partnership assets,
and the distribution of the proceeds thereof to the Limited Partner;

          (b) the decision by the Partners to dissolve;

          (c) the occurrence of an event that makes it unlawful for the Partnership’s business
to be continued;

          (d) the entry by a court of competent jurisdiction of a decree of judicial
dissolution of the Partnership; or

          (e) the liquidation, dissolution or Bankruptcy of the General Partner, unless within
90 days after such occurrence the Limited Partner elects to continue the Partnership and elects a
new general partner, and such new general partner agrees in writing to be bound by all of the
terms, provisions and conditions of the Agreement.

 

 

     7.2 Winding Up. Upon dissolution under Section 7.1, no further business shall be
conducted by the Partnership except for the taking of such action as shall be necessary for the
winding-up of the affairs of the Partnership and the distribution of its assets to the Limited
Partner pursuant to the provisions hereof, and thereupon the General Partner (or such other Person
approved by the Partners) shall act as the Liquidator of the Partnership within the meaning of the
Act and immediately proceed to wind up and terminate the business and affairs of the Partnership.

     7.3 Sale of Partnership Assets. Upon dissolution, the Liquidator shall sell such of
the Partnership assets as it deems necessary or appropriate. In lieu of the sale of the Property,
the Liquidator may convey, distribute and assign all or any part of Property to the Limited Partner
in such form of ownership as shall be determined by the Liquidator to be applicable to the
jurisdiction where the Property is located. A full accounting shall be made of the accounts of the
Partnership and of the Partnership’s assets, liabilities and income, from the date of the last
accounting to the date of such dissolution. The profits and losses of the Partnership shall be
determined to the date of dissolution and transferred as provided in Section 4, to the Limited
Partner.

     7.4 Distribution of Assets. The Liquidator shall apply the remaining Partnership
assets, in the following order of priority:

          (a) first, to the payment and discharge of, or the making of reasonable provisions
for, all of the Partnership’s debts and liabilities to Persons other than the Limited Partner,
including contingent, conditional and unmatured liabilities of the Partnership, and the expenses of
dissolution and winding-up, in the order of priority as provided by law, including the
establishment of a reserve fund for contingent, conditional and unmatured claims as deemed
necessary and reasonable by the Liquidator;

          (b) second, to the payment and discharge of, or the making of reasonable provisions
for, all of the Partnership’s debts and liabilities to the Limited Partner; and

          (c) third, all remaining assets to the Limited Partner.

 

 

SECTION 8

SEPARATENESS COVENANTS

     8.1 Affirmative Covenants. The Partnership shall (i) maintain its accounts, books and
records separate from any other person or entity, (ii) maintain its books, records, resolutions and
agreements as official records, (iii) hold its assets in its own name, (iv) conduct its business in
its own name (provided that any Partner or its Affiliates may provide management or other services
for the Partnership), (v) maintain its internal financial statements, accounting records and other
entity documents separate from any other person or entity (provided that its external financial
statements and tax returns may be prepared on a consolidated basis with other entities), (vi) hold
itself out and identify itself as a separate and distinct entity under its own name and not as a
part of any person or entity, (vii) correct any known misunderstanding regarding its separate
identity, and (viii) observe all limited partnership formalities.

SECTION 9

MISCELLANEOUS

     9.1 Variation of Terms. All terms and any variations thereof shall be deemed to refer
to masculine, feminine, or neuter, singular or plural, as the identity of the Person or Persons may
require.

     9.2 Governing Law. The laws of the State of Delaware (other than the choice of law
provisions thereat) shall govern the validity of this Agreement, the construction of its terms, and
the interpretation of the rights and duties arising hereunder.

     9.3 Waiver. Any of the terms and conditions of this Agreement may be waived in whole
or in part, but only by an agreement in writing making specific reference to this Agreement and
executed by the party entitled to the benefit thereof.

     9.4 Binding Agreement and Successors. This Agreement shall be binding upon and shall
inure to the benefit of the Partners and their successors and assigns.

     9.5 No Third-Party Beneficiaries. Except as otherwise expressly provided in this
Agreement, nothing in this Agreement is intended to confer upon any Person other than the parties
hereto any rights or remedies.

     9.6 Section Headings. Section headings contained in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the meaning or interpretation
of this Agreement or any of its terms and conditions.

     9.7 Interest Held for Investment. The Limited Partner does hereby represent and
warrant by the execution of this Agreement that its interest in the Partnership was obtained for
investment purposes only and not for resale or distribution.

     9.8 Securities Laws Restrictions. The interests described. in this Agreement have not
been registered under the Securities Act of 1933, as amended, or under the securities laws of the

 

 

State of Delaware or any other jurisdiction. Consequently, these interests may not be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed of, except in accordance with
the provisions of such laws and this Agreement.

IN WITNESS WHEREOF, the undersigned parties have executed and entered into this Agreement effective
as of the day first above set forth.

	 	 	 	 	 
	 	GENERAL PARTNER:

[GLADSTONE ENTITY], INC., a Delaware corporation

 	 
	 	By:  	
 	 
	 	 	[Name], [Title] 	 

	 	 	 	 	 
	 	LIMITED PARTNER:

GLADSTONE COMMERCIAL LIMITED

PARTNERSHIP, a Delaware limited partnership

 	 
	 	By:  	 Gladstone Commercial Partners, LLC, its 
General Partner
 	 

	 	 	 	 	 
	 	        By:  	                Gladstone Commercial Corporation,
 its Manager
 	 

	 	 	 	 	 
	 	       By:  	
 	 
	 	 	[Name], [Title] 	 

 

 

EXHIBIT G-2

STATE of DELAWARE

CERTIFICATE of LIMITED PARTNERSHIP

	•  	The Undersigned, desiring to form a limited partnership pursuant to the Delaware Revised Uniform Limited
Partnership Act, 6 Delaware Code, Chapter 17, do hereby certify as follows:
	 
	•  	First: The name of the limited partnership is [Gladstone entity] L.P.
	 
	•  	Second: The name and address of the Registered Agent is:

Corporation Service Company

2711 Centerville Road, Suite 400

Wilmington, Delaware 19805

	•  	Third: The name and mailing address of the general partner is as follows:

___, Inc.

1251 West Branch Road

Suite 200

McLean, Virginia 22102

	•  	In Witness Whereof, the undersigned has executed this Certificate of Limited Partnership as of the ___day of
___200_.

	 	 	 
	BY:

	 	___, INC., a Delaware corporation
	

	 	(General Partner)
	 
	 	 
	NAME:
	 	 
	

	 	
 [Name],
[Title]

 

 

EXHIBIT G-2

WRITTEN CONSENT

OF THE GENERAL PARTNER OF

[GLADSTONE ENTITY], L.P.

Dated as of ________ __, 200_

     The undersigned, being the general partner of [Gladstone Entity], L.P., a Delaware limited
partnership (the “Partnership”), pursuant to the partnership agreement of the Partnership does
hereby consent in writing, without a meeting, to the following actions, and directs that this
Consent be filed with the minutes of proceedings of the Partnership:

     WHEREAS, the Company was formed pursuant to filing of the Certificate of Formation with the
Secretary of State of the State of Delaware on ___,
200___ (the “Formation Date”).

     RESOLVED, that all of the acts and transactions of the manager and officers of the Company
which have been taken or made prior to or since the Formation Date and all other acts and
transactions taken or made in furtherance of the purposes of the Company be, and they hereby are,
ratified and approved.

	 	 	 	 	 
	 	[Gladstone Entity], INC.

 	 
	 	By:  	________________________
 	 
	 	 	[Name], [Title] 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT R

EQUITY PLEDGE AGREEMENT

[Formerly Titled
“Membership Pledge Agreement”]

     THIS EQUITY PLEDGE AGREEMENT (this “Agreement”) dated as of this ___day of March, 2005,
between Gladstone Commercial Corporation, a Maryland corporation, Gladstone Commercial Limited
Partnership, a Delaware limited partnership (together, the “Pledgors”) and Branch Banking and Trust
Company, a national banking association (“BB&T”), acting as Administrative Agent (in such capacity,
the “Administrative Agent”) for itself and the other Secured Parties (as defined in the Credit
Agreement referred to below).

W I T N E S S E T H

     WHEREAS, the Administrative Agent and the Banks (as defined in the Credit Agreement) have
agreed to extend credit to the Pledgors pursuant to the terms of that certain Credit Agreement of
even date herewith (as amended, restated, or otherwise modified from time to time, the “Credit
Agreement”) among the Pledgors, the Administrative Agent and the Banks signatory thereto;

     WHEREAS, the Pledgors beneficially and legally own the limited liability company membership
interests, limited partnership interests and stock in the Subsidiaries of the Borrowers described
on Exhibit A attached hereto (the “Pledged Subsidiaries”), which membership interests,
limited partnership interests and stock comprise all of the outstanding membership interests,
limited partnership interests and stock in each such Subsidiary;

     WHEREAS, Pledgors, as Borrowers under the Credit Agreement and as holders of all the
outstanding equity interests of each Pledged Subsidiary (other than the general partnership
interests in the Pledged Subsidiaries which are limited partnerships) will derive material benefit
from Banks’ extension of credit to the Pledgors pursuant to the Credit Agreement; and

     WHEREAS, it is a condition of Banks’ agreement to extend credit to Borrowers pursuant to the
Credit Agreement that the Administrative Agent, on behalf of the Secured Parties (as defined in the
Credit Agreement), receive a pledge of the Collateral (as defined below) hereunder by the Pledgors’
execution and delivery of this Agreement to secure: (a) the due and punctual payment by the
Borrowers of: (i) the principal of and interest on the Notes, when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise and any renewals,
modifications or extensions thereof, in whole or in part; (ii) each payment required to be made by
the Borrowers under the Credit Agreement and Letter of Credit Agreements in respect of any of the
Letters of Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon, and obligations, if any, to provide cash collateral and any
renewals, modifications or extensions thereof, in whole or in part; and (iii) all other monetary
obligations of the Borrowers to the Secured Parties under the Credit Agreement and the other Loan
Documents to which the Borrowers are or are to be a party and any renewals, modifications or
extensions thereof, in whole or in part; (b) the due and punctual performance of all other
obligations of the Borrowers under the Credit Agreement and the other Loan

 

 

Documents to which the Borrowers are or are to be a party, and any renewals, modifications or
extensions thereof, in whole or in part and (c) the due and punctual payment and performance of all
obligations of each of the Guarantors under the Credit Agreement and the other Loan Documents to
which they are or are to be a party and any and all renewals, modifications or extensions thereof,
in whole or in part (all of the foregoing indebtedness, liabilities and obligations being
collectively called the “Obligations”).

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

     SECTION 1. Definitions. Any capitalized terms used but not defined herein shall have
the meanings assigned to them in the Credit Agreement.

     SECTION 2. Pledge. As collateral security for the due and punctual payment of the
Obligations, each Pledgor hereby pledges, hypothecates, delivers and assigns and grants unto
Administrative Agent, as Administrative Agent for itself and the Secured Parties, a security
interest (which security interest shall constitute a first priority security interest), in all of
the Pledgor’s membership interests, limited partnership interests and common stock in the Pledged
Subsidiaries and all securities instruments or other rights convertible into or exercisable for the
foregoing (the “Equity Interests”), together with all proceeds, profits, interests, capital
accounts, accounts, contract rights, general intangibles, deposits, funds, dividends,
distributions, rights to distributions, including both distributions of money and of property, and
other rights, claims and interests relating to or arising out of Pledgor’s Equity Interests, now
owned or hereafter acquired, in the Pledged Subsidiaries, together with any and all replacements or
substitutions for or proceeds of all of the foregoing (collectively, the “Collateral”), and each
Pledgor hereby delivers to Administrative Agent, on behalf of the Secured Parties, including
itself, the certificates, instruments or other documents, if any, evidencing or representing the
Collateral. This Agreement is not intended to place Administrative Agent or any Secured Party in a
position of being a member or partner of any Pledged Subsidiary, but is intended to grant
Administrative Agent, on behalf of the Secured Parties, a lien on and security interest in
Pledgor’s Equity Interests in the Pledged Subsidiaries including, without limitation, any and all
of the Collateral but specifically excluding any general partnership interests.

     SECTION 3. Representations and Warranties. Each Pledgor hereby represents and
warrants that:

          (a) Pledgor has all requisite power and authority to enter into this Agreement, to
grant a security interest in the Collateral for the purposes described in Section 2 and to
carry out the transactions contemplated by this Agreement;

          (b) No approval of or consent from any person or entity (other than the acknowledgement
and consent of the Pledged Subsidiaries as evidenced by their signature hereto) is required
in connection with the execution and delivery by Pledgor of this Agreement, the granting of
the security interests in the Collateral, or the carrying out of the transactions
contemplated by this Agreement;

 

 

          (c) Pledgor is the direct and beneficial owner of the Collateral as of the date hereof;

          (d) All of the Collateral is owned by the Pledgor free and clear of any pledge,
mortgage, hypothecation, lien, charge, encumbrance or any security interest in such
Collateral or the proceeds thereof, except for the security interest granted to the
Administrative Agent on behalf of the Secured Parties hereunder;

          (e) The execution, delivery and performance by Pledgor of this Agreement do not and
will not contravene or constitute a default under or result in any violation of any
agreement (including, without limitation, the operating or partnership agreement of any
Pledged Subsidiary), indenture or other instrument, license, judgment, decree, order, law,
statute, ordinance or other governmental rule or regulation applicable to Pledgor;

          (f) Each Pledged Subsidiary is a limited liability company, limited partnership or
corporation duly formed, validly existing and in good standing as such under the laws of the
State of its organization as set forth on Exhibit A hereto, and the execution and delivery
of this Agreement are within the limited liability company, partnership or corporate powers
of such Pledged Subsidiary, have been duly authorized by all necessary limited liability
company, partnership or corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (except for the Uniform Commercial Code
filings set forth in paragraph (g) below) and do not contravene, or constitute a default
under, the operating agreement, partnership agreement, charter or by-laws of such Pledged
Subsidiary;

          (g) Upon filing of a Uniform Commercial Code Financing Statement with the Maryland
Secretary of State, in the case of Gladstone Commercial Corporation and with the Delaware
Secretary of State, in the case of Gladstone Commercial Limited Partnership, this Agreement
creates and grants a valid lien on and perfected security interest in the Collateral and the
proceeds thereof, subject to no prior security interest, lien, charge or encumbrance, or to
any agreement purporting to grant to any third party a security interest in the property or
assets of the Pledgor which would include the Collateral; and

          (h) A true, correct and complete copy of the operating agreement, limited partnership
agreement, charter and by-laws, as the case may be, of each Pledged Subsidiary (together
with all amendments thereto) has been provided to the Administrative Agent.

     SECTION 4. Voting Rights; Distributions, Etc.

          (a) So long as no Event of Default, as defined in the Credit Agreement, shall have
occurred and be continuing:

               (i) each Pledgor shall be entitled to exercise any and all voting and/or
consensual rights and powers relating or pertaining to the Collateral or any part
thereof, provided, however, that no vote shall be cast or right exercised or other
action taken which would impair the Collateral or which would be inconsistent

 

 

with or result in any violation of the provisions of this Agreement, the Credit
Agreement or any other Loan Document,

               (ii) except to the extent limited by this Agreement, the Credit Agreement or
any other Loan Document, each Pledgor shall be entitled to receive and retain any
and all cash dividends or cash distributions payable on the Collateral, but any and
all equity interests and/or liquidating dividends, distributions in property,
returns of capital, or other distributions made on or in respect of the Collateral,
whether resulting from a subdivision, combination, or reclassification of the
outstanding ownership units or other interests of the Pledged Subsidiaries or
received in exchange for the Collateral or any part thereof or as a result of any
merger, consolidation, acquisition, or other exchange of assets to which any Pledged
Subsidiary may be a party or otherwise, and any and all cash and other property
received in redemption of or in exchange for any Collateral (either upon call for
redemption or otherwise), shall be and become part of the Collateral pledged
hereunder and, if received by the Pledgor, shall forthwith be delivered to
Administrative Agent (accompanied by proper instruments of assignment and/or powers
of attorneys executed by the Pledgor) to be held subject to the terms of this
Agreement;

          (b) Upon the occurrence and during the continuance of an Event of Default, all rights
of either Pledgor to exercise the voting and/or consensual rights and powers that such
Pledgor is entitled to exercise pursuant to Section 4(a)(i) hereof and/or to receive the
payments that such Pledgor is authorized to receive and retain pursuant to Section 4(a)(ii)
hereof shall cease, and all such rights shall thereupon become vested in Administrative
Agent for the benefit of the Secured Parties, who shall have the sole and exclusive right
and authority to exercise such voting and/or consensual rights and powers and/or to receive
and retain such payments; provided, that nothing herein shall obligate Administrative Agent
to exercise such voting and/or consensual rights, all such action in such regard being
solely in Administrative Agent’s or Secured Parties’ discretion. Any and all money and
other property paid over to or received by Administrative Agent pursuant to the provisions
of this paragraph (b) shall be retained by Administrative Agent as additional Collateral
hereunder and be applied in accordance with the provisions hereof.

     SECTION 5. Covenants. Each Pledgor hereby covenants that until such time as the
Obligations shall have been indefeasibly paid in full:

          (a) Pledgor will not, without the prior written consent of the Administrative Agent,
sell, convey, assign, or otherwise dispose of all or any part of the Collateral or any
interest therein, except that prior to an Event of Default, Pledgor shall be permitted to
receive and dispose of distributions to the extent permitted by Section 4 above; nor will
the Pledgor create, incur or permit to exist any pledge, mortgage, lien, charge, encumbrance
or security interest whatsoever with respect to all or any part of the Collateral or the
proceeds thereof, other than that created hereby; nor will the Pledgor amend the operating
agreement, limited partnership agreement or charter of any Pledged Subsidiary or consent to
or permit any amendment thereof; nor will Pledgor consent to or

 

 

permit the issuance of any additional Equity Interests in any Pledged Subsidiary
(unless pledged to Administrative Agent hereunder), or any securities or instruments
exercisable or exchangeable for Equity Interests in any Pledged Subsidiary or otherwise
representing any right to acquire any Equity Interest in any Pledged Subsidiary or any
general partnership interests in any Pledged Subsidiary that is a limited partnership.

          (b) Pledgor will not permit any Pledged Subsidiary to change its entity form and will
give to Administrative Agent not less than 30 days prior written notice of (i) any change in
its name or the name of any Pledged Subsidiary or (ii) any change in the location of the
principal place of business of Pledgor or any Pledged Subsidiary.

          (c) Pledgor will, at Pledgor’s own expense, defend Administrative Agent’s and Secured
Parties’ right, title, special property and security interest in and to the Collateral and
any distributions with respect thereto against the claims of any person, firm, corporation
or other entity.

          (d) Pledgor will preserve and protect the Collateral.

          (e) Pledgor will promptly pay and discharge before the same become delinquent, all
taxes, assessments and governmental charges or levies imposed on Pledgor or the Collateral,
except for taxes timely disputed in good faith, for which adequate reserves have been made.

          (f) The Secured Parties shall have the right, upon request, to review, examine and
audit the books and records of any Pledged Subsidiary and of any Pledgor with regard to the
Collateral and any distributions with respect thereto. Each Secured Party’s costs and
expenses incurred in connection with any such review, examination or audit shall be paid by
Pledgors.

     SECTION 6. Remedies upon Default. Upon the occurrence of an Event of Default as
defined in the Credit Agreement, Administrative Agent may, in addition to the exercise by
Administrative Agent of its rights and remedies under any other Section of this Agreement or under
the Credit Agreement or any other agreement relating to the Obligations or otherwise available to
it at law or in equity:

          (a) declare the principal of and all accrued interest on and any other amounts owing
with respect to the Obligations immediately due and payable, without demand, protest, notice
of default, notice of acceleration or of intention to accelerate or other notices of any
kind, and

          (b) exercise all the rights and remedies of a secured party under the Uniform
Commercial Code in effect in the State of North Carolina at that time and sell (in
compliance with applicable laws, including securities laws) the Collateral, or any part
thereof, at public or private sale, at any broker’s board, upon any securities exchange, or
elsewhere, for cash, upon credit, or for future delivery, as Administrative Agent may deem
appropriate in the circumstances and commercially reasonable. Administrative Agent shall
have the right to impose limitations and restrictions on the sale of the Collateral as
Administrative Agent may deem to be necessary or appropriate to comply

 

 

with any law, rule, or regulation (Federal, state, or local) having applicability to
the sale, including, but without limitation, restrictions on the number and qualifications
of the offerees and requirements for any necessary governmental approvals, and
Administrative Agent shall be authorized at any such sale (if it deems it necessary or
advisable to do so) to restrict the prospective offerees or purchasers to persons who will
represent and agree that they are purchasing securities included in the Collateral for their
own account and not with a view to the distribution or sale thereof in violation of
applicable securities laws and each Pledgor hereby waives, to the maximum extent permitted
by law, any claim arising because the price at which the Collateral may have been sold at
such private sale was less than the price that might have been obtained at public sale, even
if Administrative Agent accepts the first offer received and does not offer such Collateral
to more than one offeree. Upon consummation of any such sale, Administrative Agent shall
have the right to assign, transfer, and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of each Pledgor, and the Pledgor hereby
waives (to the extent permitted by law) all rights of redemption, stay, and/or appraisal
that the Pledgor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. To the extent that notice of sale shall be
required to be given by law, Administrative Agent shall give the Pledgor at least ten (10)
days’ prior written notice of its intention to make any such public or private sale. Such
notice shall state the time and place fixed for sale, and the Collateral, or portion
thereof, to be offered for sale. Any such sale shall be held at such time or times within
ordinary business hours and at such place or places as Administrative Agent may fix in the
notice of such sale. At any such sale, the Collateral, or portion thereof, to be sold may
be sold in one lot as an entirety or in separate parcels, as Administrative Agent may
determine, and Administrative Agent may itself bid (which bid may be in whole or in part in
the form of cancellation of the Obligations) for and purchase the whole or any part of the
Collateral. Administrative Agent shall not be obligated to make any sale of the Collateral
if it shall determine not to do so, regardless of the fact that notice of sale of the
Collateral may have been given. Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without further
notice, be made at the time and place to which the same was so adjourned. In case sale of
all or any part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by Administrative Agent until the sale price is paid by the
purchaser or purchasers thereof, but Administrative Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon like notice.
Each Pledgor hereby agrees that any sale or disposition of the Collateral conducted in
conformity with reasonable commercial practices of banks, insurance companies or other
financial institutions in the city and state where Administrative Agent is located in
disposing of property similar to the Collateral shall be deemed to be commercially
reasonable.

     SECTION 7. Application of Proceeds of Sale. The proceeds of sale of the Collateral
sold pursuant to Section 6 hereof shall be applied by Administrative Agent as set forth in Section
6.04 of the Credit Agreement.

 

 

     SECTION 8. Administrative Agent Appointed Attorney-in-Fact. Each Pledgor hereby
appoints Administrative Agent the Pledgor’s attorney-in-fact, with full power of substitution, for
the purpose of carrying out the provisions of this Agreement and taking any action and executing
any instrument that Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is coupled with an interest and is irrevocable. Without limiting the
generality of the foregoing, after the occurrence of an Event of Default as defined in the Credit
Agreement, Administrative Agent shall have the right and power to receive, endorse, and collect all
checks and other orders for the payment of money made payable to Pledgor representing any dividend
or other distribution payable or distributable in respect of the Collateral or any part thereof,
and to give full discharge for same.

     SECTION 9. Responsibility. Notwithstanding the provisions of Section 4(b) hereof,
Administrative Agent shall have no duty to exercise any voting and/or consensual rights and powers
becoming vested in Administrative Agent with respect to the Collateral or any part thereof, to
exercise any right to redeem, convert, or exchange any securities included in the Collateral, to
enforce or see to the payment of any dividend or any other distribution payable or distributable on
or with respect to the Collateral or any part thereof, or otherwise to preserve any rights in
respect of the Collateral against any third parties.

     SECTION 10. No Waiver: Cumulative Remedies. No failure on the part of Administrative
Agent to exercise, and no delay in exercising, any right, power, or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by
Administrative Agent preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies of Administrative Agent hereunder are cumulative and are not
exclusive of any other remedies available to Administrative Agent at law or in equity.

     SECTION 11. Termination. This Agreement shall terminate upon the complete performance
of each Loan Party’s obligations under each Loan Document and the final and indefeasible payment in
full of the Obligations. Upon termination of this Agreement, Administrative Agent shall reassign
and redeliver (or cause to be reassigned or redelivered) to the Pledgors such Collateral (if any)
as shall not have been sold or otherwise applied by Administrative Agent pursuant to the terms
hereof and as shall still be held by it hereunder together with appropriate instruments of
assignment and release.

     SECTION 12. Notices. Any notice or communication required or permitted hereunder
shall be given in the manner prescribed in the Credit Agreement.

     SECTION 13. Further Assurances. Each Pledgor agrees to do such further acts and
things, and to execute and deliver such agreements and instruments, as Administrative Agent may at
any time reasonably request in connection with the administration or enforcement of this Agreement
or related to the Collateral or any part thereof or in order better to assure and confirm unto
Administrative Agent and the Secured Parties their rights, powers and remedies hereunder. Each
Pledgor hereby authorizes Administrative Agent to file one or more Uniform Commercial Code
financing or continuation statements, or amendments thereto, relative to all or any part of the
Collateral.

 

 

     SECTION 14. Binding Agreement. This Agreement and the terms, covenants, and
conditions hereof, shall be binding upon and inure to the benefit of the parties hereto, and their
respective heirs, executors, administrators, successors and assigns.

     SECTION 15. Modification. Neither this Agreement nor any provisions hereof may be
amended, modified, waived, discharged, or terminated, nor may any of the Collateral be released or
the pledge or the security interest created hereby extended, except by an instrument in writing
signed by the parties hereto.

     SECTION 16. Severability. In case any lien, security interest, or other right of
Administrative Agent hereunder shall be held to be invalid, illegal, or unenforceable, such
invalidity, illegality, and/or unenforceability shall not affect any other lien, security interest,
or other right of Administrative Agent hereunder.

     SECTION 17. Governing Law. This Agreement (including matters of construction,
validity, and performance) , the rights, remedies, and obligations of the parties with respect to
the Collateral to the extent not provided for herein, and all matters concerning the validity,
perfection, and the effect of non-perfection of the pledge contemplated hereby, shall be governed
by and construed in accordance with the laws of the State of North Carolina or other mandatory
applicable laws. Notwithstanding anything herein, EACH PLEDGOR AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NORTH CAROLINA AND THE UNITED STATES DISTRICT COURTS
SITTING THEREIN IN ANY ACTION TAKEN BY ADMINISTRATIVE AGENT RELATING TO THIS AGREEMENT OR ANY
PROVISIONS, RIGHTS OR REMEDIES HEREOF. EACH PLEDGOR FURTHER AGREES THAT ANY ACTION TAKEN BY
PLEDGOR RELATING TO THIS AGREEMENT OR ANY PROVISIONS, RIGHTS OR REMEDIES HEREOF SHALL BE TAKEN IN
SAID COURTS AND SHALL NOT BE TAKEN IN ANY OTHER JURISDICTION. PLEDGOR RECOGNIZES THAT THIS
COVENANT IS AN ESSENTIAL PROVISION OF THIS AGREEMENT, THE ABSENCE OF WHICH WOULD MATERIALLY ALTER
THE CONSIDERATION GIVEN BY ADMINISTRATIVE AGENT AND SECURED PARTIES TO PLEDGOR AND GLADSTONE
COMMERCIAL CORPORATION.

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be duly executed
and delivered as of the date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	PLEDGORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	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	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	

	 	Name:
	 	George Stelljes III	 	 	 	 
	

	 	 	 	      Executive Vice President	 	 	 	 
	

	 	 	 	          and Chief Investment Officer	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ADMINISTRATIVE AGENT:
	 
	 	 	 	 	 	 	 	 
	 	 	BRANCH BANK AND TRUST COMPANY,
	 	 	as Administrative Agent for itself and the other Secured
Parties
	 
	 	 	 	 	 	 	 	 
	

	 	By:	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 
	

	 	 	 	James C. Stallings III	 	 	 	 
	 	 	Vice President

 

 

	 	 	 	 	 	 	 	 	 
	 	 	Acknowledged and Consented to:
	 
	 	 	 	 	 	 	 	 
	 	 	PLEDGED SUBSIDIARIES:
	 
	 	 	 	 	 	 	 	 
	 	 	GCC NORFOLK LLC
	 
	 	 	 	 	 	 	 	 
	 	 	GLADSTONE LENDING LLC
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	Gladstone Commercial Limited Partnership

its Manager	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	Gladstone Commercial Partners, LLC

its General Partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	Gladstone Commercial Corporation
Manager of each of the above LLCs	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	 	 	(SEAL)	 	 
	

	 	 	 	 	 	 	 	 
	

	 	Name:
	 	George Stelljes III	 	 	 	 
	

	 	Title:
	 	Executive Vice President	 	 	 	 
	

	 	 	 	and Chief Investment Officer	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	TUSCANY AUSTIN GCC L.P.
	 
	 	 	 	 	 	 	 	 
	

	 	By:
	 	GCC COCO, Inc.	 	 	 	 
	

	 	 	 	its General Partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	By:	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 
	

	 	 	 	      Arthur S. Cooper, President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FIRST PARK TEN COCO SAN ANTONIO, L.P.
	

	 	(SEAL)	 	 	 	 	 	 
	

	 	By:
	 	GCC COCO, Inc.	 	 	 	 
	

	 	 	 	its General Partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	By:	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 
	

	 	 	 	      Arthur S. Cooper, President	 	 	 	 

 

 

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.

	 	1616 Anderson Road, Suite

208

McLean, VA 22101

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

	 	1616 Anderson Road, Suite

208

McLean, VA 22101

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

	 	1616 Anderson Road, Suite

208

McLean, VA 22101

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

	 	1616 Anderson Road, Suite

208

McLean, VA 22101

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

	 	1616 Anderson Road, Suite

208

McLean, VA 22101

Attn: George Stelljes III
	 	100% of Common
Stock, no par value
	 	Delaware

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