Document:

exv10w4

 

Exhibit 10.4

LOAN AGREEMENT

Dated as of
October 27th, 2004

Between

YSI III LLC,

as Borrower

and

LEHMAN BROTHERS BANK, FSB,

as Lender

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page

	I.	 	DEFINITIONS; PRINCIPLES OF CONSTRUCTION	 	 	1	 
	 
	 	Section	 	1.1	 	Definitions	 	 	1	 
	 
	 	Section	 	1.2	 	Principles of Construction	 	 	19	 
	II.	 	GENERAL TERMS	 	 	20	 
	 
	 	Section	 	2.1	 	Loan Commitment; Disbursement to Borrower	 	 	20	 
	 
	 	 	 	2.1.1	 	The Loan	 	 	20	 
	 
	 	 	 	2.1.2	 	Disbursement to Borrower	 	 	20	 
	 
	 	 	 	2.1.3	 	The Note, Security Instruments and Loan Documents	 	 	20	 
	 
	 	 	 	2.1.4	 	Use of Proceeds	 	 	20	 
	 
	 	Section	 	2.2	 	Interest; Loan Payments; Late Payment Charge	 	 	20	 
	 
	 	 	 	2.2.1	 	Interest Generally	 	 	20	 
	 
	 	 	 	2.2.2	 	Interest Calculation	 	 	20	 
	 
	 	 	 	2.2.3	 	Payments	 	 	20	 
	 
	 	 	 	2.2.4	 	Intentionally Deleted	 	 	21	 
	 
	 	 	 	2.2.5	 	Payment on Maturity Date	 	 	21	 
	 
	 	 	 	2.2.6	 	Payments after Default	 	 	21	 
	 
	 	 	 	2.2.7.	 	Late Payment Charge	 	 	21	 
	 
	 	 	 	2.2.8	 	Usury Savings	 	 	21	 
	 
	 	 	 	2.2.9	 	Making of Payments	 	 	22	 
	 
	 	 	 	2.2.10	 	Indemnified Taxes	 	 	22	 
	 
	 	Section	 	2.3	 	Prepayments	 	 	23	 
	 
	 	 	 	2.3.1	 	Voluntary Prepayments	 	 	23	 
	 
	 	 	 	2.3.2	 	Mandatory Prepayments	 	 	23	 
	 
	 	 	 	2.3.3	 	Prepayments After Default	 	 	23	 
	 
	 	Section	 	2.4	 	Defeasance	 	 	24	 
	 
	 	 	 	2.4.1	 	Voluntary Defeasance	 	 	24	 
	 
	 	 	 	2.4.2	 	Successor Borrower	 	 	26	 
	 
	 	Section	 	2.5	 	Release of Property	 	 	26	 
	 
	 	 	 	2.5.1	 	Release of all Properties	 	 	26	 
	 
	 	 	 	2.5.2	 	Release of Individual Property	 	 	27	 
	 
	 	 	 	2.5.3	 	Release on Payment in Full	 	 	28	 
	 
	 	Section	 	2.6	 	Manner of Making Payments; Cash Management	 	 	28	 
	 
	 	 	 	2.6.1	 	Deposits into Lockbox Account	 	 	28	 
	 
	 	 	 	2.6.2	 	Payments Received in the Lockbox Account	 	 	28	 
	 
	 	 	 	2.6.3	 	No Deductions, etc.	 	 	28	 
	 
	 	Section	 	2.7	 	Substitute Property	 	 	28	 
	III.	 	CONDITIONS PRECEDENT	 	 	35	 
	 
	 	Section	 	3.1	 	Conditions Precedent to Closing	 	 	35	 

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	 	 	 	3.1.1	 	Representations and Warranties; Compliance with Conditions	 	 	36	 
	 
	 	 	 	3.1.2	 	Loan Agreement and Note	 	 	36	 
	 
	 	 	 	3.1.3	 	Delivery of Loan Documents; Title Insurance; Reports; Leases	 	 	36	 
	 
	 	 	 	3.1.4	 	Related Documents	 	 	37	 
	 
	 	 	 	3.1.5	 	Delivery of Organizational Documents	 	 	37	 
	 
	 	 	 	3.1.6	 	Opinions of Borrower’s Counsel	 	 	37	 
	 
	 	 	 	3.1.7	 	Budgets	 	 	37	 
	 
	 	 	 	3.1.8	 	Basic Carrying Costs	 	 	37	 
	 
	 	 	 	3.1.9	 	Completion of Proceedings	 	 	38	 
	 
	 	 	 	3.1.10	 	Payments	 	 	38	 
	 
	 	 	 	3.1.11	 	Tenant Estoppels	 	 	38	 
	 
	 	 	 	3.1.12	 	Transaction Costs	 	 	38	 
	 
	 	 	 	3.1.13	 	Material Adverse Effect	 	 	38	 
	 
	 	 	 	3.1.14	 	Leases and Rent Roll	 	 	38	 
	 
	 	 	 	3.1.15	 	Tax Lot	 	 	38	 
	 
	 	 	 	3.1.16	 	Physical Conditions Reports	 	 	38	 
	 
	 	 	 	3.1.17	 	Management Agreement	 	 	38	 
	 
	 	 	 	3.1.18	 	Appraisal	 	 	39	 
	 
	 	 	 	3.1.19	 	Financial Statements	 	 	39	 
	 
	 	 	 	3.1.20	 	Further Documents	 	 	39	 
	IV.	 	REPRESENTATIONS AND WARRANTIES	 	 	39	 
	 
	 	Section	 	4.1	 	Borrower Representations	 	 	39	 
	 
	 	 	 	4.1.1	 	Organization	 	 	39	 
	 
	 	 	 	4.1.2	 	Proceedings	 	 	39	 
	 
	 	 	 	4.1.3	 	No Conflicts	 	 	39	 
	 
	 	 	 	4.1.4	 	Litigation	 	 	40	 
	 
	 	 	 	4.1.5	 	Agreements	 	 	40	 
	 
	 	 	 	4.1.6	 	Title	 	 	40	 
	 
	 	 	 	4.1.7	 	Solvency / No Bankruptcy Filing	 	 	40	 
	 
	 	 	 	4.1.8	 	Full and Accurate Disclosure	 	 	41	 
	 
	 	 	 	4.1.9	 	No Plan Assets	 	 	41	 
	 
	 	 	 	4.1.10	 	Compliance	 	 	41	 
	 
	 	 	 	4.1.11	 	Financial Information	 	 	42	 
	 
	 	 	 	4.1.12	 	Condemnation	 	 	42	 
	 
	 	 	 	4.1.13	 	Federal Reserve Regulations	 	 	42	 
	 
	 	 	 	4.1.14	 	Utilities and Public Access	 	 	42	 
	 
	 	 	 	4.1.15	 	Not a Foreign Person	 	 	42	 
	 
	 	 	 	4.1.16	 	Separate Lots	 	 	42	 
	 
	 	 	 	4.1.17	 	Assessments	 	 	42	 
	 
	 	 	 	4.1.18	 	Enforceability	 	 	43	 
	 
	 	 	 	4.1.19	 	No Prior Assignment	 	 	43	 
	 
	 	 	 	4.1.20	 	Insurance	 	 	43	 
	 
	 	 	 	4.1.21	 	Use of Property	 	 	43	 
	 
	 	 	 	4.1.22	 	Certificate of Occupancy; Licenses	 	 	43	 
	 
	 	 	 	4.1.23	 	Flood Zone	 	 	43	 

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	 	 	 	4.1.24	 	Physical Condition	 	 	43	 
	 
	 	 	 	4.1.25	 	Boundaries	 	 	44	 
	 
	 	 	 	4.1.26	 	Leases	 	 	44	 
	 
	 	 	 	4.1.27	 	Survey	 	 	45	 
	 
	 	 	 	4.1.28	 	Loan to Value	 	 	45	 
	 
	 	 	 	4.1.29	 	Filing and Recording Taxes	 	 	45	 
	 
	 	 	 	4.1.30	 	Single Purpose Entity/Separateness	 	 	45	 
	 
	 	 	 	4.1.31	 	Management Agreement	 	 	48	 
	 
	 	 	 	4.1.32	 	Illegal Activity	 	 	48	 
	 
	 	 	 	4.1.33	 	No Change in Facts or Circumstances; Disclosure	 	 	48	 
	 
	 	 	 	4.1.34	 	Intellectual Property	 	 	49	 
	 
	 	 	 	4.1.35	 	Investment Company Act	 	 	49	 
	 
	 	 	 	4.1.36	 	Principal Place of Business; State of Organization	 	 	49	 
	 
	 	 	 	4.1.37	 	Business Purposes	 	 	49	 
	 
	 	 	 	4.1.38	 	Taxes	 	 	49	 
	 
	 	 	 	4.1.39	 	Forfeiture	 	 	50	 
	 
	 	 	 	4.1.40	 	Environmental Representations and Warranties	 	 	50	 
	 
	 	 	 	4.1.41	 	Taxpayer Identification Number	 	 	50	 
	 
	 	 	 	4.1.42	 	OFAC	 	 	50	 
	 
	 	 	 	4.1.43	 	Ground Lease Representations	 	 	50	 
	 
	 	 	 	4.1.44	 	Embargoed Person	 	 	52	 
	 
	 	Section	 	4.2	 	Survival of Representations	 	 	52	 
	V.	 	BORROWER COVENANTS	 	 	52	 
	 
	 	Section	 	5.1	 	Affirmative Covenants	 	 	52	 
	 
	 	 	 	5.1.1	 	Existence; Compliance with Legal Requirements; Insurance	 	 	52	 
	 
	 	 	 	5.1.2	 	Taxes and Other Charges	 	 	53	 
	 
	 	 	 	5.1.3	 	Litigation	 	 	54	 
	 
	 	 	 	5.1.4	 	Access to Properties	 	 	54	 
	 
	 	 	 	5.1.5	 	Notice of Default	 	 	54	 
	 
	 	 	 	5.1.6	 	Cooperate in Legal Proceedings	 	 	54	 
	 
	 	 	 	5.1.7	 	Perform Loan Documents	 	 	54	 
	 
	 	 	 	5.1.8	 	Awards or Insurance Benefits	 	 	55	 
	 
	 	 	 	5.1.9	 	Further Assurances	 	 	55	 
	 
	 	 	 	5.1.10	 	Supplemental Security Instrument Affidavits	 	 	55	 
	 
	 	 	 	5.1.11	 	Financial Reporting	 	 	56	 
	 
	 	 	 	5.1.12	 	Business and Operations	 	 	57	 
	 
	 	 	 	5.1.13	 	Title to the Properties	 	 	58	 
	 
	 	 	 	5.1.14	 	Costs of Enforcement	 	 	58	 
	 
	 	 	 	5.1.15	 	Estoppel Statement	 	 	58	 
	 
	 	 	 	5.1.16	 	Loan Proceeds	 	 	58	 
	 
	 	 	 	5.1.17	 	Performance by Borrower	 	 	58	 
	 
	 	 	 	5.1.18	 	Confirmation of Representations	 	 	59	 
	 
	 	 	 	5.1.19	 	No Joint Assessment	 	 	59	 
	 
	 	 	 	5.1.20	 	Leasing Matters	 	 	59	 
	 
	 	 	 	5.1.21	 	Alterations	 	 	60	 

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	 	 	 	5.1.22	 	Environmental Covenants	 	 	60	 
	 
	 	 	 	5.1.23	 	OFAC	 	 	62	 
	 
	 	 	 	5.1.24	 	O&M Program	 	 	62	 
	 
	 	 	 	5.1.25	 	The Ground Leases	 	 	62	 
	 
	 	Section	 	5.2	 	Negative Covenants	 	 	63	 
	 
	 	 	 	5.2.1	 	Operation of Property	 	 	64	 
	 
	 	 	 	5.2.2	 	Liens	 	 	64	 
	 
	 	 	 	5.2.3	 	Dissolution	 	 	64	 
	 
	 	 	 	5.2.4	 	Change In Business	 	 	64	 
	 
	 	 	 	5.2.5	 	Debt Cancellation	 	 	64	 
	 
	 	 	 	5.2.6	 	Affiliate Transactions	 	 	64	 
	 
	 	 	 	5.2.7	 	Zoning	 	 	65	 
	 
	 	 	 	5.2.8	 	Assets	 	 	65	 
	 
	 	 	 	5.2.9	 	Debt	 	 	65	 
	 
	 	 	 	5.2.10	 	No Joint Assessment	 	 	65	 
	 
	 	 	 	5.2.11	 	Principal Place of Business	 	 	65	 
	 
	 	 	 	5.2.12	 	ERISA	 	 	65	 
	 
	 	 	 	5.2.13	 	Transfers	 	 	65	 
	 
	 	Section	 	5.3	 	Traded Shares	 	 	69	 
	VI.	 	INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS	 	 	69	 
	 
	 	Section	 	6.1	 	Insurance	 	 	69	 
	 
	 	Section	 	6.2	 	Casualty	 	 	73	 
	 
	 	Section	 	6.3	 	Condemnation	 	 	73	 
	 
	 	Section	 	6.4	 	Restoration	 	 	73	 
	VII.	 	RESERVE FUNDS	 	 	78	 
	 
	 	Section	 	7.1	 	Required Repair Funds	 	 	78	 
	 
	 	 	 	7.1.1	 	Deposits	 	 	78	 
	 
	 	 	 	7.1.2	 	Release of Required Repair Funds	 	 	78	 
	 
	 	Section	 	7.2	 	Tax and Insurance Escrow Fund	 	 	79	 
	 
	 	Section	 	7.3	 	Replacements and Replacement Reserve	 	 	80	 
	 
	 	 	 	7.3.1	 	Replacement Reserve Fund	 	 	80	 
	 
	 	 	 	7.3.2	 	Disbursements from Replacement Reserve Account	 	 	80	 
	 
	 	 	 	7.3.3	 	Performance of Replacements	 	 	82	 
	 
	 	 	 	7.3.4	 	Failure to Make Replacements	 	 	84	 
	 
	 	 	 	7.3.5	 	Balance in the Replacement Reserve Account	 	 	84	 
	 
	 	Section	 	7.4	 	Ground Lease Escrow Fund	 	 	84	 
	 
	 	Section	 	7.5	 	Leasing Reserve Fund	 	 	85	 
	 
	 	 	 	7.5.1	 	Deposits to Leasing Reserve Fund	 	 	85	 
	 
	 	 	 	7.5.2	 	Withdrawals of Leasing Reserve Funds	 	 	85	 
	 
	 	Section	 	7.6	 	Reserve Funds, Generally	 	 	85	 
	VIII.	 	DEFAULTS	 	 	86	 
	 
	 	Section	 	8.1	 	Event of Default	 	 	86	 
	 
	 	Section	 	8.2	 	Remedies	 	 	89	 

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	 	Section	 	8.3	 	Remedies Cumulative; Waivers	 	 	91	 
	IX.	 	SPECIAL PROVISIONS	 	 	91	 
	 
	 	Section	 	9.1	 	Sale of Notes and Securitization	 	 	91	 
	 
	 	Section	 	9.2	 	Securitization Indemnification	 	 	93	 
	 
	 	Section	 	9.3	 	Intentionally Deleted	 	 	95	 
	 
	 	Section	 	9.4	 	Exculpation	 	 	95	 
	 
	 	Section	 	9.5	 	Management Agreement	 	 	97	 
	 
	 	Section	 	9.6	 	Servicer	 	 	98	 
	 
	 	Section	 	9.7	 	Restructuring of Mortgage and/or Mezzanine Loan	 	 	98	 
	X.	 	MISCELLANEOUS	 	 	100	 
	 
	 	Section	 	10.1	 	Survival	 	 	100	 
	 
	 	Section	 	10.2	 	Lender’s Discretion	 	 	101	 
	 
	 	Section	 	10.3	 	Governing Law	 	 	101	 
	 
	 	Section	 	10.4	 	Modification, Waiver in Writing	 	 	102	 
	 
	 	Section	 	10.5	 	Delay Not a Waiver	 	 	102	 
	 
	 	Section	 	10.6	 	Notices	 	 	103	 
	 
	 	Section	 	10.7	 	Trial by Jury	 	 	104	 
	 
	 	Section	 	10.8	 	Headings	 	 	104	 
	 
	 	Section	 	10.9	 	Severability	 	 	104	 
	 
	 	Section	 	10.10	 	Preferences	 	 	104	 
	 
	 	Section	 	10.11	 	Waiver of Notice	 	 	105	 
	 
	 	Section	 	10.12	 	Remedies of Borrower	 	 	105	 
	 
	 	Section	 	10.13	 	Expenses; Indemnity	 	 	105	 
	 
	 	Section	 	10.14	 	Schedules Incorporated	 	 	107	 
	 
	 	Section	 	10.15	 	Offsets, Counterclaims and Defenses	 	 	107	 
	 
	 	Section	 	10.16	 	No Joint Venture or Partnership; No Third Party Beneficiaries	 	 	107	 
	 
	 	Section	 	10.17	 	Publicity	 	 	107	 
	 
	 	Section	 	10.18	 	Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets	 	 	108	 
	 
	 	Section	 	10.19	 	Waiver of Counterclaim	 	 	108	 
	 
	 	Section	 	10.20	 	Conflict; Construction of Documents; Reliance	 	 	108	 
	 
	 	Section	 	10.21	 	Brokers and Financial Advisors	 	 	109	 
	 
	 	Section	 	10.22	 	Prior Agreements	 	 	109	 

v

 

SCHEDULES

	 	 	 	 	 
	Schedule I

	 	-
	 	Properties - Allocated Loan Amounts
	Schedule II

	 	-
	 	Ground Leases
	Schedule III

	 	-
	 	O&M Program Properties
	Schedule 4.1.1

	 	-
	 	Organizational Chart
	Schedule 4.1.4

	 	-
	 	Litigation
	Schedule 4.1.5

	 	-
	 	Material Agreements
	Schedule 4.1.26

	 	-
	 	Major Leases
	Schedule 4.1.30

	 	-
	 	Non-Consolidation Opinion
	Schedule 4.1.31

	 	-
	 	Properties Not Operated as a U-Store-It Facility
	Schedule 7.1.1

	 	-
	 	Required Repairs
	Schedule 7.3.2

	 	-
	 	Replacement Reserves

vi

 

LOAN AGREEMENT

          THIS
LOAN AGREEMENT, dated as of October 27th, 2004 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
“Agreement”), between LEHMAN BROTHERS BANK, FSB, a federal stock savings
bank, having an address at 1000 West Street, Suite 200, Wilmington, Delaware
19801 (“Lender”) and YSI III LLC, a Delaware limited liability company,
having an address at 6745 Engle Road, Suite 300, Middleburg Heights, Ohio 44130
(“Borrower”).

WITNESSETH:

          WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from
Lender; and

          WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).

          NOW, THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:

     I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

     Section 1.1 Definitions.

          For all purposes of this Agreement, except as otherwise expressly required
or unless the context clearly indicates a contrary intent:

          “Acceptable Accountant” shall mean a “Big Four” accounting firm or
other independent certified public accountant acceptable to Lender.

          “Accounts” shall have the meaning set forth in the Cash Management
Agreement.

          “Affiliate” shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.

          “Agent” shall have the meaning set forth in the Cash Management
Agreement.

          “Allocated Loan Amount” shall mean, for an Individual Property, the
amount set forth on Schedule I attached hereto.

          “ALTA” shall mean American Land Title Association or any successor
thereto.

 

 

          “Annual Budget” shall mean the operating budget, including all
planned capital expenditures, for the Properties prepared by Borrower for the
applicable Fiscal Year or other period.

          “Applicable Interest Rate” shall mean 5.085% per annum.

          “Approved Appraisal” shall mean, with respect to an Individual
Property, an appraisal of such Individual Property (i) executed and delivered
to Lender by a qualified MAI appraiser having no direct or indirect interest in
such Individual Property or any loan secured in whole or in part thereby and
whose compensation is not affected by the approval or disapproval of such
appraisal by Lender; (ii) addressed to Lender and its successors and assigns;
(iii) satisfying the requirements of the Federal National Mortgage Association
or the Federal Home Loan Mortgage Corporation and Title XI of the Federal
Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date of such calculation, with
respect to such appraisal and the appraiser making such appraisal and (iv)
otherwise satisfactory to Lender in all respects in Lender’s sole
discretion.

          “Assignment of Leases” shall mean, with respect to each Individual
Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, from Borrower, as assignor, to Lender, as assignee,
assigning to Lender all of Borrower’s interest in and to the Leases and Rents
of such Individual Property as security for the Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

          “Assignment of Management Agreement” shall mean that certain
Assignment of Management Agreement and Subordination of Management Fees dated
as of the date hereof among Lender, Borrower and Manager, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

          “Award” shall mean any compensation paid by any Governmental
Authority in connection with a Condemnation in respect of all or any part of
any Individual Property.

          “Bankruptcy Code” shall mean Title 11 U.S.C. § 101 et seq., and the
regulations adopted and promulgated pursuant thereto (as the same may be
amended from time to time).

          “Basic Carrying Costs” shall mean, with respect to each Individual
Property, the sum of the following costs associated with such Individual
Property for the relevant Fiscal Year or payment period: (i) Taxes, (ii)
Insurance Premiums, and (iii) if applicable, Ground Rent.

          “Borrower” shall mean YSI III LLC, a Delaware limited liability
company, together with its successors and permitted assigns.

          “Business Day” shall mean any day other than a Saturday, Sunday or
any other day on which national banks in New York, New York are not open for
business.

          “Capital Expenditures” shall mean, for any period, the amount
expended for items capitalized under GAAP (including expenditures for building
improvements or major repairs, leasing commissions and tenant improvements).

2

 

          “Cash Management Agreement” shall mean that certain Cash Management
Agreement by and among Borrower, Manager, Agent and Lender dated the date
hereof, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

          “Casualty” shall have the meaning specified in Section 6.2 hereof.

          “Casualty Consultant” shall have the meaning set forth in Section
6.4(b)(iii) hereof.

          “Casualty Retainage” shall have the meaning set forth in Section
6.4(b)(iv) hereof.

          “Closing Date” shall mean the date of the funding of the Loan.

          “Code” shall mean the Internal Revenue Code of 1986, as amended, as
it may be further amended from time to time, and any successor statutes
thereto, and applicable U.S. Department of Treasury regulations issued pursuant
thereto in temporary or final form.

          “Condemnation” shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
any Individual Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting such
Individual Property or any part thereof.

          “Condemnation Proceeds” shall have the meaning set forth in Section
6.4(b).

          “Creditors Rights Laws” shall mean with respect to any Person, any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to its debts or debtors.

          “Debt” shall mean the outstanding principal amount set forth in,
and evidenced by, this Agreement and the Note together with all interest
accrued and unpaid thereon and all other sums (including the Yield Maintenance
Premium) due to Lender in respect of the Loan under the Note, this Agreement,
the Security Instruments or any other Loan Document.

          “Debt Service” shall mean, with respect to any particular period of
time, all principal and/or interest payments under the Note.

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

	 	(a)	 	the numerator is the Net Operating Income
(excluding interest on credit accounts) for such period as set
forth in the statements required hereunder, without deduction
for (i) actual management fees incurred in connection with the
operation of the Properties, or (ii) amounts paid to the
Reserve Funds, less (A) management fees equal to the greater
of (1) assumed

3

 

	 	 	 	management fees of three percent (3%) of Gross Income from
Operations or (2) the actual management fees incurred, and
(B) actual Replacement Reserve Fund contributions equal to an
annual amount of $0.15 per square foot of gross leaseable
area at the Properties; and
	 
	 	(b)	 	the denominator is the aggregate amount of
principal and interest due and payable on the Note or, in the
event a Defeasance Event has occurred, the Undefeased Note,
for such period.

          “Default” shall mean the occurrence of any event hereunder or under
any other Loan Document which, but for the giving of notice or passage of time,
or both, would be an Event of Default.

          “Default Rate” shall mean, with respect to the Loan, a rate per
annum equal to the lesser of (a) the Maximum Legal Rate or (b) three percent
(3%) above the Applicable Interest Rate.

          “Defeasance Date” shall have the meaning set forth in Section
2.4.1(a)(i) hereof.

          “Defeasance Deposit” shall mean an amount equal to the remaining
principal amount of the Note or the Defeased Note, as applicable, the Yield
Maintenance Premium, any costs and expenses incurred or to be incurred in the
purchase of U.S. Obligations necessary to meet the Scheduled Defeasance
Payments and any revenue, documentary stamp or intangible taxes or any other
tax or charge due in connection with the transfer of the Note or the Defeased
Note, as applicable, the creation of the Defeased Note and the Undefeased Note,
if applicable, or otherwise required to accomplish the agreements of Sections
2.3 and 2.4 hereof.

          “Defeasance Event” shall have the meaning set forth in Section
2.4.1(a) hereof.

          “Defeased Note” shall have the meaning set forth in Section
2.4.1(a)(v) hereof.

          “Disclosure Document” shall have the meaning set forth in Section
9.2(a) hereof.

          “Eligible Account” shall mean a separate and identifiable account
from all other funds held by the holding institution that is either (a) an
account or accounts maintained with a Federal or State-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (b) a segregated trust account or accounts maintained with a
Federal or State-chartered depository institution or trust company acting in
its fiduciary capacity which, in the case of a State-chartered depository
institution or trust company, is subject to regulations substantially similar
to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus of
at least $50,000,000 and subject to supervision or examination by Federal and
State authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.

          “Eligible Institution” shall mean a depository institution or trust
company insured by the Federal Deposit Insurance Corporation, the short term
unsecured debt obligations or commercial paper of which are rated at least A-1
by S&P, P-1 by Moody’s and F-1+ by Fitch in the case of accounts in which funds
are held for 30 days or less (or, in the case of accounts in

4

 

which funds are held for more than 30 days, the long term unsecured debt
obligations of which are rated at least “AA” by Fitch and S&P and “Aa2” by
Moody’s).

          “Embargoed Person” shall have the meaning set forth in Section
4.1.44 hereof.

          “Environmental Indemnity” shall mean that certain Environmental and
Hazardous Substance Indemnification Agreement executed by Borrower in
connection with the Loan for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

          “Environmental Laws” shall have the meaning set forth in the
Environmental Indemnity.

          “Environmental Liens” shall have the meaning set forth in Section
5.1.22 hereof.

          “Environmental Report” shall have the meaning set forth in Section
4.1.40 hereof.

          “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended.

          “Event of Default” shall have the meaning set forth in Section
8.1(a) hereof.

          “Exchange Act” shall have the meaning set forth in Section 9.2(a)
hereof.

          “Fee Estate” shall mean, with respect to any Ground Lease, the fee
interest of the lessor under such Ground Lease in the Land and the Improvements
demised under such Ground Lease.

          “Fee Owner” shall mean, with respect to any Ground Lease, the owner
of the lessor’s interest in such Ground Lease and the related Fee Estate.

          “Fiscal Year” shall mean each twelve (12) month period commencing
on January 1 and ending on December 31 during each year of the term of the
Loan.

          “Fitch” shall mean Fitch IBCA, Inc.

          “GAAP” shall mean generally accepted accounting principles in the
United States of America as of the date of the applicable financial report
consistently applied.

          “Governmental Authority” shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental unit (Federal, State, county, district, municipal, city or
otherwise) whether now or hereafter in existence.

          “Gross Income from Operations” shall mean all income, computed in
accordance with GAAP, derived from the ownership and operation of the
Properties from whatever source, including, but not limited to, Rents,
utility charges, escalations, forfeited security deposits, interest on credit
accounts, service fees or charges, license fees, parking fees,

5

 

rent concessions or credits, and other required pass-throughs but
excluding sales, use and occupancy or other taxes on receipts required
to be accounted for by Borrower to any Governmental Authority, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, Insurance
Proceeds (other than business interruption or other loss of income insurance),
Awards, unforfeited security deposits, utility and other similar deposits and
any disbursements to Borrower from the Reserve Funds, all as approved by
Lender. Gross income shall not be diminished as a result of the Security
Instrument or the creation of any intervening estate or interest in the
Properties or any part thereof.

          “Ground Lease” shall mean, individually and collectively, as the
context may require, each ground lease described on Schedule II attached
hereto and made a part hereof as such Schedule may be amended from time to time
upon the release and/or substitution of an Individual Property.

          “Ground Lease Escrow Fund” shall have the meaning set forth in
Section 7.4 hereof.

          “Ground Lease Estoppel” shall mean that certain estoppel
certificate and agreement given by Fee Owner for the benefit of Lender and
containing certain statements and agreements relating to the Ground Lease.

          “Ground Rent” shall mean the amount of monthly rent and other
charges due and payable by Borrower under the Ground Lease.

          “Guarantor” shall mean U-Store-It, L.P., a Delaware limited
partnership.

          “Guaranty” shall mean that certain Guaranty executed by Guarantor,
dated the date hereof, as the same may be amended, restated, replaced,
supplemented, or otherwise modified from time to time.

          “Hazardous Substances” shall have the meaning set forth in the
Environmental Indemnity.

          “Improvements” shall have the meaning set forth in the granting
clause of the related Security Instrument with respect to each Individual
Property.

          “Indebtedness” of a Person, at a particular date, means the sum
(without duplication) at such date of (a) indebtedness or liability for
borrowed money; (b) obligations evidenced by bonds, debentures, notes, or other
similar instruments; (c) obligations for the deferred purchase price of
property or services (including trade obligations); (d) obligations under
letters of credit; (e) obligations under acceptance facilities; (f) all
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to purchase, to provide
funds for payment, to supply funds, to invest in any Person or entity, or
otherwise to assure a creditor against loss; and (g) obligations secured by any
Liens, whether or not the obligations have been assumed.

          “Indemnified Parties” shall mean Lender, any Person who is or will
have been involved in the origination of the Loan, any Person who is or will
have been involved with the

6

 

servicing of the Loan, any Person in whose name the encumbrance created by
the Security Instrument is or will have been recorded, Persons and entities who
may hold or acquire or will have held a full or partial interest in the Loan
(including, but not limited to, Investors or prospective Investors in the
Securities, as well as custodians, trustees and other fiduciaries who hold or
have held a full or partial interest in the Loan for the benefit of third
parties) as well as the respective directors, officers, shareholders, partners,
employees, agents, servants, representatives, contractors, subcontractors,
affiliates, subsidiaries, participants, successors and assigns of any and all
of the foregoing (including but not limited to any other Person who holds or
acquires or will have held a participation or other full or partial interest in
the Loan or the Properties, whether during the term of the Loan or as a part of
or following a foreclosure of the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all or a substantial
portion of Indemnitee’s assets and business).

          “Indemnified Taxes” shall mean any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority.

          “Independent Director” shall have the meaning set forth in Section
4.1.30(p) hereof.

          “Individual LTV Ratio” shall mean, with respect to an Individual
Property, the ratio of (a) the Allocated Loan Amount for such Individual
Property to (b) fair market value of such Individual Property set forth in an
Approved Appraisal.

          “Individual Property” shall mean each parcel of real property, the
Improvements thereon and all personal property owned by Borrower and encumbered
by a Security Instrument, together with all rights pertaining to such property
and Improvements, as more particularly described in the granting clauses of
each Security Instrument and referred to therein as the “Property”; a list of
all Individual Properties on the date hereof appears on Schedule I
attached hereto.

          “Insolvency Opinion” shall mean that certain opinion letter dated
the date hereof delivered by Hogan & Hartson L.L.P. in connection with the
Loan.

          “Insurance Premiums” shall have the meaning set forth in Section
6.1(b) hereof.

          “Insurance Proceeds” shall have the meaning set forth in Section
6.4(b) hereof.

          “Intellectual Property” shall mean patents, licenses, franchises,
trademarks, trademark rights, trade names, trade name rights, trade secrets and
copyrights.

          “Interest Only Payment Amount” shall have the meaning set forth in
Section 2.2.3 hereof.

          “Interest Period” shall mean, with respect to the application of
the Interest Only Payment Amount and the Monthly Debt Service Payment Amount
paid by Borrower on a Payment Date, the period commencing on the eleventh
(11th) day of the prior calendar month to and including the tenth (10th) day of
the calendar month in which such Payment Date occurs.

7

 

          “Investor” shall mean each purchaser, transferee, assignee,
servicer, participant or investor in such Securities or any credit rating
agency rating such Securities.

          “Lease” shall mean any lease, sublease or subsublease, letting,
license, concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in any
Individual Property and every modification, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.

          “Leasing Reserve Account” shall have the meaning set forth in the
Cash Management Agreement.

          “Leasing Reserve Fund” shall have the meaning set forth in Section
7.5.1 hereof.

          “Lease Termination Payments” shall mean all payments made to
Borrower in connection with any termination, cancellation, surrender, sale or
other disposition of any Lease.

          “Legal Requirements” shall mean, with respect to each Individual
Property, all Federal, State, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions of Governmental Authorities affecting such Individual Property or
any part thereof, or the construction, use, alteration or operation thereof, or
any part thereof, whether now or hereafter enacted and in force, and all
permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting such Individual Property or any part thereof, including, without
limitation, any which may (a) require repairs, modifications or alterations in
or to such Individual Property or any part thereof, or (b) in any way limit the
use and enjoyment thereof.

          “Lehman” shall have the meaning set forth in Section 9.2(b) hereof.

          “Lehman Group” shall have the meaning set forth in Section 9.2(b)
hereof.

          “Lender” shall mean Lehman Brothers Bank, FSB, a federal stock
savings bank, together with its successors and assigns.

          “Liabilities” shall have the meaning set forth in Section 9.2(b)
hereof.

          “Licenses” shall have the meaning set forth in Section 4.1.22
hereof.

          “Lien” shall mean, with respect to an Individual Property, any
mortgage, deed of trust, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance (but excluding any easements permitted by
Section 5.2.13 hereof), charge or transfer of, on or affecting Borrower, the
related Individual Property, any portion thereof or any interest therein,
including, without limitation, any conditional sale or other title retention
agreement, any

8

 

financing lease having substantially the same economic effect as any of
the foregoing, the filing of any financing statement, and mechanic’s,
materialmen’s and other similar liens and encumbrances.

          “Loan” shall mean the loan made by Lender to Borrower pursuant to
this Agreement.

          “Loan Documents” shall mean, collectively, this Agreement, the
Note, the Security Instrument, the Assignment of Leases, the Environmental
Indemnity, the Assignment of Management Agreement, the Cash Management
Agreement and all other documents executed and/or delivered in connection with
the Loan.

          “Loan to Value Ratio” shall mean, as of the date of its
calculation, the ratio of (i) the sum of the outstanding principal amount of
the Loan as of the date of such calculation to (ii) the most recent appraised
value of the Properties (according to the most recent Approved Appraisal
available to Lender).

          “Lockbox Account” shall mean the account, if any, specified in the
Cash Management Agreement for deposit of Rents and other receipts from the
Properties.

          “Major Lease” shall mean any Lease which together with all other
Leases to the same tenant and to all Affiliates of such tenant, (i) provides
for rental income representing ten percent (10%) or more of the total rental
income for the applicable Individual Property; or (ii) covers (A) ten percent
(10%) or more, or (B) 4,000 square feet or more, of the total leaseable area of
the related Individual Property.

          “Management Agreement” shall mean, with respect to any Individual
Property, the management agreement entered into by and between Borrower and the
Manager, pursuant to which the Manager is to provide management and other
services with respect to such Individual Property.

          “Manager” shall mean YSI Management LLC, a Delaware limited
liability company, or, if the context requires, a Qualifying Manager who is
managing the Properties or any Individual Property in accordance with the terms
and provisions of this Agreement.

          “Material Adverse Effect” shall mean any condition which causes or
continues the occurrence of an Event of Default or has a material adverse
effect upon (i) the business, operations, properties, assets, prospects,
corporate structure or condition (financial or otherwise) of Borrower or any
Guarantor, individually or taken as a whole, (ii) the ability of Borrower or
any Guarantor to perform, or of Lender to enforce, any of their obligations
under the Loan Documents or (iii) the value of the Properties, individually or
taken as a whole.

          “Maturity Date” shall mean November 11, 2009, or such other date on
which the final payment of principal of the Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by
declaration of acceleration, or otherwise.

          “Maximum Legal Rate” shall mean the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or

9

 

received on the indebtedness evidenced by the Note and as provided for
herein or the other Loan Documents, under the laws of such State or States
whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.

          “Monthly Debt Service Payment Amount” shall mean a constant monthly
payment of $511,291.00.

          “Monthly Ground Rent Deposit” shall have the meaning set forth in
Section 7.4 hereof.

          “Moody’s” shall mean Moody’s Investors Service, Inc.

          “Net Cash Flow” for any period shall mean the amount obtained by
subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income from Operations for such period.

          “Net Cash Flow After Debt Service” for any period shall mean the
amount obtained by subtracting Debt Service for such period from Net Cash Flow
for such period.

          “Net Cash Flow Schedule” shall have the meaning set forth in
Section 5.1.11(b) hereof.

          “Net Operating Income” shall mean the amount obtained by
subtracting Operating Expenses from Gross Income from Operations.

          “Net Proceeds” shall have the meaning set forth in Section 6.4(b)
hereof.

          “Net Proceeds Deficiency” shall have the meaning set forth in
Section 6.4(b)(vi) hereof.

          “Nondisqualification Opinion” shall mean an opinion of tax counsel,
which shall be independent outside counsel, to the effect that a contemplated
action would not materially adversely affect the Federal income tax status as a
REMIC, trust or other vehicle of any REMIC, trust or other vehicle in which the
Loan may be included at the time such opinion is required.

          “Non-U.S. Entity” shall have the meaning set forth in Section
2.2.10(b) hereof.

          “Note” shall mean that certain note of even date herewith in the
principal amount of NINETY MILLION AND 00/100 DOLLARS ($90,000,000.00), made by
Borrower in favor of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, including any Defeased
Note and Undefeased Note that may exist from time to time.

          “O&M Program” shall mean, with respect to each Individual Property
listed on Schedule III attached hereto, the asbestos operations and
maintenance program developed by Borrower and approved by Lender, as the same
may be amended, replaced, supplemented or otherwise modified from time to time.

10

 

          “Officer’s Certificate” shall mean a certificate delivered to
Lender by Borrower which is signed by an authorized senior officer of the
general partner of the sole member Borrower.

          “Operating Expenses” shall mean the total of all expenditures,
computed in accordance with GAAP, of whatever kind relating to the operation,
maintenance and management of the Properties that are incurred on a regular
monthly or other periodic basis, including without limitation, utilities,
ordinary repairs and maintenance, insurance, license fees, property taxes and
assessments, advertising expenses, management fees, payroll and related taxes,
computer processing charges, operational equipment or other lease payments, all
as approved by Lender, and other similar costs, but excluding depreciation,
Debt Service, Capital Expenditures and contributions to the Reserve Funds.

          “Other Charges” shall mean all Ground Rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining any Individual Property, now or hereafter levied or
assessed or imposed against such Individual Property or any part thereof.

          “Payment Date” shall mean the eleventh (11th) day of each calendar
month during the term of the Loan or, if such day is not a Business Day, the
immediately succeeding Business Day.

          “Permitted Encumbrances” shall mean, with respect to an Individual
Property, collectively, (a) the Liens and security interests created by the
Loan Documents, (b) all Liens, encumbrances and other matters disclosed in the
Title Insurance Policies relating to such Individual Property or any part
thereof, (c) Liens, if any, for Taxes imposed by any Governmental Authority not
yet due or delinquent, and (d) such other title and survey exceptions as Lender
has approved or may approve in writing in Lender’s sole discretion, which
Permitted Encumbrances in the aggregate do not materially adversely affect the
value or use of such Individual Property or Borrower’s ability to repay the
Loan.

          “Permitted Investments” shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Servicer, the trustee under any Securitization or any
of their respective Affiliates, payable on demand or having a maturity date not
later than the Business Day immediately prior to the first Monthly Payment Date
following the date of acquiring such investment and meeting one of the
appropriate standards set forth below:

               (i) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or instrumentality
thereof provided such obligations are backed by the full faith and credit of
the United States of America including, without limitation, obligations of: the
U.S. Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local

11

 

authority bonds) and the Washington Metropolitan Area Transit Authority
(guaranteed transit bonds); provided, however, that the investments described
in this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

               (ii) Federal Housing Administration debentures;

               (iii) obligations of the following United States government sponsored
agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association
(debt obligations), the Student Loan Marketing Association (debt obligations),
the Financing Corp. (debt obligations), and the Resolution Funding Corp. (debt
obligations); provided, however, that the investments described in this clause
must (A) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus
a fixed spread (if any) and must move proportionately with that index, and (D)
such investments must not be subject to liquidation prior to their maturity;

               (iv) Federal funds, unsecured certificates of deposit, time deposits,
bankers’ acceptances and repurchase agreements with maturities of not more than
365 days of any bank, the short term obligations of which at all times are
rated in the highest short term rating category by each Rating Agency (or, if
not rated by all Rating Agencies, rated by at least one Rating Agency in the
highest short term rating category and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in and
of itself, result in a downgrade, qualification or withdrawal of the initial,
or, if higher, then current ratings assigned to the Securities); provided,
however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must
not be subject to liquidation prior to their maturity;

               (v) fully Federal Deposit Insurance Corporation-insured demand and time
deposits in, or certificates of deposit of, or bankers’ acceptances issued by,
any bank or trust company, savings and loan association or savings bank, the
short term obligations of which at all times are rated in the highest short
term rating category by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency in the highest short term rating
category and otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an “r” highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate

12

 

must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must
not be subject to liquidation prior to their maturity;

               (vi) debt obligations with maturities of not more than 365 days and at all
times rated by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in and
of itself, result in a downgrade, qualification or withdrawal of the initial,
or, if higher, then current ratings assigned to the Securities) in its highest
long-term unsecured rating category; provided, however, that the investments
described in this clause must (A) have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (B) if rated by S&P, must
not have an “r” highlighter affixed to their rating, (C) if such investments
have a variable rate of interest, such interest rate must be tied to a single
interest rate index plus a fixed spread (if any) and must move proportionately
with that index, and (D) such investments must not be subject to liquidation
prior to their maturity;

               (vii) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof) with
maturities of not more than 365 days and that at all times is rated by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) in its highest short-term unsecured
debt rating; provided, however, that the investments described in this clause
must (A) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus
a fixed spread (if any) and must move proportionately with that index, and (D)
such investments must not be subject to liquidation prior to their maturity;

               (viii) units of taxable money market funds or mutual funds, which funds
are regulated investment companies, seek to maintain a constant net asset value
per share and invest solely in obligations backed by the full faith and credit
of the United States, which funds have the highest rating available from each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) for money market funds or mutual
funds; and

               (ix) any other security, obligation or investment which has been approved
as a Permitted Investment in writing by (a) Lender and (b) each Rating Agency,
as evidenced by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities by such Rating Agency;

13

 

          provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments
on such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.

          “Permitted Owner” shall mean a Person who satisfies (i), (ii) or
(iii) below:

          (i) a Qualified Transferee;

          (ii) a Sponsor; or

          (iii) any Person, prior to a Securitization, approved by Lender (such
approval not to be unreasonably withheld) or, regarding which, after a
Securitization, Lender has received confirmation from the Rating Agencies that
such transfer shall not result in a downgrade, qualification or withdrawal of
the then-current ratings assigned to the Securities.

          “Permitted Prepayment Date” shall have the meaning set forth in
Section 2.3.1 hereof.

          “Permitted Release Date” shall mean the date that is the earlier of
(a) three (3) years from the Closing Date or (b) two (2) years from the
“startup day” within the meaning of Section 860G(a)(9) of the Code of the REMIC
Trust.

          “Person” shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any Federal, State, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of
the foregoing.

          “Personal Property” shall have the meaning set forth in the
granting clause of the Security Instrument with respect to each Individual
Property.

          “Physical Conditions Report” shall mean, with respect to each
Individual Property, a report prepared by a company satisfactory to Lender
regarding the physical condition of such Individual Property, satisfactory in
form and substance to Lender in its sole discretion, which report shall, among
other things, (a) confirm that such Individual Property and its use complies,
in all material respects, with all applicable Legal Requirements (including,
without limitation, zoning, subdivision and building laws) and (b) to the
extent available, include a copy of a final certificate of occupancy with
respect to all Improvements on such Individual Property.

          “Plan” shall mean an employee benefit plan (as defined in section
3(3) of ERISA) whether or not subject to ERISA or a plan or other arrangement
within the meaning of Section 4975 of the Code.

          “Plan Assets” shall mean assets of a Plan within the meaning of
section 29 C.F.R. Section 2510.3-101 or similar law.

          “Policies” shall have the meaning specified in Section 6.1(b)
hereof.

14

 

          “Prohibited Person” shall mean any Person:

          (a) listed in the Annex to, or otherwise subject to the provisions of, the
Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,
and relating to Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism (the “Executive
Order”);

          (b) that is owned or controlled by, or acting for or on behalf of, any
person or entity that is listed to the Annex to, or is otherwise subject to the
provisions of, the Executive Order;

          (c) with whom Lender is prohibited from dealing or otherwise engaging in
any transaction by any terrorism or money laundering law, including the
Executive Order;

          (d) who commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order;

          (e) that is named as a “specially designated national and blocked person”
on the most current list published by the U.S. Treasury Department Office of
Foreign Assets Control at its official website,
http://www.treas.gov.ofac/t11sdn.pdf or at any replacement website or other
replacement official publication of such list; or

          (f) who is an Affiliate of or affiliated with a Person listed above.

          “Properties” shall mean, collectively, each and every Individual
Property which is subject to the terms of this Agreement.

          “Provided Information” shall have the meaning set forth in Section
9.1(a) hereof.

          “Qualified Transferee” shall mean any one of the following Persons:

	 	(i)	 	a pension fund, pension trust or pension account
that (a) has total real estate assets of at least $1 Billion
and (b) is managed by a Person who controls at least $1
Billion of real estate equity assets; or
	 
	 	(ii)	 	a pension fund advisor who (a) immediately prior
to such transfer, controls at least $1 Billion of real estate
equity assets and (b) is acting on behalf of one or more
pension funds that, in the aggregate, satisfy the requirements
of clause (i) of this definition; or
	 
	 	(iii)	 	an insurance company which is subject to
supervision by the insurance commissioner, or a similar
official or agency, of a State or territory of the United
States (including the District of Columbia) (a) with a net
worth, as of a date no more than six (6) months prior to the
date of the transfer of at least $500 Million and (b) who,
immediately prior to such transfer, controls real estate
equity assets of at least $1 Billion; or

15

 

	 	(iv)	 	a corporation organized under the banking laws of
the United States or any State or territory of the United
States (including the District of Columbia) (a) with a
combined capital and surplus of at least $500 Million and (b)
who, immediately prior to such transfer, controls real estate
equity assets of at least $1 Billion; or
	 
	 	(v)	 	any Person (a) with a long-term unsecured debt
rating from each of the Rating Agencies of at least investment
grade or (b) who (i) owns or operates at least one hundred
(100) self-service storage facilities totaling at least 5
million square feet of gross leasable area, (ii) has a net
worth, as of a date no more than six (6) months prior to the
date of such transfer, of at least $500 Million and (iii)
immediately prior to such transfer, controls real estate
equity assets of at least $1 Billion .

          “Qualifying Manager” shall mean (i) YSI Management LLC, a Delaware
limited liability company or (ii) a reputable and experienced management
organization possessing experience in managing properties similar in size,
scope and value to the Property, provided that (a) prior to a Securitization,
Borrower shall have obtained the prior written consent of Lender for such
entity which consent shall not be unreasonably withheld and (b) after a
Securitization, Borrower shall have obtained prior written confirmation from
the Rating Agencies that management of the Property by such entity will not, in
and of itself, cause a downgrade, withdrawal or qualification of the then
current ratings of the Securities issued pursuant to the Securitization.

          “Rating Agencies” shall mean each of S&P, Moody’s and Fitch, or any
other nationally-recognized statistical rating agency which has been approved
by Lender.

          “Registration Statement” shall have the meaning set forth in
Section 9.2(b) hereof.

          “Release” shall have the meaning set forth in the Environmental
Indemnity.

          “Release Amount” shall mean, for an Individual Property, the
product of the Allocated Loan Amount for such Individual Property and one
hundred twenty-five percent (125%).

          “Released Individual Property” shall have the meaning set forth in
Section 2.5.2 hereof.

          “REMIC Trust” shall mean a “real estate mortgage investment
conduit” within the meaning of Section 860D of the Code that holds the Note.

          “Rents” shall mean, with respect to each Individual Property, all
rents, rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, forfeited security deposits, utility
and other deposits), accounts, cash, issues, profits, charges for services
rendered, and other consideration of whatever form or nature received by or
paid to or for the account of or

16

 

benefit of Borrower or its agents or employees from any and all sources
arising from or attributable to the Individual Property, and proceeds, if any,
from business interruption or other loss of income insurance.

          “Replaced Property” shall have the meaning set forth in Section
2.7(a) hereof.

          “Replacement Management Agreement” shall mean, collectively, (a)
either (i) a management agreement with a Qualifying Manager substantially in
the same form and substance as the Management Agreement, or (ii) a management
agreement with a Qualifying Manager, which management agreement shall be
acceptable to Lender in form and substance, provided, with respect to this
subclause (ii), Lender, at its option, may require that Borrower obtain
confirmation from the applicable Rating Agencies that such management agreement
will not result in a downgrade, withdrawal or qualification of the initial, or
if higher, then current rating of the Securities or any class thereof; and (b)
a conditional assignment of management agreement substantially in the form of
the Assignment of Management Agreement (or such other form acceptable to
Lender), executed and delivered to Lender by Borrower and such Qualifying
Manager at Borrower’s expense.

          “Replacement Reserve Account” shall have the meaning set forth in
Section 7.3.1 hereof.

          “Replacement Reserve Fund” shall have the meaning set forth in
Section 7.3.1 hereof.

          “Replacement Reserve Monthly Deposit” shall mean (i) $21,011.00, or
(ii) following the release of an Individual Property from the lien of its
related Security Instrument pursuant to Section 2.5 hereof or following the
release and substitution of an Individual Property pursuant to Section 2.7
hereof, an amount equal to (A) the aggregate square footage of all Improvements
at the Properties after giving effect to such release or substitution times (B)
$0.15, divided by 12.

          “Replacements” shall have the meaning set forth in Section 7.3.1
hereof.

          “Required Repair Account” shall have the meaning set forth in the
Cash Management Agreement.

          “Required Repair Fund” shall have the meaning set forth in Section
7.1.1 hereof.

          “Required Repairs” shall have the meaning set forth in Section
7.1.1 hereof.

          “Reserve Funds” shall mean the Required Repair Fund, Tax and
Insurance Escrow Fund, the Replacement Reserve Fund, the Ground Lease Escrow
Fund or any other escrow fund established or required by the Loan Documents.

          “Restoration” shall have the meaning set forth in Section 6.2
hereof.

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          “Restricted Party” shall mean Borrower, SPC Party, Guarantor,
Sponsor or any affiliated Manager or any shareholder, partner, member or
non-member manager, or any direct or indirect legal or beneficial owner of,
Borrower, SPC Party, Guarantor, Sponsor, any affiliated Manager or any
non-member manager.

          “Scheduled Defeasance Payments” shall have the meaning set forth in
Section 2.4.1(b) hereof.

          “Securities” shall have the meaning set forth in Section 9.1
hereof.

          “Securities Act” shall have the meaning set forth in Section 9.2(a)
hereof.

          “Securitization” shall have the meaning set forth in Section 9.1
hereof.

          “Security Agreement” shall have the meaning set forth in Section
2.4.1(a)(vi) hereof.

          “Security Instrument” shall mean, with respect to each Individual
Property, that certain first priority Mortgage (or Deed of Trust or Deed to
Secure Debt, as applicable) and Security Agreement, executed and delivered by
Borrower as security for the Loan and encumbering such Individual Property, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.

          “Servicer” shall have the meaning set forth in Section 9.6 hereof.

          “Servicing Agreement” shall have the meaning set forth in Section
9.6 hereof.

          “Severed Loan Documents” shall have the meaning set forth in
Section 8.2(c) hereof.

          “S&P” shall mean Standard & Poor’s Ratings Services, a division of
The McGraw-Hill Companies.

          “SPC Party” shall have the meaning set forth in Section 4.1.30(o)
hereof.

          “Special Purpose Entity” shall mean a Person which satisfies the
requirements of Section 4.1.30 hereof.

          “Sponsor” shall mean U-Store-It Trust, a Maryland real estate
investment trust.

          “State” shall mean, with respect to an Individual Property, the
State or Commonwealth in which such Individual Property or any part thereof is
located.

          “Substitute Property” shall have the meaning set forth in Section
2.7(a) hereof.

          “Substitute Security Instrument” shall have the meaning set forth
in Section 2.7(a) hereof.

          “Substitution” shall have the meaning set forth in Section 2.7(a)
hereof.

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          “Substitution Date” shall have the meaning set forth in Section
2.7(c)(iv) hereof.

          “Successor Borrower” shall have the meaning set forth in Section
2.4.2 hereof.

          “Survey” shall mean a survey of the Individual Property in question
delivered to Lender and which survey has been prepared by a surveyor licensed
in the State and satisfactory to Lender and the company or companies issuing
the Title Insurance Policies, and containing a certification of such surveyor
satisfactory to Lender.

          “Tax and Insurance Escrow Fund” shall have the meaning set forth in
Section 7.2 hereof.

          “Taxes” shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any Individual Property or part thereof.

          “Tax Opinion” shall mean an opinion of competent counsel to the
effect that a contemplated action (a) will not result in any deemed exchange
pursuant to Section 1001 of the Code of the Note; and (b) will not adversely
affect the Note status as indebtedness for Federal income tax purposes.

          “Title Insurance Policy” shall mean, with respect to each
Individual Property, an ALTA mortgagee title insurance policy in the form
(acceptable to Lender) (or, if an Individual Property is in a State which does
not permit the issuance of such ALTA policy, such form as shall be permitted in
such State and acceptable to Lender) issued with respect to such Individual
Property and insuring the lien of the Security Instrument encumbering such
Individual Property.

          “Traded Entity” shall have the meaning set forth in Section
5.2.13(h) hereof.

          “UCC” or “Uniform Commercial Code” shall mean the Uniform
Commercial Code as in effect in the applicable State in which an Individual
Property is located.

          “Undefeased Note” shall have the meaning set forth in Section
2.4.1(a)(v) hereof.

          “Underwriter Group” shall have the meaning set forth in Section
9.2(b) hereof.

          “U.S. Obligations” shall mean direct non-callable obligations of
the United States of America.

          “Yield Maintenance Premium” shall mean the amount (if any) which,
when added to the remaining principal amount of the Note or the principal
amount of a Defeased Note, as applicable, will be sufficient to purchase U.S.
Obligations providing the required Scheduled Defeasance Payments.

     Section 1.2 Principles of Construction

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          All references to sections and schedules are to sections and schedules in
or to this Agreement unless otherwise specified. All uses of the word
“including” shall mean “including, without limitation” unless the context shall
indicate otherwise. Unless otherwise specified, the words “hereof,” “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined
terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined.

     II.GENERAL TERMS

     Section 2.1 Loan Commitment; Disbursement to Borrower.

     2.1.1 The Loan. Subject to and upon the terms and conditions set
forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept
the Loan on the Closing Date.

     2.1.2 Disbursement to Borrower. Borrower may request and receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed.

     2.1.3 The Note, Security Instruments and Loan Documents. The Loan
shall be evidenced by the Note and secured by the Security Instrument, the
Assignment of Leases and the other Loan Documents.

     2.1.4 Use of Proceeds. Borrower shall use the proceeds of the Loan
to (a) pay the cost of the acquisition of the Properties, (b) repay and
discharge any existing loans relating to the Properties, (c) pay all past-due
Basic Carrying Costs, if any, in respect of the Properties, (d) make deposits
into the Reserve Funds on the Closing Date in the amounts provided herein, (e)
pay costs and expenses incurred in connection with the Closing of the Loan, as
approved by Lender, (f) fund any working capital requirements of the
Properties, and (g) distribute the balance, if any, to Borrower.

     Section 2.2 Interest; Loan Payments; Late Payment Charge.

     2.2.1 Interest Generally. Interest on the outstanding principal
balance of the Loan shall accrue from the Closing Date to but excluding the
Maturity Date at the Applicable Interest Rate.

     2.2.2 Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the period for which the calculation is being made by (b) a
daily rate based on a three hundred sixty (360) day year by (c) the outstanding
principal balance.

     2.2.3 Payments. Borrower shall pay to Lender (a) on the Closing
Date, an amount equal to interest only on the outstanding principal balance of
the Loan from the Closing Date up to but not including the eleventh day of the
next succeeding calendar month, (b) on December 11, 2004 and on each Payment
Date thereafter through and including the Payment Date occurring on November
11, 2005, interest only on the outstanding principal balance of the Loan (the
“Interest Only Payment Amount”), and (c) on each Payment Date commencing
with the

20

 

Payment Date occurring on December 11, 2005 up to and including the
Maturity Date, an amount equal to the Monthly Debt Service Payment Amount,
which payments shall be applied first to accrued and unpaid interest on the
Loan for the prior Interest Period and the balance to the outstanding principal
of the Loan.

     2.2.4 Intentionally Deleted.

     2.2.5 Payment on Maturity Date. Borrower shall pay to Lender on
the Maturity Date, the outstanding principal balance of the Loan, all accrued
and unpaid interest and all other amounts due hereunder and under the Note, the
Security Instruments and the other Loan Documents.

     2.2.6 Payments after Default. Upon the occurrence and during the
continuance of an Event of Default, (a) interest on the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest and
other amounts due in respect of the Loan, shall accrue at the Default Rate,
calculated from the date such payment was due without regard to any grace or
cure periods contained herein and (b) Lender shall be entitled to receive and
Borrower shall pay to Lender on each Payment Date an amount equal to the Net
Cash Flow After Debt Service for the prior month, such amount to be applied by
Lender to the payment of the Debt in such order as Lender shall determine in
its sole discretion, including, without limitation, alternating applications
thereof between interest and principal. Interest at the Default Rate and Net
Cash Flow After Debt Service shall both be computed from the occurrence of the
Event of Default until the actual receipt and collection of the Debt (or that
portion thereof that is then due). To the extent permitted by applicable law,
interest at the Default Rate shall be added to the Debt, shall itself accrue
interest at the same rate as the Loan and shall be secured by the Security
Instruments. This paragraph shall not be construed as an agreement or
privilege to extend the date of the payment of the Debt, nor as a waiver of any
other right or remedy accruing to Lender by reason of the occurrence of any
Event of Default; the acceptance of any payment of Net Cash Flow After Debt
Service shall not be deemed to cure or constitute a waiver of any Event of
Default; and Lender retains its rights under this Note to accelerate and to
continue to demand payment of the Debt upon the happening of any Event of
Default, despite any payment of Net Cash Flow After Debt Service.

            2.2.7. Late Payment Charge. If any principal, interest or any
other sums due under the Loan Documents is not paid by Borrower on or prior to
the date on which it is due, Borrower shall pay to Lender upon demand an amount
equal to the lesser of five percent (5%) of such unpaid sum or the maximum
amount permitted by applicable law in order to defray the expense 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 amount
shall be secured by the Security Instruments and the other Loan Documents to
the extent permitted by applicable law.

     2.2.8 Usury Savings. This Agreement and the Note are subject to
the express condition that at no time shall Borrower be obligated or required
to pay interest on the principal balance of the Loan at a rate which could
subject Lender to either civil or criminal liability as a result of being in
excess of the Maximum Legal Rate. If, by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay
interest on the

21

 

principal balance due hereunder at a rate in excess of the Maximum Legal
Rate, the Applicable Interest Rate or the Default Rate, as the case may be,
shall be deemed to be immediately reduced to the Maximum Legal Rate and all
previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.

     2.2.9 Making of Payments. Each payment by Borrower hereunder or
under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by noon, New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the immediately
preceding Business Day.

     2.2.10 Indemnified Taxes.

     (a) All payments made by Borrower hereunder shall be made free and clear
of, and without reduction for or on account of, Indemnified Taxes, excluding
(i) Indemnified Taxes measured by Lender’s net income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which Lender is resident
or organized, or any political subdivision thereof, (ii) taxes measured by
Lender’s overall net income, and franchise taxes imposed on it, by the
jurisdiction of Lender’s applicable lending office or any political subdivision
thereof or in which Lender is resident or engaged in business, and (iii)
withholding taxes imposed by the United States of America, any State,
commonwealth, protectorate territory or any political subdivision or taxing
authority thereof or therein as a result of the failure of Lender which is a
Non-U.S. Entity to comply with the terms of paragraph (b) below. If any non
excluded Indemnified Taxes are required to be withheld from any amounts payable
to Lender hereunder, the amounts so payable to Lender shall be increased to the
extent necessary to yield to Lender (after payment of all non excluded
Indemnified Taxes) interest or any such other amounts payable hereunder at the
rate or in the amounts specified hereunder. Whenever any non excluded
Indemnified Tax is payable pursuant to applicable law by Borrower, Borrower
shall send to Lender an original official receipt showing payment of such non
excluded Indemnified Tax or other evidence of payment reasonably satisfactory
to Lender. Borrower hereby indemnifies Lender for any incremental taxes,
interest or penalties that may become payable by Lender which may result from
any failure by Borrower to pay any such non excluded Indemnified Tax when due
to the appropriate taxing authority or any failure by Borrower to remit to
Lender ender the required receipts or other required documentary evidence.

     (b) In the event that Lender or any successor and/or assign of Lender is
not incorporated under the laws of the United States of America or a State
thereof (a “Non-U.S. Entity”) Lender agrees that, prior to the first
date on which any payment is due such entity hereunder, it will deliver to
Borrower two duly completed copies of United States Internal

22

 

Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the
case may be, certifying in each case that such entity is entitled to receive
payments under the Note, without deduction or withholding of any United States
Federal income taxes. Each entity required to deliver to Borrower a Form
W-8BEN or W-8ECI pursuant to the preceding sentence further undertakes to
deliver to Borrower two further copies of such forms, or successor applicable
forms, or other manner of certification, as the case may be, on or before the
date that any such form expires (which, in the case of the Form W-8ECI, is the
last day of each U.S. taxable year of the Non-U.S. Entity) or becomes obsolete
or after the occurrence of any event requiring a change in the most recent form
previously delivered by it to Borrower, and such other extensions or renewals
thereof as may reasonably be requested by Borrower, certifying in the case of a
Form W-8BEN or W-8ECI that such entity is entitled to receive payments under
the Note without deduction or withholding of any United States Federal income
taxes, unless in any such case an event (including, without limitation, any
change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such entity from duly completing and
delivering any such form with respect to it and such entity advises Borrower
that it is not capable of receiving payments without any deduction or
withholding of United States Federal income tax.

     Section 2.3 Prepayments.

     2.3.1 Voluntary Prepayments. Except as otherwise provided herein,
Borrower shall not have the right to prepay the Loan in whole or in part prior
to the Maturity Date. On August 11, 2009 (the “Permitted Prepayment
Date”) or on any Payment Date thereafter, Borrower may, at its option and
upon thirty (30) days prior written notice to Lender, prepay the Debt in whole
or in part without payment of the Yield Maintenance Premium, provided, Borrower
pays to Lender all accrued and unpaid interest on the amount of principal being
prepaid through and including the date of prepayment. Any partial prepayment
shall be applied to the last payments of principal due under the Loan.

     2.3.2 Mandatory Prepayments. On each date on which Borrower
actually receives any Net Proceeds, if Lender is not obligated to make such Net
Proceeds available to Borrower for the restoration of any Individual Property,
Borrower shall prepay the outstanding principal balance of the Note in an
amount equal to one hundred percent (100%) of such Net Proceeds. No Yield
Maintenance Premium shall be due in connection with any prepayment made
pursuant to this Section 2.3.2. Any partial prepayment under this Section
shall be applied to the last payments of principal due under the Loan.

     2.3.3 Prepayments After Default. If, following an Event of
Default, payment of all or any part of the Debt is tendered by Borrower or
otherwise recovered by Lender, such tender or recovery shall be deemed a
voluntary prepayment by Borrower in violation of the prohibition against
prepayment set forth in Section 2.3.1 hereof and, if such payment is made prior
to the Permitted Prepayment Date, Borrower shall pay, in addition to the Debt,
(i) an amount equal to the greater of (a) one percent (1%) of the outstanding
principal amount of the Loan to be prepaid or satisfied, or (b) the Yield
Maintenance Premium that would be required if a Defeasance Event had occurred
in an amount equal to the outstanding principal amount of the Loan to be
satisfied or prepaid and (ii) all accrued and unpaid interest on the amount of
principal being prepaid through and including the date of prepayment.

23

 

     Section 2.4 Defeasance.

     2.4.1 Voluntary Defeasance. (a) Provided no Event of Default
shall then exist, Borrower shall have the right at any time after the Permitted
Release Date to voluntarily defease all or any portion of the Loan by and upon
satisfaction of the following conditions (such event being a “Defeasance
Event”):

            (i) Borrower shall provide not less than thirty (30) days prior
written notice to Lender specifying the Payment Date (the “Defeasance
Date”) on which the Defeasance Event will occur and the principal
amount of the Loan to be defeased;

            (ii) Borrower shall pay to Lender all accrued and unpaid interest on
the principal balance of the Note to and including the Defeasance Date;

            (iii) Borrower shall pay to Lender all other sums, not including
scheduled interest or principal payments, then due under the Note, this
Agreement, the Security Instruments, and the other Loan Documents;

            (iv) Borrower shall deliver to Lender the Defeasance Deposit
applicable to the Defeasance Event;

            (v) In the event only a portion of the Loan is the subject of the
Defeasance Event, Borrower shall prepare all necessary documents to
modify this Agreement and to amend and restate the Note and issue two
substitute notes for the Note, one note having a principal balance equal
to the defeased portion of the original Note and a maturity date equal to
the Permitted Prepayment Date (the “Defeased Note”) and the other
note having a principal balance equal to the undefeased portion of the
original Note and a maturity date equal to the Maturity Date (the
“Undefeased Note”). The Defeased Note and the Undefeased Note
shall otherwise have terms identical to the original Note, except that a
Defeased Note cannot be the subject of any further Defeasance Event. The
Undefeased Note may be the subject of a further Defeasance Event in
accordance with the terms and provisions of this Section 2.4 (the term
“Note”, as used in this clause (v) for such purpose, being deemed to
refer to the Undefeased Note that is the subject of further defeasance),
provided, however, that no such partial defeasance shall take place
unless the conditions outlined in Section 2.5 are satisfied;

            (vi) Borrower shall execute and deliver a security agreement, in a
form and substance that would be reasonably satisfactory to a prudent
institutional lender, creating a first priority lien on the Defeasance
Deposit and the U.S. Obligations purchased with the Defeasance Deposit in
accordance with the provisions of this Section 2.4 (the “Security
Agreement”);

            (vii) Borrower shall deliver an opinion of counsel for Borrower in a
form and substance that would be reasonably satisfactory to a prudent
institutional lender stating, among other things, that Borrower has
legally and validly transferred and assigned the U.S. Obligations and all
obligations, rights and duties under and to the Note or the Defeased Note
(as applicable) to the Successor Borrower, that Lender has a perfected
first priority security interest in the Defeasance Deposit and the U.S.
Obligations

24

 

delivered by Borrower and that any REMIC Trust formed pursuant to a
Securitization will not fail to maintain its status as a “real estate
mortgage investment conduit” within the meaning of Section 860D of the
Code as a result of such Defeasance Event;

     (viii) Borrower shall deliver confirmation in writing from the
applicable Rating Agencies to the effect that such defeasance and release
will not result in a downgrading, withdrawal or qualification of the
respective ratings in effect immediately prior to such Defeasance Event
for the Securities issued in connection with the Securitization which are
then outstanding. If required by the applicable Rating Agencies,
Borrower shall also deliver or cause to be delivered a non-consolidation
opinion with respect to the Successor Borrower in form and substance
satisfactory to Lender and the applicable Rating Agencies;

     (ix) Borrower shall deliver an Officer’s Certificate certifying that
the requirements set forth in this Section 2.4.1(a) have been satisfied;

     (x) Borrower shall deliver a certificate of an Acceptable Accountant
certifying that the U.S. Obligations purchased with the Defeasance
Deposit generate monthly amounts equal to or greater than the Scheduled
Defeasance Payments;

     (xi) Borrower shall deliver such other certificates, documents or
instruments as Lender may reasonably request; and

     (xii) Borrower shall pay all costs and expenses of Lender incurred
in connection with the Defeasance Event, including, without limitation,
(A) any costs and expenses associated with a release of the Lien of the
related Security Instrument as provided in Section 2.5 hereof, (B)
Lender’s reasonable attorneys’ fees and expenses, (C) the costs and
expenses of the Rating Agencies, (D) any revenue, documentary stamp or
intangible taxes or any other tax or charge due in connection with the
transfer of the Note, or otherwise required to accomplish the defeasance
and (E) the reasonable costs and expenses actually incurred by Servicer
and any trustee, including reasonable attorneys’ fees.

                        (b) In connection with each Defeasance Event, Borrower hereby appoints
Lender as its agent and attorney-in-fact for the purpose of using the
Defeasance Deposit to purchase U.S. Obligations which provide payments on or
prior to, but as close as possible to, all successive scheduled payment dates
after the Defeasance Date upon which interest and principal payments are
required under the Note, in the case of a Defeasance Event for the entire
outstanding principal balance of the Loan, or the Defeased Note, in the case of
a Defeasance Event for only a portion of the outstanding principal balance of
the Loan, as applicable, and in amounts equal to the scheduled payments due on
such dates under this Agreement and the Note or the Defeased Note, as
applicable, (including without limitation scheduled payments of principal,
interest, servicing fees (if any), the Rating Surveillance Charge and any other
amounts due under the Loan Documents on such dates) and assuming such Note or
Defeased Note, as applicable, is prepaid in full on the Permitted Prepayment
Date (the “Scheduled Defeasance Payments”). Borrower, pursuant to the
Security Agreement or other appropriate document, shall authorize and direct
that the payments received from the U.S. Obligations may be made

25

 

directly to the Lockbox Account (unless otherwise directed by Lender) and
applied to satisfy the obligations of Borrower under the Note or the Defeased
Note, as applicable. Any portion of the Defeasance Deposit in excess of the
amount necessary to purchase the U.S. Obligations required by this Section 2.4
and satisfy Borrower’s other obligations under this Section 2.4 and Section 2.5
hereof shall be remitted to Borrower.

     2.4.2 Successor Borrower. In connection with any Defeasance Event,
Borrower shall establish or designate a successor entity (the “Successor
Borrower”) which shall be a single purpose bankruptcy remote entity with
one (1) Independent Director approved by Lender (two (2) if required by any
Rating Agency), and Borrower shall transfer and assign all obligations, rights
and duties under and to the Note or the Defeased Note, as applicable, together
with the pledged U.S. Obligations to such Successor Borrower. Such Successor
Borrower shall assume the obligations under the Note or the Defeased Note, as
applicable, and the Security Agreement and Borrower shall be relieved of its
obligations under such documents and the other Loan Documents, except with
respect to those obligations which are expressly stated to survive. Borrower
shall pay $1,000 to any such Successor Borrower as consideration for assuming
the obligations under the Note or the Defeased Note, as applicable, and the
Security Agreement. Notwithstanding anything in this Agreement to the
contrary, no other assumption fee shall be payable upon a transfer of the Note
or the Defeased Note, as applicable, in accordance with this Section 2.4.2, but
Borrower shall pay all costs and expenses incurred by Lender, including
Lender’s attorneys’ fees and expenses, incurred in connection therewith.

     Section 2.5 Release of Property. Except as set forth in Section
2.4 hereof and this Section 2.5, no repayment, prepayment or defeasance of all
or any portion of the Note shall cause, give rise to a right to require, or
otherwise result in, the release of any Lien of any Security Instrument on any
Individual Property.

     2.5.1 Release of all Properties.

     (a) After the Permitted Release Date, if Borrower has elected to defease
the entire Loan and the applicable requirements of Section 2.4 hereof and this
Section 2.5 have been satisfied, all of the Properties shall be released from
the Liens of their respective Security Instruments and the U.S. Obligations,
pledged pursuant to the Security Agreement, shall be the sole source of
collateral securing the Note.

     (b) In connection with the release of the Security Instruments, Borrower
shall submit to Lender, not less than thirty (30) days prior to the Defeasance
Date, a release of Lien (and related Loan Documents) for each Individual
Property for execution by Lender. Such release shall be in a form appropriate
in each jurisdiction in which an Individual Property is located and that would
be satisfactory to a prudent institutional lender. In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such release, together with an Officer’s
Certificate certifying that such documentation (i) is in compliance with all
applicable Legal Requirements, and (ii) will, following execution by Lender and
recordation thereof, effect such releases in accordance with the terms of this
Agreement.

26

 

     2.5.2 Release of Individual Property. After the Permitted Release
Date, if Borrower has elected to defease a portion of the Loan and the
applicable requirements of Section 2.4 hereof and this Section 2.5 have been
satisfied, Borrower may obtain the release of an Individual Property from the
Lien of the Security Instrument thereon (and related Loan Documents) and the
release of Borrower’s obligations under the Loan Documents with respect to such
Individual Property (other than those expressly stated to survive), upon the
satisfaction of each of the following conditions:

     (a) The principal balance of the Defeased Note shall equal or exceed the
Release Amount for the applicable Individual Property; provided, however, if
the undefeased portion of the Loan at the time a release is requested is less
than the Release Amount, the Defeased Note shall equal the remaining undefeased
portion of the Loan at the time of release;

     (b) Borrower shall provide Lender with at least thirty (30) days but no
more than ninety (90) days prior written notice of its request to obtain a
release of the Individual Property;

     (c) Borrower shall defease the portion of the Note equal to the Release
Amount of the Individual Property being released (together with all accrued and
unpaid interest on the principal amount being defeased) in accordance with the
terms and conditions of Sections 2.4.1 and 2.4.2 hereof;

     (d) Borrower shall submit to Lender, not less than thirty (30) days prior
to the date of such release, a release of Lien (and related Loan Documents) for
such Individual Property for execution by Lender. Such release shall be in a
form appropriate in each jurisdiction in which the Individual Property is
located and that would be satisfactory to a prudent institutional lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer’s Certificate certifying that such documentation (i) is in
compliance with all applicable Legal Requirements, (ii) will, following
execution by Lender and recordation thereof, effect such release in accordance
with the terms of this Agreement, and (iii) will not impair or otherwise
adversely affect the Liens, security interests and other rights of Lender under
the Loan Documents not being released (or as to the parties to the Loan
Documents and Properties subject to the Loan Documents not being released);

     (e) After giving effect to such release, the Debt Service Coverage Ratio
for the Properties then remaining subject to the Lien of the Security
Instrument shall be at least equal to the Debt Service Coverage Ratio for all
of the Properties (including the Individual Property to be released) for the
twelve (12) full calendar months immediately preceding the release of such
Individual Property.

     (f) Intentionally Deleted;

     (g) Lender shall have received evidence that the Individual Property to be
released shall be conveyed to a Person other than Borrower or SPC Party;

     (h) Lender shall have received payment of all Lender’s costs and expenses,
including due diligence review costs and reasonable counsel fees and
disbursements incurred in connection with the release of the Individual
Property from the lien of the related Security Instrument and

27

 

the review and approval of the documents and information required to be
delivered in connection therewith; and

     (i) Immediately following such release, the Allocated Loan Amount of the
Individual Property released (the “Released Individual Property”) shall
be reduced to zero and the Allocated Loan Amounts of the Individual Properties
remaining subject to the Lien of a Security Instrument immediately following
such release shall be reduced pro rata by the difference between the Release
Amount of the Released Individual Property and the original Allocated Loan
Amount of the Released Individual Property.

     2.5.3 Release on Payment in Full. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of all principal
and interest on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms and provisions of the Note and this
Agreement, release the Lien of the Security Instrument on each Individual
Property not theretofore released.

     Section 2.6 Manner of Making Payments; Cash Management. 

     2.6.1 Deposits into Lockbox Account. Borrower shall cause all
Rents from the Properties to be deposited into the Lockbox Account in
accordance with the Cash Management Agreement. Without limitation of the
foregoing, Borrower shall, and shall cause Manager to, (a) cause or direct all
tenants under Leases to deliver all Rents payable thereunder either directly to
the Lockbox Account or to Manager for deposit into the Lockbox Account, and (b)
deposit all amounts received by Borrower or Manager constituting Rents or other
revenue of any kind from the Properties into the Lockbox Account within one (1)
Business Day of receipt thereof. Disbursements from the Lockbox Account will
be made in accordance with the terms and conditions of this Agreement and the
Cash Management Agreement. Lender shall have sole dominion and control over
the Lockbox Account and, except as set forth in the Cash Management Agreement,
Borrower shall have no rights to make withdrawals therefrom.

     2.6.2 Payments Received in the Lockbox Account. Notwithstanding
anything to the contrary contained in this Agreement or the other Loan
Documents and provided no Event of Default then exists, Borrower’s obligations
with respect to the Interest Only Payment Amount, the Monthly Debt Service
Payment Amount and amounts due for the Reserve Funds shall be deemed satisfied
to the extent sufficient amounts are deposited in the Lockbox Account to
satisfy such obligations on the dates each such payment is required, regardless
of whether any of such amounts are so applied by Lender.

     2.6.3 No Deductions, etc. All payments made by Borrower hereunder
or under the Note or the other Loan Documents shall be made irrespective of,
and without any deduction for, any setoff, defense or counterclaims.

     Section 2.7 Substitute Property. 

     (a) Generally. Subject to the conditions in this Section 2.7, at
any time and from time to time, Borrower may substitute (each such act is
hereafter referred to as a “Substitution”) a property (a “Substitute
Property”) for an Individual Property (a “Replaced Property”). From
and after the substitution of a Substitute Property in accordance herewith,
such Substitute

28

 

Property shall thereafter be deemed an Individual Property under this
Agreement and the Security Instrument, and the Allocated Loan Amount of such
Substitute Property shall be the same as the Allocated Loan Amount of the
Replaced Property, except that in the event that two (2) or more Substitute
Properties replace a single Replaced Property, then in that event, the
Allocated Loan Amount of the Replaced Property shall be apportioned between or
amongst the Substitute Properties as Lender in its sole discretion decides. In
the event of a substitution, the Note shall remain in full force and effect and
a new Security Instrument encumbering the Substitute Property (the
“Substitute Security Instrument”) shall be executed and delivered by
Borrower to Lender to encumber the Substitute Property. Concurrently with the
completion of all steps necessary to substitute a Substitute Property as
provided herein, Lender shall execute or cause to be executed all such
documents as are necessary or appropriate (i) to release all Liens granted to
Lender and affecting the Replaced Property, and (ii) to cause the Substitute
Security Instrument to be cross-collateralized and cross-defaulted with the
Security Instrument. Notwithstanding anything to the contrary hereinbefore
contained, Borrower’s right to substitute a Property as herein provided shall
be subject to the additional limitation that at any time the Allocated Loan
Amount of such Substitute Property, individually or when aggregated with the
Allocated Loan Amounts of all other Properties which are or were a Substitute
Property shall not constitute more than 33 1/3 % of the original outstanding
principal amount of the Loan.

     (b) Substitute Property Requirements. To qualify as a Substitute
Property, the property nominated to be a Substitute Property must, at the time
of substitution:

            (i) be a property as to which Borrower will hold indefeasible fee
title free and clear of any lien or other encumbrance except for
Permitted Encumbrances;

            (ii) be free and clear of Hazardous Substance except for nominal
amounts of any such substances commonly incorporated in or used in the
operation of properties similar to the Properties (in either case in
compliance with all Environmental Laws), all as set forth in an
environmental report delivered to Lender;

            (iii) be in substantially the same repair and condition, which shall
be certified by an Officer’s Certificate of Borrower, as the Replaced
Property was on the Closing Date or, in the event that the Replaced
Property was itself a Substitute Property, on the date that such Property
became a Property hereunder all as set forth in a Physical Conditions
Report delivered to Lender;

            (iv) be in compliance, in all material respects, with Legal
Requirements which shall be certified in an Officer’s Certificate;

            (v) as evidenced by an Approved Appraisal performed at Borrower’s
expense and delivered to Lender, have a fair market value no less than
the greater of (y) the fair market value of the Replaced Property on the
Closing Date or (z) the fair market value of the Replaced Property
immediately prior to the Substitution;

            (vi) be used primarily for self-service storage and related uses;
and

            (vii) after giving effect to the Substitution, the Debt Service
Coverage Ratio for all of the Properties (including the Substitute
Property, but excluding the Replaced

29

 

Property) shall be at least equal to the Debt Service Coverage Ratio
for all of the Properties (including the Replaced Property) for the
twelve (12) full calendar months immediately preceding the release and
substitution of such Individual Property.

     (c) Conditions to Substitution. In addition to the requirements in
Section 2.7(b) above, substitution of any Property pursuant to this Section 2.7
shall be subject to the satisfaction of the following, all of which shall be
prepared or obtained at Borrower’s expense:

            (i) simultaneously with the Substitution, Borrower shall convey fee
simple title to the Replaced Property to a Person other than Borrower;

            (ii) Intentionally Deleted;

            (iii) Intentionally Deleted;

            (iv) receipt by Lender and the Rating Agencies of written notice
thereof from Borrower at least thirty (30) days before the date of the
proposed Substitution (the “Substitution Date”), together with (1)
written evidence that the property proposed to be a Substitute Property
complies with Section 2.7(b) above and (2) such other information,
including financial information, as Lender or the Rating Agencies may
request;

            (v) Lender’s receipt of written affirmation from the Rating Agencies
that the ratings of the Securities immediately prior to such Substitution
will not be qualified, downgraded or withdrawn as a result of such
Substitution, which affirmation may be granted or withheld in the Rating
Agencies’ sole and absolute discretion;

            (vi) delivery to Lender of an opinion of counsel opining as to the
enforceability of the Substitute Security Instrument with respect to the
Substitute Property in substantially the same form and substance as the
opinion of counsel concerning enforceability originally delivered at the
Closing Date in connection with the Replaced Property, with reasonable
allowance for variations in applicable State law, and a
Nondisqualification Opinion and a Tax Opinion;

            (vii) no Event of Default shall have occurred and be continuing;

            (viii) the representations and warranties set forth in this
Agreement, in the Security Instrument and the Loan Documents applicable
to the Replaced Property shall be true and correct (except as to title
exceptions) as to the Substitute Property on the Substitution Date in all

material respects;

            (ix) delivery to Lender of a copy of the organizational documents of
Borrower and all amendments thereto, certified as true, complete and
correct as of the date of delivery by an Officer’s Certificate; a
certificate from the secretary of the State or other applicable State
official or officer in Borrower’s State of formation certifying that it
is duly formed and in good standing (with tax clearance, if applicable),
if available, and certificates from the Secretary of State of the State
in which the Substitute Property is located (if such certificates are
issued), certifying as to Borrower’s good standing as a limited liability
company in such State (with tax clearance, if applicable); delivery of an

30

 

Officer’s Certificate, dated the Substitution Date and signed on
behalf of its Secretary or Assistant Secretary, certifying the names of
the officers of the general partner of the sole member of Borrower
authorized to execute and deliver, in the name and on behalf of Borrower,
the Security Instrument, Assignment of Leases, UCC Financing Statements,
and the other Loan Documents pertaining to such Substitute Property to
which Borrower is a party, together with the original (not photocopied)
signatures of such officers;

     (x) delivery to Lender of an Officer’s Certificate certifying to the
veracity of the statements in Subsections 2.7(b)(ii), 2.7(b)(iii),
2.7(b)(iv), 2.7(b)(vii), 2.7(c)(viii), and 2.7(c)(ix) hereof;

     (xi) delivery to Lender of originals of the following:

	 	(1)	 	Borrower shall have
executed, acknowledged and delivered to Lender a
Security Instrument, an Assignment of Leases and
two UCC Financing Statements (to the extent
execution and acknowledgment are required) with
respect to the Substitute Property, together with
a letter from Borrower countersigned by a title
insurance company acknowledging receipt of such
Security Instrument, Assignment of Leases and
UCC-1 Financing Statements and agreeing to record
or file, as applicable, such Security Instrument,
Assignment of Leases and Rents and, with regard to
the UCC-1 Financing Statements, if recordation or
a system of filing is accepted or established in
the applicable jurisdiction, one of the UCC-1
Financing Statements in the real estate records
for the county in which the Substitute Property is
located and, subject to local law, rule or custom,
to file one of the UCC-1 Financing Statements in
the office of the Secretary of State of the State
in which Borrower has been formed, so as to
effectively create upon such recording and filing
valid and enforceable Liens upon the Substitute
Property, of the requisite priority, in favor of
Lender (or such other trustee as may be desired
under local law), subject only to the Permitted
Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents. The Security
Instrument, Assignment of Leases and UCC-1
Financing Statements shall be the same in form and
substance as the counterparts of such documents
executed and delivered with respect to the related
Replaced Property subject to modifications
reflecting the Substitute Property as the Property
that is the subject of such documents and such
modifications reflecting the laws of the State in
which the Substitute Property is located as shall
be recommended by the counsel admitted to practice
in such State and delivering the opinion of
counsel as to the enforceability of

31

 

	 	 	 	such documents required pursuant to this Section.
The Security Instrument encumbering the
Substitute Property shall secure all amounts
evidenced by the Note, provided that in the event
that the jurisdiction in which the Substitute
Property is located imposes a mortgage
recording, intangibles or similar tax and does
not permit the allocation of indebtedness for the
purpose of determining the amount of such tax
payable, the principal amount secured by such
Security Instrument shall be equal to one hundred
fifty percent (150%) of the amount of the Loan
allocated to the Substitute Property;

	 	(2)	 	Lender shall have
received (A) any “tie-in” or similar endorsement
to each Title Insurance Policy insuring the Lien
of the Security Instrument as of the date of the
substitution available with respect to the Title
Insurance Policy insuring the Lien of the Security
Instrument with respect to the Substitute Property
and (B) a Title Insurance Policy (or a marked,
signed and redated commitment to issue such Title
Insurance Policy) insuring the Lien of the
Security Instrument encumbering the Substitute
Property, issued by the title company that issued
the Title Insurance Policies insuring the Lien of
the Security Instrument and dated as of the date
of the substitution, with reinsurance and direct
access agreements that replace such agreements
issued in connection with the Title Insurance
Policy insuring the Lien of the Security
Instrument encumbering the Replaced Property. The
Title Insurance Policy issued with respect to the
Substitute Property shall (1) provide coverage in
the amount of the Release Amount applicable to the
Substitute Property if the “tie-in” or similar
endorsement described above is available or, if
such endorsement is not available, in an amount
equal to one hundred fifty percent (150%) of the
Release Amount applicable for the Substitute
Property, (2) insure Lender that the relevant
Security Instrument creates a valid first lien on
the Substitute Property encumbered thereby, free
and clear of all exceptions from coverage other
than Permitted Encumbrances and standard
exceptions and exclusions from coverage (as
modified by the terms of any endorsements), (3)
contain such legally available endorsements and
affirmative coverages as are contained in the
Title Insurance Policies insuring the Liens of the
existing Security Instrument, and (4) name Lender
as the insured. Lender also shall have received
copies of paid receipts showing that all costs of
or premiums for such endorsements and Title
Insurance Policies have been paid;

32

 

	 	(3)	 	a current as-built land
title Survey and a certificate from a professional
licensed land surveyor with respect to such
Substitute Property, certified to the Title
Company and Lender, and prepared in accordance
with the 1999 Minimum Standard Detail Requirements
for ALTA/ACSM Land Title Surveys meeting the
classification of an “Urban Survey” and the
following additional items from the list of
“Optional Survey Responsibilities and
Specifications” (Table A) shall be added to each
survey 2, 3, 4, 6, 8, 9, 10, 11(a) (as to
utilities, surface matters only) and 13, and
showing the location, dimensions and area of each
parcel of the Substitute Property, including all
existing buildings and improvements, utilities,
parking areas and spaces, internal streets, if
any, external streets, rights-of-way, as well as
any easements, setback violations or encroachments
on such Substitute Property and identifying each
item with its corresponding exception, if any, in
the title policy relating thereto. Each survey
shall contain the original signature and seal of
the surveyor and any additional matter required by
the Title Company. In addition, Borrower shall
provide with respect to each Substitute Property a
certificate of a professional land surveyor to the
effect that the Improvements located upon such
Substitute Property are not located in a flood
plain area, or, if such Substitute Property is in
a flood plain area, Borrower shall deliver on the
Closing Date evidence of flood insurance;

	 	(4)	 	a certified copy of a
deed conveying to Borrower all right, title and
interest in and to the Replaced Property and a
letter from a title insurance company
acknowledging receipt of such deed and agreeing to
record such deed in the real estate records for
the county in which the Replaced Property is
located;

	 	(5)	 	insurance certificates
issued by insurance companies evidencing the
insurance coverage required under Section 6.1
hereof;

	 	(6)	 	a Phase I environmental
report issued by a qualified environmental
consultant at Borrower’s expense, and, if
recommended by the Phase I environmental report, a
Phase II environmental report, which conclude that
the Substitute Property does not contain any
Hazardous Substance except for nominal amounts of
such substances commonly incorporated in or used
in the operation of properties similar to the
Substitute Property (in either case in compliance
with all Environmental Laws). If any such report
discloses the presence of any Hazardous Substance,

33

 

	 	 	 	such report shall include an estimate of the cost
of any related remediation and Borrower shall
deposit with Lender an amount equal to one
hundred fifty percent (150%) of such estimated
cost, which deposit shall constitute additional
security for the Loan and shall be released to
Borrower upon the delivery to Lender of (A) an
update to such report indicating that there is no
longer any Hazardous Substance on the Substitute
Property except for nominal amounts of such
substances commonly incorporated in or used in
the operation of properties similar to the
Substitute Property (in either case in compliance
with all Environmental Laws) and (B) paid
receipts indicating that the costs of all such
remediation work have been paid;

	 	(7)	 	payments of or
reimbursement for all costs and expenses incurred
by Lender (including, without limitation,
reasonable attorneys’ fees and disbursements) in
connection with the substitution, and Borrower
shall have paid all recording charges, filing
fees, taxes or other expenses (including, without
limitation, mortgage and intangibles taxes and
documentary stamp taxes) payable in connection
with the substitution. Borrower shall have paid
all costs and expenses of the Rating Agencies
incurred in connection with the substitution;

	 	(8)	 	an endorsement to the
Title Insurance Policy insuring the Lien of the
Security Instrument encumbering the Substitute
Property insuring that the Substitute Property
constitutes a separate tax lot or, if such an
endorsement is not available in the State in which
the Substitute Property is located, a letter from
the title insurance company issuing such Title
Insurance Policy or of an opinion of competent
counsel in the State where such Substitute
Property is located, stating that the Substitute
Property constitutes a separate tax lot or a
letter from the appropriate authority stating that
the Substitute Property constitutes a separate tax
lot;

	 	(9)	 	a Physical Conditions
Report with respect to the Substitute Property
stating that the Substitute Property and its use
comply in all material respects with all
applicable Legal Requirements (including, without
limitation, zoning, subdivision and building laws)
and that the Substitute Property is in good
condition and repair and free of damage or waste.
If compliance with any Legal Requirements are not
addressed by the Physical Conditions Report, such
compliance shall be confirmed by delivery to
Lender of a certificate of an architect licensed
in the State in which the Substitute Property is
located, a letter from the municipality

34

 

	 	 	 	in which such Property is located, a certificate
of a surveyor that is licensed in the State in
which the Substitute Property is located (with
respect to zoning and subdivision laws), an ALTA
3.1 zoning endorsement to the Title Insurance
Policy delivered pursuant to clause (2) above
(with respect to zoning laws) or a subdivision
endorsement to the Title Insurance Policy
delivered pursuant to clause (2) above (with
respect to subdivision laws). If the Physical
Conditions Report recommends that any repairs be
made with respect to the Substitute Property,
such Physical Conditions Report shall include an
estimate of the cost of such recommended repairs
and Borrower shall deposit with Lender an amount
equal to one hundred twenty-five percent (125%)
of such estimated cost, which deposit shall
constitute additional security for the Loan and
shall be released to Borrower upon the delivery
to Lender of (A) an update to such Physical
Conditions Report or a letter from engineer that
prepared such Physical Conditions Report
indicating that the recommended repairs were
completed in good manner and (B) paid receipts
indicating that the costs of all such repairs
have been paid;

	 	(10)	 	annual operating
statements and occupancy statements for the
Substitute Property for the most current completed
fiscal year and a current operating statement for
the Replaced Property, each certified to Lender as
being true and correct, and a certificate from
Borrower certifying that there has been no adverse
change in the financial condition of the
Substitute Property since the date of such
operating statements;

	 	(12)	 	a release of Lien (and
related Loan Documents) for the Replaced Property
for execution by Lender. Such release shall be in
a form appropriate for the jurisdiction in which
the Replaced Property is located; and

	 	(13)	 	Lender shall have
received such other and further approvals,
opinions, documents and information in connection
with the substitution as the Rating Agencies may
have requested.

     III.
CONDITIONS PRECEDENT

     Section 3.1 Conditions Precedent to Closing. 

            The obligation of Lender to make the Loan hereunder is subject to the
fulfillment by Borrower or waiver by Lender of the following conditions
precedent no later than the Closing Date:

35

 

     3.1.1 Representations and Warranties; Compliance with Conditions.
The representations and warranties of Borrower contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the Closing Date with the same effect as if made on and as of such
date, and no Default or an Event of Default shall have occurred and be
continuing; and Borrower shall be in compliance in all material respects with
all terms and conditions set forth in this Agreement and in each other Loan
Document on its part to be observed or performed.

     3.1.2 Loan Agreement and Note. Lender shall have received a copy
of this Agreement and the Note, in each case, duly executed and delivered on
behalf of Borrower.

     3.1.3 Delivery of Loan Documents; Title Insurance; Reports; Leases.

     (a) Security Instrument, Assignment of Leases and other Loan
Documents. Lender shall have received from Borrower fully executed and
acknowledged counterparts of the Security Instrument and the Assignment of
Leases and evidence that counterparts of the Security Instrument and Assignment
of Leases have been delivered to the title company for recording, in the
reasonable judgment of Lender, so as to effectively create upon such recording
valid and enforceable liens upon each Individual Property, of the requisite
priority, in favor of Lender (or such other trustee as may be required or
desired under local law), subject only to the Permitted Encumbrances and such
other Liens as are permitted pursuant to the Loan Documents. Lender shall have
also received from (i) Borrower fully executed counterparts of the
Environmental Indemnity, Cash Management Agreement and Assignment of Management
Agreement and (ii) Guarantor, a fully executed counterpart of the Guaranty.

     (b) Title Insurance. Lender shall have received Title Insurance
Policies issued by a title company acceptable to Lender and dated as of the
Closing Date, with reinsurance and direct access agreements acceptable to
Lender. Such Title Insurance Policies shall (i) provide coverage in amounts
satisfactory to Lender, (ii) insure Lender that the applicable Security
Instrument creates a valid lien on the Individual Property encumbered thereby
of the requisite priority, free and clear of all exceptions from coverage other
than Permitted Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements), (iii) contain such
endorsements and affirmative coverages as Lender may reasonably request, and
(iv) name Lender as the insured. The Title Insurance Policies shall be
assignable. Lender also shall have received evidence that all premiums in
respect of such Title Insurance Policies have been paid.

     (c) Survey. Lender shall have received a current title Survey for
each Individual Property, certified to the title company and Lender and their
successors and assigns, in form and content satisfactory to Lender and prepared
by a professional and properly licensed land surveyor satisfactory to Lender in
accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys. The Surveys shall show the following additional items from
the list of “Optional Survey Responsibilities and Specifications” (Table A)
should be added to each survey: 2, 3, 4, 6, 7(a), 7(b)(1), 8, 9, 10, 11(a) (as
to utilities, surface matters only) and 13. Each such Survey shall reflect the
same legal description contained in the Title Insurance Policy relating to such
Individual Property referred to in clause (ii) above and shall include, among
other things, a metes and bounds description of the real property

36

 

comprising part of such Individual Property reasonably satisfactory to
Lender. The surveyor’s seal shall be affixed to each Survey and the surveyor
shall provide a certification for each Survey in accordance with the 1999
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys in form
and substance acceptable to Lender.

     (d) Insurance. Lender shall have received valid certificates of
insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all premiums
payable for the existing policy period.

     (e) Environmental Reports. Lender shall have received an
environmental report in respect of each Individual Property, in each case
satisfactory to Lender.

     (f) Zoning. With respect to each Individual Property, Lender shall
have received, at Lender’s option, (i) letters or other evidence with respect
to each Individual Property from the appropriate municipal authorities (or
other Persons) concerning applicable zoning and building laws, (ii) an ALTA 3.1
zoning endorsement for the applicable Title Insurance Policy or (iii) a zoning
opinion letter, in each case in substance reasonably satisfactory to Lender.

     (g) Encumbrances. Borrower shall have taken or caused to be taken
such actions in such a manner so that Lender has a valid and perfected first
lien as of the Closing Date with respect to each Security Instrument on the
applicable Individual Property, subject only to applicable Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents, and Lender shall have received satisfactory evidence thereof.

     3.1.4 Related Documents. Each additional document not specifically
referenced herein, but relating to the transactions contemplated herein, shall
have been duly authorized, executed and delivered by all parties thereto and
Lender shall have received and approved certified copies thereof.

     3.1.5 Delivery of Organizational Documents. On or before the
Closing Date, Borrower shall deliver or cause to be delivered to Lender copies
certified by Borrower of all organizational documentation related to Borrower
and/or the formation, structure, existence, good standing and/or qualification
to do business, as Lender may request in its sole discretion, including,
without limitation, good standing certificates, qualifications to do business
in the appropriate jurisdictions, resolutions authorizing the entering into of
the Loan and incumbency certificates as may be requested by Lender.

     3.1.6 Opinions of Borrower’s Counsel. Lender shall have received
opinions of Borrower’s counsel (a) with respect to non-consolidation issues,
and (b) with respect to due execution, authority, enforceability of the Loan
Documents and such other matters as Lender may require, all such opinions in
form, scope and substance satisfactory to Lender and Lender’s counsel in their
sole discretion.

     3.1.7 Budgets. Borrower shall have delivered to Lender the Annual
Budget for the current Fiscal Year.

     3.1.8 Basic Carrying Costs. Borrower shall have paid all Basic
Carrying Costs relating to the Properties which are in arrears, including
without limitation, (a) accrued but

37

 

unpaid insurance premiums relating to the Properties, (b) currently due
Taxes (including any in arrears) relating to the Properties, and (c) currently
due Other Charges relating to the Properties, which amounts shall be funded
with proceeds of the Loan.

     3.1.9 Completion of Proceedings. All corporate and other
organizational proceedings taken or to be taken in connection with the
transactions contemplated by this Agreement and other Loan Documents and all
documents incidental thereto shall be satisfactory in form and substance to
Lender, and Lender shall have received all such counterpart originals or
certified copies of such documents as Lender may reasonably request.

     3.1.10 Payments. All payments, deposits or escrows required to be
made or established by Borrower under this Agreement, the Note and the other
Loan Documents on or before the Closing Date shall have been paid.

     3.1.11 Tenant Estoppels. Lender shall have received an executed
tenant estoppel letter, which shall be in form and substance satisfactory to
Lender, from each tenant under a Major Lease.

     3.1.12 Transaction Costs. Borrower shall have paid or reimbursed
Lender for all title insurance premiums, recording and filing fees, costs of
environmental reports, Physical Conditions Reports, appraisals and other
reports, the fees and costs of Lender’s counsel and all other third party
out-of-pocket expenses incurred in connection with the origination of the Loan.

     3.1.13 Material Adverse Effect. There shall have been no Material
Adverse Effect on the financial condition or business condition of Borrower or
the Properties since the date of the most recent financial statements delivered
to Lender. The income and expenses of the Properties, the occupancy and Leases
thereof, and all other features of the transaction shall be as represented to
Lender without material adverse change. Neither Borrower nor any of its
constituent Persons shall be the subject of any bankruptcy, reorganization, or
insolvency proceeding.

     3.1.14 Leases and Rent Roll. Lender shall have received copies of
all tenant leases, certified copies of any tenant leases as requested by Lender
and certified copies of all ground leases affecting the Properties. Lender
shall have received a current certified rent roll of the Properties, reasonably
satisfactory in form and substance to Lender.

     3.1.15 Tax Lot. Lender shall have received evidence that each
Individual Property constitutes one (1) or more separate tax lots, which
evidence shall be reasonably satisfactory in form and substance to Lender.

     3.1.16 Physical Conditions Reports. Lender shall have received
Physical Conditions Reports with respect to each Individual Property, which
reports shall be reasonably satisfactory in form and substance to Lender.

     3.1.17 Management Agreement. Lender shall have received a
certified copy of the Management Agreement with respect to the Properties which
shall be satisfactory in form and substance to Lender.

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     3.1.18 Appraisal. Lender shall have received an appraisal of each
Individual Property, which shall be satisfactory in form and substance to
Lender.

     3.1.19 Financial Statements. Lender shall have received a balance
sheet with respect to each Individual Property for the two most recent Fiscal
Years and statements of income and statements of cash flows with respect to
each Individual Property for the three most recent Fiscal Years, each in form
and substance satisfactory to Lender.

     3.1.20 Further Documents. Lender or its counsel shall have
received such other and further approvals, opinions, documents and information
as Lender or its counsel may have reasonably requested including the Loan
Documents in form and substance satisfactory to Lender and its counsel.

     IV.
REPRESENTATIONS AND WARRANTIES

     Section 4.1 Borrower Representations.

            Borrower represents and warrants as of the date hereof and as of the
Closing Date that:

     4.1.1 Organization. Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
its properties and to transact the businesses in which it is now engaged.
Borrower is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations. Borrower possesses all rights,
licenses, permits and authorizations, governmental or otherwise, necessary to
entitle it to own its properties and to transact the businesses in which it is
now engaged, and the sole business of Borrower is the ownership, management and
operation of the Properties. Schedule 4.1.1 attached hereto accurately
depicts the organizational structure of Borrower.

     4.1.2 Proceedings. Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have been
duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).

     4.1.3 No Conflicts. The execution, delivery and performance of
this Agreement and the other Loan Documents by Borrower will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the
property or assets of Borrower pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, partnership agreement or other
agreement or instrument to which Borrower is a party or by which any of
Borrower’s property or assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over Borrower or
any of Borrower’s properties

39

 

or assets, and any consent, approval, authorization, order, registration
or qualification of or with any court or any such regulatory authority or other
governmental agency or body required for the execution, delivery and
performance by Borrower of this Agreement or any other Loan Documents has been
obtained and is in full force and effect.

     4.1.4 Litigation. Except as set forth on Schedule 4.1.4
attached hereto and made a part hereof there are no actions, suits or
proceedings at law or in equity by or before any Governmental Authority or
other agency now pending or threatened against or affecting Borrower or any
Individual Property, which actions, suits or proceedings, if determined against
Borrower or any Individual Property, might materially adversely affect the
condition (financial or otherwise) or business of Borrower or the condition or
ownership of any Individual Property.

     4.1.5 Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which might materially and adversely
affect Borrower or any Individual Property, or Borrower’s business, properties
or assets, operations or condition, financial or otherwise. Borrower is not in
default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement
or instrument to which it is a party or by which Borrower or any of the
Properties are bound. Borrower has no material financial obligation under any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which Borrower is a party or by which Borrower or the Properties
is otherwise bound, other than (a) obligations incurred in the ordinary course
of the operation of the Properties and specifically permitted under this
Agreement and (b) obligations under the Loan Documents. Set forth on
Schedule 4.1.5 attached hereto are the material agreements to which
Borrower is a party or by which Borrower or any of the Properties are bound.
Each such material agreement is cancellable without penalty or premium on no
more than thirty (30) days notice unless otherwise specifically set forth on
such Schedule 4.1.5.

     4.1.6 Title. Borrower has good, marketable and insurable fee
simple title to the real property comprising part of each Individual Property
and good title to the balance of such Individual Property, free and clear of
all Liens whatsoever except the Permitted Encumbrances, such other Liens as are
permitted pursuant to the Loan Documents and the Liens created by the Loan
Documents. Each Security Instrument, when properly recorded in the appropriate
records, together with any Uniform Commercial Code financing statements
required to be filed in connection therewith, will create (a) a valid,
perfected lien on the applicable Individual Property, subject only to Permitted
Encumbrances and the Liens created by the Loan Documents and (b) perfected
security interests in and to, and perfected collateral assignments of, all
personalty (including the Leases), all in accordance with the terms thereof, in
each case subject only to any applicable Permitted Encumbrances, such other
Liens as are permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents. There are no claims for payment for work, labor or
materials affecting the Properties which are or may become a lien prior to, or
of equal priority with, the Liens created by the Loan Documents.

     4.1.7 Solvency / No Bankruptcy Filing. Borrower (a) has not
entered into the transaction or executed the Note, this Agreement or any other
Loan Documents with the actual intent to hinder, delay or defraud any creditor
and (b) has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of Borrower’s assets exceeds and will, immediately following the
making of the

40

 

Loan, exceed Borrower’s total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower’s assets is and will, immediately following the
making of the Loan, be greater than Borrower’s probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower’s assets do not and, immediately
following the making of the Loan will not, constitute unreasonably small
capital to carry out its business as conducted or as proposed to be conducted.
Borrower does not intend to incur debt and liabilities (including contingent
liabilities and other commitments) beyond its ability to pay such debt and
liabilities as they mature (taking into account the timing and amounts of cash
to be received by Borrower and the amounts to be payable on or in respect of
obligations of Borrower). No petition under the Bankruptcy Code or similar
State bankruptcy or insolvency law has been filed against Borrower or any
constituent Person in the last seven (7) years, and neither Borrower nor any
constituent Person in the last seven (7) years has ever made an assignment for
the benefit of creditors or taken advantage of any insolvency act for the
benefit of debtors. Neither Borrower nor any of its constituent Persons are
contemplating either the filing of a petition by it under the Bankruptcy Code
or similar State bankruptcy or insolvency law or the liquidation of all or a
major portion of Borrower’s assets or property, and Borrower has no knowledge
of any Person contemplating the filing of any such petition against it or such
constituent Persons.

     4.1.8 Full and Accurate Disclosure. No statement of fact made by
Borrower in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no material fact presently known to Borrower which has not been disclosed to
Lender which adversely affects, nor as far as Borrower can foresee, might
adversely affect, any Individual Property or the business, operations or
condition (financial or otherwise) of Borrower.

     4.1.9 No Plan Assets. Borrower is not a Plan and none of the
assets of Borrower constitute or will constitute “Plan Assets” of one or more
Plans. In addition, (a) Borrower is not a “governmental plan” within the
meaning of Section 3(32) of ERISA and (b) transactions by or with Borrower are
not subject to State statutes regulating investment of, and fiduciary
obligations with respect to, governmental plans similar to the provisions of
Section 406 of ERISA or Section 4975 of the Code currently in effect, which
prohibit or otherwise restrict the transactions contemplated by this Agreement.

     4.1.10 Compliance. Borrower and the Properties and the use thereof
comply in all material respects with all applicable Legal Requirements,
including, without limitation, Environmental Laws, building and zoning
ordinances and codes. Borrower is not in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority. There has
not been committed by Borrower or, to Borrower’s actual knowledge, any other
Person in occupancy of or involved with the operation or use of the Properties
any act or omission affording the Federal government or any other Governmental
Authority the right of forfeiture as against any Individual Property or any
part thereof or any monies paid in performance of Borrower’s obligations under
any of the Loan Documents. Borrower hereby covenants and agrees not to commit,
permit or suffer to exist any act or omission affording such right of
forfeiture.

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     4.1.11 Financial Information. All financial data, including,
without limitation, the statements of cash flow and income and operating
expense, that have been delivered to Lender in respect of Borrower and the
Properties (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of Borrower and the Properties, as
applicable, as of the date of such reports, and (iii) to the extent prepared or
audited by an Acceptable Accountant, have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein. Borrower does not
have any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a Material
Adverse Effect on any Individual Property or the operation thereof in the
manner currently operated, except as referred to or reflected in said financial
statements. Since the date of such financial statements, there has been no
Material Adverse Effect on the financial condition, operations or business of
Borrower from that set forth in said financial statements.

     4.1.12 Condemnation. No Condemnation or other similar proceeding
has been commenced or, to the best of Borrower’s knowledge, is contemplated
with respect to all or any portion of any Individual Property or for the
relocation of roadways providing access to any Individual Property.

     4.1.13 Federal Reserve Regulations. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any “margin stock”
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of
this Agreement or the other Loan Documents.

     4.1.14 Utilities and Public Access. Each Individual Property has
rights of access to public ways and is served by public water, sewer, sanitary
sewer and storm drain facilities adequate to service such Individual Property
for its respective intended uses. All public utilities necessary or convenient
to the full use and enjoyment of each Individual Property are located either in
the public right-of-way abutting such Individual Property (which are connected
so as to serve such Individual Property without passing over other property) or
in recorded easements serving such Individual Property and such easements are
set forth in and insured by the Title Insurance Policies. All roads necessary
for the use of each Individual Property for their current respective purposes
have been completed, are physically open and are dedicated to public use and
have been accepted by all Governmental Authorities.

     4.1.15 Not a Foreign Person. Borrower is not a “foreign person”
within the meaning of §1445(f)(3) of the Code.

     4.1.16 Separate Lots. Each Individual Property is comprised of one
(1) or more parcels which constitute a separate tax lot or lots and does not
constitute a portion of any other tax lot not a part of such Individual
Property.

     4.1.17 Assessments. There are no pending or proposed special or
other assessments for public improvements or otherwise affecting any Individual
Property, nor, has Borrower received

42

 

any notice of any contemplated improvements to any Individual Property
that may result in such special or other assessments.

     4.1.18 Enforceability. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by Borrower, including
the defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable, and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.

     4.1.19 No Prior Assignment. There are no prior assignments of the
Leases or any portion of the Rents due and payable or to become due and payable
which are presently outstanding.

     4.1.20 Insurance. Borrower has obtained and has delivered to
Lender certified copies of all insurance policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. No
claims have been made under any such policy, and no Person, including Borrower,
has done, by act or omission, anything which would impair the coverage of any
such policy.

     4.1.21 Use of Property. Each Individual Property is used
exclusively for self-service storage facility purposes and other appurtenant
and related uses.

     4.1.22 Certificate of Occupancy; Licenses. All certifications,
permits, licenses and approvals, including without limitation, certificates of
completion and occupancy permits required for the legal use, occupancy and
operation of each Individual Property as currently operated (collectively, the
“Licenses”), have been obtained and are in full force and effect.
Borrower shall keep and maintain all licenses necessary for the operation of
each Individual Property as currently operated. The use being made of each
Individual Property is in conformity with the certificate of occupancy issued
for such Individual Property.

     4.1.23 Flood Zone. Except as shown on the Surveys, none of the
Improvements on any Individual Property are located in an area as identified by
the Federal Emergency Management Agency as an area having special flood hazards
and, if so located, the flood insurance required hereunder is in full force and
effect with respect to each such Individual Property.

     4.1.24 Physical Condition. Each Individual Property, including,
without limitation, all buildings, improvements, parking facilities, sidewalks,
storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; there exists no
structural or other material defects or damages in any Individual Property,
whether latent or otherwise, and Borrower has not received notice from any
insurance company or bonding company of any defects or inadequacies in any
Individual Property, or any part thereof, which would adversely affect the
insurability of the same or cause the imposition of extraordinary premiums or
charges thereon or of any termination or threatened termination of any policy
of insurance or bond. Each Individual Property is free from damage covered by
fire or other casualty. All liquid and solid

43

 

waste disposal, septic and sewer systems located on each Individual
Property are in a good and safe condition and repair and in compliance with all
Legal Requirements.

     4.1.25 Boundaries. Except as otherwise as shown on the Survey, all
of the Improvements which were included in determining the appraised value of
each Individual Property lie wholly within the boundaries and building
restriction lines of such Individual Property, and no improvements on adjoining
properties encroach upon such Individual Property, and no easements or other
encumbrances upon the applicable Individual Property encroach upon any of the
Improvements, so as to affect the value or marketability of the applicable
Individual Property except those which are insured against by title insurance;
provided, however, to the extent that any of the foregoing are not satisfied,
such encroachments do not have a Material Adverse Effect.

     4.1.26 Leases.

     (a) The Properties are not subject to any Leases other than the Leases
disclosed to Lender in writing or set forth in the occupancy and/or rental
reports delivered to Lender on or prior to the Closing Date. Except as set
forth on Schedule 4.1.26 attached hereto, there are no Major Leases on
any Individual Property. Borrower is the owner and lessor of landlord’s
interest in the Leases. No Person has any possessory interest in any
Individual Property or right to occupy the same except under and pursuant to
the provisions of the Leases. The current Leases are in full force and effect
and there are no defaults by Borrower or, to the best of Borrower’s knowledge,
any tenant under any Lease which have a Material Adverse Effect and, to the
best of Borrower’s knowledge, there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute defaults under any
Lease which would have a Material Adverse Effect. Except as disclosed to
Lender in writing or set forth in the Rent Rolls delivered to Lender on or
prior to the Closing Date, no Rent (including security deposits) has been paid
more than one (1) month in advance of its due date. There are no offsets or
defenses to the payment of any portion of the Rents. All work to be performed
by Borrower under each Lease has been performed as required and has been
accepted by the applicable tenant, and, except as disclosed to Lender in
writing or set forth in the Rent Rolls, any payments, free rent, partial rent,
rebate of rent or other payments, credits, allowances or abatements required to
be given by Borrower to any tenant has already been received by such tenant.
There has been no prior sale, transfer or assignment, hypothecation or pledge
of any Lease or of the Rents received therein which is still in effect. Except
as disclosed to Lender in writing or set forth in the Rent Rolls, to the best
of Borrower’s knowledge, no tenant has assigned its Lease or sublet all or any
portion of the premises demised thereby, no such tenant holds its leased
premises under assignment or sublease, nor does anyone except such tenant and
its employees occupy such leased premises. No tenant under any Lease has a
right or option pursuant to such Lease or otherwise to purchase all or any part
of the leased premises or the building of which the leased premises are a part.
No tenant under any Lease has any right or option for additional space in the
Improvements. To Borrower’s knowledge, no hazardous wastes or toxic
substances, as defined by applicable Federal, State or local statutes, rules
and regulations, have been disposed, stored or treated by any tenant under any
Lease on or about the leased premises nor does Borrower have any knowledge of
any tenant’s intention to use its leased premises for any activity which,
directly or indirectly, involves the use, generation, treatment, storage,
disposal or transportation of any petroleum product or any toxic or hazardous
chemical, material, substance or waste.

44

 

     (b) With respect to any Individual Property located within the State of
New York, Lender shall have all of the rights against lessees of each
Individual Property located in the State of New York set forth in Section 291-f
of the Real Property Law of New York.

     4.1.27 Survey. The Survey for each Individual Property delivered
to Lender in connection with this Agreement has been prepared in accordance
with the provisions of Section 3.1.3(c) hereof, and does not fail to reflect
any material matter affecting such Individual Property or the title thereto.

     4.1.28 Loan to Value. The maximum principal amount of the Loan
does not exceed one hundred twenty-five percent (125%) of the fair market value
of the Properties.

     4.1.29 Filing and Recording Taxes. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the transfer of the Properties to Borrower have
been paid. All mortgage, mortgage recording, stamp, intangible or other
similar tax required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Security Instrument, been paid,
and, under current Legal Requirements, each Security Instrument is enforceable
in accordance with their respective terms by Lender (or any subsequent holder
thereof).

     4.1.30 Single Purpose Entity/Separateness. Borrower represents,
warrants and covenants as follows:

            (a) The purpose for which Borrower is organized is and shall be
limited solely to (i) owning, holding, selling, leasing, transferring,
exchanging, operating and managing the Properties, (ii) entering into
this Agreement with Lender, (iii) refinancing the Properties in
connection with a permitted repayment of the Loan and (iv) transacting
any and all lawful business for which a Borrower may be organized under
its constitutive law that is incident, necessary and appropriate to
accomplish the foregoing.

            (b) Borrower does not own and will not own any asset or property
other than (i) the Properties, and (ii) incidental personal property
necessary for and used or to be used in connection with the ownership or
operation of the Properties.

            (c) Borrower will not engage in any business other than the
ownership, management and operation of the Properties.

            (d) Borrower will not enter into any contract or agreement with any
Affiliate of Borrower, any constituent party of Borrower, any guarantors
of the obligations of Borrower or any Affiliate of any constituent party,
owner or guarantor (collectively, the “Related Parties”), except
upon terms and conditions that are intrinsically fair, commercially
reasonable and substantially similar to those that would be available on
an arms-length basis with third parties not so affiliated with Borrower
or such Related Parties. Borrower will maintain an arm’s length
relationship with such Related Parties or any other Person.

45

 

            (e) Borrower has not incurred and will not incur any Indebtedness
other than (i) the Loan and (ii) trade payables in the ordinary course of
business with trade creditors in amounts as are normal and reasonable
under the circumstances, provided such debt is not evidenced by a note,
does not exceed $4,000,000.00 in the aggregate, and is not in excess of
sixty (60) days past due. No Indebtedness other than the Debt may be
secured (senior, subordinate or pari passu) by the
Properties.

            (f) Borrower has not made and will not make any loans or advances to
any Person and shall not acquire obligations or securities of any Related
Party. Borrower will not form, acquire or hold any subsidiaries, or own
or acquire any stock or equity interest in any Related Parties or any
other Person (except that Borrower may invest in those investments
permitted under the Loan Documents).

            (g) Borrower is and will remain solvent and Borrower will pay its
debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its own assets only, and as the same shall become
due.

            (h) Borrower has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its
existence, and Borrower will not, nor will Borrower permit any Related
Party to, amend, modify or otherwise change the partnership certificate,
partnership agreement, articles of incorporation and bylaws, operating
agreement, trust or other organizational documents of Borrower or such
Related Party without the prior written consent of Lender.

            (i) Borrower will maintain all of its books, records, financial
statements and bank accounts separate from those of any other Person and
Borrower’s assets will not be listed as assets on the financial statement
of any other Person except as otherwise required in accordance with GAAP.
Borrower will file its own tax returns to the extent required by
applicable law; provided, however, that Borrower’s assets and income may
be included in a consolidated tax return of its parent companies if
inclusion on such a consolidated tax return is required to comply with
the requirements of applicable law or by reason of Borrower’s being
treated as a disregarded entity for Federal income tax purposes.

            (j) Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other Person
(including any Affiliate or other Related Party), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its
Affiliates as a division or part of the other and shall maintain and
utilize separate stationery, invoices and checks.

            (k) Borrower will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations, except
that no constituent party of Borrower shall be required to make any
additional capital contributions to Borrower.

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            (l) Neither Borrower nor any Related Party will seek the
dissolution, winding up, liquidation, consolidation or merger in whole or
in part, or the sale of material assets of Borrower.

            (m) Borrower will not commingle its assets with those of any other
Person and will hold all of its assets in its own name. Borrower will
deposit all of its funds in checking accounts, savings accounts, time
deposits or certificate deposits in its own name or invest such funds in
its own name.

            (n) Borrower will not guarantee or become obligated for the debts of
any other Person and does not and will not hold itself out as being
responsible for the debts or obligations of any other Person.

            (o) Unless Borrower is a single member limited liability company
formed under the laws of the State of Delaware, Borrower shall require
that a Person holding an interest in Borrower be a corporation or limited
liability company (the “SPC Party”) which will at all times
comply, and will cause Borrower to comply, with each of the
representations, warranties, and covenants contained in this Section
4.1.30 as if such representation, warranty or covenant was made
directly by such Person. The structure of Borrower and the interest of
the SPC Party shall be reasonably acceptable to Lender and shall satisfy
the requirements of the Rating Agencies for “single purpose, bankruptcy
remote entities”. Notwithstanding the foregoing so long as Borrower is a
single member limited liability company formed under the laws of the
State of Delaware and the organizational documents of Borrower as
delivered to Lender in connection with the Closing are not modified,
Borrower shall not be required to have an SPC Party and all provisions of
this Agreement and the other Loan Documents pertaining to SPC Party shall
be disregarded.

            (p) Borrower shall at all times cause there to be at least one (1)
duly appointed members of the board of directors of the SPC Party or if
Borrower is a single member Delaware limited liability company, its board
of managers (an “Independent Director”) reasonably satisfactory to
Lender who shall not have been at the time of each such individual’s
respective appointment, and shall not be at any time while serving as a
Independent Director and may not have been at any time during the
preceding five years (i) a shareholder of, or an officer, director,
partner or employee of, Borrower or any of its or their shareholders,
subsidiaries or Affiliates, (ii) a customer of, or supplier to, or who
derives any of its purchases or revenues from its activities with
Borrower or SPC Party (if applicable) or any Affiliate of either of them
any of its or their shareholders, subsidiaries or Affiliates, (iii) a
Person controlling or under common control with any such shareholder,
partner supplier or customer, or (iv) a member of the immediate family of
any such shareholder, officer, director, partner, employee, supplier or
customer of any other director of Borrower or the SPC Party (if
applicable). Notwithstanding the foregoing, an individual that otherwise
satisfies the foregoing shall not be disqualified from serving as an
Independent Director if such individual is at the time of initial
appointment, or at any time while serving as an Independent Director, an
independent director of a “special purpose entity” affiliated with
Borrower. As used in this clause (p), the term “special purpose
entity” shall mean an entity whose organizational documents

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contain restrictions on its activities and impose requirements
intended to preserve separateness that are substantially similar to those
of Borrower and provide, inter alia, that it: (a) is organized for a
limited purpose; (b) has restrictions on its ability to incur
indebtedness, dissolve, liquidate, consolidate, merge and/or sell assets;
(c) may not file voluntarily a bankruptcy petition without the consent of
independent managers or independent directors and (d) shall conduct
itself in accordance with certain “separateness covenants”, including,
but not limited to, the maintenance of its books, records, bank accounts
and assets separate from those of any other Person.

     (q) Borrower shall not cause or permit the board of directors of the
SPC Party to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any
common stock, requires a vote of the board of directors of the SPC Party
of Borrower unless at the time of such action there shall be at least one
member who is an Independent Director.

     (r) Borrower shall allocate fairly and reasonably any overhead
expenses that are shared with an Affiliate, including paying for office
space and services performed by any employee of an Affiliate or Related
Party.

     (s) Borrower shall not pledge its assets for the benefit of any
other Person other than with respect to the Loan.

     (t) Borrower shall maintain a sufficient number of employees in
light of its contemplated business operations and pay the salaries of its
own employees from its own funds.

     (u) Borrower shall conduct its business so that the assumptions made
with respect to Borrower in the Insolvency Opinion, a true copy of which
is attached as Schedule 4.1.30 attached hereto, shall be and
remain true and correct in all respects.

     4.1.31 Management Agreement. The Management Agreement is in full
force and effect and there is no default thereunder by any party thereto and no
event has occurred that, with the passage of time and/or the giving of notice
would constitute a default thereunder. Except with respect to the Properties
set forth on Schedule 4.1.31 attached hereto, the Properties are managed
and operated as “U-Store-It” self-service storage facilities.

     4.1.32 Illegal Activity. No portion of any Individual Property has
been or will be purchased with proceeds of any illegal activity and to the best
of Borrower’s knowledge, there are no illegal activities or activities relating
to any controlled substances at any Individual Property.

     4.1.33 No Change in Facts or Circumstances; Disclosure. All
information submitted by Borrower to Lender and in all financial statements,
rent rolls, reports, certificates and other documents submitted in connection
with the Loan or in satisfaction of the terms thereof and all statements of
fact made by Borrower in this Agreement or in any other Loan Document, are
accurate, complete and correct in all material respects. There has been no
material adverse change in any condition, fact, circumstance or event that
would make any such information inaccurate, incomplete or otherwise misleading
in any material respect or that otherwise

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materially and adversely affects or might materially and adversely affect
the Properties or the business operations or the financial condition of
Borrower. Borrower has disclosed to Lender all material facts and has not
failed to disclose any material fact that could cause any Provided Information
or representation or warranty made herein to be materially misleading.

     4.1.34 Intellectual Property.

          Borrower owns or has the right to use, under valid license agreements or
otherwise, all Intellectual Property necessary to or used in the conduct of its
businesses as now conducted and as contemplated by this Agreement or the other
Loan Documents, without known conflict with any patent, license, franchise,
trademark, trade secret, trade name, copyright, or other proprietary right of
any other Person, provided, however, Borrower may not be able to use the
“U-Store-It” name with respect to the Properties set forth on Schedule
4.1.31 attached hereto. All such Intellectual Property is fully protected
and/or duly and properly registered, filed or issued in the appropriate office
and jurisdictions for such registrations, filings or issuances. No material
claim has been asserted by any Person with respect to the use of any
Intellectual Property, or challenging or questioning the validity or
effectiveness of any Intellectual Property. The use of such Intellectual
Property by Borrower does not infringe on the rights of any Person, subject to
such claims and infringements as do not, in the aggregate, give rise to any
liabilities on the part of Borrower that could reasonably be expected to have a
Material Adverse Effect.

     4.1.35 Investment Company Act.

            Borrower is not (a) an “investment company” or a company “controlled” by
an “investment company,” within the meaning of the Investment Company Act of
1940, as amended; (b) a “holding company” or a “subsidiary company” of a
“holding company” or an “affiliate” of either a “holding company” or a
“subsidiary company” within the meaning of the Public Utility Holding Company
Act of 1935, as amended; or (c) subject to any other Federal or State law or
regulation which purports to restrict or regulate its ability to borrow money.

     4.1.36 Principal Place of Business; State of Organization.

            Borrower’s principal place of business as of the date hereof is the
address set forth in the introductory paragraph of this Agreement. Borrower is
organized under the laws of the State of Delaware and its organizational
identification number is 3859379.

     4.1.37 Business Purposes.

            The Loan is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.

     4.1.38 Taxes.

            Borrower has filed all Federal, State, county, municipal, and city income
and other tax returns required to have been filed by it and has paid all taxes
and related liabilities which have become due pursuant to such returns or
pursuant to any assessments received by it. Borrower knows of no basis for any
additional assessment in respect of any such taxes and related liabilities for
prior years.

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     4.1.39 Forfeiture.

            Neither Borrower nor, to Borrower’s actual knowledge, any other Person in
occupancy of or involved with the operation or use any of the Properties has
committed any act or omission affording the Federal government or any State or
local government the right of forfeiture as against any of the Properties or
any part thereof or any monies paid in performance of Borrower’s obligations
under the Note, this Agreement or the other Loan Documents. Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture.

     4.1.40 Environmental Representations and Warranties.

            Borrower represents and warrants, except as disclosed in the written
reports resulting from the environmental site assessments of the Properties
delivered to and approved by Lender prior to the Closing Date (the
“Environmental Report”) and to the best of Borrower’s knowledge: (a)
there are no Hazardous Substances or underground storage tanks in, on, or under
any of the Properties, except those that are both (i) in compliance with
current Environmental Laws and with permits issued pursuant thereto (if such
permits are required), and (ii) in amounts not in excess of that necessary to
operate, clean, repair and maintain the applicable Individual Property or each
tenant’s respective business at such Individual Property as set forth in their
respective Leases; (b) there are no past, present or threatened Releases of
Hazardous Substances in violation of any Environmental Law in, on, under or
from any of the Properties and which would require remediation by a
Governmental Authority; (c) there is no threat of any Release of Hazardous
Substances migrating to any of the Properties which would require remediation
by a Governmental Authority; (d) there is no past or present non-compliance
with current Environmental Laws, or with permits issued pursuant thereto, in
connection with any of the Properties except as described in the Environmental
Reports; (e) Borrower does not know of, and has not received, any written or
oral notice or other communication from any Person (including but not limited
to a Governmental Authority) relating to Hazardous Substances in, on, under or
from any of the Properties; and (f) Borrower has truthfully and fully provided
to Lender, in writing, any and all information relating to environmental
conditions in, on, under or from any of the Properties known to Borrower or
contained in Borrower’s files and records, including but not limited to any
reports relating to Hazardous Substances in, on, under or migrating to or from
any of the Properties and/or to the environmental condition of the Properties.

     4.1.41 Taxpayer Identification Number.

            Borrower’s United States taxpayer identification number is 34-1837021.

     4.1.42 OFAC.

            Borrower represents and warrants that none of Borrower or any Guarantor or
any of their respective Affiliates is a Prohibited Person, and Borrower and
each Guarantor and their respective Affiliates are in full compliance with all
applicable orders, rules, regulations and recommendations of The Office of
Foreign Assets Control of the U.S. Department of the Treasury.

     4.1.43 Ground Lease Representations.

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     (a) (i) Each Ground Lease is in full force and effect and has not been
modified or amended in any manner whatsoever, (ii) there are no defaults under
any Ground Lease by Borrower, or, to the best of Borrower’s knowledge, landlord
thereunder, and, to the best of Borrower’s knowledge, no event has occurred
which but for the passage of time, or notice, or both would constitute a
default under such Ground Lease, (iii) all rents, additional rents and other
sums due and payable under each Ground Lease have been paid in full, (iv)
neither Borrower nor the landlord under each Ground Lease has commenced any
action or given or received any notice for the purpose of terminating such
Ground Lease, (v) no Fee Owner, as debtor in possession or by a trustee for
such Fee Owner, has given any notice of, and Borrower has not consented to, any
attempt to sell or transfer the related Fee Estate free and clear of such
Ground Lease under Section 363(f) (or any similar provision) of the Bankruptcy
Code, and (vi) to the best of Borrower’s knowledge, no Fee Owner under any
Ground Lease is subject to any voluntary or involuntary bankruptcy,
reorganization or insolvency proceeding and no Fee Estate with respect to any
Ground Lease is an asset being administered in any voluntary or involuntary
bankruptcy, reorganization or insolvency proceeding.

     (b) The Ground Lease does not by its terms provide that it will be
subordinated to the Lien of any other mortgage or other Lien upon the related
fee interest;

     (c) The Ground Leases or a memorandum thereof have been duly recorded, the
Ground Leases permits the interest of the lessee thereunder to be encumbered by
the applicable Security Instrument, and there has not been any change in the
terms of the Ground Leases since their recordation;

     (d) Except as indicated in the related Title Insurance Policy, Borrower’s
interest in the Ground Leases are not subject to any Liens superior to, or of
equal priority with, the applicable Security Instrument;

     (e) Borrower’s interest in the Ground Leases are assignable upon notice
to, but without the consent of, Fee Owner thereunder and, in the event that it
is so assigned, it is further assignable upon notice to, but without the need
to obtain the consent of, such Fee Owner;

     (f) The Ground Leases require Fee Owner thereunder to give notice of any
default by Borrower to Lender and the Ground Lease Estoppel provides that
notice of termination given under the Ground Leases are not effective against
Lender unless a copy of the notice has been delivered to Lender in the manner
described in the applicable Ground Lease;

     (g) Lender is permitted the opportunity (including, where necessary,
sufficient time to gain possession of the interest of Borrower under the Ground
Leases) to cure any default under the Ground Leases, which is curable after the
receipt of notice of any default before Fee Owner thereunder may terminate such
Ground Lease;

     (h) Each Ground Lease has a term (including extension options) which
extends not less than twenty (20) years beyond the Maturity Date;

     (i) The Ground Lease Estoppel provides that Fee Owner thereunder shall
enter into a new lease with Lender upon termination of the applicable Ground
Lease for any reason, including rejection of such Ground Lease in a bankruptcy
proceeding;

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     (j) Under the terms of each Ground Lease and the applicable Loan
Documents, taken together, any Net Proceeds will be applied either to the
Restoration of all or part of the Properties, with Lender or a trustee
appointed by Lender having the right to hold and disburse such Net Proceeds as
the Restoration progresses, or to the payment of the outstanding principal
balance of the Loan together with any accrued interest thereon; and

     (k) The Ground Leases do not impose restrictions on subletting.

     4.1.44 Embargoed Person.

            As of the date hereof and at all times throughout the term of the Loan,
including after giving effect to any transfers permitted pursuant to the Loan
Documents, (a) none of the funds or other assets of Borrower, SPC Party or any
Guarantor constitutes property of, or are beneficially owned, directly or
indirectly, by any person, entity or government subject to trade restrictions
under U.S. law, including but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act,
50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder with the result that the investment in Borrower, SPC Party or any
Guarantor (whether directly or indirectly), is prohibited by law or the Loan
made by the Lender is in violation of law (“Embargoed Person”); (b) no
Embargoed Person has any interest of any nature whatsoever in Borrower, SPC
Party or any Guarantor with the result that the investment in Borrower, SPC
Party or any Guarantor (whether directly or indirectly), is prohibited by law
or the Loan is in violation of law; and (c) none of the funds of Borrower, SPC
Party or any Guarantor (whether directly or indirectly), has been derived from
any unlawful activity with the result that the investment in Borrower, SPC
Party or any Guarantor (whether directly or indirectly), is prohibited by law
or the Loan is in violation of law.

     Section 4.2 Survival of Representations.

            Borrower agrees that all of the representations and warranties of Borrower
set forth in Section 4.1 and elsewhere in this Agreement and in the other Loan
Documents shall survive for so long as any amount remains owing to Lender under
this Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made
by Lender or on its behalf.

     V. BORROWER COVENANTS

     Section 5.1 Affirmative Covenants. 

            From the date hereof and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Security Instruments encumbering the Properties (and all related
obligations) in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:

     5.1.1 Existence; Compliance with Legal Requirements; Insurance.

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     (a) Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises, and comply, in all material respects, with
all Legal Requirements applicable to it and the Properties. There shall never
be committed by Borrower, nor shall Borrower suffer or permit any other Person
in occupancy of or involved with the operation or use of the Properties to do,
any act or omission affording the Federal government or any State or local
government the right of forfeiture as against any Individual Property or any
part thereof or any monies paid in performance of Borrower’s obligations under
any of the Loan Documents. Borrower hereby covenants and agrees not to commit,
permit or suffer to exist any act or omission affording such right of
forfeiture. Borrower shall, at all times, maintain, preserve and protect all
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and shall keep the Properties in good
working order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in this Agreement and the
Security Instruments. Borrower shall keep the Properties insured at all times
by financially sound and reputable insurers, to such extent and against such
risks, and maintain liability and such other insurance, as is more fully
provided in this Agreement. Borrower shall operate any Individual Property
that is the subject of any O&M Program in accordance with the terms and
provisions thereof in all material respects.

     (b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding promptly initiated and conducted in

good faith and with due diligence, the validity of any Legal Requirement, the
applicability of any Legal Requirement to Borrower or any Individual Property
or any alleged violation of any Legal Requirement, provided that (i) no Default
or Event of Default has occurred and remains uncured; (ii) such proceeding
shall be permitted under and be conducted in accordance with the provisions of
any instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable laws; (iii) no Individual Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, cancelled or
lost; (iv) Borrower shall promptly upon final determination thereof comply with
any such Legal Requirement determined to be valid or applicable or cure any
violation of any Legal Requirement; (v) such proceeding shall suspend the
enforcement of the contested Legal Requirement against Borrower or any
Individual Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or as may be requested by Lender, to insure
compliance with such Legal Requirement, together with all interest and
penalties payable in connection therewith. Lender may apply any such security
or part thereof, as necessary to cause compliance with such Legal Requirement
at any time when, in the judgment of Lender, the validity, applicability or
violation of such Legal Requirement is finally established or any Individual
Property (or any part thereof or interest therein) shall be in danger of being
sold, forfeited, terminated, cancelled or lost.

     5.1.2 Taxes and Other Charges. Borrower shall pay all Taxes and
Other Charges now or hereafter levied or assessed or imposed against the
Properties or any part thereof as the same become due and payable; provided,
however, Borrower’s obligation to directly pay Taxes and comply with the
following sentence shall be suspended for so long as Borrower complies with the
terms and provisions of Section 7.2 hereof. Borrower will deliver to Lender
receipts for payment or other evidence satisfactory to Lender that the Taxes
and Other Charges have been so

53

 

paid or are not then delinquent no later than ten (10) days prior to the
date on which the Taxes and/or Other Charges would otherwise be delinquent if
not paid. Borrower shall not suffer and shall promptly cause to be paid and
discharged any Lien or charge whatsoever which may be or become a Lien or
charge against the Properties, and shall promptly pay for all utility services
provided to the Properties. After prior written notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any Taxes or Other Charges,
provided that (i) no Default or Event of Default has occurred and remains
uncured; (ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder and such proceeding shall
be conducted in accordance with all applicable statutes, laws and ordinances;
(iii) no Individual Property nor any part thereof or interest therein will be
in danger of being sold, forfeited, terminated, cancelled or lost; (iv)
Borrower shall promptly upon final determination thereof pay the amount of any
such Taxes or Other Charges, together with all costs, interest and penalties
which may be payable in connection therewith; (v) such proceeding shall suspend
the collection of such contested Taxes or Other Charges from the applicable
Individual Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or as may be requested by Lender, to insure the
payment of any such Taxes or Other Charges, together with all interest and
penalties thereon. Lender may pay over any such cash deposit or part thereof
held by Lender to the claimant entitled thereto at any time when, in the
judgment of Lender, the entitlement of such claimant is established or any
Individual Property (or part thereof or interest therein) shall be in danger of
being sold, forfeited, terminated, cancelled or lost or there shall be any
danger of the Lien of any Security Instrument being primed by any related Lien.

     5.1.3 Litigation. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
against Borrower which might materially adversely affect Borrower’s condition
(financial or otherwise) or business or any Individual Property.

     5.1.4 Access to Properties. Borrower shall permit agents,
representatives and employees of Lender to inspect the Properties or any part
thereof at reasonable hours upon reasonable advance notice.

     5.1.5 Notice of Default. Borrower shall promptly advise Lender of
any Material Adverse Effect on Borrower’s condition, financial or otherwise, or
of the occurrence of any Default or Event of Default of which Borrower has
knowledge.

     5.1.6 Cooperate in Legal Proceedings. Borrower shall cooperate
fully with Lender with respect to any proceedings before any court, board or
other Governmental Authority which may in any way adversely affect the rights
of Lender hereunder or any rights obtained by Lender under any of the other
Loan Documents and, in connection therewith, permit Lender, at its election, to
participate in any such proceedings.

     5.1.7 Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or

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applicable to, Borrower. Borrower shall execute and deliver the Cash
Management Agreement within fifteen (15) Business Days of the Closing Date.

     5.1.8 Awards or Insurance Benefits. Borrower shall cooperate with
Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds
lawfully or equitably payable in connection with any Individual Property, and
Lender shall be reimbursed for any expenses incurred in connection therewith
(including attorneys’ fees and disbursements, and the payment by Borrower of
the expense of an appraisal on behalf of Lender in case of a Casualty or
Condemnation affecting any Individual Property or any part thereof) out of such
Award or Insurance Proceeds.

     5.1.9 Further Assurances. Borrower shall, at Borrower’s sole cost
and expense:

     (a) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and
every other document, certificate, agreement and instrument required to be
furnished by Borrower pursuant to the terms of the Loan Documents or reasonably
requested by Lender in connection therewith;

     (b) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require, including, without limitation, the
authorization of Lender to execute and/or the execution by Borrower of UCC
financing statements; and

     (c) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of
the intents and purposes of this Agreement and the other Loan Documents, as
Lender shall reasonably require from time to time.

     5.1.10 Supplemental Security Instrument Affidavits. As of the date
hereof, Borrower represents that it has paid all State, county and municipal
recording and all other taxes imposed upon the execution and recordation of the
Security Instruments. If at any time Lender determines, based on applicable
law, that Lender is not being afforded the maximum amount of security available
from any one or more of the Properties as a direct or indirect result of
applicable taxes not having been paid with respect to any Individual Property,
Borrower agrees that Borrower will execute, acknowledge and deliver to Lender,
immediately upon Lender’s request, supplemental affidavits increasing the
amount of the Debt attributable to any such Individual Property (as set forth
as the Release Amount on Schedule I attached hereto) for which all
applicable taxes have been paid to an amount determined by Lender to be equal
to the lesser of (a) the greater of the fair market value of the applicable
Individual Property (i) as of the date hereof and (ii) as of the date such
supplemental affidavits are to be delivered to Lender, and (b) the amount of
the Debt attributable to any such Individual Property (as set forth as the
Release Amount on Schedule I attached hereto), and Borrower shall, on
demand, pay any additional taxes.

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     5.1.11 Financial Reporting.

     (a) Borrower will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP (or such other
accounting basis acceptable to Lender), proper and accurate books, records and
accounts reflecting all of the financial affairs of Borrower and all items of
income and expense in connection with the operation on an individual basis of
the Properties. Lender shall have the right from time to time at all times
during normal business hours upon reasonable notice to examine such books,
records and accounts at the office of Borrower or other Person maintaining such
books, records and accounts and to make such copies or extracts thereof as
Lender shall desire. After the occurrence of an Event of Default, Borrower
shall pay any costs and expenses incurred by Lender to examine Borrower’s
accounting records with respect to the Properties, as Lender shall determine to
be necessary or appropriate in the protection of Lender’s interest.

     (b) Borrower will furnish to Lender annually, within ninety (90) days
following the end of each Fiscal Year of Borrower, a complete copy of
Borrower’s annual financial statements audited by an Acceptable Accountant in
accordance with GAAP (or such other accounting basis acceptable to Lender)
covering the Properties on a combined basis as well as each Individual Property
for such Fiscal Year and containing statements of profit and loss for Borrower
and the Properties and a balance sheet for Borrower. Such statements shall set
forth the financial condition and the results of operations for the Properties
for such Fiscal Year, and shall include, but not be limited to, amounts
representing annual Net Cash Flow, Net Operating Income, Gross Income from
Operations and Operating Expenses. Borrower’s annual financial statements
shall be accompanied by (i) a comparison of the budgeted income and expenses
and the actual income and expenses for the prior Fiscal Year; (ii) an Officer’s
Certificate stating that each such annual financial statement presents fairly
the financial condition and the results of operations of Borrower and the
Properties being reported upon and has been prepared in accordance with GAAP;
(iii) an unqualified opinion of an Acceptable Accountant; (iv) a list of
tenants under Major Leases; (v) a breakdown showing the year in which each
Major Lease then in effect expires and the percentage of total floor area of
the Improvements and the percentage of base rent with respect to which Major
Leases shall expire in each such year, each such percentage to be expressed on
both a per year and cumulative basis; (vi) if requested by Lender, an annual
occupancy report for such year; and (vii) a schedule audited by such Acceptable
Accountant reconciling Net Operating Income to Net Cash Flow (the “Net Cash
Flow Schedule”), which shall itemize all adjustments made to Net Operating
Income to arrive at Net Cash Flow deemed material by such Acceptable
Accountant. Together with Borrower’s annual financial statements, Borrower
shall furnish to Lender an Officer’s Certificate certifying as of the date
thereof whether there exists an event or circumstance which constitutes a
Default or Event of Default under the Loan Documents executed and delivered by,
or applicable to, Borrower, and if such Default or Event of Default exists, the
nature thereof, the period of time it has existed and the action then being
taken to remedy the same.

     (c) Borrower will furnish, or cause to be furnished, to Lender on or
before twenty (20) days after the end of each calendar month the following
items, accompanied by an Officer’s Certificate stating that such items are
true, correct, accurate, and complete and fairly present the financial
condition and results of the operations of Borrower and the Properties on a
combined basis as well as each Individual Property (subject to normal year-end
adjustments) as applicable:

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(i) a rent roll or other record of leasing for the subject month
accompanied by an Officer’s Certificate with respect thereto; (ii) monthly and
year-to-date operating statements (including Capital Expenditures) prepared for
each calendar month, noting Net Operating Income, Gross Income from Operations,
and Operating Expenses (not including any contributions to the Replacement
Reserve Fund), and other information necessary and sufficient to fairly
represent the financial position and results of operation of the Properties
during such calendar month (on a combined basis as well as each Individual
Property), and containing a comparison of budgeted income and expenses and the
actual income and expenses; (iii) a calculation reflecting the annual Debt
Service Coverage Ratio for the immediately preceding twelve (12) month period
as of the last day of such month accompanied by an Officer’s Certificate with
respect thereto; and (iv) a Net Cash Flow Schedule. In addition, such
certificate shall also state that the representations and warranties of
Borrower set forth in Section 4.1.30 are true and correct as of the date of
such certificate and that there are no trade payables outstanding for more than
sixty (60) days.

     (d) For the partial year period commencing on the date hereof, and for
each Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget
not later than sixty (60) days prior to the commencement of such period or
Fiscal Year in form reasonably satisfactory to Lender.

     (e) Intentionally Deleted.

     (f) Borrower shall furnish to Lender, within ten (10) Business Days after
request (or as soon thereafter as may be reasonably possible), such further
detailed information with respect to the operation of any Individual Property
and the financial affairs of Borrower as may be reasonably requested by Lender.

     (g) Any reports, statements or other information required to be delivered
under this Agreement shall be delivered (i) in paper form, (ii) on a diskette,
and (iii) if requested by Lender in electronic form and prepared using a
Microsoft Word for Windows or Microsoft Excel for Windows program.

     (h) Borrower agrees that Lender may forward to each purchaser, transferee,
assignee, servicer, participant, or investor in all or any portion of the Loan
or any Securities or any Rating Agency rating such participations and/or
Securities and each prospective investor, and any organization maintaining
databases on the underwriting and performance of commercial mortgage loans, all
documents and information which Lender now has or may hereafter acquire
relating to the Debt and to Borrower, any Guarantor and the Properties, whether
furnished by Borrower, any Guarantor or otherwise, as Lender determines
necessary or desirable. Borrower irrevocably waives any and all rights it may
have under any applicable laws to prohibit such disclosure, including, but not
limited, to any right of privacy.

     5.1.12 Business and Operations. Borrower will continue to engage
in the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Properties. Borrower will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for the ownership, maintenance, management and operation of the
Properties.

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     5.1.13 Title to the Properties. Borrower will warrant and defend
(a) the title to each Individual Property and every part thereof, subject only
to Liens permitted hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Liens of the Security Instruments and the
Assignments of Leases on the Properties, subject only to Liens permitted
hereunder (including Permitted Encumbrances), in each case against the claims
of all Persons whomsoever. Borrower shall reimburse Lender for any losses,
costs, damages or expenses (including reasonable attorneys’ fees and court
costs) incurred by Lender if an interest in any Individual Property, other than
as permitted hereunder, is claimed by another Person.

     5.1.14 Costs of Enforcement. In the event (a) that any Security
Instrument encumbering any Individual Property is foreclosed in whole or in
part or that any such Security Instrument is put into the hands of an attorney
for collection, suit, action or foreclosure, (b) of the foreclosure of any
mortgage prior to or subsequent to any Security Instrument encumbering any
Individual Property in which proceeding Lender is made a party, or (c) of the
bankruptcy, insolvency, rehabilitation or other similar proceeding in respect
of Borrower or any of its constituent Persons or an assignment by Borrower or
any of its constituent Persons for the benefit of its creditors, Borrower, its
successors or assigns, shall be chargeable with and agrees to pay all costs of
collection and defense, including attorneys’ fees and costs, incurred by Lender
or Borrower in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required
service or use taxes.

     5.1.15 Estoppel Statement. (a) After request by Lender, Borrower
shall within ten (10) days furnish Lender with a statement, duly acknowledged
and certified, setting forth (i) the amount of the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the Applicable
Interest Rate of the Note, (iv) the date installments of interest and/or
principal were last paid, (v) any offsets or defenses to the payment of the
Debt, if any, and (vi) that the Note, this Agreement, the Security Instruments
and the other Loan Documents are valid, legal and binding obligations and have
not been modified or if modified, giving particulars of such modification.

     (b) After request by Lender, Borrower shall use its commercially
reasonable efforts to deliver to Lender, tenant estoppel certificates from each
commercial tenant leasing space at the Properties pursuant to a Major Lease in
form and substance reasonably satisfactory to Lender provided that Borrower
shall not be required to deliver such certificates more frequently than two (2)
times in any calendar year.

     5.1.16 Loan Proceeds. Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in Section
2.1.4 hereof.

     5.1.17 Performance by Borrower. Borrower shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision of
each Loan Document executed and delivered by, or applicable to, Borrower, and
shall not enter into or otherwise suffer or permit any amendment, waiver,
supplement, termination or other modification of any Loan Document executed and
delivered by, or applicable to, Borrower without the prior written consent of
Lender.

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     5.1.18 Confirmation of Representations. Borrower shall deliver, in
connection with any Securitization, (a) one or more Officer’s Certificates
certifying as to the accuracy of all representations made by Borrower in the
Loan Documents as of the date of the closing of such Securitization in all
relevant jurisdictions, and (b) certificates of the relevant Governmental
Authorities in all relevant jurisdictions indicating the good standing and
qualification of Borrower and SPC Party as of the date of the Securitization.

     5.1.19 No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of any Individual Property (a) with any other
real property constituting a tax lot separate from such Individual Property,
and (b) which constitutes real property with any portion of such Individual
Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such real property
portion of the Individual Property.

     5.1.20 Leasing Matters.

     (a) Except as otherwise consented to by Lender in writing, all Leases
shall be written on the standard form of lease which shall have been approved
by Lender. Upon reasonable request (not to be made more than once in any
consecutive twelve (12) month period), Borrower shall furnish Lender with
executed copies of a sample of the Leases as requested by Lender. No material
changes may be made to the Lender-approved standard form of lease without the
prior written consent of Lender. In addition, all renewals of Leases and all
proposed leases shall provide for rental rates and terms comparable to existing
local market rates and terms and shall be arm’s-length transactions with bona
fide, independent third party tenants. All Major Leases shall provide that
they are subordinate to the applicable Security Instrument and that the tenant
agrees to attorn to Lender.

     (b) Borrower (i) shall observe and perform all the obligations imposed
upon the landlord under the Leases and shall not do or permit to be done
anything to impair the value of the Leases as security for the Debt; (ii) shall
enforce all of the terms, covenants and conditions contained in the Leases upon
the part of the tenant thereunder to be observed or performed (except for
termination of a Major Lease which shall require Lender’s prior written
approval); (iii) shall not collect any of the Rents more than two (2) months in
advance (other than security deposits); (iv) shall not execute any other
assignment of the landlord’s interest in the Leases or the Rents; and (v) shall
not consent to any assignment of or subletting under the Leases not in
accordance with their terms, without the prior written consent of Lender.

     (c) All proposed Leases, renewals of Leases or amendments or terminations
of Leases shall be subject to the prior approval of Lender, which approval
shall not be unreasonably withheld, conditioned or delayed; provided, however,
Borrower may, without the consent of Lender, terminate any Lease (other than a
Major Lease) if the tenant thereunder is in default beyond applicable notice
and grace periods under such Lease. Notwithstanding the provisions of the
preceding sentence, renewals of Leases and proposed Leases shall not be subject
to the prior approval of Lender, provided all of the following conditions are
satisfied: (i) the Lease is not a Major Lease; (ii) the term is on a
month-to-month basis; (iii) the renewal or proposed Lease is on the standard
form of lease approved by Lender and provides for a term of less than one (1)
year; (iv) the renewal or proposed Lease does not contain any option, offer,
right of first refusal, or

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other similar right to acquire all or any portion of the applicable
Individual Property; and (v) the renewal or proposed Lease provides for rental
rates and terms (including credits or concessions) comparable to existing
market rates and terms and is an arm’s-length transaction with a bona fide,
independent third party tenant. Upon Lender’s reasonable request, Borrower
shall deliver to Lender, (i) within thirty (30) days after the execution of any
renewal or proposed Major Lease, copies of all such Major Leases, and (ii)
within thirty days of such request, Borrower’s certification that it has
satisfied all of the conditions of this Section 5.1.20(c) with respect to all
renewal or new Leases (which are not Major Leases) which were entered into
pursuant to this Section 5.1.20(c) since the date of Lender’s last request.

     5.1.21 Alterations. Borrower shall obtain Lender’s prior written
consent to any alterations to any Improvements, which consent shall not be
unreasonably withheld or delayed except with respect to alterations that may
have a Material Adverse Effect. Notwithstanding the foregoing, Lender’s
consent shall not be required in connection with any alterations that will not
have a Material Adverse Effect, provided that such alterations are made in
connection with (a) tenant improvement work performed pursuant to the terms of
any Lease executed on or before the date hereof, (b) tenant improvement work
performed pursuant to the terms and provisions of a Lease and not adversely
affecting any structural component of any Improvements, any utility or HVAC
system contained in any Improvements or the exterior of any building
constituting a part of any Improvements, or (c) alterations performed in
connection with the restoration of an Individual Property after the occurrence
of a casualty in accordance with the terms and provisions of this Agreement.
If the total unpaid amounts with respect to alterations to the Improvements at
any Individual Property (other than such amounts to be paid or reimbursed by
tenants under the Leases), together with any other alterations undertaken at
the same time at any of the other Properties, shall at any time exceed Four
Million and 00/100 Dollars ($4,000,000.00) (the “Threshold Amount”),
Borrower shall promptly deliver to Lender as security for the payment of such
amounts and as additional security for Borrower’s obligations under the Loan
Documents any of the following: (A) cash, (B) U.S. Obligations, (C) other
securities having a rating acceptable to Lender and that the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned in connection with any Securitization, or (D) a
completion bond or letter of credit issued by a financial institution having a
rating by S&P of not less than A-1+ if the term of such bond or letter of
credit is no longer than three (3) months or, if such term is in excess of
three (3) months, issued by a financial institution having a rating that is
acceptable to Lender and that the applicable Rating Agencies have confirmed in
writing will not, in and of itself, result in a downgrade, withdrawal or
qualification of the initial, or, if higher, then current ratings assigned in
connection with any Securitization. Such security shall be in an amount equal
to the excess of the total unpaid amounts with respect to alterations to the
Improvements on the applicable Individual Property (other than such amounts to
be paid or reimbursed by tenants under the Leases), together with any other
alterations undertaken at the same time at any of the other Properties over the
Threshold Amount and applied from time to time at the option of Lender to pay
for such alterations or to terminate any of the alterations and restore the
applicable Properties to the extent necessary to prevent any Material Adverse
Effect.

     5.1.22 Environmental Covenants.

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     (a) Borrower covenants and agrees that so long as the Loan is outstanding
(i) all uses and operations on or of the Properties, whether by Borrower or any
other Person, shall be in compliance in all material respects with all
Environmental Laws and permits issued pursuant thereto; (ii) Borrower shall not
cause or permit any Releases of Hazardous Substances in, on, under or from any
of the Properties; (iii) there shall be no Hazardous Substances in, on, or
under any of the Properties, except those that are both (A) in compliance with
all Environmental Laws and with permits issued pursuant thereto, if and to the
extent required, and (B) (1) in amounts not in excess of that necessary to
operate the applicable Individual Property or (2) fully disclosed to and
approved by Lender in writing; (iv) Borrower shall keep the Properties free and
clear of all liens and other encumbrances imposed pursuant to any Environmental
Law, whether due to any act or omission of Borrower or any other Person (the
“Environmental Liens”); (v) Borrower shall, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to
paragraph (b) below, including but not limited to providing all relevant
information and making knowledgeable persons available for interviews; (vi)
Borrower shall, at its sole cost and expense, perform any environmental site
assessment or other investigation of environmental conditions in connection
with any of the Properties, pursuant to any reasonable written request of
Lender, upon Lender’s reasonable belief that an Individual Property is not in
full compliance with all Environmental Laws, and share with Lender the reports
and other results thereof, and Lender and other Indemnified Parties shall be
entitled to rely on such reports and other results thereof; (vii) Borrower
shall, at its sole cost and expense, comply with all reasonable written
requests of Lender to (A) reasonably effectuate remediation of any Hazardous
Substances in, on, under or from any Individual Property to the extent required
by Environmental Laws; and (B) comply with any Environmental Law; (viii)
Borrower shall not allow any tenant or other user of any of the Properties to
violate any Environmental Law; and (ix) Borrower shall immediately notify
Lender in writing after it has become aware of: (A) any presence or Release or
threatened Releases of Hazardous Substances in, on, under, from or migrating
towards any of the Properties if it would reasonably be expected to result in a
Material Adverse Effect; (B) any non compliance with any Environmental Laws
related in any way to any of the Properties if it would reasonably be expected
to result in a Material Adverse Effect; (C) any actual or potential
Environmental Lien; (D) any required or proposed remediation of environmental
conditions relating to any of the Properties; and (E) any written or oral
notice or other communication of which Borrower becomes aware from any source
whatsoever (including but not limited to a Governmental Authority) relating in
any way to Hazardous Substances.

     (b) Lender and any other Person designated by Lender, including but not
limited to any representative of a Governmental Authority, and any
environmental consultant, and any receiver appointed by any court of competent
jurisdiction, shall have the right, but not the obligation, to enter upon any
Individual Property at all reasonable times upon reasonable notice to Borrower
to assess any and all aspects of the environmental condition of any Individual
Property and its use, including but not limited to conducting any environmental
assessment or audit (the scope and need of which shall be determined in
Lender’s reasonable discretion based upon its good-faith belief that any
Individual Property is not in full compliance with all Environmental Laws) and
taking samples of soil, groundwater or other water, air, or building materials,
and conducting other invasive testing reasonably necessary to assess the
environmental condition of such Individual Property. Borrower shall cooperate
with and provide access to Lender and any such Person or entity designated by
Lender and Lender shall take

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reasonable steps to minimize any disruption to Borrower’s use and
operation of such Individual Property.

     5.1.23 OFAC.

            At all times throughout the term of the Loan, Borrower, each Guarantor and
their respective Affiliates shall be in full compliance with all applicable
orders, rules, regulations and recommendations of The Office of Foreign Assets
Control of the U.S. Department of the Treasury.

     5.1.24 O&M Program.

            Borrower covenants and agrees to implement and follow the terms and
conditions of the O&M Program for each applicable Property during the term of
the Loan, including any extension or renewal thereof. Lender’s requirement
that Borrower comply with the O&M Program shall not be deemed to constitute a
waiver or modification of any of Borrower’s covenants and agreements with
respect to Hazardous Substances or Environmental Laws.

     5.1.25 The Ground Leases.

            With respect to each Ground Lease:

     (a) Borrower shall (i) pay all rents, additional rents and other sums
required to be paid by Borrower, as tenant under and pursuant to the provisions
of each Ground Lease, (ii) diligently perform and observe all of the terms,
covenants and conditions of each Ground Lease on the part of Borrower, as
tenant thereunder, (iii) promptly notify Lender of the giving of any notice by
the Fee Owner under the applicable Ground Lease to Borrower of any default by
Borrower, as tenant thereunder, and deliver to Lender a true copy of each such
notice within five (5) Business Days of receipt and (iv) promptly notify Lender
of any bankruptcy, reorganization or insolvency proceeding of the Fee Owner
under the applicable Ground Lease or of any notice thereof, and deliver to
Lender a true copy of such notice within five (5) Business Days of Borrower’s
receipt, together with copies of all notices, pleadings, schedules and similar
matters received by Borrower in connection with such bankruptcy, reorganization
or insolvency proceeding within five (5) Business Days after receipt. Borrower
shall not, without the prior consent of Lender, (x) surrender the leasehold
estate created by the applicable Ground Lease or terminate or cancel any Ground
Lease or modify, change, supplement, alter or amend any Ground Lease, either
orally or in writing, (y) consent to, acquiesce in, or fail to object to, any
attempt by any Fee Owner, as debtor in possession or by a trustee for such Fee
Owner, to sell or transfer the Fee Estate with respect to any Ground Lease free
and clear of the Ground Lease under Section 363(f) (or any similar provision)
of the Bankruptcy Code or otherwise. Borrower shall object to any such attempt
by such Fee Owner, as debtor in possession or by a trustee for such Fee Owner,
to sell or transfer the Fee Estate with respect to any Ground Lease free and
clear of the Ground Lease under Section 363(f) (or any similar provision) of
the Bankruptcy Code or otherwise, and in such event shall affirmatively assert
and pursue its right to adequate protection under Section 363(e) (or any
similar provision) of the Bankruptcy Code. Borrower hereby assigns to Lender
all of its rights and claims under Section 363 of the Bankruptcy Code to
consent or object to any sale or transfer of such Fee Estate, to seek valuation
of the Ground

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Lease and adequate protection with respect to the same and grants to
Lender the right to object to any such sale or transfer on behalf of Borrower,
and Borrower shall not contest any pleadings, motions documents or other
actions filed or taken by Lender on Lender’s or Borrower’s behalf in the event
that any Fee Owner, as debtor-in-possession or by a trustee for such Fee Owner,
attempts to sell or transfer the Fee Estate with respect to any Ground Lease or
under Section 363(f) (or any similar provision) of the Bankruptcy Code or
otherwise, or (z) vacate the premises upon the land underlying the Ground
Lease.

     (b) If Borrower shall default in the performance or observance of any
term, covenant or condition of any Ground Lease on the part of Borrower, as
tenant thereunder, and shall fail to cure the same prior to the expiration of
any applicable cure period provided thereunder, Lender shall have the right,
but shall be under no obligation, to pay any sums and to perform any act or
take any action as may be appropriate to cause all of the terms, covenants and
conditions of such Ground Lease on the part of Borrower to be performed or
observed on behalf of Borrower, to the end that the rights of Borrower in, to
and under such Ground Lease shall be kept unimpaired and free from default. If
the landlord under the applicable Ground Lease shall deliver to Lender a copy
of any notice of default under such Ground Lease, such notice shall constitute
full protection to Lender for any action taken or omitted to be taken by
Lender, in good faith, in reliance thereon. Borrower shall exercise each
individual option, if any, to extend or renew the term of each Ground Lease
upon demand by Lender made at any time within one (1) year prior to the last
day upon which any such option may be exercised, and Borrower hereby expressly
authorizes and appoints Lender its attorney-in-fact to exercise any such option
in the name of and upon behalf of Borrower, which power of attorney shall be
irrevocable and shall be deemed to be coupled with an interest.

     (c) Subleases. Notwithstanding anything contained in any Ground
Lease to the contrary, Borrower shall not further sublet any portion of the
related Individual Property (other than as permitted pursuant to Section 5.1.20
hereof) without prior written consent of Lender. Each sublease hereafter made
(other than as permitted pursuant to Section 5.1.20 hereof) shall provide that,
(a) in the event of the termination of the Ground Lease, the sublease shall not
terminate or be terminable by the lessee thereunder; (b) in the event of any
action for the foreclosure of the Security Instrument with respect to the
related Individual Property, the sublease shall not terminate or be terminable
by the lessee thereunder by reason of the termination of the Ground Lease
unless such lessee is specifically named and joined in any such action and
unless a judgment is obtained therein against such lessee; and (c) in the event
that the Ground Lease is terminated as aforesaid, the lessee under the sublease
shall attorn to the lessor under the Ground Lease or to the purchaser at the
sale of the related Individual Property on such foreclosure, as the case may
be. In the event that any portion of such Individual Property shall be sublet
pursuant to the terms of this subsection, such sublease shall be deemed to be
included in the Individual Property.

     Section 5.2 Negative Covenants. 

            From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Security Instruments encumbering the Properties (and all related
obligations) in accordance with the terms

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of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that it will not do, directly or indirectly, any of the
following:

     5.2.1 Operation of Property. Borrower shall not, without the prior
consent of Lender (which consent shall not be unreasonably withheld), amend,
modify, cancel or terminate the Management Agreement or otherwise replace the
Manager or enter into any other management agreement with respect to any
Individual Property.

     5.2.2 Liens. Borrower shall not, without the prior written consent
of Lender, create, incur, assume or suffer to exist any Lien on any portion of
any Individual Property or permit any such action to be taken, except:

            (i) Permitted Encumbrances;

            (ii) Liens created by or permitted pursuant to the Loan Documents;
and

            (iii) Liens for Taxes or Other Charges not yet due.

     5.2.3 Dissolution. Borrower shall not (a) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (b) engage in any business activity not related to the
ownership and operation of the Properties, (c) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower except to the extent
permitted by the Loan Documents, (d) except as expressly permitted under the
Loan Documents, modify, amend, waive or terminate its organizational documents
or its qualification and good standing in any jurisdiction or (e) cause the SPC
Party to (i) dissolve, wind up or liquidate or take any action, or omit to take
an action, as a result of which the SPC Party would be dissolved, wound up or
liquidated in whole or in part, or (ii) except as expressly permitted under the
Loan Documents, amend, modify, waive or terminate the certificate of
incorporation, bylaws or similar organizational documents of the SPC Party, in
each case, without obtaining the prior written consent of Lender or Lender’s
designee.

     5.2.4 Change In Business. Borrower shall not enter into any line
of business other than the ownership, acquisition, development, operation,
leasing and management of the Properties (including providing services in
connection therewith), or make any material change in the scope or nature of
its business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business.

     5.2.5 Debt Cancellation. Borrower shall not cancel or otherwise
forgive or release any material claim or debt (other than termination of Leases
in accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower’s business.

     5.2.6 Affiliate Transactions. Borrower shall not enter into, or be
a party to, any transaction with an Affiliate of Borrower or any of the
Affiliates of Borrower except in the ordinary course of business and on terms
which are no less favorable to Borrower or such Affiliate than would be
obtained in a comparable arm’s-length transaction with an unrelated third
party.

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     5.2.7 Zoning. Borrower shall not initiate or consent to any zoning
reclassification of any portion of any Individual Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
any Individual Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.

     5.2.8 Assets. Borrower shall not purchase or own any property
other than the Properties.

     5.2.9 Debt. Borrower shall not create, incur or assume any
Indebtedness other than the Debt except to the extent expressly permitted
hereby.

     5.2.10 No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of any Individual Property with (a) any other
real property constituting a tax lot separate from such Individual Property, or
(b) any portion of such Individual Property which may be deemed to constitute
personal property, or any other procedure whereby the Lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to such Individual Property.

     5.2.11 Principal Place of Business. Borrower shall not change its
principal place of business set forth on the first page of this Agreement
without first giving Lender thirty (30) days prior written notice.

     5.2.12 ERISA. (a) During the term of the Loan or of any obligation
or right hereunder, Borrower shall not be a Plan and none of the assets of
Borrower shall constitute Plan Assets.

     (a) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, and represents and
covenants that (A) Borrower is not and does not maintain an “employee benefit
plan” as defined in Section 3(3) of ERISA, which is subject to Title I of
ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA;
(B) Borrower is not subject to State statutes regulating investments and
fiduciary obligations with respect to governmental plans; and (C) one or more
of the following circumstances is true:

	 	(i)	 	Equity interests in Borrower are
publicly offered securities, within the meaning of 29
C.F.R. §2510.3-101(b)(2);
	 
	 	(ii)	 	Less than twenty-five percent (25%)
of each outstanding class of equity interests in
Borrower are held by “benefit plan investors” within the
meaning of 29 C.F.R. §2510.3-101(f)(2); or
	 
	 	(iii)	 	Borrower qualifies as an “operating
company” or a “real estate operating company” within the
meaning of 29 C.F.R. §2510.3-101(c) or (e).

     5.2.13 Transfers. (a) Except as otherwise permitted by the
provisions of this Section 5.2.13 or except to the extent permitted elsewhere
in the Loan Documents, Borrower will not (i) permit or suffer (by operation of
law or otherwise) any sale, assignment, conveyance, transfer or

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other disposition of legal or equitable interest in all or any part of any
Individual Property, (ii) permit or suffer (by operation of law or otherwise)
any sale, assignment, conveyance, transfer or other disposition of any direct
or indirect interest in Borrower, (iii) permit or suffer (by operation of law
or otherwise) any mortgage, lien or other encumbrance of all or any part of any
Individual Property, (iv) permit or suffer (by operation of law or otherwise)
any pledge, hypothecation, creation of a security interest in or other
encumbrance of any direct or indirect interests in Borrower, or (v) file a
declaration of condominium with respect to any Individual Property.

     (b) A sale or conveyance by Borrower of any Individual Property (but not a
mortgage, lien or other encumbrance) is permitted provided that each of the
following conditions have been satisfied:

                    (i) no Event of Default shall have occurred and be continuing;

                    (ii) the Person to whom such Individual Property is sold or
conveyed satisfies the requirements of a Special Purpose Entity and
not less than 50% of the direct or indirect interests are owned and
controlled by a Permitted Owner;

                    (iii) Lender has received a non-consolidation opinion which
may be relied upon by Lender, the Rating Agencies and their
respective counsel, successors and assigns, with respect to the
sale or conveyance, which opinion shall be reasonably acceptable to
Lender and, after a Securitization, the Rating Agencies;

                    (iv) if a Securitization has occurred, Borrower shall deliver
confirmation in writing from the applicable Rating Agencies to the
effect that such transfer or sale will not result in a downgrading,
withdrawal or qualification of the respective ratings in effect
immediately prior to such transfer or sale for the Securities
issued in connection with the Securitization which are then
outstanding;

                    (v) the transferee of such Individual Property shall execute
an assumption of all of the obligations of the Borrower under the
Loan Agreement, the applicable Security Instrument and the other
Loan Documents, subject, however, to the provisions of Section 9.4
of this Agreement and the proposed replacement guarantor shall
assume all of the obligations of Guarantor under the Guaranty, in a
manner satisfactory to Lender in all respects, including, without
limitation, by entering into an assumption agreement in form and
substance satisfactory to Lender, and, in each case, delivering
such legal opinions as Lender may reasonably require;

                    (vi) Borrower shall give written notice to Lender of the
proposed sale or conveyance not later than fifteen (15) days prior
thereto, which notice shall set forth the name of the proposed
transferee, identify the owners of such direct and indirect
interests of the proposed transferee and set forth the date the
sale or conveyance is expected to be effective.

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     (c) A transfer or sale (but not a pledge, hypothecation, creation of a
security interest in or other encumbrance) of an indirect ownership interest in
Borrower (other than those expressly permitted pursuant to Section 5.2.13(d)
hereof) is permitted provided the following conditions have been satisfied:

                    (i) such transfer or sale is to a Permitted Owner;

                    (ii) prior to any such transfer or sale of direct or indirect
ownership interests in Borrower, as a result of which (and after
giving effect to such transfer or sale), more than 49% of the
direct or indirect ownership interests in Borrower shall have been
transferred to a Person or entity not owning at least 49% of the
direct or indirect ownership interests in Borrower on the date of
closing, Borrower shall deliver to Lender a non-consolidation
opinion which may be relied upon by Lender, the Rating Agencies and
their respective counsel, successors and assigns, with respect to
the proposed transfer or sale, which opinion shall be reasonably
acceptable to Lender and, after a Securitization, the Rating
Agencies;

                    (iii) immediately prior to such transfer or sale no Event of
Default has occurred and is continuing;

                    (iv) Borrower shall deliver confirmation in writing from the
applicable Rating Agencies to the effect that such transfer or sale
will not result in a downgrading, withdrawal or qualification of
the respective ratings in effect immediately prior to such transfer
or sale for the Securities issued in connection with the
Securitization which are then outstanding; and

                    (v) Borrower shall give or cause to be given written notice to
Lender of the proposed transfer or sale not later than fifteen (15)
days prior thereto, which notice shall set forth the name of the
Person to which the interest in Borrower is to be transferred or
sold, identify the proposed transferee and set forth the date the
transfer or sale is expected to be effective.

     (c) Notwithstanding the provisions of Sections 5.2.13(a) and (c) hereof,
the following transfers or sales shall not be deemed to be a transfer or sale
in violation of the provisions of this Section 5.2.13: (i) a transfer by devise
or descent or by operation of law upon the death of a member, partner or
shareholder of a Restricted Party or a Restricted Party itself; (ii) the
transfer or sale, in one or a series of transactions, of not more than
forty-nine percent (49%) of the stock in a Restricted Party (other than
Guarantor); provided, however, no such transfer or sale shall result in the
change of voting control in such Restricted Party; (iii) the transfer or sale,
in one or a series of transactions, of not more than forty-nine percent (49%)
of the limited partnership interests or non-managing membership interests (as
the case may be) in a Restricted Party (other than Guarantor); provided,
however, no such transfer or sale shall result in the change of voting control
in such Restricted Party; (iv) the transfer or sale by Sponsor, in one or a
series of transactions, of not more than twenty-five percent (25%) of the
general partnership interests in Guarantor; provided, however, no such transfer
or sale shall result in the change of voting control in Guarantor; and (v) the
transfer or sale by any limited partner of Guarantor, in one or a series of
transactions, of not more than forty-nine percent (49%) of the limited
partnership

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interests in Guarantor; provided, however, no such transfer or sale shall
result in the change of voting control in Guarantor. In connection with any
such transfer or sale pursuant to clauses (ii) through (v) above, and as a
condition to each such transfer or sale, Lender shall receive not less than ten
(10) days prior written notice of such proposed transfer or sale.

     (d) Borrower agrees to bear and shall reimburse Lender on demand all
reasonable expenses incurred by Lender in connection with any transaction
described in this Section 5.2.13.

     (e) Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon any violation of this Section 5.2.13.

     (f) The provisions of this Section 5.2.13 shall not be modified or amended
by Borrower and Lender unless the Rating Agencies have confirmed that such
amendment or modification will not result in a downgrade, qualification or
withdrawal of the then current ratings assigned to the Securities.

     (g) Nothing contained in this Section 5.2.13 or in any other provision of
this Agreement or in any of the other Loan Documents shall limit or prohibit
transfers, sales, pledges or issuance of direct interests in Sponsor (the
“Traded Entity”); provided the Traded Entity complies with the
provisions of Section 5.3 hereof.

     (h) Notwithstanding the preceding provisions of this Section 5.2.13,
Borrower upon prior consent of Lender (which shall not be unreasonably withheld
upon receipt of such information pertaining to such transfer as Lender may
request) may (i) make transfers of immaterial portions of the Property to
Governmental Authorities in connection with a Condemnation of such immaterial
portions of the Property for dedication or public use, and (ii) grant
easements, restrictions, covenants, reservations and rights of way in the
ordinary course of business for water and sewer lines, telephone and telegraph
lines, electric lines and other utilities or for other similar purposes,
provided that no such transfer, described in the foregoing clauses (i) and (ii)
shall materially impair the utility and operation of the Property or materially
adversely affect the value of the Property or materially adversely affect
Borrower’s ability to pay the Debt, the Interest Only Payment Amount or the
Monthly Debt Service Payment Amount. Lender shall approve or disapprove such
transfers or easements within thirty (30) days after receipt of all information
pertaining thereto by Borrower.

     (i) Notwithstanding anything to the contrary contained in this Section
5.2.13 and except with respect to the Person to whom an Individual Property is
sold or conveyed pursuant to Section 5.2.13(b) hereof, Sponsor must continue to
control Borrower and Guarantor and own, directly or indirectly, at least a 51%
interest in Borrower and in Guarantor.

            Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon a transfer in violation of this Section
5.2.13. This provision shall apply to every transfer regardless of whether
voluntary or not, or whether or not Lender has consented to any previous
transfer. Notwithstanding anything to the contrary contained in this Section
5.2.13, (a) no transfer shall be made to any Prohibited Person and (b) in the
event any transfer results in any

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Person owning in excess of forty-nine percent (49%) of the ownership
interest in any direct or indirect owner of Borrower or Guarantor and a
Securitization has occurred, Borrower shall, prior to such transfer, deliver an
updated Insolvency Opinion to Lender, which opinion shall be in form, scope and
substance acceptable in all respects to Lender and the Rating Agencies.

     Section 5.3 Traded Shares.

            The Traded Entity shall cause its issued and outstanding shares of stock
or other ownership units to be listed for trading on the New York Stock
Exchange or such other nationally recognized stock exchange throughout the term
of the Loan.

     VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS

     Section 6.1 Insurance. 

     (a) Borrower shall obtain and maintain, or cause to be maintained,
insurance for Borrower and the Properties providing at least the following
coverages:

            (i) comprehensive all risk insurance on the Improvements and the
Personal Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to one hundred percent
(100%) of the “Full Replacement Cost,” which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a
waiver of depreciation, but the amount shall in no event be less than the
Release Amount applicable to the Individual Property; (B) containing an
agreed amount endorsement with respect to the Improvements and Personal
Property waiving all co-insurance provisions; (C) providing for no
deductible in excess of $25,000; (D) containing an “Ordinance or Law
Coverage” or “Enforcement” endorsement if any of the Improvements or the
use of the Individual Property shall at any time constitute legal
non-conforming structures or uses; (E) providing coverage for the peril
of Sprinkler Leakage; and (F) providing Comprehensive Plate Glass
Insurance. In addition, Borrower shall obtain: (y) if any portion of the
Improvements is currently or at any time in the future located in a
federally designated “special flood hazard area”, flood hazard insurance
in an amount equal to the lesser of (1) the Release Amount applicable to
the Individual Property or (2) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Reform
Act of 1994, as each may be amended or such greater amount as Lender
shall require; and (z) earthquake insurance in amounts and in form and
substance satisfactory to Lender in the event the Individual Property is
located in an area with a high degree of seismic activity, provided that
the insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required
under this subsection (i);

            (ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon,
in or about the Individual Property, such insurance (A) to be on the
so-called “occurrence” form with a limit, per occurrence, of not less
than One Million and No/100 Dollars ($1,000,000) and an

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aggregate limit of Two Million and No/100 Dollars ($2,000,000); (B)
to continue at not less than the aforesaid limit until required to be
changed by Lender in writing by reason of changed economic conditions
making such protection inadequate; and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and
completed operations on an “if any” basis; (3) independent contractors;
(4) blanket contractual liability for all legal contracts; and (5)
contractual liability covering the indemnities contained in Article 10 of
the Security Instruments to the extent the same is available;

            (iii) business interruption/loss of rents insurance (A) with loss
payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above; (C) in an amount equal to
100% of the projected gross income from each Individual Property (on an
actual loss sustained basis) for a period of twelve (12) months; the
amount of such business interruption/loss of rents insurance shall be
determined prior to the Closing Date and at least once each year
thereafter based on the greatest of: (x) Borrower’s reasonable estimate
of the gross income from each Individual Property and (y) the highest
gross income received during the term of the Note for any full calendar
year prior to the date the amount of such insurance is being determined,
in each case for the succeeding twelve (12) month period and (D)
containing an extended period of indemnity endorsement which provides
that after the physical loss to the Improvements and the Personal
Property has been repaired, the continued loss of income will be insured
until such income either returns to the same level it was at prior to the
loss, or the expiration of twelve (12) months from the date that the
applicable Individual Property is repaired or replaced and operations are
resumed, whichever first occurs, and notwithstanding that the policy may
expire prior to the end of such period; All insurance proceeds payable to
Lender pursuant to this subsection shall be held by Lender and shall be
applied to the obligations secured hereunder from time to time due and
payable hereunder and under the Note and this Agreement; provided,
however, that nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the obligations secured hereunder on
the respective dates of payment provided for in the Note and this
Agreement except to the extent such amounts are actually paid out of the
proceeds of such business interruption/loss of rents insurance;

            (iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if
the Individual Property coverage form does not otherwise apply, (A)
owner’s contingent or protective liability insurance covering claims not
covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance
provided for in subsection (i) above written in a so-called builder’s
risk completed value form (1) on a non-reporting basis, (2) against all
risks insured against pursuant to subsection (i) above, (3) including
permission to occupy the Individual Property, and (4) with an agreed
amount endorsement waiving co-insurance provisions;

            (v) workers’ compensation, subject to the statutory limits of the
State in which each Individual Property is located, and employer’s
liability insurance with a limit of at least $1,000,000 per accident and
per disease per employee, and $1,000,000 for disease aggregate in respect
of any work or operations on or about the Individual Property, or in
connection with the Individual Property or its operation (if applicable);

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     (vi) comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent
with the commercial property insurance policy required under subsection
(i) above;

     (vii) umbrella liability insurance in an amount not less than
$25,000,000 per occurrence and $25,000,000 in the aggregate on terms
consistent with the commercial general liability insurance policy
required under subsection (ii) above;

     (viii) motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits
per occurrence, including umbrella coverage, of not less than $1,000,000;

     (ix) [intentionally deleted];

     (x) [intentionally deleted];

     (xi) [intentionally deleted]; and

     (xii) upon sixty (60) days’ written notice, such other reasonable
insurance and in such reasonable amounts as Lender from time to time may
reasonably request against such other insurable hazards which at the time
are commonly insured against for property similar to the Individual
Property located in or around the region in which the Individual Property
is located.

     (b) No Policy shall contain an exclusion from coverage under such Policy
for loss or damage incurred as a result of an act of terrorism (including
bio-terrorism) or similar acts of sabotage. If a Policy contains such
exclusion, Borrower shall obtain a separate Policy providing coverage for loss
or damage incurred as a result of an act of terrorism (including bio-terrorism)
or similar acts of sabotage if such coverage is commercially available at
commercially reasonable rates.

     (c) All insurance provided for in Section 6.1(a) hereof shall be obtained
under valid and enforceable policies (collectively, the “Policies” or in
the singular, the “Policy”), and shall be subject to the approval of
Lender as to insurance companies, amounts, deductibles, loss payees and
insureds. The Policies shall be issued by financially sound and responsible
insurance companies authorized to do business in the State in which each
Individual Property is located and approved by Lender. The insurance companies
must have a claims paying ability/financial strength rating of “A” (or its
equivalent) or better by at least two (2) of the Rating Agencies (one of which
shall be S&P). The Policies described in Section 6.1 (other than those
strictly limited to liability protection) shall designate Lender as loss payee.
Not less than thirty (30) days prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums due thereunder (the “Insurance Premiums”), shall be delivered
by Borrower to Lender.

     (d) Borrower shall not obtain (i) any umbrella or blanket liability or
casualty Policy unless, in each case, such Policy is approved in advance in
writing by Lender and Lender’s interest is included therein as provided in this
Agreement and such Policy is issued by a

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Qualified Insurer, or (ii) separate insurance concurrent in form or
contributing in the event of loss with that required in Section 6.1(a) hereof
to be furnished by, or which may be reasonably required to be furnished by,
Borrower. In the event Borrower obtains separate insurance or an umbrella or a
blanket policy, Borrower shall notify Lender of the same and shall cause
certified copies of each Policy to be delivered as required in Section 6.1(a)
hereof. Any blanket insurance Policy shall specifically allocate to the
Individual Property the amount of coverage from time to time required hereunder
and shall otherwise provide the same protection as would a separate Policy
insuring only the Individual Property in compliance with the provisions of
Section 6.1(a) hereof. Notwithstanding Lender’s approval of any umbrella or
blanket liability or casualty Policy hereunder, Lender reserves the right, in
its sole discretion, to require Borrower to obtain a separate Policy in
compliance with this Section 6.1.

     (e) All Policies provided for or contemplated by Section 6.1(a) hereof,
except for the Policy referenced in Section 6.1(a)(v), shall name Borrower and
Lender as the insured or additional insured, as their respective interests may
appear, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.

     (f) All Policies provided for in Section 6.1(a)(v) hereof shall contain
clauses or endorsements to the effect that:

     (i) no act or negligence of Borrower, or anyone acting for Borrower,
or of any tenant or other occupant, or failure to comply with the
provisions of any Policy, which might otherwise result in a forfeiture of
the insurance or any part thereof, shall in any way affect the validity
or enforceability of the insurance insofar as Lender is concerned;

     (ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least
thirty (30) days’ written notice to Lender and any other party named
therein as an additional insured;

     (iii) each Policy shall provide that the issuers thereof shall give
written notice to Lender if the Policy has not been renewed thirty (30)
days prior to its expiration; and

     (iv) Lender shall not be liable for any Insurance Premiums thereon
or subject to any assessments thereunder.

     (g) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems
necessary to protect its interest in the Properties, including, without
limitation, the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate. All premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrower to Lender upon demand and, until paid, shall be secured by
the Security Instruments and shall bear interest at the Default Rate.

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     (h) Borrower shall furnish to Lender, on or before thirty (30) days after
the close of each of Borrower’s fiscal years, a statement certified by Borrower
or a duly authorized officer of Borrower of the amounts of insurance maintained
in compliance herewith, of the risks covered by such insurance and of the
insurance company or companies which carry such insurance and, if requested by
Lender, verification of the adequacy of such insurance by an independent
insurance broker or appraiser acceptable to Lender.

     Section 6.2 Casualty. If the Individual Property shall be damaged
or destroyed, in whole or in part, by fire or other casualty (a
“Casualty”), Borrower shall give prompt notice of such damage to Lender
and shall promptly commence and diligently prosecute the completion of the
repair and restoration of the Individual Property as nearly as possible to the
condition the Individual Property was in immediately prior to such Casualty,
with such alterations as may be reasonably approved by Lender (a
“Restoration”) and otherwise in accordance with Section 6.4 hereof.
Borrower shall pay all costs of such Restoration whether or not such costs are
covered by insurance. Lender may, but shall not be obligated to make proof of
loss if not made promptly by Borrower.

     Section 6.3 Condemnation. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any proceeding for the
Condemnation of all or any part of any Individual Property and shall deliver to
Lender copies of any and all papers served in connection with such proceedings.
Lender may participate in any such proceedings, and Borrower shall from time
to time deliver to Lender all instruments requested by it to permit such
participation. Borrower shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Notwithstanding any taking by any public or quasi-public authority through
Condemnation or otherwise (including, but not limited to, any transfer made in
lieu of or in anticipation of the exercise of such taking), Borrower shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and in this Agreement and the Debt shall not be reduced until any
Award shall have been actually received and applied by Lender, after the
deduction of expenses of collection, to the reduction or discharge of the Debt.
Lender shall not be limited to the interest paid on the Award by the
condemning authority but shall be entitled to receive out of the Award interest
at the rate or rates provided herein or in the Note. If any Individual
Property or any portion thereof is taken by a condemning authority, Borrower
shall promptly commence and diligently prosecute the Restoration of the
applicable Individual Property and otherwise comply with the provisions of
Section 6.4 hereof. If any Individual Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt.

     Section 6.4 Restoration. The following provisions shall apply in
connection with the Restoration of the Properties:

     (a) If the Net Proceeds shall be less than Four Million and 00/100 Dollars
($4,000,000) (on an aggregate basis for all of the Properties affected by a
Casualty or Condemnation) and the costs of completing the Restoration shall be
less than Four Million and 00/100 Dollars ($4,000,000) (on an aggregate basis
for all of the Properties affected by a Casualty or Condemnation), the Net
Proceeds will be disbursed by Lender to Borrower upon

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receipt, provided that all of the conditions set forth in Section
6.4(b)(i) are met and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement.

     (b) If the Net Proceeds are equal to or greater than Four Million and
00/100 Dollars ($4,000,000) (on an aggregate basis for all of the Properties
affected by a Casualty or Condemnation) or the costs of completing the
Restoration is equal to or greater than Four Million and 00/100 Dollars
($4,000,000) (on an aggregate basis for all of the Properties affected by a
Casualty or Condemnation), Lender shall make the Net Proceeds available for the
Restoration in accordance with the provisions of this Section 6.4. The term
“Net Proceeds” shall mean: (i) the net amount of all insurance proceeds
received by Lender pursuant to Section 6.1 (a)(i), (iv), (vi) and (vii) as a
result of such damage or destruction, after deduction of its reasonable costs
and expenses (including, but not limited to, reasonable counsel fees), if any,
in collecting same (“Insurance Proceeds”), or (ii) the net amount of the
Award, after deduction of its reasonable costs and expenses (including, but not
limited to, reasonable counsel fees), if any, in collecting same
(“Condemnation Proceeds”), whichever the case may be.

     (i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:

           (A) no Event of Default shall have occurred and be continuing;

           (B) (1) in the event the Net Proceeds are Insurance Proceeds, less than
twenty-five percent (25%) of the total aggregate floor area of the Improvements
on the Properties has been damaged, destroyed or rendered unusable as a result
of such Casualty or (2) in the event the Net Proceeds are Condemnation
Proceeds, less than ten percent (10%) of the land constituting the Properties
is taken, and such land is located along the perimeter or periphery of the
Properties affected by such Condemnation, and no portion of the Improvements is
located on such land;

           (C) Intentionally Deleted;

           (D) Borrower shall commence the Restoration as soon as reasonably
practicable (but in no event later than sixty (60) days after such Casualty or
Condemnation, whichever the case may be, occurs) and shall diligently pursue
the same to satisfactory completion in accordance with all applicable laws,
including, without limitation, all applicable Environmental Laws;

           (E) Lender shall be satisfied that any operating deficits, including all
scheduled payments of principal and interest under the Note, which will be
incurred with respect to the Properties as a result of the occurrence of any
such Casualty or Condemnation, whichever the case may be, will be covered out
of (1) the Net Proceeds, (2) the insurance coverage referred to in Section
6.1(a)(iii) hereof, if applicable, or (3) by other funds of Borrower;

           (F) Lender shall be satisfied that the Restoration will be completed on or
before the earliest to occur of (1) six (6) months prior to the Maturity Date,
(2) six (6) months after the occurrence of such Casualty or Condemnation, (3)
the earliest date required for such completion under the terms of any Leases,
if any, which are required in accordance with the provisions of this Section
6.4(b) to remain in effect subsequent to the occurrence of such

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Casualty or Condemnation and the completion of the Restoration, (4) such
time as may be required under applicable zoning law, ordinance, rule or
regulation, in order to repair and restore the Properties affected by such
Casualty or Condemnation to the condition they were in immediately prior to
such Casualty or Condemnation or (5) the expiration of the insurance coverage
referred to in Section 6.1(a)(iii) hereof;

           (G) the Properties affected by such Casualty or Condemnation and the use
thereof after the Restoration will be in compliance with and permitted under
all applicable zoning laws, ordinances, rules and regulations;

           (H) the Restoration shall be done and completed by Borrower in an
expeditious and diligent fashion and in compliance with all applicable
governmental laws, rules and regulations (including, without limitation, all
applicable Environmental Laws); and

           (I) such Casualty or Condemnation, as applicable, does not result in the
total loss of access to the Properties affected by such Casualty or
Condemnation or the related Improvements.

           (J) Borrower shall deliver, or cause to be delivered, to Lender a signed
detailed budget approved in writing by Borrower’s architect or engineer stating
the entire cost of completing the Restoration, which budget shall be acceptable
to Lender;

           (K) the Net Proceeds together with any cash or cash equivalent deposited
by Borrower with Lender are sufficient in Lender’s discretion to cover the cost
of the Restoration, or, if not sufficient, Borrower shall deposit the
deficiency with Lender; and

           (L) the Management Agreement in effect as of the date of the occurrence of
such Casualty or Condemnation, whichever the case may be, shall (1) remain in
full force and effect during the Restoration and shall not otherwise terminate
as a result of the Casualty or Condemnation or the Restoration or (2) if
terminated, shall have been replaced with a Replacement Management Agreement
with a Qualifying Manager, prior to the opening or reopening of the Properties
affected by such Casualty or Condemnation or any portion thereof for business
with the public.

     (ii) The Net Proceeds shall be held by Lender in an
interest-bearing account and, until disbursed in accordance with
the provisions of this Section 6.4(b), shall constitute additional
security for the Debt and other obligations under the Loan
Documents. The Net Proceeds shall be disbursed by Lender to, or as
directed by, Borrower from time to time during the course of the
Restoration, upon receipt of evidence satisfactory to Lender that
(A) all materials installed and work and labor performed (except to
the extent that they are to be paid for out of the requested
disbursement) in connection with the Restoration have been paid for
in full, and (B) there exist no notices of pendency, stop orders,
mechanic’s or materialman’s liens or notices of intention to file
same, or any other liens or encumbrances of any nature whatsoever
on the Individual Property which have not either been fully bonded
to the satisfaction of Lender and

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discharged of record or in the alternative fully insured to
the satisfaction of Lender by the title company issuing the Title
Insurance Policy.

     (iii) All plans and specifications required in connection with
the Restoration, the cost of which is greater than $100,000, shall
be subject to prior review and acceptance in all respects by Lender
and by an independent consulting engineer selected by Lender (the
“Casualty Consultant”). Lender shall have the use of the
plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. The

identity of the contractors, subcontractors and materialmen engaged
in the Restoration, the cost of which is greater than $100,000, as
well as the contracts under which they have been engaged, shall be
subject to prior review and acceptance by Lender and the Casualty
Consultant. All costs and expenses incurred by Lender in
connection with making the Net Proceeds available for the
Restoration including, without limitation, reasonable counsel fees
and disbursements and the Casualty Consultant’s fees, shall be paid
by Borrower.

     (iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to
the costs actually incurred from time to time for work in place as
part of the Restoration, as certified by the Casualty Consultant,
minus the Casualty Retainage. The term “Casualty
Retainage” shall mean an amount equal to ten percent (10%) of
the costs actually incurred for work in place as part of the
Restoration, as certified by the Casualty Consultant, until the
Restoration has been completed. The Casualty Retainage shall in no
event, and notwithstanding anything to the contrary set forth above
in this Section 6.4(b), be less than the amount actually held back
by Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be
released until the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of
this Section 6.4(b) and that all approvals necessary for the
re-occupancy and use of the Individual Property have been obtained
from all appropriate Governmental Authorities, and Lender receives
evidence satisfactory to Lender that the costs of the Restoration
have been paid in full or will be paid in full out of the Casualty
Retainage; provided, however, that Lender will release the portion
of the Casualty Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration
as of the date upon which the Casualty Consultant certifies to
Lender that the contractor, subcontractor or materialman has
satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor’s, subcontractor’s
or materialman’s contract, the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in
full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the
title company issuing the Title Insurance Policy for the related
Individual Property, and Lender receives an endorsement to such
Title Insurance Policy insuring the continued priority of the lien
of the related Security Instrument and evidence of payment of any
premium payable for such endorsement. If required by Lender, the
release of any such portion of the Casualty Retainage shall be
approved by the surety

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company, if any, which has issued a payment or performance
bond with respect to the contractor, subcontractor or materialman.

     (v) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.

     (vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the opinion of Lender in consultation
with the Casualty Consultant, if any, be sufficient to pay in full
the balance of the costs which are estimated by the Casualty
Consultant to be incurred in connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the “Net
Proceeds Deficiency”) with Lender before any further
disbursement of the Net Proceeds shall be made. The Net Proceeds
Deficiency deposited with Lender shall be held by Lender and shall
be disbursed for costs actually incurred in connection with the
Restoration on the same conditions applicable to the disbursement
of the Net Proceeds, and until so disbursed pursuant to this
Section 6.4(b) shall constitute additional security for the Debt
and other obligations under the Loan Documents.

     (vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited
with Lender after the Casualty Consultant certifies to Lender that
the Restoration has been completed in accordance with the
provisions of this Section 6.4(b), and the receipt by Lender of
evidence satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full, shall be
remitted by Lender to Borrower, provided no Event of Default shall
have occurred and shall be continuing under the Note, this
Agreement or any of the other Loan Documents.

     (c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 6.4(b)(vii) may be retained and applied by Lender toward the payment
of the Debt whether or not then due and payable in such order, priority and
proportions as Lender in its sole discretion shall deem proper, or, at the
discretion of Lender, the same may be paid, either in whole or in part, to
Borrower for such purposes as Lender shall designate, in its discretion. If
Lender shall receive and retain Net Proceeds, the Lien of the Security
Instruments shall be reduced only by the amount thereof received and retained
by Lender and actually applied by Lender in reduction of the Debt.

     (d) In the event of foreclosure of the Security Instrument with respect to
the Individual Property, or other transfer of title to the Individual Property
in extinguishment in whole or in part of the Debt all right, title and interest
of Borrower in and to the Policies that are not blanket Policies then in force
concerning the Individual Property and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.

     (e) The provisions of subsection 4 of Section 254 of the New York Real
Property Law covering the insurance of buildings against loss by fire shall not
apply to this Agreement. In the event of any conflict, inconsistency or
ambiguity between the provisions of Section 6.4 hereof and the provisions of
subsection 4 of Section 254 of the New York Real Property Law

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covering the insurance of buildings against loss by fire, the provisions
of Section 6.4 hereof shall control.

     VII. RESERVE FUNDS

     Section 7.1
Required Repair Funds.

     7.1.1 Deposits.

           On the Closing Date, Borrower shall deposit with Lender the amount for
each Individual Property set forth on Schedule 7.1.1 attached hereto to
perform the Required Repairs for such Individual Property. Amounts so
deposited with Lender shall be held by Lender in accordance with Section 7.6
hereof. Amounts so deposited shall hereinafter be referred to as Borrower’s
“Required Repair Fund.” Borrower shall perform the repairs at the Properties,
as more particularly set forth on Schedule 7.1.1 attached hereto (such
repairs hereinafter referred to as “Required Repairs”). Borrower shall
complete the Required Repairs on or before the required deadline for each
repair as set forth on Schedule 7.1.1 attached hereto. It shall be an
Event of Default under this Agreement if (a) Borrower does not complete the
Required Repairs at each Individual Property by the required deadline for each
repair as set forth on Schedule 7.1.1 attached hereto, or (b) Borrower
does not satisfy each condition contained in Section 7.1.2 hereof. Upon the
occurrence of an Event of Default, Lender, at its option, may withdraw all
Required Repair Funds from the Required Repair Account and Lender may apply
such funds either to completion of the Required Repairs at one or more of the
Properties or toward payment of the Debt in such order, proportion and priority
as Lender may determine in its sole discretion. Lender’s right to withdraw and
apply Required Repair Funds shall be in addition to all other rights and
remedies provided to Lender under this Agreement and the other Loan Documents.

     7.1.2 Release of Required Repair Funds.

           Lender shall disburse to Borrower the Required Repair Funds from the
Required Repair Account from time to time upon satisfaction by Borrower of each
of the following conditions: (a) Borrower shall submit a written request for
payment to Lender at least thirty (30) days prior to the date on which Borrower
requests such payment be made and specifies the Required Repairs to be paid,
(b) on the date such request is received by Lender and on the date such payment
is to be made, no Default or Event of Default shall exist and remain uncured,
(c) Lender shall have received an Officer’s Certificate (i) stating that all
Required Repairs at the applicable Individual Property to be funded by the
requested disbursement have been completed in good and workmanlike manner and,
to the best of Borrower’s knowledge, in accordance with all Legal Requirements
and Environmental Laws, such certificate to be accompanied by a copy of any
license, permit or other approval by any Governmental Authority required to
commence and/or complete the Required Repairs, (ii) identifying each Person
that supplied materials or labor in connection with the Required Repairs
performed at such Individual Property with respect to the reimbursement to be
funded by the requested disbursement, and (iii) stating that each such Person
has been paid in full upon such disbursement, such Officer’s Certificate to be
accompanied by lien waivers or other evidence of payment satisfactory to
Lender, (d) at Lender’s option, a title search for such Individual Property
indicating that such Individual

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Property is free from all Liens, claims and other encumbrances not
previously approved by Lender, and (e) Lender shall have received such other
evidence as Lender shall reasonably request that the Required Repairs at such
Individual Property to be funded by the requested disbursement have been
completed and are paid for upon such disbursement to Borrower. Lender shall
not be required to make disbursements from the Required Repair Account with
respect to any Individual Property unless such requested disbursement is in an
amount greater than $25,000 (or a lesser amount if the total amount in the
Required Repair Account is less than $25,000, in which case only one
disbursement of the amount remaining in the account shall be made). Lender
shall not be obligated to make disbursements from the Required Repair Account
with respect to an Individual Property in excess of the amount allocated for
such Individual Property as set forth on Schedule 7.1.1 attached hereto.
Upon the earlier of (1) Borrower’s completion of all Required Repairs to the
satisfaction of Lender (provided Borrower has supplied Lender with evidence
satisfactory to Lender of payment of all Required Repairs applicable to such
Individual Property and, if requested by Lender, waivers of liens and/or, in
the case of Required Repairs greater than $100,000.00, a title search of the
Property or an endorsement to the mortgagee’s title insurance policy), (2)
payment in full by Borrower of all sums evidenced by the Note and secured by
the Security Instruments and release by Lender of the lien of the Security
Instruments, or (3) release of such Individual Property in accordance with the
provisions of Section 2.5 hereof, Lender shall disburse to Borrower all
remaining Required Repair Funds allocated to such Individual Property as set
forth on Schedule 7.1.1 attached hereto.

     Section 7.2 Tax and Insurance Escrow Fund.

           Borrower shall pay to Lender on each Payment Date (a) one-twelfth of the
Taxes that Lender estimates will be payable during the next ensuing twelve (12)
months in order to accumulate with Lender sufficient funds to pay all such
Taxes at least thirty (30) days prior to their respective due dates, and (b) at
the option of Lender, if the liability or casualty Policy maintained by
Borrower covering the Properties shall not constitute an approved blanket or
umbrella Policy pursuant to Section 6.1(c) hereof, or Lender shall require
Borrower to obtain a separate Policy pursuant to Section 6.1(c) hereof, an
amount equal to one-twelfth of the Insurance Premiums that Lender estimates
will be payable for the renewal of the coverage afforded by the Policies upon
the expiration thereof in order to accumulate with Lender sufficient funds to
pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies (said amounts in (a) and (b) above hereinafter
called the “Tax and Insurance Escrow Fund”). In the event Lender shall
elect to collect payments in escrow for Insurance Premiums pursuant to clause
(b) above, Borrower shall pay to Lender an initial deposit to be determined by
Lender, in its sole discretion, to increase the amounts in the Tax and
Insurance Escrow Fund to an amount which, together with anticipated monthly
deposits for the payment of Insurance Premiums, shall be sufficient to pay all
Insurance Premiums as they become due. The Tax and Insurance Escrow Fund and
the payments of interest or principal or both, payable pursuant to the Note,
shall be added together and shall be paid as an aggregate sum by Borrower to
Lender. Lender will apply the Tax and Insurance Escrow Fund to payments of
Taxes and Insurance Premiums required to be made by Borrower pursuant to
Sections 5.1.2 and 6.1 hereof, respectively. In making any payment relating to
the Tax and Insurance Escrow Fund, Lender may do so according to any bill,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), without

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inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof. If the amount of the Tax and Insurance Escrow Fund shall exceed the
amounts due for Taxes and Insurance Premiums pursuant to Sections 5.1.2 and 6.1
hereof, respectively, Lender shall, in its sole discretion, return any excess
to Borrower or credit such excess against future payments to be made to the Tax
and Insurance Escrow Fund. Any amount remaining in the Tax and Insurance
Escrow Fund after the Debt has been paid in full shall be returned to Borrower.
In allocating such excess, Lender may deal with the Person shown on the
records of Lender to be the owner of the Properties. If at any time Lender
reasonably determines that the Tax and Insurance Escrow Fund is not or will not
be sufficient to pay Taxes and Insurance Premiums by the dates set forth in (a)
and (b) above, Lender shall notify Borrower of such determination and Borrower
shall increase its monthly payments to Lender by the amount that Lender
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to delinquency of the Taxes and/or thirty (30) days prior to expiration
of the Policies, as the case may be. Any amount held in the Tax and Insurance
Escrow Fund and allocated for an Individual Property shall be retained by
Lender and credited toward the future payments of Taxes and Insurance Premiums
required by Lender hereunder in the event such Individual Property is released
from the Lien of its related Security Instrument in accordance with Section 2.5
hereof.

     Section 7.3 Replacements and Replacement Reserve.

     7.3.1 Replacement Reserve Fund. Borrower shall pay to Lender on
each Payment Date the Replacement Reserve Monthly Deposit for replacements and
repairs required to be made to the Properties during the calendar year
(collectively, the “Replacements”). Amounts so deposited shall
hereinafter be referred to as Borrower’s “Replacement Reserve Fund” and
the account in which such amounts are held shall hereinafter be referred to as
Borrower’s “Replacement Reserve Account”. Lender may reassess its
estimate of the amount necessary for the Replacement Reserve Fund from time to
time, and may increase the monthly amounts required to be deposited into the
Replacement Reserve Fund upon thirty (30) days notice to Borrower if Lender
determines in its reasonable discretion that an increase is necessary to
maintain the proper maintenance and operation of the Properties. Any amount
held in the Replacement Reserve Account and allocated for an Individual
Property shall be retained by Lender and credited toward the future Replacement
Reserve Monthly Deposits required by Lender hereunder in the event such
Individual Property is released from the Lien of its related Security
Instrument in accordance with Section 2.5 hereof.

     7.3.2 Disbursements from Replacement Reserve Account. (a) Lender
shall make disbursements from the Replacement Reserve Account to pay Borrower
only for the costs of the Replacements. Lender shall not be obligated to make
disbursements from the Replacement Reserve Account to reimburse Borrower for
the costs of routine maintenance to an Individual Property or for costs which
are to be reimbursed from the Required Repair Fund. Lender shall not be
obligated to make disbursements from the Replacement Reserve Account with
respect to an Individual Property in excess of the amount allocated for such
Individual Property as set forth on Schedule 7.3.2 attached hereto.

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     (b) Lender shall, upon written request from Borrower and satisfaction of
the requirements set forth in this Section 7.3.2, disburse to Borrower amounts
from the Replacement Reserve Account necessary to pay for the actual approved
costs of Replacements or to reimburse Borrower therefor, upon completion of
such Replacements (or, upon partial completion in the case of Replacements made
pursuant to Section 7.3.2(e)) as determined by Lender. In no event shall
Lender be obligated to disburse funds from the Replacement Reserve Account if a
Default or an Event of Default exists.

     (c) Each request for disbursement from the Replacement Reserve Account
shall be in a form specified or approved by Lender and shall specify (i) the
specific Replacements for which the disbursement is requested, (ii) the
quantity and price of each item purchased, if the Replacement includes the
purchase or replacement of specific items, (iii) the price of all materials
(grouped by type or category) used in any Replacement other than the purchase
or replacement of specific items, and (iv) the cost of all contracted labor or
other services applicable to each Replacement for which such request for
disbursement is made. With each request Borrower shall certify that, to the
best of Borrower’s knowledge, all Replacements have been made in accordance
with all applicable Legal Requirements of any Governmental Authority having
jurisdiction over the applicable Individual Property to which the Replacements
are being provided. Each request for disbursement shall include copies of
invoices for all items or materials purchased and all contracted labor or
services provided and, unless Lender has agreed to issue joint checks as
described below in connection with a particular Replacement, each request shall
include evidence satisfactory to Lender of payment of all such amounts. Except
as provided in Section 7.3.2(e) hereof, each request for disbursement from the
Replacement Reserve Account shall be made only after completion of the
Replacement for which disbursement is requested. Borrower shall provide Lender
evidence of completion satisfactory to Lender in its reasonable judgment.

     (d) Borrower shall pay all invoices in connection with the Replacements
with respect to which a disbursement is requested prior to submitting such
request for disbursement from the Replacement Reserve Account or, at the
request of Borrower, Lender will issue joint checks, payable to Borrower and
the contractor, supplier, materialman, mechanic, subcontractor or other party
to whom payment is due in connection with a Replacement. In the case of
payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment prior to Lender’s disbursement from the Replacement
Reserve Account. In addition, as a condition to any disbursement, Lender may
require Borrower to obtain lien waivers from each contractor, supplier,
materialman, mechanic or subcontractor who receives payment in an amount equal
to or greater than $25,000 for completion of its work or delivery of its
materials. Any lien waiver delivered hereunder shall conform to the
requirements of applicable law and shall cover all work performed and materials
supplied (including equipment and fixtures) for the applicable Individual
Property by that contractor, supplier, subcontractor, mechanic or materialman
through the date covered by the current reimbursement request (or, in the event
that payment to such contractor, supplier, subcontractor, mechanic or
materialmen is to be made by a joint check, the release of lien shall be

effective through the date covered by the previous release of funds request).

     (e) If (i) the cost of a Replacement exceeds $50,000, (ii) the contractor
performing such Replacement requires periodic payments pursuant to terms of a
written contract, and

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(iii) Lender has approved in writing in advance such periodic payments, a
request for reimbursement from the Replacement Reserve Account may be made
after completion of a portion of the work under such contract, provided (A)
such contract requires payment upon completion of such portion of the work, (B)
the materials for which the request is made are on site at the applicable
Individual Property and are properly secured or have been installed in such
Individual Property, (C) all other conditions in this Section 7.3 for
disbursement have been satisfied, (D) funds remaining in the Replacement
Reserve Account are, in Lender’s judgment, sufficient to complete such
Replacement and other Replacements when required, and (E) if required by
Lender, each contractor or subcontractor receiving payments under such contract
shall provide a waiver of lien with respect to amounts which have been paid to
that contractor or subcontractor.

     (f) Borrower shall not make a request for disbursement from the
Replacement Reserve Account more frequently than once in any calendar month and
(except in connection with the final disbursement) the total cost of all
Replacements in any request shall not be less than $50,000.

     7.3.3 Performance of Replacements. (a) Borrower shall make
Replacements when required in order to keep each Individual Property in
condition and repair consistent with other properties in the same market
segment in the metropolitan area in which the respective Individual Property is
located (but at all times consistent with the standards of other “U-Store-It”
properties, irrespective of whether such Individual Property is currently
operated as a “U-Store-It” self-service storage facility), and to keep each
Individual Property or any portion thereof from deteriorating. Borrower shall
complete all Replacements in a good and workmanlike manner as soon as
practicable following the commencement of making each such Replacement.

     (b) Lender reserves the right, at its option, to approve all contracts or
work orders with materialmen, mechanics, suppliers, subcontractors, contractors
or other parties providing labor or materials in connection with the
Replacements costing, in the aggregate, in excess of $50,000 with respect to
each Individual Property. Upon Lender’s request, Borrower shall assign any
contract or subcontract to Lender.

     (c) In the event Lender determines in its reasonable discretion that any
Replacement is not being performed in a workmanlike or timely manner or that
any Replacement has not been completed in a workmanlike or timely manner,
Lender shall have the option to withhold disbursement for such unsatisfactory
Replacement and to proceed under existing contracts or to contract with third
parties to complete such Replacement and to apply the Replacement Reserve Fund
toward the labor and materials necessary to complete such Replacement, without
providing any prior notice to Borrower and to exercise any and all other
remedies available to Lender upon an Event of Default hereunder.

     (d) In order to facilitate Lender’s completion or making of the
Replacements pursuant to Section 7.3.3(c) above, Borrower grants Lender the
right to enter onto any Individual Property and perform any and all work and
labor necessary to complete or make the Replacements and/or employ watchmen to
protect such Individual Property from damage. All sums so expended by Lender,
to the extent not from the Replacement Reserve Fund, shall be deemed to have
been advanced under the Loan to Borrower and secured by the Security
Instruments. For this purpose,

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Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
Replacements in the name of Borrower. Such power of attorney shall be deemed
to be a power coupled with an interest and cannot be revoked. Borrower
empowers said attorney-in-fact as follows: (i) to use any funds in the
Replacement Reserve Account for the purpose of making or completing the
Replacements; (ii) to make such additions, changes and corrections to the
Replacements as shall be necessary or desirable to complete the Replacements;
(iii) to employ such contractors, subcontractors, agents, architects and
inspectors as shall be required for such purposes; (iv) to pay, settle or
compromise all existing bills and claims which are or may become Liens against
any Individual Property, or as may be necessary or desirable for the completion
of the Replacements, or for clearance of title; (v) to execute all applications
and certificates in the name of Borrower which may be required by any of the
contract documents; (vi) to prosecute and defend all actions or proceedings in
connection with any Individual Property or the rehabilitation and repair of any
Individual Property; and (vii) to do any and every act which Borrower might do
in its own behalf to fulfill the terms of this Agreement.

     (e) Nothing in this Section 7.3.3 shall: (i) make Lender responsible for
making or completing the Replacements; (ii) require Lender to expend funds in
addition to the Replacement Reserve Fund to make or complete any Replacement;
(iii) obligate Lender to proceed with the Replacements; or (iv) obligate Lender
to demand from Borrower additional sums to make or complete any Replacement.

     (f) Borrower shall permit Lender and Lender’s agents and representatives
(including, without limitation, Lender’s engineer, architect, or inspector) or
third parties making Replacements pursuant to this Section 7.3.3 to enter onto
each Individual Property during normal business hours (subject to the rights of
tenants under their Leases) to inspect the progress of any Replacements and all
materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at each
Individual Property, and to complete any Replacements made pursuant to this
Section 7.3.3. Borrower shall cause all contractors and subcontractors to
cooperate with Lender or Lender’s representatives or such other persons
described above in connection with inspections described in this Section
7.3.3(f) or the completion of Replacements pursuant to this Section 7.3.3.

     (g) Lender may require an inspection of the Individual Property at
Borrower’s expense prior to making a monthly disbursement from the Replacement
Reserve Account in order to verify completion of the Replacements for which
reimbursement in excess of $10,000 is sought. Lender may require that such
inspection be conducted by an appropriate independent qualified professional
selected by Lender and/or may require a copy of a certificate of completion by
an independent qualified professional acceptable to Lender prior to the
disbursement of any amounts from the Replacement Reserve Account. Borrower
shall pay the reasonable expense of the inspection as required hereunder,
whether such inspection is conducted by Lender or by an independent qualified
professional.

     (h) The Replacements and all materials, equipment, fixtures, or any other
item comprising a part of any Replacement shall be constructed, installed or
completed, as applicable, free and clear of all mechanic’s, materialman’s or
other liens (except for those Liens existing on the date of this Agreement
which have been approved in writing by Lender).

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     (i) Before each disbursement from the Replacement Reserve Account, Lender
may require Borrower to provide Lender with a search of title to the applicable
Individual Property effective to the date of the disbursement, which search
shows that no mechanic’s or materialmen’s liens or other liens of any nature
have been placed against the applicable Individual Property since the date of
recordation of the related Security Instrument and that title to such
Individual Property is free and clear of all Liens (other than the lien of the
related Security Instrument and any other Liens previously approved in writing
by Lender, if any).

     (j) All Replacements shall comply with all applicable Legal Requirements
of all Governmental Authorities having jurisdiction over the applicable
Individual Property and applicable insurance requirements including, without
limitation, applicable building codes, special use permits, environmental
regulations, and requirements of insurance underwriters.

     (k) In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen’s compensation
insurance, builder’s risk, and public liability insurance and other insurance
to the extent required under applicable law in connection with a particular
Replacement. All such policies shall be in form and amount reasonably
satisfactory to Lender. All such policies which can be endorsed with standard
mortgagee clauses making loss payable to Lender or its assigns shall be so
endorsed. Certified copies of such policies shall be delivered to Lender.

     7.3.4 Failure to Make Replacements. (a) It shall be an Event of
Default under this Agreement if Borrower fails to comply with any provision of
this Section 7.3 and such failure is not cured within thirty (30) days after
notice from Lender. Upon the occurrence of such an Event of Default, Lender
may use the Replacement Reserve Fund (or any portion thereof) for any purpose,
including but not limited to completion of the Replacements as provided in
Section 7.3.3, or for any other repair or replacement to any Individual
Property or toward payment of the Debt in such order, proportion and priority
as Lender may determine in its sole discretion. Lender’s right to withdraw and
apply the Replacement Reserve Funds shall be in addition to all other rights
and remedies provided to Lender under this Agreement and the other Loan
Documents.

     (a) Nothing in this Agreement shall obligate Lender to apply all or any
portion of the Replacement Reserve Fund on account of an Event of Default to
payment of the Debt or in any specific order or priority.

     7.3.5 Balance in the Replacement Reserve Account. The
insufficiency of any balance in the Replacement Reserve Account shall not
relieve Borrower from its obligation to fulfill all preservation and
maintenance covenants in the Loan Documents.

     Section 7.4 Ground Lease Escrow Fund.

           Borrower shall pay to Lender on each Payment Date, an amount (the
“Monthly Ground Rent Deposit”) that is estimated by Lender to be due and
payable by Borrower under the Ground Lease for all Ground Rent which may be due
by Borrower under the Ground Lease in order to accumulate with Lender
sufficient funds to pay all sums payable under the Ground Lease at least ten
(10) Business Days prior to the next date such Ground Rents are due and

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payable (said amounts, hereinafter called the “Ground Lease Escrow
Fund”). The Ground Lease Escrow Fund is for the purpose of paying all sums
due under the Ground Lease. Upon Borrower’s failure to pay any Ground Rents
after the receipt of any notice and at least ten (10) days prior to the
expiration of any cure period available to Borrower pursuant to the Ground
Lease, Lender may, in its discretion, apply any amounts held in the Ground
Lease Escrow Fund to the payment of such Ground Rent; provided however, that
the provisions of this Section 7.4 shall not be deemed to create any obligation
on the part of Lender to pay any such Ground Rent from amounts on deposit in
the Ground Lease Escrow Fund. Such deposit may be increased by Lender in the
amount Lender deems is necessary in its reasonable discretion based on any
increases in the Ground Rent due under the Ground Lease.

     Section 7.5 Leasing Reserve Fund.

     7.5.1 Deposits to Leasing Reserve Fund. All Lease Termination
Payments shall be deposited in the Leasing Reserve Account with and held by
Lender for tenant improvement and leasing commission obligations incurred in
connection with the re-leasing of the space demised under the related Lease.
Amounts so deposited shall hereinafter be referred to as the “Leasing Reserve
Fund”.

     7.5.2 Withdrawals of Leasing Reserve Funds. Lender shall make
disbursements from the Leasing Reserve Fund for tenant improvement and leasing
commission obligations incurred by Borrower in connection with the re-leasing
of the space demised under the related Lease. All such expenses shall be
approved by Lender in its sole discretion. Lender shall make disbursements as
requested by Borrower on a monthly basis in increments of no less than
$50,000.00 upon delivery by Borrower of Lender’s standard form of draw request
accompanied by copies of paid invoices for the amounts requested and, if
required by Lender, lien waivers and releases from all parties furnishing
materials and/or services in connection with the requested payment. Lender may
require an inspection of the applicable Individual Property at Borrower’s
expense prior to making a quarterly disbursement in order to verify completion
of improvements for which reimbursement is sought. All earnings or interest on
the Leasing Reserve Fund shall be and become part of such Leasing Reserve Fund
and shall be disbursed as provided in this Section 7.5.

     Section 7.6 Reserve Funds, Generally.

     (a) Borrower grants to Lender a first-priority perfected security interest
in each of the Reserve Funds and any and all monies now or hereafter deposited
in each Reserve Fund as additional security for payment of the Debt. Until
expended or applied in accordance herewith, the Reserve Funds shall constitute
additional security for the Debt.

     (b) Upon the occurrence of an Event of Default, Lender may, in addition to
any and all other rights and remedies available to Lender, apply any sums then
present in any or all of the Reserve Funds to the payment of the Debt in any
order in its sole discretion.

     (c) The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by Lender.

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     (d) The Reserve Funds shall be held in interest bearing accounts and all
earnings or interest on a Reserve Fund shall be added to and become a part of
such Reserve Fund and shall be disbursed in the same manner as other monies
deposited in such Reserve Fund.

     (e) Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in any Reserve
Fund or the monies deposited therein or permit any lien or encumbrance to
attach thereto, or any levy to be made thereon, or any UCC-1 Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto.

     (f) Lender shall not be liable for any loss sustained on the investment of
any funds constituting the Replacement Reserve Fund.

     (g) Borrower shall indemnify Lender and hold Lender harmless from and
against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation costs and
reasonable attorneys fees and expenses) arising from or in any way connected
with the Reserve Funds or the related Accounts or the performance of the
obligations for which the Reserve Funds or the related Accounts were
established, except to the extent arising from the gross negligence or willful
misconduct of Lender, its agents or employees or arising from the failure of
Lender to disburse funds from the Reserve Funds or related Accounts when
required to do so hereunder. Borrower shall assign to Lender all rights and
claims Borrower may have against all Persons supplying labor, materials or
other services which are to be paid from or secured by the Reserve Funds or the
related Accounts; provided, however, that Lender may not pursue any such right
or claim unless an Event of Default has occurred and remains uncured.

     VIII.DEFAULTS

     Section 8.1 Event of Default.

     (a) Each of the following events shall constitute an event of default
hereunder (an “Event of Default”):

     (i) if any portion of the Debt is not paid on or prior to the date
when due and payable;

     (ii) if any of the Taxes or Other Charges are not paid on or prior
to the date when the same are due and payable;

     (iii) if the Policies are not kept in full force and effect, or if
certified copies of the Policies are not delivered to Lender upon
request;

     (iv) if Borrower transfers or encumbers any portion of the
Properties without Lender’s prior written consent or otherwise violates
the provisions of Section 5.2.13 hereof or Article 7 of any Security
Instrument;

     (v) if any representation or warranty made by Borrower, the SPC
Party or Guarantor herein or in any other Loan Document, or in any
report, certificate, financial

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statement or other instrument, agreement or document furnished to
Lender shall have been false or misleading in any material respect as of
the date the representation or warranty was made;

     (vi) if Borrower, the SPC Party, Guarantor or any other guarantor
under any guaranty issued in connection with the Loan shall make an
assignment for the benefit of creditors;

     (vii) if a receiver, liquidator or trustee shall be appointed for
Borrower, the SPC Party, Guarantor or any other guarantor under any
guaranty issued in connection with the Loan or if Borrower, the SPC
Party, Guarantor or such other guarantor shall be adjudicated a bankrupt
or insolvent, or if any petition for bankruptcy, reorganization or
arrangement pursuant to the Bankruptcy Code, or any similar Federal or
State law, shall be filed by or against, consented to, or acquiesced in
by, Borrower, the SPC Party, Guarantor or such other guarantor, or if any
proceeding for the dissolution or liquidation of Borrower, the SPC Party,
Guarantor or such other guarantor shall be instituted; provided, however,
if such appointment, adjudication, petition or proceeding was involuntary
and not consented to by Borrower, the SPC Party, Guarantor or such other
guarantor, upon the same not being discharged, stayed or dismissed within
sixty (60) days;

     (viii) if Borrower attempts to assign its rights under this
Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;

     (ix) if Borrower breaches any of its respective negative covenants
contained in Section 5.2 or any covenant contained in Section 4.1.30
hereof;

     (x) with respect to any term, covenant or provision set forth herein
which specifically contains a notice requirement or grace period, if
Borrower shall be in default under such term, covenant or condition after
the giving of such notice or the expiration of such grace period;

     (xi) if any of the assumptions contained in the Insolvency Opinion,
or in any other “non-consolidation” opinion delivered to Lender in
connection with the Loan, or in any other “non-consolidation” delivered
subsequent to the closing of the Loan, is or shall become untrue in any
material respect;

     (xii) if Borrower violates or does not comply with any of the
provisions of Section 5.1.20 hereof;

     (xiii) if a default has occurred and continues beyond any applicable
cure period under the Management Agreement (or any Replacement Management
Agreement) if such default permits the Manager thereunder to terminate or
cancel the Management Agreement (or any Replacement Management Agreement)
unless in such case Borrower shall enter into a Replacement Management
Agreement in accordance with the terms hereof;

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     (xiv) if any Individual Property becomes subject to any mechanic’s,
materialman’s or other Lien other than a Lien for local real estate taxes
and assessments not then due and payable and the Lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period of
thirty (30) days;

     (xv) if any Federal tax Lien or State or local income tax Lien is
filed against Borrower, SPC Party, any Guarantor or any Individual
Property and same is not discharged of record within thirty (30) days
after same is filed;

     (xvi) (A) Borrower fails to timely provide Lender with the written
certification and evidence referred to in Section 5.2.12 hereof, (B)
Borrower is a Plan or its assets constitute Plan Asset; or (C) Borrower
consummates a transaction which would cause the Security Instruments or
Lender’s exercise of its rights under the Security Instruments, the Note,
this Agreement or the other Loan Documents to constitute a nonexempt
prohibited transaction under ERISA or result in a violation of a State
statute regulating governmental plans, subjecting Lender to liability for
a violation of ERISA, the Code, a State statute or other similar law;

     (xvii) if Borrower shall fail to deliver to Lender, within ten (10)
days after request by Lender, the estoppel certificates required pursuant
to the terms of Section 5.1.15(a) hereof;

     (xviii) if any default occurs under any guaranty or indemnity
executed in connection herewith (including, without limitation, the
Guaranty and the Environmental Indemnity) and such default continues
after the expiration of applicable grace periods, if any;

     (xix) if Borrower shall be in default beyond applicable notice and
grace periods under any other mortgage, deed of trust, deed to secure
debt or other security agreement covering any part of any Individual
Property whether it be superior or junior in lien to the related Security
Instrument;

     (xx) if Borrower operates any Individual Property (other than the
Properties set forth on Schedule 4.1.31 attached hereto) under the
name other than “U-Store-It”, without Lender’s prior written consent;

     (xxi) if Borrower shall fail to pay the Ground Rent or any
additional rent or other charge mentioned in or made payable by any
Ground Lease when said rent or other charge is due and payable (except to
the extent that sufficient funds have been deposited with Lender to
satisfy such obligations on the date each such payment is required and
Lender is not prohibited from withdrawing or applying such funds by Legal
Requirements or otherwise);

     (xxii) if there shall occur any default by Borrower, as tenant under
any Ground Lease, in the observance or performance of any term, covenant
or condition of such Ground Lease on the part of Borrower to be observed
or performed and said default is not cured following the expiration of
any applicable grace and notice periods therein provided, or if the
leasehold estate created by such Ground Lease shall be surrendered or

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if such Ground Lease shall cease to be in full force and effect or
such Ground Lease shall be terminated or canceled for any reason or under
any circumstances whatsoever, or if any of the terms, covenants or
conditions of such Ground Lease shall in any manner be modified, changed,
supplemented, altered, or amended without the consent of Lender;

     (xxiii) if there shall be a default under any of the other Loan
Documents beyond any applicable cure periods contained in such documents,
whether as to Borrower or any Individual Property, or if any other such
event shall occur or condition shall exist, if the effect of such event
or condition is to accelerate the maturity of any portion of the Debt or
to permit Lender to accelerate the maturity of all or any portion of the
Debt; or

     (xxiv) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xxiii) above, for ten (10) days after notice to
Borrower from Lender, in the case of any Default which can be cured by
the payment of a sum of money, or for thirty (30) days after notice from
Lender in the case of any other Default; provided, however, that if such
non-monetary Default is susceptible of cure but cannot reasonably be
cured within such thirty (30) day period and provided further that
Borrower shall have commenced to cure such Default within such thirty
(30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (30) day period shall be extended for such
time as is reasonably necessary for Borrower in the exercise of due
diligence to cure such Default, such additional period not to exceed
sixty (60) days.

     (b) Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter, in addition to any other rights or remedies available to it
pursuant to this Agreement and the other Loan Documents or at law or in equity,
Lender may take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in and to all
or any Individual Property, including, without limitation, declaring the Debt
to be immediately due and payable, and Lender may enforce or avail itself of
any or all rights or remedies provided in the Loan Documents against Borrower
and any or all of the Properties, including, without limitation, all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vi), (vii) or (viii) above, the Debt and all other obligations of
Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and Borrower
hereby expressly waives any such notice or demand, anything contained herein or
in any other Loan Document to the contrary notwithstanding.

     Section 8.2 Remedies.

     (a) Upon the occurrence of an Event of Default, all or any one or more of
the rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be
exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to all or any Individual Property. Any such actions taken by Lender
shall be cumulative and concurrent and may be

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pursued independently, singly, successively, together or otherwise, at
such time and in such order as Lender may determine in its sole discretion, to
the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth herein or in the other Loan Documents. Without limiting the
generality of the foregoing, Borrower agrees that if an Event of Default is
continuing (i) Lender is not subject to any “one action” or “election of
remedies” law or rule, and (ii) all liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until
Lender has exhausted all of its remedies against the Properties and each
Security Instrument has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.

     (b) With respect to Borrower and the Properties, nothing contained herein
or in any other Loan Document shall be construed as requiring Lender to resort
to any Individual Property for the satisfaction of any of the Debt in
preference or priority to any other Individual Property, and Lender may seek
satisfaction out of all of the Properties or any part thereof, in its absolute
discretion in respect of the Debt. In addition, Lender shall have the right
from time to time to partially foreclose the Security Instruments in any manner
and for any amounts secured by the Security Instruments then due and payable as
determined by Lender in its sole discretion including, without limitation, the
following circumstances: (i) in the event Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose one or more of the Security
Instruments to recover such delinquent payments, or (ii) in the event Lender
elects to accelerate less than the entire outstanding principal balance of the
Loan, Lender may foreclose one or more of the Security Instruments to recover
so much of the principal balance of the Loan as Lender may accelerate and such
other sums secured by one or more of the Security Instruments as Lender may
elect. Notwithstanding one or more partial foreclosures, the Properties shall
remain subject to the Security Instruments to secure payment of the Debt and
not previously recovered.

     (c) Lender shall have the right, from time to time, to sever the Note and
the other Loan Documents into one or more separate notes, mortgages and other
security documents (the “Severed Loan Documents”) in such denominations
as Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute
and deliver to Lender from time to time, promptly after the request of Lender,
a severance agreement and such other documents as Lender shall request in order
to effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender’s intent to exercise its
rights under such power. Except as may be required in connection with a
Securitization pursuant to Section 9.1 hereof, (i) Borrower shall not be
obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents, and
(ii) the Severed Loan Documents shall not contain any representations,
warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be
given by Borrower only as of the Closing Date.

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     Section 8.3 Remedies Cumulative; Waivers.

           The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender’s rights,
powers and remedies may be pursued singularly, concurrently or otherwise, at
such time and in such order as Lender may determine in Lender’s sole
discretion. No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default shall impair any such remedy, right or power
or shall be construed as a waiver thereof, but any such remedy, right or power
may be exercised from time to time and as often as may be deemed expedient. A
waiver of one Default or Event of Default with respect to Borrower shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Borrower or to impair any remedy, right or power consequent thereon.

     IX.SPECIAL PROVISIONS

     Section 9.1 Sale of Notes and Securitization.

           At the request of the holder of the Note and, to the extent not already
required to be provided by Borrower under this Agreement, Borrower shall use
reasonable efforts to satisfy the market standards to which the holder of the
Note customarily adheres or which may be reasonably required in the marketplace
or by the Rating Agencies in connection with the sale of the Note or
participations therein or the first successful securitization (such sale and/or
securitization, the “Securitization”) of rated single or multi-class
securities (the “Securities”) secured by or evidencing ownership
interests in the Note and the Security Instruments, including, without
limitation, to:

	 	(a)	 	(i) provide such financial and other information
with respect to the Properties, Borrower, Guarantor and the
Manager, (ii) provide budgets relating to the Properties and
(iii) at Lender’s cost, to perform or permit or cause to be
performed or permitted such site inspection, appraisals,
market studies, environmental reviews and reports (Phase I’s
and, if appropriate, Phase II’s), engineering reports and
other due diligence investigations of the Properties, as may
be reasonably requested by the holder of the Note or the
Rating Agencies or as may be necessary or appropriate in
connection with the Securitization (the “Provided
Information”), together, if customary, with appropriate
verification and/or consents of the Provided Information
through letters of auditors or opinions of counsel of
independent attorneys acceptable to Lender and the Rating
Agencies;
	 
	 	(b)	 	if required by the Rating Agencies, deliver (i) a
revised Insolvency Opinion, (ii) revised or additional
opinions of counsel as to due execution and enforceability
with respect to the Properties, Borrower, any Guarantor and
Manager and their respective Affiliates and the Loan
Documents, and (iii) revised organizational documents for
Borrower, any Guarantor and Manager and their respective
Affiliates (including without limitation, such

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	 	 	 	revisions as are necessary to comply with the provisions of
Section 4.1.30 hereof, and if required by any Rating Agency,
amend such organizational documents to require that there
shall be two (2) Independent Directors serving in such
capacity at all times), which counsel, opinions, and
organizational documents shall be satisfactory to Lender and
the Rating Agencies;
	 
	 	(c)	 	make such representations and warranties as of
the closing date of the Securitization with respect to the
Properties, Borrower, Guarantor, Manager and the Loan
Documents as are customarily provided in securitization
transactions and as may be reasonably requested by the holder
of the Note or the Rating Agencies and consistent with the
facts covered by such representations and warranties as they
exist on the date thereof, including the representations and
warranties made in the Loan Documents;
	 
	 	(d)	 	execute such amendments to the Loan Documents and
Borrower’s organizational documents as may be requested by the
holder of the Note or the Rating Agencies or otherwise to
effect the Securitization including (i) bifurcating the Note
into two or more notes and splitting the Security Instrument
into two mortgages, including a first priority mortgage or
otherwise as determined by and acceptable to Lender or (ii)
dividing the Note into multiple components corresponding to
tranches of certificates to be issued in a Securitization each
having a notional balance and an interest rate determined by
Lender; provided, however, that Borrower shall not be required
to modify or amend any Loan Document if the overall effect of
such modification or amendment would (i) change the interest
rate, the stated maturity (as the same may be extended
pursuant to this Agreement) or the amortization of principal
set forth in the Note, or (ii) modify or amend any other
material economic term of the Loan;
	 
	 	(e)	 	if Lender elects, in its sole discretion, prior
to or upon a Securitization, to split the Loan into two or
more parts, or the Note into multiple component notes or
tranches which may have different interest rates, amortization
payments, principal amounts and maturities, Borrower agrees to
cooperate with Lender in connection with the foregoing and to
execute the required modifications and amendments to the Note,
this Agreement and the Loan Documents and to provide opinions
necessary to effectuate the same. Such Notes or components
may be assigned different interest rates, so long as the
initial weighted average of such interest rates does not
exceed the Applicable Interest Rate ;and
	 
	 	(f)	 	supply to Lender such documentation, financial
statements and reports in form and substance required for
Lender to comply with the Federal securities law, if
applicable.

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           All reasonable third party costs and expenses incurred by Lender or
Borrower in connection with Borrower’s complying with requests made under this
Section 9.1 shall be paid by Lender (other than the fees and expenses of
Borrower’s counsel).

     Section 9.2 Securitization Indemnification.

     (a) Borrower understands that certain of the Provided Information may be
included in disclosure documents in connection with the Securitization,
including, without limitation, a prospectus, prospectus supplement, private
placement memorandum, offering circular or other offering document (each, a
“Disclosure Document”) and may also be included in filings with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the “Securities Act”), or the Securities and Exchange Act of
1934, as amended (the “Exchange Act”), or provided or made available to
investors or prospective investors in the Securities, the Rating Agencies, and
service providers relating to the Securitization. In the event that the
Disclosure Document is required to be revised prior to the sale of all
Securities, Borrower will cooperate with the holder of the Note in updating the
Disclosure Document by providing all current information necessary to keep the
Disclosure Document accurate and complete in all material respects.

     (b) Borrower agrees to provide in connection with each of (i) a
preliminary and a final private placement memorandum, (ii) a preliminary and
final prospectus or prospectus supplement, as applicable, or (iii) collateral
and structured term sheets or similar materials, an indemnification certificate
(A) certifying that Borrower has carefully examined such memorandum, prospectus
or term sheets, as applicable, including without limitation, the sections
entitled “Special Considerations,” “Description of the Mortgages,” “Description
of the Mortgage Loans and Mortgaged Property,” “The Manager,” “The Borrower”
and “Certain Legal Aspects of the Mortgage Loan,” and such sections (and any
other sections reasonably requested) do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading, (B) indemnifying Lender (and for purposes of this Section 9.2,
Lender hereunder shall include its officers and directors), the Affiliate of
Lehman Brothers Inc. (“Lehman”) that has filed the registration
statement relating to the Securitization (the “Registration Statement”),
each of its directors, each of its officers who have signed the Registration
Statement and each Person or entity who controls the Affiliate within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the “Lehman Group”), and Lehman, each of its directors
and each Person who controls Lehman within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act (collectively, the
“Underwriter Group”) for any losses, claims, damages or liabilities
(collectively, the “Liabilities”) to which Lender, the Lehman Group or
the Underwriter Group may become subject insofar as the Liabilities arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such sections described in clause (A) above, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated in such sections or necessary in
order to make the statements in such sections or in light of the circumstances
under which they were made, not misleading and (C) agreeing to reimburse
Lender, the Lehman Group and the Underwriter Group for any legal or other
expenses reasonably incurred by Lender and Lehman in connection with
investigating or defending the Liabilities; provided, however,

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that Borrower will be liable in any such case under clauses (B) or (C)
above only to the extent that any such Liability arises out of or is based upon
any such untrue statement or omission made therein in reliance upon and in
conformity with information furnished to Lender by or on behalf of Borrower in
connection with the preparation of the memorandum or prospectus or in
connection with the underwriting of the debt, including, without limitation,
financial statements of Borrower, operating statements, rent rolls,
environmental site assessment reports and property condition reports with
respect to the Properties. This indemnification will be in addition to any
liability which Borrower may otherwise have. Moreover, the indemnification
provided for in clauses (B) and (C) above shall be effective whether or not an
indemnification certificate described in (A) above is provided and shall be
applicable based on information previously provided by Borrower or its
Affiliates if Borrower does not provide the indemnification certificate.

     (c) In connection with filings under the Exchange Act, Borrower agrees to
indemnify (i) Lender, the Lehman Group and the Underwriter Group for
Liabilities to which Lender, the Lehman Group or the Underwriter Group may
become subject insofar as the Liabilities arise out of or are based upon the
omission or alleged omission to state in the Provided Information a material
fact required to be stated in the Provided Information in order to make the
statements in the Provided Information, in light of the circumstances under
which they were made not misleading and (ii) reimburse Lender, the Lehman Group
or the Underwriter Group for any legal or other expenses reasonably incurred by
Lender, the Lehman Group or the Underwriter Group in connection with defending
or investigating the Liabilities.

     (d) Promptly after receipt by an indemnified party under this Section 9.2
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 9.2, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled, jointly
with any other indemnifying party, to participate therein and, to the extent
that it (or they) may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof with counsel satisfactory to such
indemnified party. After notice from the indemnifying party to such
indemnified party under this Section 9.2 the indemnifying party shall not be
responsible for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. The indemnifying party
shall not be liable for the expenses of more than one such separate counsel
unless an indemnified party shall have reasonably concluded that there may be
legal defenses available to it that are different from or additional to those
available to another indemnified party.

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     (e) In order to provide for just and equitable contribution in
circumstances in which the indemnifications provided for in Section 9.2(b) or
(c) is or are for any reason held to be unenforceable by an indemnified party
in respect of any Liabilities (or action in respect thereof) referred to
therein which would otherwise be indemnifiable under Section 9.2(b) or (c), the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to
which the respective parties are entitled, the following factors shall be
considered: (i) Lehman’s and Borrower’s relative knowledge and access to
information concerning the matter with respect to which claim was asserted;
(ii) the opportunity to correct and prevent any statement or omission; and
(iii) any other equitable considerations appropriate in the circumstances.
Lender and Borrower hereby agree that it would not be equitable if the amount
of such contribution were determined by pro rata or per capita allocation.

     (f) The liabilities and obligations of both Borrower and Lender under this
Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

     Section 9.3 Intentionally Deleted.

     Section 9.4 Exculpation.

           Subject to the qualifications below, Lender shall not enforce the
liability and obligation of Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Security Instruments or the other
Loan Documents by any action or proceeding wherein a money judgment shall be
sought against Borrower or any of its partners or members except that Lender
may bring a foreclosure action, an action for specific performance or any other
appropriate action or proceeding to enable Lender to enforce and realize upon
its interest under the Note, this Agreement, the Security Instruments and the
other Loan Documents, or in the Properties, the Rents, or any other collateral
given to Lender pursuant to the Loan Documents; provided, however, that, except
as specifically provided herein, any judgment in any such action or proceeding
shall be enforceable against Borrower only to the extent of Borrower’s interest
in the Properties, in the Rents and in any other collateral given to Lender,
and Lender, by accepting the Note, this Agreement, the Security Instruments and
the other Loan Documents, agrees that it shall not sue for, seek or demand any
deficiency judgment against Borrower in any such action or proceeding under or
by reason of or under or in connection with the Note, this Agreement, the
Security Instruments or the other Loan Documents. The provisions of this
Section shall not, however, (a) constitute a waiver, release or impairment of
any obligation evidenced or secured by any of the Loan Documents; (b) impair
the right of Lender to name Borrower as a party defendant in any action or suit
for foreclosure and sale under any of the Security Instruments; (c) affect the
validity or enforceability of any indemnity (including, without limitation, the
Environmental Indemnity), guaranty (including, without limitation, the
Guaranty), master lease or similar instrument made in connection with the Loan
Documents; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of any of the Assignments of Leases; (f)
constitute a prohibition against Lender to seek a deficiency judgment against
Borrower in order to fully realize the security granted by each of the

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Security Instruments or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against all of the
Properties; or (g) constitute a waiver of the right of Lender to enforce the
liability and obligation of Borrower, by money judgment or otherwise, to the
extent of any loss, damage, cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys’ fees and costs reasonably incurred)
arising out of or in connection with the following:

	 	(i)	 	fraud or intentional misrepresentation by
Borrower, Guarantor or any other guarantor in connection with
the Loan;
	 
	 	(ii)	 	the gross negligence or willful misconduct of
Borrower or Guarantor;
	 
	 	(iii)	 	the breach of any representation, warranty,
covenant or indemnification provision in the Environmental
Indemnity or in the Security Instruments concerning
Environmental Laws, hazardous substances and asbestos and any
indemnification of Lender with respect thereto in either
document;
	 
	 	(iv)	 	the removal or disposal of any portion of the
Properties after an Event of Default;
	 
	 	(v)	 	the misapplication or conversion by Borrower (but
only to the extent of such misapplication or conversion) of
(A) any Insurance Proceeds paid by reason of any loss, damage
or destruction to the Properties, (B) any Awards or other
amounts received in connection with the condemnation of all or
a portion of the Properties, or (C) any Rents following an
Event of Default;
	 
	 	(vi)	 	failure to pay Taxes, charges for labor or
materials or Other Charges that can create liens on any
portion of the Properties;
	 
	 	(vii)	 	any security deposits, advance deposits or any
other deposits collected with respect to the Properties which
are not delivered to Lender upon a foreclosure of the
Properties or action in lieu thereof, except to the extent any
such security deposits were applied in accordance with the
terms and conditions of any of the Leases prior to the
occurrence of the Event of Default that gave rise to such
foreclosure or action in lieu thereof; and
	 
	 	(viii)	 	Borrower’s indemnifications of Lender set forth in Section
9.2 hereof.

           Notwithstanding anything to the contrary in this Agreement, the Note or
any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt secured by the Security Instruments or to require that all collateral
shall continue to secure all of the Debt owing to Lender in accordance with the
Loan Documents, and (B) the Debt shall be fully recourse to Borrower in the
event that: (i) the first Interest Only Payment Amount is not paid when due;
(ii) Borrower fails to permit on-site inspections of the Properties, fails to
provide financial information, fails to maintain its status as

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a single purpose entity or fails to appoint a new property manager upon
the request of Lender after an Event of Default, each as required by, and in
accordance with the terms and provisions of, this Agreement and the Security
Instruments; (iii) Borrower fails to obtain Lender’s prior written consent to
any subordinate financing or other voluntary lien encumbering any Individual
Property; (iv) Borrower fails to obtain Lender’s prior written consent to any
assignment, transfer, or conveyance of any Individual Property or any interest
therein as required by the Security Instrument or hereunder; or (v) if any
Individual Property becomes an asset in a bankruptcy or insolvency proceeding
as a result of any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar federal or state law, filed
by, or collusively arranged by, Borrower or any Affiliates of Borrower.

     Section 9.5 Management Agreement. 

     (a) The Improvements on the Properties are operated and managed as
“U-Store-It” self-service storage facilities (other than the Properties set
forth on Schedule 4.1.31 attached hereto) under the terms and conditions
of the Management Agreement, which have been approved by Lender including the
management fees and any other items set forth therein. The Properties (other
than the Properties set forth on Schedule 4.1.31 attached hereto) shall
at all times continue to be operated as “U-Store-It” self-service storage
facilities or under such other tradename or trademark as may be approved by
Lender. In no event shall the management fees under the Management Agreement
exceed three percent (3%) of the gross income derived from the applicable
Individual Property. Borrower shall, (i) diligently perform and observe all of
the terms, covenants and conditions of the Management Agreement, on the part of
Borrower to be performed and observed to the end that all things shall be done
which are necessary to keep unimpaired the rights of Borrower under the
Management Agreement and (ii) promptly notify Lender of the giving of any
notice by Manager to Borrower of any default by Borrower in the performance or
observance of any of the terms, covenants or conditions of the Management
Agreement on the part of Borrower to be performed and observed and deliver to
Lender a true copy of each such notice. Borrower shall not surrender the
Management Agreement, consent to the assignment by the Manager of its interest
under the Management Agreement, or terminate or cancel the Management
Agreement, or modify, change, supplement, alter or amend the Management
Agreement, in any respect, either orally or in writing. Borrower hereby
assigns to Lender as further security for the payment of the Debt and for the
performance and observance of the terms, covenants and conditions of this
Agreement, all the rights, privileges and prerogatives of Borrower to surrender
the Management Agreement, or to terminate, cancel, modify, change, supplement,
alter or amend the Management Agreement, in any respect, and any such surrender
of the Management Agreement, or termination, cancellation, modification,
change, supplement, alteration or amendment of the Management Agreement,
without the prior consent of Lender shall be void and of no force and effect.
If Borrower shall default in the performance or observance of any material
term, covenant or condition of the Management Agreement on the part of Borrower
to be performed or observed, then, without limiting the generality of the other
provisions of this Agreement, and without waiving or releasing Borrower from
any of its obligations hereunder, Lender shall have the right, but shall be
under no obligation, to pay any sums and to perform any act or take any action
as may be appropriate to cause all the terms, covenants and conditions of the
Management Agreement on the part of Borrower to be performed or observed to be
promptly performed or observed on behalf of

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Borrower, to the end that the rights of Borrower in, to and under the
Management Agreement shall be kept unimpaired and free from default. Lender
and any Person designated by Lender shall have, and are hereby granted, the
right to enter upon the applicable Individual Property at any time and from
time to time for the purpose of taking any such action. If the Manager shall
deliver to Lender a copy of any notice sent to Borrower of default under the
Management Agreement, such notice shall constitute full protection to Lender
for any action taken or omitted to be taken by Lender in good faith, in
reliance thereon. Borrower shall not, and shall not permit the Manager to,
sub-contract any or all of its management responsibilities under the Management
Agreement to a third-party without the prior written consent of Lender, which
consent shall not be unreasonably withheld. Borrower shall, from time to time,
obtain from the Manager such certificates of estoppel with respect to
compliance by Borrower with the terms of the Management Agreement as may be
requested by Lender. Borrower shall exercise each individual option, if any,
to extend or renew the term of the Management Agreement upon demand by Lender
made at any time within one (1) year of the last day upon which any such option
may be exercised, and Borrower hereby expressly authorizes and appoints Lender
its attorney-in-fact to exercise any such option in the name of and upon behalf
of Borrower, which power of attorney shall be irrevocable and shall be deemed
to be coupled with an interest. Any sums expended by Lender pursuant to this
paragraph (i) shall bear interest at the Default Rate from the date such cost
is incurred to the date of payment to Lender, (ii) shall be deemed to
constitute a portion of the Debt, (iii) shall be secured by the lien of the
Security Instruments and the other Loan Documents and (iv) shall be immediately
due and payable upon demand by Lender therefor.

     (b) Without limitation of the foregoing, Borrower, upon the request of
Lender, shall terminate the Management Agreement and replace Manager, without
penalty or fee, if at any time during the Loan: (a) Manager shall become
insolvent or a debtor in any bankruptcy or insolvency proceeding, (b) there
exists an Event of Default, (c) there exists a default by Manager under the
Management Agreement that continues beyond the expiration of any applicable
notice and cure periods. At such time as the Manager may be removed, a
Qualifying Manager shall assume management of the applicable Individual
Property pursuant to a Replacement Management Agreement.

     Section 9.6 Servicer.

           At the option of Lender, the Loan may be serviced by a servicer/trustee
(the “Servicer”) selected by Lender and Lender may delegate all or any
portion of its responsibilities under this Agreement and the other Loan
Documents to the Servicer pursuant to a servicing agreement (the “Servicing
Agreement”) between Lender and Servicer. Borrower shall not be responsible
for (i) any set-up fees or any other initial costs relating to or arising under
the Servicing Agreement, and (ii) the monthly servicing fee due to the Servicer
under the Servicing Agreement.

     Section 9.7 Restructuring of Mortgage and/or Mezzanine Loan.

           Lender shall have the right at any time to divide the Loan and/or the
Mezzanine Loan into two or more parts (the “Restructuring Option”): one
or more mortgage loans (the “Mortgage Loan(s)”) and/or one or more
mezzanine loans (the “Mezzanine Loan(s)”). The

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principal amount of the Mortgage Loan(s) plus the principal amount of the
Mezzanine Loan(s) shall equal the outstanding principal balance of the Loan and
the Mezzanine Loan immediately prior to the creation of the Mortgage Loan(s)
and the Mezzanine Loan(s). In effectuating the foregoing, Mezzanine Lender
will make a loan to Mezzanine Borrower(s); Mezzanine Borrower(s) will
contribute the amount of the Mezzanine Loan(s) to Borrower (in its capacity as
Borrower under the Mortgage Loan(s), “Mortgage Borrower”) and Mortgage
Borrower will apply the contribution to pay down the Loan, without the payment
of the Yield Maintenance Premium or other premium. The Mortgage Loan(s) and
the Mezzanine Loan(s) will be on the same terms and subject to the same
conditions set forth in this Agreement, the Note, the Security Instrument and
the other Loan Documents except as follows:

           (a) Lender (in its capacity as the lender under the Mortgage Loan(s), the
“Mortgage Lender”) shall have the right to establish different interest
rates and debt service payments for the Mortgage Loan(s) and the Mezzanine
Loan(s) and to require the payment of the Mortgage Loan(s) and the Mezzanine
Loan(s) in such order of priority as may be designated by Lender; provided,
that (i) the total loan amounts for the Mortgage Loan(s) and the Mezzanine
Loan(s) shall equal the amount of the Loan and the Mezzanine Loan immediately
prior to the creation of the Mortgage Loan(s) and the Mezzanine Loan(s); (ii)
the initial weighted average interest rate of the Mortgage Loan(s) and the
Mezzanine Loan(s) shall initially on the date created equal the interest rate
which was applicable to the Loan immediately prior to creation of the Mortgage
Loan(s) and the Mezzanine Loan(s); and (iii) the initial debt service payments
on the Mortgage Loan(s) and the Mezzanine Loan(s) shall initially on the date
created equal the debt service payment which was due under the Loan and the
Mezzanine Loan immediately prior to creation of the Mortgage Loan(s) and the
Mezzanine Loan(s). The Mortgage Loan(s) and the Mezzanine Loan(s) will be made
pursuant to Lender’s standard loan documents; provided, however, in the case of
the Mortgage Loan(s), the Mortgage Loan(s) shall be made pursuant to loan
documents substantially similar to the Loan Documents. The Mezzanine Loan(s)
will be subordinate to the Mortgage Loan(s) and will be governed by the terms
of an intercreditor agreement between the holders of the Mortgage Loan(s) and
the Mezzanine Loan(s).

           (b) Mezzanine Borrower(s) shall be a special purpose, bankruptcy remote
entity pursuant to applicable Rating Agency criteria and shall own directly or
indirectly one hundred percent (100%) of Mortgage Borrower. The direct equity
holder(s) of Mezzanine Borrower(s) (such holder(s), the “Second Level
SPE(s)”) shall be a special purpose, bankruptcy remote entity pursuant to
applicable Rating Agency criteria and shall own directly or indirectly one
hundred percent (100%) of Mezzanine Borrower(s). The security for the
Mezzanine Loan(s) shall be a pledge of one hundred percent (100%) of the direct
and indirect ownership interests held by such Mezzanine Borrower(s).

           (c) Mezzanine Borrower(s), Second Level SPE(s) and Mortgage Borrower shall
cooperate with all reasonable requests of Lender in order to divide the Loan
and/or the Mezzanine Loan into one or more Mortgage Loan(s) and one or more
Mezzanine Loan(s) and shall execute and deliver such documents as shall
reasonably be required by Lender and any Rating Agency in connection therewith,
including, without limitation, (i) the delivery of non-consolidation opinions,
(ii) the modification of organizational documents and loan documents, including
        , without limitation, this Agreement, (iii) authorize Lender to file any UCC-1
Financing Statements reasonably required by Lender to perfect its security
interest in the

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collateral pledged as security for the Mortgage Loan(s) and/or the
Mezzanine Loan(s), (iv) execute such other documents reasonably required by
Lender in connection with the creation of the Mortgage Loan(s) and/or the
Mezzanine Loan(s), including, without limitation, a guaranty substantially
similar in form and substance to the Guaranty delivered on the date hereof, an
environmental indemnity substantially similar in form and substance to the
Environmental Indemnity delivered on the date hereof and a conditional
assignment of management agreement substantially similar in form and substance
to the Assignment of Management Agreement delivered on the date hereof, (v)
deliver appropriate authorization, execution and enforceability opinions with
respect to the Mezzanine Loan(s) and the Mortgage Loan(s), and (vi) deliver
such title insurance policies, “Eagle 9” or equivalent UCC title insurance
policies, satisfactory to Lender, insuring the perfection and priority of the
lien on the collateral pledged as security for the Mortgage Loan(s) and/or the
Mezzanine Loan(s).

           It shall be an Event of Default hereunder if Borrower, Mezzanine
Borrower(s), Second Level SPE(s) or Sponsor fails to comply with any of the
terms, covenants or conditions of this Section 9.7 after expiration of ten (10)
Business Days after notice thereof.

           Solely for the purposes of this Section 9.7, Lender shall reimburse
Borrower for all of its actual out-of-pocket costs and expenses (other than the
fees and expenses of Borrower’s counsel) that Borrower incurs in connection
with complying with a request made by Lender under this Section 9.7.
Notwithstanding the foregoing, the provisions of this paragraph shall in no way
limit or affect any Borrower obligation to pay any costs expressly required to
be paid by Borrower pursuant to any other Sections of this Agreement. Lender,
without in any way limiting its other rights hereunder, in its sole and
absolute discretion, shall have the right, at any time prior to a
Securitization, to reallocate the amount of the Loan and the Mezzanine Loan
and/or adjust the interest rate rates thereon provided that (i) the aggregate
principal amount of the Loan and the Mezzanine Loan immediately following such
reallocation shall equal the outstanding principal balance of the Loan and the
Mezzanine Loan immediately prior to such reallocation and (ii) the weighted
average interest rate of the Note and the Mezzanine Note immediately following
such reallocation shall equal the weighted average interest rate which was
applicable to the Note and the Mezzanine Note immediately prior to such
reallocation. Borrower shall cooperate with all reasonable requests of Lender
in order to reallocate the amount of the Loan and the Mezzanine Loan and shall
execute and deliver such documents as shall reasonably be required by Lender in
connection therewith, all in form and substance reasonably satisfactory to
Lender.

     X. MISCELLANEOUS

     Section 10.1 Survival.

           This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is
expressly set forth herein or in the other Loan Documents. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the legal

100

 

representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.

     Section 10.2 Lender’s Discretion.

           Whenever pursuant to this Agreement, Lender exercises any right given to
it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.

     Section 10.3 Governing Law. 

     (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS AND THE DETERMINATION OF DEFICIENCY JUDGMENTS, SHALL BE GOVERNED BY
AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE
INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND
ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT
AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

101

 

     (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER’S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON
VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

CT CORPORATION SYSTEM

111 EIGHTH AVENUE – 13TH FLOOR

NEW YORK, NEW YORK 10011

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL
BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III)
SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO
HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.

     Section 10.4 Modification, Waiver in Writing.

           No modification, amendment, extension, discharge, termination or waiver of
any provision of this Agreement, or of the Note, or of any other Loan Document,
nor consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against
whom enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar
or other circumstances.

     Section 10.5 Delay Not a Waiver.

102

 

           Neither any failure nor any delay on the part of Lender in insisting upon
strict performance of any term, condition, covenant or agreement, or exercising
any right, power, remedy or privilege hereunder, or under the Note or under any
other Loan Document, or any other instrument given as security therefor, shall
operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other
amount.

     Section 10.6 Notices.

           All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and by telecopier (with answer back
acknowledged), addressed as follows (or at such other address and Person as
shall be designated from time to time by any party hereto, as the case may be,
in a written notice to the other parties hereto in the manner provided for in
this Section):

	 	 	 
	If to Lender:

	 	Lehman Brothers Bank, FSB
	

	 	c/o Lehman Brothers Holdings Inc.
	

	 	399 Park Avenue
	

	 	New York, New York 10022
	

	 	Attention: Gary Taylor
	

	 	Facsimile No.: (646) 758-2256
	 
	 	 
	With a copy to:

	 	Lehman Brothers Holdings Inc.
	

	 	399 Park Avenue
	

	 	New York, New York 10022
	

	 	Attention: Scott Weiner
	

	 	Facsimile No.: (646) 758-4872
	 
	 	 
	with a copy to:

	 	Thacher Proffitt & Wood LLP
	

	 	2 World Financial Center
	

	 	New York, New York 10281
	

	 	Attention: Mitchell G. Williams, Esq.
	

	 	Facsimile No.: (212) 912-7751

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	If to Borrower:

	 	YSI III LLC
	

	 	6745 Engle Road, Suite 300
	

	 	Middleburg Heights, Ohio 44130
	

	 	Attention: Steven Osgood
	

	 	Facsimile No.: (440) 234-8776
	 
	 	 
	With a copy to:

	 	Hogan & Hartson L.L.P.
	

	 	8300 Greensboro Drive, Suite 1100
	

	 	McLean, Virginia 22101
	

	 	Attention: Lee E. Berner, Esq.
	

	 	Facsimile No.: (703) 610-6200

A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.

     Section 10.7 Trial by Jury.

           EACH OF BORROWER AND LENDER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY
TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
OTHER PARTY.

     Section 10.8 Headings.

           The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

     Section 10.9 Severability.

           Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

     Section 10.10 Preferences.

104

 

           Lender shall have the continuing and exclusive right to apply or reverse
and reapply any and all payments by Borrower to any portion of the obligations
of Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, receiver or any other party under any bankruptcy
law, State or Federal law, common law or equitable cause, then, to the extent
of such payment or proceeds received, the obligations hereunder or part thereof
intended to be satisfied shall be revived and continue in full force and
effect, as if such payment or proceeds had not been received by Lender.

     Section 10.11 Waiver of Notice.

           Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the
other Loan Documents specifically and expressly provide for the giving of
notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive
the giving of notice. Borrower hereby expressly waives the right to receive
any notice from Lender with respect to any matter for which this Agreement or
the other Loan Documents do not specifically and expressly provide for the
giving of notice by Lender to Borrower.

     Section 10.12 Remedies of Borrower.

           In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower’s sole remedies shall be limited to commencing
an action seeking injunctive relief or declaratory judgment. The parties
hereto agree that any action or proceeding to determine whether Lender has
acted reasonably shall be determined by an action seeking declaratory judgment.

     Section 10.13 Expenses; Indemnity.

     (a) Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender within five (5) days of receipt of written notice from Lender
for all reasonable costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect
to the Properties); (ii) Borrower’s ongoing performance of and compliance with
Borrower’s respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) Lender’s ongoing performance
and compliance with all agreements and conditions contained in this Agreement
and the other Loan Documents on its

105

 

part to be performed or complied with after the Closing Date; (iv) the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by Lender;
(v) securing Borrower’s compliance with any requests made pursuant to the
provisions of this Agreement; (vi) the filing and recording fees and expenses,
title insurance and reasonable fees and expenses of counsel for providing to
Lender all required legal opinions, and other similar expenses incurred in
creating and perfecting the Liens in favor of Lender pursuant to this Agreement
and the other Loan Documents; (vii) enforcing or preserving any rights, in
response to third party claims or the prosecuting or defending of any action or
proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents, the Properties, or any
other security given for the Loan; and (viii) enforcing any obligations of or
collecting any payments due from Borrower under this Agreement, the other Loan
Documents or with respect to the Properties or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason
of the gross negligence, illegal acts, fraud or willful misconduct of Lender.
Any cost and expenses due and payable to Lender may be paid from any amounts in
the Lockbox Account.

     (b) Borrower shall indemnify, defend and hold harmless Lender from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, the reasonable fees
and disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of (i)
any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Indemnified Liabilities”); provided, however, that
Borrower shall not have any obligation to Lender hereunder to the extent that
such Indemnified Liabilities arise from the gross negligence, illegal acts,
fraud or willful misconduct of Lender. To the extent that the undertaking to
indemnify, defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable
law to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.

     (c) Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless Lender and the Indemnified Parties from
and against any and all losses (including, without limitation, reasonable
attorneys’ fees and costs incurred in the investigation, defense, and
settlement of losses incurred in correcting any prohibited transaction or in
the sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA, the Code, any State statute or other similar
law that may be required, in Lender’s sole discretion) that Lender may incur,
directly or indirectly, as a result of a default under Sections 4.1.9 or 5.2.12
hereof.

106

 

     (d) Borrower covenants and agrees to pay for or, if Borrower fails to pay,
to reimburse Lender for, (i) any fees and expenses incurred by any Rating
Agency in connection with any Rating Agency review of the Loan, the Loan
Documents or any transaction contemplated thereby or (ii) any consent,
approval, waiver or confirmation obtained from such Rating Agency pursuant to
the terms and conditions of this Agreement or any other Loan Document and
Lender shall be entitled to require payment of such fees and expenses as a
condition precedent to the obtaining of any such consent, approval, waiver or
confirmation.

     Section 10.14 Schedules Incorporated.

           The Schedules and Exhibits attached hereto are hereby incorporated herein
as a part of this Agreement with the same effect as if set forth in the body
hereof.

     Section 10.15 Offsets, Counterclaims and Defenses.

           Any assignee of Lender’s interest in and to this Agreement, the Note and
the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such
unrelated counterclaim or defense shall be interposed or asserted by Borrower
in any action or proceeding brought by any such assignee upon such documents
and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Borrower.

     Section 10.16 No Joint Venture or Partnership; No Third Party
Beneficiaries.

     (a) Borrower and Lender intend that the relationships created hereunder
and under the other Loan Documents be solely that of borrower and lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender
nor to grant Lender any interest in the Properties other than that of
mortgagee, beneficiary or lender.

     (b) This Agreement and the other Loan Documents are solely for the benefit
of Lender and Borrower and nothing contained in this Agreement or the other
Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance
of any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing
to require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.

     Section 10.17 Publicity.

           All news releases, publicity or advertising by Borrower or their
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to
Lender, Lehman, or any of their Affiliates shall

107

 

be subject to the prior written approval of Lender, which shall not be
unreasonably withheld. Notwithstanding the foregoing, disclosure required by
any Federal or State securities laws, rules or regulations, as determined by
Borrower’s counsel, shall not be subject to the prior written approval of
Lender.

     Section 10.18 Cross-Default; Cross-Collateralization; Waiver of
Marshalling of Assets.

     (a) Borrower acknowledges that Lender has made the Loan to Borrower upon
the security of its collective interest in the Properties and in reliance upon
the aggregate of the Properties taken together being of greater value as
collateral security than the sum of each Individual Property taken separately.
Borrower agrees that the Security Instruments are and will be
cross-collateralized and cross-defaulted with each other so that (i) an Event
of Default under any of the Security Instruments shall constitute an Event of
Default under each of the other Security Instruments which secure the Note;
(ii) an Event of Default under the Note or this Agreement shall constitute an
Event of Default under each Security Instrument; and (iii) each Security
Instrument shall constitute security for the Note as if a single blanket lien
were placed on all of the Properties as security for the Note.

     (b) To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower’s partners and others with interests in Borrower, Guarantor
and of the Properties, or to a sale in inverse order of alienation in the event
of foreclosure of all or any of the Security Instruments, and agrees not to
assert any right under any laws pertaining to the marshalling of assets, the
sale in inverse order of alienation, homestead exemption, the administration of
estates of decedents, or any other matters whatsoever to defeat, reduce or
affect the right of Lender under the Loan Documents to a sale of the Properties
or any other assets of Borrower or Guarantor for the collection of the Debt
without any prior or different resort for collection or of the right of Lender
to the payment of the Debt out of the net proceeds of the Properties or any
other assets of Borrower or Guarantor in preference to every other claimant
whatsoever. In addition, Borrower, for itself and its successors and assigns,
waives in the event of foreclosure of any or all of the Security Instruments,
any equitable right otherwise available to Borrower which would require the
separate sale of the Properties or any other assets of Borrower or Guarantor or
require Lender to exhaust its remedies against any Individual Property or any
combination of the Properties or any other assets of Borrower or Guarantor
before proceeding against any other Individual Property or combination of
Properties or any other assets of Borrower or Guarantor; and further in the
event of such foreclosure Borrower does hereby expressly consents to and
authorizes, at the option of Lender, the foreclosure and sale either separately
or together of any combination of the Properties or any other assets of
Borrower or Guarantor.

     Section 10.19 Waiver of Counterclaim.

           Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.

     Section 10.20 Conflict; Construction of Documents; Reliance.

108

 

          In
 the event of any conflict between the provisions of this Agreement and any of the other Loan
 Documents, the provisions of this Agreement shall control.  The parties hereto acknowledge
 that they were represented by competent counsel in connection with the negotiation, drafting and
 execution of the Loan Documents and that such Loan Documents shall not be subject to the
 principle of construing their meaning against the party which drafted same.  Borrower
 acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment
 and advisors in entering into the Loan without relying in any manner on any statements,
 representations or recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
  Lender shall not be subject to any limitation whatsoever in the exercise of any rights or
 remedies available to it under any of the Loan Documents or any other agreements or instruments
which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate
 of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby
 irrevocably waives the right to raise any defense or take any action on the basis of the
 foregoing with respect to Lender’s exercise of any such rights or remedies.
 Borrower acknowledges that Lender engages in the business of real estate financings and other
 real estate transactions and investments which may be viewed as adverse to or competitive with
 the business of Borrower or its Affiliates.

     Section 10.21 Brokers and Financial Advisors.

           Borrower hereby represents that it has dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. Borrower hereby agrees to
indemnify, defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender’s attorneys’ fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein. The provisions of this Section 10.21 shall
survive the expiration and termination of this Agreement and the payment of the
Debt.

     Section 10.22 Prior Agreements.

           This Agreement and the other Loan Documents contain the entire agreement
of the parties hereto and thereto in respect of the transactions contemplated
hereby and thereby, and all prior agreements among or between such parties,
whether oral or written, between Borrower and/or its Affiliates and Lender are
superseded by the terms of this Agreement and the other Loan Documents.

[NO FURTHER TEXT ON THIS PAGE]

109

 

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

	 	 	 	 	 
	 	 	BORROWER:
	 	 	YSI III LLC, a Delaware limited liability company
	 	 	
By:
	 	/s/ Steven G. Osgood

Name: Steven G. Osgood

Title: President
	 	 	LENDER:
	 	 	LEHMAN BROTHERS BANK, FSB, a federal stock

savings bank
	 	 	
By:
	 	/s/ Charlene Thomas

Name: Charlene Thomas

Title: Authorized Signatoryexv10w5

 

Exhibit 10.5

$150,000,000

CREDIT AGREEMENT

among

U-STORE-IT TRUST,

U-STORE-IT, L.P.,

as Borrower,

The Several Lenders

from Time to Time Parties Hereto,

LEHMAN BROTHERS INC.

and

WACHOVIA CAPITAL MARKETS, LLC,

as Joint Lead Arrangers

WACHOVIA CAPITAL MARKETS, LLC,

as Syndication Agent,

SUNTRUST BANK

and

LASALLE BANK NATIONAL ASSOCIATION,

as Co-Documentation Agents

and

LEHMAN COMMERCIAL PAPER INC.,

as Administrative Agent

Dated as of October 27, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	SECTION 1. DEFINITIONS
	 	 	1	 
	1.1 Defined Terms
	 	 	1	 
	1.2 Other Definitional Provisions
	 	 	24	 
	SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
	 	 	25	 
	2.1 Commitments
	 	 	25	 
	2.2 Procedure for Borrowing
	 	 	25	 
	2.3 Repayment of Loans; Evidence of Debt
	 	 	25	 
	2.4 Commitment Fees, etc.
	 	 	26	 
	2.5 Termination or Reduction of Commitments
	 	 	26	 
	2.6 Optional Prepayments
	 	 	27	 
	2.7 Mandatory Prepayments
	 	 	27	 
	2.8 Conversion and Continuation Options
	 	 	27	 
	2.9 Minimum Amounts and Maximum Number of Eurodollar Tranches
	 	 	28	 
	2.10 Interest Rates and Payment Dates
	 	 	28	 
	2.11 Computation of Interest and Fees
	 	 	28	 
	2.12 Inability to Determine Interest Rate
	 	 	29	 
	2.13 Pro Rata Treatment and Payments
	 	 	29	 
	2.14 Requirements of Law
	 	 	31	 
	2.15 Taxes
	 	 	32	 
	2.16 Indemnity
	 	 	33	 
	2.17 Illegality
	 	 	34	 
	2.18 Change of Lending Office
	 	 	34	 
	2.19 Extension of Termination Date
	 	 	34	 
	2.20 Commitment Increases
	 	 	35	 
	SECTION 3. LETTERS OF CREDIT
	 	 	37	 
	3.1 L/C Commitment
	 	 	37	 
	3.2 Procedure for Issuance of Letter of Credit
	 	 	37	 
	3.3 Fees and Other Charges
	 	 	37	 
	3.4 L/C Participations
	 	 	38	 
	3.5 Reimbursement Obligation of the Borrower
	 	 	39	 
	3.6 Obligations Absolute
	 	 	39	 
	3.7 Letter of Credit Payments
	 	 	40	 
	3.8 Applications
	 	 	40	 
	SECTION 4. BORROWING BASE PROPERTIES
	 	 	40	 
	4.1 Acceptance of Borrowing Base Properties
	 	 	40	 
	4.2 Release of Borrowing Base Properties
	 	 	43	 
	4.3 Frequency of Calculations of Borrowing Base
	 	 	44	 
	4.4 Appraisals Required by Governmental Authorities
	 	 	44	 
	4.5 Recording of Mortgages
	 	 	45	 
	4.6 Status of Escrowed Documents
	 	 	47	 

 

 

	 	 	 	 	 
	 	 	Page
	SECTION 5. REPRESENTATIONS AND WARRANTIES
	 	 	47	 
	5.1 Financial Condition
	 	 	47	 
	5.2 No Change
	 	 	48	 
	5.3 Corporate Existence; Compliance with Law
	 	 	48	 
	5.4 Corporate Power; Authorization; Enforceable Obligations
	 	 	48	 
	5.5 No Legal Bar
	 	 	49	 
	5.6 No Material Litigation
	 	 	49	 
	5.7 No Default
	 	 	49	 
	5.8 Ownership of Property; Liens
	 	 	49	 
	5.9 Intellectual Property
	 	 	49	 
	5.10 Taxes
	 	 	50	 
	5.11 Federal Regulations
	 	 	50	 
	5.12 Labor Matters
	 	 	50	 
	5.13 ERISA
	 	 	50	 
	5.14 Investment Company Act; Other Regulations
	 	 	51	 
	5.15 Subsidiaries
	 	 	51	 
	5.16 Use of Proceeds
	 	 	51	 
	5.17 Environmental Matters
	 	 	51	 
	5.18 Accuracy of Information, etc.
	 	 	52	 
	5.19 Security Documents
	 	 	53	 
	5.20 Solvency
	 	 	53	 
	5.21 REIT Status; Borrower Tax Status; Listing
	 	 	53	 
	5.22 Regulation H
	 	 	54	 
	SECTION 6. CONDITIONS PRECEDENT
	 	 	54	 
	6.1 Conditions to Initial Extension of Credit
	 	 	54	 
	6.2 Conditions to Each Extension of Credit
	 	 	57	 
	6.3 Conditions to Borrowing Base Properties
	 	 	58	 
	SECTION 7. AFFIRMATIVE COVENANTS
	 	 	61	 
	7.1 Financial Statements
	 	 	61	 
	7.2 Certificates; Other Information
	 	 	62	 
	7.3 Payment of Obligations
	 	 	63	 
	7.4 Conduct of Business and Maintenance of Existence; Compliance
	 	 	63	 
	7.5 Maintenance of Property; Insurance
	 	 	64	 
	7.6 Inspection of Property; Books and Records; Discussions
	 	 	64	 
	7.7 Notices
	 	 	64	 
	7.8 Environmental Laws
	 	 	65	 
	7.9 Interest Rate Protection
	 	 	65	 
	7.10 Additional Collateral, etc.
	 	 	65	 
	7.11 Further Assurances
	 	 	67	 
	7.12 Maintenance of Occupancy Rate
	 	 	67	 
	7.13 Acquiport/Amsdell V, LLC and Acquiport/Amsdell VI, LLC
	 	 	67	 
	SECTION 8. NEGATIVE COVENANTS
	 	 	67	 
	8.1 Financial Condition Covenants
	 	 	67	 
	8.2 Limitation on Indebtedness
	 	 	68	 

 ii 

 

 

	 	 	 	 	 
	 	 	Page
	8.3 Limitation on Liens
	 	 	68	 
	8.4 Limitation on Fundamental Changes
	 	 	69	 
	8.5 Limitation on Disposition of Property
	 	 	70	 
	8.6 Limitation on Restricted Payments
	 	 	70	 
	8.7 Limitation on Investments
	 	 	71	 
	8.8 Limitation on Transactions with Affiliates
	 	 	72	 
	8.9 Limitation on Sales and Leasebacks
	 	 	72	 
	8.10 Limitation on Changes in Fiscal Periods
	 	 	72	 
	8.11 Limitation on Negative Pledge Clauses
	 	 	72	 
	8.12 Limitation on Restrictions on Subsidiary Distributions
	 	 	73	 
	8.13 Limitation on Lines of Business
	 	 	73	 
	8.14 Limitation on Subject Property and Ground Leases
	 	 	73	 
	8.15 Special Covenants Relating to the REIT
	 	 	73	 
	8.16 Taxation of the Borrower
	 	 	74	 
	8.17 Limitation on Hedge Agreements
	 	 	74	 
	SECTION 9. EVENTS OF DEFAULT
	 	 	74	 
	SECTION 10. THE AGENTS
	 	 	77	 
	10.1 Appointment
	 	 	77	 
	10.2 Delegation of Duties
	 	 	77	 
	10.3 Exculpatory Provisions
	 	 	77	 
	10.4 Reliance by Agents
	 	 	78	 
	10.5 Notice of Default
	 	 	78	 
	10.6 Non-Reliance on Agents and Other Lenders
	 	 	78	 
	10.7 Indemnification
	 	 	79	 
	10.8 Agent in Its Individual Capacity
	 	 	79	 
	10.9 Successor Administrative Agent
	 	 	80	 
	10.10 Authorization to Release Liens and Guarantees
	 	 	80	 
	10.11 The Arrangers; the Syndication Agent; the Co-Documentation Agents
	 	 	80	 
	SECTION 11. MISCELLANEOUS
	 	 	80	 
	11.1 Amendments and Waivers
	 	 	80	 
	11.2 Notices
	 	 	82	 
	11.3 No Waiver; Cumulative Remedies
	 	 	84	 
	11.4 Survival of Representations and Warranties
	 	 	84	 
	11.5 Payment of Expenses
	 	 	84	 
	11.6 Successors and Assigns; Participations and Assignments
	 	 	86	 
	11.7 Adjustments; Set-off
	 	 	89	 
	11.8 Counterparts
	 	 	89	 
	11.9 Severability
	 	 	89	 
	11.10 Integration
	 	 	90	 
	11.11 GOVERNING LAW
	 	 	90	 
	11.12 Submission To Jurisdiction; Waivers
	 	 	90	 
	11.13 Acknowledgments
	 	 	90	 
	11.14 Confidentiality
	 	 	91	 
	11.15 Release of Collateral and Guarantee Obligations
	 	 	91	 

 iii 

 

 

	 	 	 	 	 
	 	 	Page

	11.16 Accounting Changes
	 	 	92	 
	11.17 Delivery of Lender Addenda
	 	 	92	 
	11.18 WAIVERS OF JURY TRIAL
	 	 	92	 

iv

 

ANNEXES:

A     Pricing Grid

	 	 	 
	SCHEDULES:
	 	 
	 
	 	 
	1.1A

	 	Initial Borrowing Base Properties
	1.1B

	 	Real Property
	4.1(b)

	 	Limited Review Criteria
	5.4

	 	Consents, Authorizations, Filings and Notices
	5.15

	 	Subsidiaries
	5.19(a)-1UCC

	 	Filing Jurisdictions
	5.19(a)-2UCC

	 	Financing Statements to Remain on File
	5.19(a)-3UCC

	 	Financing Statements to be Terminated
	5.19(b)

	 	Mortgage Filing Jurisdictions
	6.1(c)

	 	Terminated Indebtedness
	8.2(d)

	 	Existing Indebtedness
	8.2(f)

	 	Exceptions to Non-Recourse
	8.3(f)

	 	Existing Liens

	 	 	 
	EXHIBITS:
	 	 
	 
	 	 
	A

	 	Form of Guarantee and Collateral Agreement
	B

	 	Form of Compliance Certificate
	C

	 	Form of Closing Certificate
	D

	 	Form of Mortgage
	E

	 	Form of Assignment and Acceptance
	F

	 	Form of Legal Opinion of Hogan & Hartson L.L.P.
	G

	 	Form of Note
	H

	 	Form of Exemption Certificate
	I

	 	Form of Lender Addendum
	J

	 	Form of Borrowing Notice
	K-1

	 	Form of New Lender Supplement
	K-2

	 	Form of Commitment Increase Supplement
	L

	 	Form of Borrowing Base Certificate
	M

	 	Form of Borrowing Base Property Officer’s Certificate
	N

	 	Form of Escrow Agreement
	O

	 	Form of Environmental Indemnity Agreement

 

 

           CREDIT AGREEMENT, dated as of October 27, 2004, among U-STORE-IT TRUST, a
Maryland real estate investment trust (the “REIT”), U-STORE-IT, L.P., a
Delaware limited partnership (the “Borrower”), the several banks and
other financial institutions or entities from time to time parties to this
Agreement (the “Lenders”), LEHMAN BROTHERS INC. and WACHOVIA CAPITAL
MARKETS, LLC, as joint advisors, joint lead arrangers and joint bookrunners
(collectively, in such capacity, the “Arrangers”), WACHOVIA CAPITAL
MARKETS, LLC, as syndication agent (in such capacity, the “Syndication
Agent”), SUNTRUST BANK and LASALLE BANK NATIONAL ASSOCIATION, as
co-documentation agents (in such capacity, the “Co-Documentation
Agents”) and LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such
capacity, the “Administrative Agent”).

WITNESSETH:

           WHEREAS, the existing equity holders (the “Existing Equity
Holders”) of the Borrower have formed the REIT and contributed
substantially all of the outstanding equity interests of the Borrower held by
the Existing Equity Holders to the REIT in a series of one or more transactions
(the “Restructuring”) and the remaining partnership interests are owned
by the members of the Permitted Investors;

           WHEREAS, the Borrower and its Subsidiaries intend to obtain collateralized
mortgage-backed security financing of certain of their real property with gross
proceeds equal to approximately $270,000,000 (the “CMBS Financing”);

           WHEREAS, the shares of common stock of the REIT will be offered pursuant
to an initial public offering (the “IPO”);

           WHEREAS, in connection with the Restructuring, the CMBS Financing and the
IPO, the Borrower requested that the Lenders make available a revolving credit
facility in an aggregate amount equal to $150,000,000; and

           WHEREAS, the Lenders are willing to make such credit facilities available
upon and subject to the terms and conditions hereinafter set forth;

           NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

           1.1 Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.

           “Acquisition Price”: with respect to any Subject Property, the
purchase price paid by the Borrower or any of its Subsidiaries for such
Property less closing costs and any amounts paid by the Borrower or such
Subsidiary as a purchase price adjustment, to be held in escrow, to be retained
as a contingency reserve, or other similar amounts.

           “Adjusted Asset Value”: with respect to any Subject Property, on
any date of determination, (i) with respect to any Subject Property owned in
fee simple or leased by the

 

 

REIT or any of its Subsidiaries for more than two
full fiscal quarters ended prior to such date of determination and for which
financial statements are available, an amount equal to (a) the Net Operating
Income of such Subject Property for the two full fiscal quarters of the
Borrower most recently ended for which financial statements are available
multiplied by two divided by (b) the Capitalization Rate and (ii)
otherwise, an amount equal to 90% of the Acquisition Price of such Property,
provided that, if an Appraisal has been obtained with respect to such
Subject Property, then the Adjusted Asset Value shall be an amount equal to the
lesser of (x) the Appraised Value of such Property and (y) the value determined
pursuant to the preceding clause (i) or (ii), as applicable. Notwithstanding
the foregoing, the Adjusted Asset Value for any Lease-Up Property shall be an
amount equal to 90% of the Acquisition Price of such Property.

           “Adjusted EBITDA”: for any period, Consolidated EBITDA for such
period less Reserves for Capital Expenditures for all Subject Properties
for such period.

           “Adjusted Total Revenue”: for any period, an amount equal to (i)
the total revenue of the Borrower and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, minus (ii)
the aggregate amount of total revenue of all the Excluded Financing
Subsidiaries for such period.

           “Adjustment Date”: as defined in the Pricing Grid.

           “Administrative Agent”: as defined in the preamble hereto.

           “Affiliate”: as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, “control” of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.

           “Agents”: the collective reference to the Syndication Agent, the
Co-Documentation Agents and the Administrative Agent.

           “Aggregate Exposure”: with respect to any Lender at any time, an
amount equal to the amount of such Lender’s Commitment then in effect or, if
the Commitments have been terminated, the amount of such Lender’s Extensions of
Credit then outstanding.

           “Aggregate Exposure Percentage”: with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure
at such time to the sum of the Aggregate Exposures of all Lenders at such time.

           “Agreement”: this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.

           “Anticipated Mortgage Payment”: for any period of determination, an
amount equal to the annual principal and interest payment sufficient to
amortize in full during a 30-year period an amount equal to the average daily
aggregate Total Extensions of Credit during such period, calculated using an
interest rate equal to the greater of (i) the yield on a 10-year United

2

 

States
Treasury Note at such time as determined by the Administrative Agent
plus 1.50% or (ii) 8.5%.

     “Applicable Margin”: for each Type of Loan, the rate per annum set
forth under the relevant column heading below:

	 	 	 	 	 
	Base Rate	 	Eurodollar
	Loans
	 	Loans

	0.75%
	 	 	1.75	%

; provided, that on and after the first Adjustment Date occurring after
the completion of two full fiscal quarters of the Borrower after the Closing
Date, the Applicable Margin will be determined pursuant to the Pricing Grid.

           “Applicable Reserve Amount”: $0.15.

           “Application”: an application, in such form as the relevant
Issuing Lender may specify from time to time, requesting such Issuing Lender to
issue a Letter of Credit.

           “Appraisal”: with respect to any Subject Property, an appraisal
commissioned by and addressed to the Administrative Agent, conforming with the
Uniform Standards of Professional Appraisal Practice as defined by The
Appraisal Foundation and in form and substance reasonably acceptable to the
Administrative Agent, prepared by a professional appraiser acceptable to the
Administrative Agent, having at least the minimum qualifications required by
any Governmental Authority governing the Administrative Agent and the Lenders,
including FIRREA, and determining the “as is” market value of such Property in
its current condition as of such date as between a willing buyer and a willing
seller.

           “Appraised Value”: with respect to any Subject Property, the “as
is” market value of such Property as reflected in the most recent Appraisal of
such Property.

           “Asset Value”: with respect to any Subject Property, on any date of
determination, (i) with respect to any Subject Property owned by the REIT or
any of its Subsidiaries for more than two full fiscal quarters ended prior to
such date of determination and for which financial statements are available, an
amount equal to (a) the Adjusted EBITDA of such Subject Property for the two
full fiscal quarters of the Borrower most recently ended for which financial
statements are available multiplied by two divided by (b) the
Capitalization Rate and (ii) otherwise, an amount equal to 90% of the
Acquisition Price of such Property. Notwithstanding the foregoing, the Asset
Value for any Lease-Up Property shall be an amount equal to 90% of the
Acquisition Price of such Property.

           “Arrangers”: as defined in the preamble hereto.

           “Assignee”: as defined in Section 11.6(c).

           “Assignor”: as defined in Section 11.6(c).

3

 

           “Available Commitment”: with respect to any Lender at any time, an
amount equal to the excess, if any, of (a) such Lender’s Commitment then in
effect over (b) such Lender’s Extensions of Credit then outstanding.

           “Base Rate”: for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: “Prime Rate”
shall mean the prime lending rate as set forth on the British Banking
Association Telerate Page 5 (or such other comparable publicly available page
as may, in the reasonable opinion of the Administrative Agent after notice to
the Borrower, replace such page for the purpose of displaying such rate if such
rate no longer appears on the British Bankers Association Telerate page 5), as
in effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually available. Any change
in the Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the
effective day of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.

           “Base Rate Loans”: Loans for which the applicable rate of interest
is based upon the Base Rate.

           “Benefitted Lender”: as defined in Section 11.7.

           “Board”: the Board of Governors of the Federal Reserve System of
the United States (or any successor).

           “Borrower”: as defined in the preamble hereto.

           “Borrowing Base”: on any date of determination, an amount equal to
the lesser of:

     (i) (x) the sum of the Borrowing Base Values of the Borrowing Base
Properties for such date as set forth in the most recent Borrowing Base
Report delivered by the Borrower pursuant to Section 4.2(b), Section
6.1(s), Section 6.3(h) or Section 7.2(f) multiplied by (y) 0.60,
provided that, the Borrowing Base Value of all Lease-Up Properties
may not exceed 10% of the Borrowing Base and any excess of such amounts
shall be excluded when determining the Borrowing Base; and

     (ii) the maximum amount necessary to cause the ratio of (x) the Net
Operating Income for all Borrowing Base Properties for the period of two
consecutive fiscal quarters of the REIT most recently ended for which
financial statements are available multiplied by two to (y) the
Anticipated Mortgage Payment for such period to be equal to 1.50 to 1.00.

           “Borrowing Base Leverage Ratio”: on any date of determination, the
ratio of (a) the Total Extensions of Credit on such date to (b) the sum of the
Borrowing Base Values of the Borrowing Base Properties for such date as set
forth in the most recent Borrowing Base Report delivered by the Borrower
pursuant to Section 4.2(b), Section 6.1(s), Section 6.3(h) or Section 7.2(f).

4

 

           “Borrowing Base Property”: (a) each Subject Property owned in fee
simple or leased by a Loan Party and listed on Schedule 1.1A on the
Closing Date and (b) each Subject Property owned in fee simple or leased by a
Loan Party and (i) which the Administrative Agent and, to the extent required,
the Required Lenders have agreed to include in the calculation of the Borrowing
Base pursuant to Section 4.1 and (ii) with respect to which the Administrative
Agent has received all documents required to be executed and delivered pursuant
to Section 4.1 and Section 6.3.

           “Borrowing Base Report”: a report substantially in the form of
Exhibit L, executed and certified by the chief financial officer or the
controller of the Borrower, setting forth the calculations required to
establish the Borrowing Base Value for each Borrowing Base Property and the
Borrowing Base for all Borrowing Base Properties, with supporting detail
reasonably satisfactory to the Administrative Agent.

           “Borrowing Base Value”: with respect to each Borrowing Base
Property, on any date of determination, (i) if such Borrowing Base Property has
been owned in fee simple or leased by any Loan Party for more than two full
fiscal quarters ended prior to such date of determination and financial
statements are available for such period, an amount equal to (a) the Net
Operating Income of such Borrowing Base Property for the two full fiscal
quarters of the Borrower most recently ended for which financial statements are
available multiplied by two divided by (b) the Capitalization
Rate, and (ii) otherwise, an amount equal to 90% of the Acquisition Price of
such Borrowing Base Property, provided that, if an Appraisal has been
obtained with respect to such Borrowing Base Property, then the Borrowing Base
Value shall be an amount equal to the lesser of (x) the Appraised Value of such
Property and (y) the value determined pursuant to the preceding clause (i) or
(ii), as applicable. Notwithstanding the foregoing, (1) the Borrowing Base
Value for any Lease-Up Property shall be an amount equal to 90% of the
Acquisition Price of such Property and (2) the Borrowing Base Value of any of
the following types of Subject Property shall be $0:

     (A) Subject Property not owned in fee simple by a Loan Party, unless
a Loan Party has a leasehold interest in such Property and the
Administrative Agent has approved the applicable lease in writing,
provided that, there may not be more than five Subject Properties
leased by the Loan Parties included in the determination of the Borrowing
Base at any one time;

     (B) Subject Property, or any interest of a Loan Party therein,
subject to a Lien (other than as permitted by Sections 8.3(b) through
(e)) or a negative pledge clause;

     (C) with respect to any Subject Property owned or leased by a
Subsidiary Guarantor, the Borrower’s direct or indirect ownership
interest of such Subsidiary
Guarantor is subject to a Lien (other than as permitted by Sections
8.3(b) through (e)) or a negative pledge clause;

     (D) Subject Property with respect to which any Loan Party is
prohibited from taking the following actions without the consent of any
Person: (I) creating Liens on such Property as security for Indebtedness
of such Loan Party and (II) the sale, transfer or other Disposition of
such Property;

5

 

     (E) Subject Property (other than a Lease-Up Property) on any date of
determination, the Occupancy Rate of which is less than 50% on such date;

     (F) Business Park Properties representing aggregate leaseable square
footage in excess of 5% of the aggregate leaseable square footage of all
Borrowing Base Properties;

     (G) Subject Property subject to structural defects, title defects,
environmental conditions or other adverse matters which materially and
adversely affect the profitable operation of such Property as determined
by the Administrative Agent in its sole discretion;

     (H) Subject Property, at any time after the 90th day following the
Recordation Date, for which the Administrative Agent does not have a
valid and perfected first priority Lien on such Property and any
Collateral relating to such Property;

     (I) Subject Property with respect to which a Default under the
related Mortgage has occurred and is continuing; and

     (J) Subject Property designated by the Borrower as having a
Borrowing Base Value of $0, provided that, the Borrower may
rescind such designation upon written notice to the Administrative Agent.

           “Borrowing Date”: any Business Day specified by the Borrower as a
date on which the Borrower requests the Lenders to make Loans hereunder.

           “Borrowing Notice”: with respect to any request for borrowing of
Loans hereunder, a notice from the Borrower, substantially in the form of, and
containing the information prescribed by, Exhibit J, delivered to the
Administrative Agent.

           “Business Day”: (a) for all purposes other than as covered by
clause (b) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close
and (b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (a) and which is also a day for trading by and
between banks in Dollar deposits in the interbank eurodollar market.

           “Business Park Property”: a business park owned and operated by the
Borrower or any of its Subsidiaries immediately adjacent to a Storage Property.

           “Capital Expenditures”: for any period, with respect to any
Person, the aggregate of all expenditures by such Person for the acquisition or
leasing (pursuant to a capital lease) of fixed or capital assets or additions
to equipment (including replacements, capitalized repairs and improvements
during such period) which are required to be capitalized under GAAP on a
balance sheet of such Person.

           “Capital Lease Obligations”: with respect to any Person, the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right

6

 

to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP;
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.

           “Capital Stock”: any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.

           “Capitalization Rate”: 8.50%.

           “Cash Equivalents”: (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof having combined
capital and surplus of not less than $500,000,000; (c) commercial paper of an
issuer rated at least A-2 by Standard & Poor’s Ratings Services (“S&P”)
or P-2 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of acquisition; (d)
repurchase obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than
30 days with respect to securities issued or fully guaranteed or insured by the
United States government; (e) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody’s; (f) securities with maturities of six
months or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition; and (g) shares of money market mutual or similar
funds which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.

           “Change of Control”: the occurrence of any of the following
events: (a) any “person” or “group” (as such terms are used in Sections 13(d)
and 14(d) of the Exchange
Act), shall become, or obtain rights (whether by means or warrants,
options or otherwise) to become, the “beneficial owner” (as defined in Rules
13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more
than 25% of the outstanding common stock of the REIT; (b) the board of
directors of the REIT shall cease to consist of a majority of Continuing
Directors; or (c) the REIT shall cease to own and control, of record and
beneficially, directly, 75% of each class of outstanding Capital Stock of the
Borrower free and clear of all Liens (except Liens created by the Guarantee and
Collateral Agreement).

7

 

           “Closing Date”: the date on which the conditions precedent set
forth in Section 6.1 shall have been satisfied, which date shall be not later
than October 27, 2004.

           “CMBS Financing”: as defined in the recitals.

           “Code”: the Internal Revenue Code of 1986, as amended from time to
time.

           “Collateral”: all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.

           “Commitment”: as to any Lender, the obligation of such Lender to
make Loans and participate in Letters of Credit, in an aggregate principal
and/or face amount not to exceed the amount set forth under the heading
“Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum
delivered by such Lender, or, as the case may be, in the Assignment and
Acceptance pursuant to which such Lender became a party hereto, as the same may
be changed from time to time pursuant to the terms hereof. The original
aggregate amount of the Total Commitments is $150,000,000.

           “Commitment Fee Rate”: 0.25% per annum; provided, that on
and after the first Adjustment Date occurring after the completion of two full
fiscal quarters of the Borrower after the Closing Date, the Commitment Fee Rate
will be as determined pursuant to the Pricing Grid.

           “Commitment Increase Notice”: as defined in Section 2.20(a).

           “Commitment Percentage”: as to any Lender at any time, the
percentage which such Lender’s Commitment then constitutes of the Total
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate amount of such Lender’s
Extensions of Credit then outstanding constitutes of the Total Extensions of
Credit then outstanding).

           “Commitment Period”: the period from and including the Closing
Date to the Termination Date.

           “Commonly Controlled Entity”: an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.

           “Compliance Certificate”: a certificate duly executed by a
Responsible Officer, substantially in the form of Exhibit B.

           “Confidential Information Memorandum”: a collective reference to
the marketing materials furnished to the initial Lenders in connection with the
syndication of the Facility.

           “Consolidated Adjusted Asset Value”: on any date of determination,
the sum (without duplication) of (a) the aggregate Adjusted Asset Value of all
Subject Properties on such date plus (b) the book value (determined in
accordance with GAAP) of all other tangible assets of the REIT and its
Subsidiaries on such date, provided that, (x) the portion of the
Consolidated

8

 

Adjusted Asset Value attributable to clause (b) above shall not
exceed 5% of the Consolidated Adjusted Asset Value and (y) the portion of the
Consolidated Adjusted Asset Value attributable to Lease-Up Properties shall not
exceed 10% of the Consolidated Adjusted Asset Value and any excess of such
amounts shall be excluded when determining the Consolidated Adjusted Asset
Value.

           “Consolidated EBITDA”: for any period, Consolidated Net Income of
the REIT and its Subsidiaries for such period plus, without duplication
and to the extent reflected as a charge in the statement of such Consolidated
Net Income for such period, the sum of (a) income tax expense, (b) interest
expense of the REIT and its Subsidiaries, amortization or writeoff of debt
discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness, (c) depreciation and amortization
expense, (d) amortization of intangibles (including, but not limited to,
goodwill) and organization costs, (e) any extraordinary, unusual or
non-recurring non-cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, losses on sales of assets outside of the ordinary course of
business), and (f) any other non-cash charges, and minus, to the extent
included in the statement of such Consolidated Net Income for such period, the
sum of (a) interest income (except to the extent deducted in determining such
Consolidated Net Income), (b) any extraordinary, unusual or non-recurring
income or gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period, gains on
the sales of assets outside of the ordinary course of business), (c) any other
non-cash income and (d) any cash payments made during such period in respect of
items described in clause (e) above subsequent to the fiscal quarter in which
the relevant non-cash expenses or losses were reflected as a charge in the
statement of Consolidated Net Income, all as determined on a consolidated
basis.

           “Consolidated Fixed Charge Coverage Ratio”: for any period, the
ratio of (a) Adjusted EBITDA for such period to (b) Consolidated Fixed Charges
for such period.

           “Consolidated Fixed Charges”: for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b) all
regularly scheduled payments made during such period on account of principal of
Indebtedness of the REIT or any of its Subsidiaries, other than balloon
principal, bullet or similar principal payments which repays in full such
Indebtedness, (c) dividends accrued (whether or not declared or payable) on the
preferred stock of the REIT or its Subsidiaries during such period and (d) the
REIT’s and its
Subsidiaries’ pro-rata share of all expenses and payments referred to in
the preceding clauses (a) and (b) of any unconsolidated Person in which they
have an equity interest.

           “Consolidated Interest Coverage Ratio”: for any period, the ratio
of (a) Adjusted EBITDA for such period to (b) Consolidated Interest Expense for
such period.

           “Consolidated Interest Expense”: for any period, the total interest
expense of the REIT and its Subsidiaries (including that attributable to
Capital Lease Obligations and any capitalized interest expense) for such period
with respect to all outstanding Indebtedness of the REIT and its Subsidiaries
(including, without limitation, all commissions, discounts and other fees and
charges owed by the REIT and its Subsidiaries with respect to letters of
credit, bankers’ acceptance financing and net costs of the REIT and its
Subsidiaries under Hedge Agreements in

9

 

respect of interest rates to the extent
such net costs are allocable to such period in accordance with GAAP,
plus the REIT’s and its Subsidiaries’ pro-rata share of all such
expenses of any unconsolidated Person in which they have an equity interest.

           “Consolidated Leverage Ratio”: on any date of determination, the
ratio of (a) Consolidated Total Debt on such day to (b) Consolidated Adjusted
Asset Value in effect on such day.

           “Consolidated Net Income”: of any Person for any period, the
consolidated net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP;
provided, that in calculating Consolidated Net Income of the REIT and
its consolidated Subsidiaries for any period, there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the REIT or is merged into or consolidated with the REIT or any
of its Subsidiaries, (b) the income (or deficit) of any Person (other than a
Subsidiary of the Borrower) in which the REIT or any of its Subsidiaries has an
ownership interest, except to the extent that any such income is actually
received by the REIT or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the REIT
to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any Contractual Obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.

           “Consolidated Total Asset Value”: on any date of determination,
the sum (without duplication) of (a) the aggregate Asset Value of all Subject
Properties on such date plus (b) the book value (determined in
accordance with GAAP) of all other tangible assets of the REIT and its
Subsidiaries on such date, provided that, (x) the portion of the
Consolidated Total Asset Value attributable to clause (b) above shall not
exceed 5% of the Consolidated Total Asset Value and (y) the portion of the
Consolidated Total Asset Value attributable to Lease-Up Properties shall not
exceed 10% of the Consolidated Total Asset Value and any excess of such amounts
shall be excluded when determining the Consolidated Total Asset Value.

           “Consolidated Total Debt”: at any date, the aggregate principal
amount of all Indebtedness of the REIT and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP.

           “Construction Budget”: the fully-budgeted costs for the acquisition
and construction of a given piece of real property (including the cost of
acquiring such piece of real property) as reasonably determined by the Borrower
in good faith.

           “Continuing Directors”: the directors of the REIT on the Closing
Date, after giving effect to the IPO and the other transactions contemplated
hereby, and each other director of the REIT, if, in each case, such other
director’s nomination for election to the board of directors of the REIT is
recommended by at least 66-2/3% of the then Continuing Directors.

           “Contractual Obligation”: as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.

10

 

           “Control Investment Affiliate”: as to any Person, any other Person
that (a) directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person and (b) is organized by such Person
primarily for the purpose of making equity or debt investments in one or more
companies. For purposes of this definition, “control” of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

           “Default”: any of the events specified in Section 9, whether or
not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.

           “Derivatives Counterparty”: as defined in Section 8.6.

           “Disposition”: with respect to any Property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition thereof;
and the terms “Dispose” and “Disposed of” shall have correlative
meanings.

           “Dollars” and “$”: dollars in lawful currency of the United
States of America.

           “Domestic Subsidiary”: any Subsidiary of the Borrower organized
under the laws of any jurisdiction within the United States of America.

           “Environmental Indemnity Agreement”: the Environmental Indemnity
Agreement to be executed and delivered by each Loan Party executing a mortgage,
substantially in the form of Exhibit O.

           “Environmental Laws”: any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common law) of any
international authority, foreign government, the United States, or any state,
local, municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of the
environment or of human health, or employee health and safety, as has been, is
now, or may at any time hereafter be, in effect.

           “Environmental Permits”: any and all permits, licenses, approvals,
registrations, notifications, exemptions and other authorizations under any
Environmental Law.

           “ERISA”: the Employee Retirement Income Security Act of 1974, as
amended from time to time.

           “Escrow Agent”: Chicago Title Insurance Company, and its
successors and assigns.

           “Escrow Agreement”: the Escrow Agreement to be executed and
delivered by the REIT, the Borrower, the Subsidiary Guarantors, the
Administrative Agent and the Escrow Agent, substantially in the form of Exhibit
O, as the same may be amended, supplemented or otherwise modified from time to
time.

11

 

           “Eurocurrency Reserve Requirements”: for any day, the aggregate
(without duplication) of the maximum rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves) under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.

           “Eurodollar Base Rate”: with respect to each day during each
Interest Period, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on
the first day of such Interest Period appearing on Page 3750 of the Telerate
screen as of 11:00 A.M., London time, two Business Days prior to the beginning
of such Interest Period. In the event that such rate does not appear on Page
3750 of the Telerate screen (or otherwise on such screen), the “Eurodollar
Base Rate” for purposes of this definition shall be determined by reference
to such other comparable publicly available service for displaying eurodollar
rates as may be selected by the Administrative Agent.

           “Eurodollar Loans”: Loans for which the applicable rate of
interest is based upon the Eurodollar Rate.

           “Eurodollar Rate”: with respect to each day during each Interest
Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):

Eurodollar Base Rate

1.00 - Eurocurrency Reserve Requirements

           “Eurodollar Tranche”: the collective reference to Eurodollar Loans
under a particular Facility the then current Interest Periods with respect to
all of which begin on the same date and end on the same later date (whether or
not such Loans shall originally have been made on the same day).

           “Event of Default”: any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.

           “Exchange Act”: the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.

           “Excluded Foreign Subsidiary”: any Foreign Subsidiary in respect
of which either (a) the pledge of all of the Capital Stock of such Subsidiary
as Collateral or (b) the guaranteeing by such Subsidiary of the Obligations,
would, in the good faith judgment of the Borrower, result in adverse tax
consequences to the Borrower.

           “Excluded Financing Subsidiary”: any Subsidiary of the Borrower (i)
which is the primary obligor with respect to any Indebtedness outstanding under
Section 8.2(d) or 8.2(f) and such Indebtedness expressly prohibits the pledge
of the Capital Stock of such Subsidiary to secure the Obligations and (ii)
which does not own or lease a Borrowing Base Property.

12

 

           “Extensions of Credit”: as to any Lender at any time an amount
equal to the sum of (a) the aggregate principal amount of all Loans made by
such Lender then outstanding and (b) such Lender’s Commitment Percentage of the
L/C Obligations then outstanding.

           “Facility”: the Commitments and the extensions of credit made
thereunder.

           “Fair Market Value”: with respect to any asset, the price which
could be negotiated in an arm’s length transaction, for cash, between a willing
seller and a willing buyer, neither of which is under pressure or compulsion to
complete the transaction. Fair Market Value shall be determined by the board
of directors of the general partner of the Borrower acting in good faith and
evidenced by a board resolution thereof delivered to the Administrative Agent
or, with respect to any asset valued at less than $1,000,000, such
determination may be by a duly authorized officer of the Borrower evidenced by
a certificate of Responsible Officer delivered to the Administrative Agent.

           “Federal Funds Effective Rate”: for any day, the weighted average
of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.

           “FIRREA”: the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.

           “Foreign Subsidiary”: any Subsidiary of the Borrower that is not a
Domestic Subsidiary.

           “Funding Office”: the office specified from time to time by the
Administrative Agent as its funding office by notice to the Borrower and the
Lenders.

           “Funds From Operations”: for any period, with respect to the REIT
and its Subsidiaries, Consolidated Net Income of the REIT and its Subsidiaries
for such period, plus real estate depreciation and amortization
(excluding amortization of financing costs), plus amortization
associated with the purchase of property management companies, plus
non-cash charges for the impairment of real estate assets for such period,
minus, to the extent included in the statement of such Consolidated Net
Income for such period (without duplication), gains or losses from debt
restructuring and sales of property, and after adjustments for unconsolidated
partnerships and joint ventures (with adjustments for unconsolidated
partnerships and joint ventures calculated to reflect funds from operations on
the same basis) together with adjustments for the non-cash deferred portion of
any income tax provision for unconsolidated subsidiaries and the payment of
dividends on preferred stock, as interpreted by the National Association of
Real Estate Investment Trusts in its March, 1995, White Paper on Funds From
Operations; provided that, the following shall be excluded when
calculating “Funds From Operations”: (i) non-cash adjustments for loan
amortization costs, and (ii) interest expense charges (or benefits) for
minority interest marked-to-market adjustments arising under Statement of

13

 

Financial Accounting Standards No. 150 of the Financial Accounting Standards
Board (“FAS 150”) as interpreted under GAAP.

           “GAAP”: generally accepted accounting principles in the United
States of America as in effect from time to time.

           “Governmental Authority”: any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

           “Guarantee and Collateral Agreement”: the Guarantee and Collateral
Agreement to be executed and delivered by the REIT, the Borrower and each
Subsidiary Guarantor, substantially in the form of Exhibit A, as the same may
be amended, supplemented or otherwise modified from time to time.

           “Guarantee Obligation”: as to any Person (the “guaranteeing
person”), any obligation, including a reimbursement, counterindemnity or
similar obligation, of the guaranteeing person that guarantees or in effect
guarantees, or which is given to induce the creation of a separate obligation
by another Person (including any bank under any letter of credit) that
guarantees or in effect guarantees any Indebtedness, leases, dividends or other
obligations (the “primary obligations”) of any other third Person (the
“primary obligor”) in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
Property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii)
to purchase Property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however,
that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed
to be the lower of (a) an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Guarantee Obligation is made
and (b) the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee Obligation,
unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person’s
maximum reasonably anticipated liability in respect thereof as determined by
the Borrower in good faith.

           “Guarantors”: the collective reference to the REIT and the
Subsidiary Guarantors.

14

 

           “Hedge Agreements”: all interest rate or currency swaps, caps or
collar agreements, foreign exchange agreements, commodity contracts or similar
arrangements entered into by the Borrower or its Subsidiaries providing for
protection against fluctuations in interest rates, currency exchange rates,
commodity prices or the exchange of nominal interest obligations, either
generally or under specific contingencies.

           “Increase Effective Date”: the date on which the Administrative
Agent shall have received a Commitment Increase Notice and all conditions
precedent to the effectiveness of the related Commitment increase set forth in
Section 2.20 shall have been satisfied, which date shall occur no later than
the second anniversary of the Closing Date.

           “Increase Option Period”: the period beginning on the Closing Date
to, but excluding, the date that is the second anniversary of the Closing Date.

           “Indebtedness”: of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services (other than
trade payables incurred in the ordinary course of such Person’s business), (c)
all obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to Property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such Property), (e) all Capital Lease Obligations of such Person,
(f) all obligations of such Person, contingent or otherwise, as an account
party or applicant under acceptance, letter of credit, surety bond or similar
facilities, (g) all obligations of such Person, contingent or otherwise, to
purchase, redeem, retire or otherwise acquire for value any Capital Stock of
such Person, (h) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above, (i) all
obligations of the kind referred to in clauses (a) through (h) above secured by
(or for which the holder of such obligation has an existing right, contingent
or otherwise, to be secured by) any Lien on Property (including, without
limitation, accounts and contract rights) owned by such Person,
whether or not such Person has assumed or become liable for the payment of
such obligation and (j) for the purposes of Section 9(e) only, all obligations
of such Person in respect of Hedge Agreements. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership
in which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor,
provided that, Indebtedness shall include such Person’s pro-rata share
of any Indebtedness of any joint venture in which such Person is a partner,
regardless if such Person is liable therefor.

           “Indemnified Liabilities”: as defined in Section 11.5.

           “Indemnitee”: as defined in Section 11.5.

           “Insolvency”: with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.

15

 

           “Insolvent”: pertaining to a condition of Insolvency.

           “Intellectual Property”: the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.

           “Interest Payment Date”: (a) as to any Base Rate Loan, the last
day of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurodollar
Loan having an Interest Period of three months or shorter, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day that is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Loan (other than any Base Rate Loan), the date of any
repayment or prepayment made in respect thereof.

           “Interest Period”: as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not later than 11:00 A.M., New York City time, on the date
that is three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:

(1) if any Interest Period would otherwise end on a day that is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day
unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;

(2) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date; and

(3) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period.

           “Investments”: as defined in Section 8.7.

           “IPO”: as defined in the recitals.

16

 

           “Issuing Lender”: Wachovia Bank, National Association or any
Lender from time to time designated by the Borrower as an Issuing Lender with
the consent of such Lender and the Administrative Agent.

           “L/C Commitment”: $10,000,000.

           “L/C Fee Payment Date”: the last day of each March, June,
September and December and the last day of the Commitment Period.

           “L/C Obligations”: at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.5.

           “L/C Participants”: with respect to any Letter of Credit, the
collective reference to all the Lenders other than the Issuing Lender that
issued such Letter of Credit.

           “Lease-Up Property”: any Subject Property upon which construction
of all improvements has been completed but has not reached stabilization. For
the purposes of this definition, the “stabilization” of any Subject Property is
the earlier to occur of (a) the first date on which the Occupancy Rate equals
or exceeds 65% and (b) the date that is twelve months after the completion of
such construction.

           “Lehman Entity”: any of Lehman Commercial Paper Inc. or any of its
affiliates (including Syndicated Loan Funding Trust).

           “Lender Addendum”: with respect to any initial Lender, a Lender
Addendum, substantially in the form of Exhibit I, to be executed and delivered
by such Lender on the Closing Date as provided in Section 11.17.

           “Lenders”: as defined in the preamble hereto.

           “Letters of Credit”: as defined in Section 3.1(a).

           “Lien”: any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).

           “Loan”: any loan made by any Lender pursuant to this Agreement.

           “Loans”: as defined in Section 2.1.

           “Loan Documents”: this Agreement, the Security Documents, the
Environmental Indemnity Agreement, the Escrow Agreement, the Applications and
the Notes.

17

 

           “Loan Parties”: the REIT, the Borrower and each Subsidiary of the
Borrower that is a party to a Loan Document.

           “Material Adverse Effect”: a material adverse effect on (a) the
Transactions, (b) the business, assets, property, operations, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries
taken as a whole or (c) the validity or enforceability of this Agreement or any
of the other Loan Documents or the rights or remedies of the Agents or the
Lenders hereunder or thereunder.

           “Material Environmental Amount”: an amount or amounts payable by
the Borrower and/or any of its Subsidiaries, in the aggregate in excess of
$1,000,000, for: costs to comply with any Environmental Law; costs of any
investigation, and any remediation, of any Material of Environmental Concern;
and compensatory damages (including, without limitation damages to natural
resources), punitive damages, fines, and penalties pursuant to any
Environmental Law.

           “Material Subsidiary”: any Subsidiary of the Borrower (other than
any Excluded Foreign Subsidiary or Excluded Financing Subsidiary or any
Subsidiary of an Excluded Foreign Subsidiary or Excluded Financing Subsidiary)
which (a) owns, or otherwise has any interest in, any Borrowing Base Property
or any other property or asset which is taken into account when calculating
Borrowing Base Value; (b) has total assets greater than or equal to 5% of total
assets of the Borrower determined on a consolidated basis (calculated as of the
end of the fiscal quarter most recently ending for which financial statements
are available) or (c) has total revenues greater than or equal to 5% of the
total revenues of the Borrower determined on a consolidated basis (calculated
for the fiscal quarter most recently ending for which financial statements are
available). In any event, the term “Material Subsidiaries” shall mean
and include all Subsidiaries of the Borrower, which, together with the
Borrower, account for 90% or more of the Adjusted Total Revenue of the Borrower
determined on a consolidated basis for the fiscal quarter most recently ended
for which financial statements are available. If more than one combination of
Subsidiaries satisfies such threshold, then those Subsidiaries so determined to
be “Material Subsidiaries” shall be specified by the Borrower.
Schedule 5.15 sets forth the Material Subsidiaries as of the Closing
Date.

           “Materials of Environmental Concern”: any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactivity, and any other substances or forces of any kind,
whether or not any such substance or force is defined as hazardous or toxic
under any Environmental Law, that is regulated pursuant to or could give rise
to liability under any Environmental Law.

           “Mortgages”: each of the mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Secured Parties, substantially in the form of Exhibit D (with
such changes thereto as shall be advisable under the law of the jurisdiction in
which such mortgage or deed of trust is to be recorded), as the same may be
amended, supplemented or otherwise modified from time to time.

18

 

           “Multiemployer Plan”: a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.

           “Net Operating Income”: with respect to any Subject Property for
any period, the sum (without duplication) of (a) rents and other revenues
received in the ordinary course of business from operating such Property
(including the proceeds of rent loss insurance, but excluding pre-paid rents
and revenues and security deposits (except to the extent applied in
satisfaction of tenants’ obligations for rents)) during such period
minus (b) all expenses paid or accrued related to the ownership,
operation or maintenance of such Property, including, but not limited to,
taxes, assessments and other similar charges, insurance, utilities, payroll
costs, maintenance, repair and landscaping expenses and on-site marketing
expenses during such period minus (c) Reserves for Capital Expenditures
with respect to such Property for such period minus (d) an implied
management fee in an amount equal to 5.0% of the total gross revenues for such
Property for such period.

           “Net Proceeds”: with respect to any issuance or sale of equity
securities of any Person, the aggregate amount of all cash proceeds and the
Fair Market Value of all other Property received by such Person from such
issuance, net of investment banking fees, legal fees, accountants’ fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred by such Person in connection therewith.

           “New Lender”: as defined in Section 2.20(b).

           “Non-Excluded Taxes”: as defined in Section 2.15(a).

           “Non-U.S. Lender”: as defined in Section 2.15(d).

           “Note”: as defined in Section 2.3.

           “Obligations”: the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) the Loans,
the Reimbursement Obligations and all other obligations and liabilities of the
Borrower to
the Administrative Agent or to any Lender or any Qualified Counterparty,
whether direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, the Letters of
Credit, any Specified Hedge Agreement or any other document made, delivered or
given in connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees, charges and disbursements of counsel
to the Administrative Agent or to any Lender that are required to be paid by
the Borrower pursuant hereto) or otherwise; provided, that (i)
obligations of the Borrower or any Subsidiary under any Specified Hedge
Agreement shall be secured and guaranteed pursuant to the Security Documents
only to the extent that, and for so long as, the other Obligations are so
secured and guaranteed and (ii) any release of Collateral or Guarantors

19

 

effected in the manner permitted by this Agreement shall not require the
consent of holders of obligations under Specified Hedge Agreements.

           “Occupancy Rate”: with respect to any Subject Property on any date
of determination, the ratio, expressed as a percentage of (a) the aggregate
leaseable square footage of all completed space of such Property actually
occupied by tenants that are not Affiliates of any Loan Party, paying rent at
market rates pursuant to binding leases as to which no monetary default has
occurred and has continued for a period in excess of 45 days to (b) the
aggregate leaseable square footage of all completed space of such Property.

           “Other Taxes”: any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.

           “Participant”: as defined in Section 11.6(b).

           “Payment Office”: the office specified from time to time by the
Administrative Agent as its payment office by notice to the Borrower and the
Lenders.

           “PBGC”: the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).

           “Permitted Investors”: the collective reference to Robert J.
Amsdell, Barry L. Amsdell, Todd C. Amsdell, the Robert J. Amsdell Family
Irrevocable Trust and the Loretta Amsdell Family Irrevocable Trust.

           “Person”: an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.

           “Plan”: at a particular time, any employee benefit plan that is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.

           “Pricing Grid”: the pricing grid attached hereto as Annex A.

           “Pro Forma Balance Sheet”: as defined in Section 5.1(a).

           “Projections”: as defined in Section 7.2(c).

           “Property”: any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Capital Stock.

           “Property Management Agreement”: with respect to a Subject
Property, an agreement entered into by a Loan Party to engage a Person to
advise such Loan Party with

20

 

respect to the management of such Property. As of
the Closing Date, all Borrowing Base Properties are subject to the Property
Management Agreement, dated as of October 27, 2004, between the Borrower and
YSI Management LLC, a Delaware corporation.

           “Qualified Counterparty”: with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender or an affiliate of a Lender.

           “Recordation Date”: the earlier of: (i) the date on which an
Event of Default shall have occurred and is continuing or (ii) the date on
which the Administrative Agent receives notice pursuant to Section 7.2(g)
stating that the Borrowing Base Leverage Ratio equals or exceeds 0.55 to 1.00.

           “Recourse Indebtedness”: with respect any Indebtedness or
Guarantee Obligation initially incurred by any Person pursuant to Section
8.2(f), such Indebtedness shall be deemed “Recourse” and excluded from
Section 8.2(f) if, and to the extent that, any of the events giving rise to the
nonrecourse exceptions for liability of the Borrower as guarantor of such
Indebtedness described in (i) Section (A) of Schedule 8.2(f) has
occurred and the aggregate amount of such losses, costs, expenses and
liabilities exceeds $10,000,000 or (ii) Section (B) of Schedule 8.2(f)
has occurred. An obligation of the Borrower that is without Recourse to the
assets and/or properties of the Borrower shall not be considered a
“Recourse” obligation unless any of the events or circumstances
described in Section (A) or (B) of Schedule 8.2(f) have occurred.

           “REIT”: as defined in the preamble.

           “REIT Status”: with respect to any Person, (a) the qualification
of such Person as a real estate investment trust under Sections 856 through 860
of the Code, and (b) the applicability to such Person and its shareholders of
the method of taxation provided for in Sections 857 et seq. of
the Code.

           “Register”: as defined in Section 11.6(d).

           “Regulation H”: Regulation H of the Board as in effect from time
to time.

           “Regulation U”: Regulation U of the Board as in effect from time
to time.

           “Reimbursement Obligation”: the obligation of the Borrower to
reimburse each Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit issued by such Issuing Lender.

           “Related Fund”: with respect to any Lender, any fund that (x)
invests in commercial loans and (y) is managed or advised by the same
investment advisor as such Lender, by such Lender or an Affiliate of such
Lender.

           “Reorganization”: with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.

21

 

           “Reportable Event”: any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg.
§ 4043.

           “Required Lenders”: at any time, the holders of more than 66-2/3%
of the Total Commitments then in effect or, if the Commitments have been
terminated, more than 66-2/3% of the Total Extensions of Credit then
outstanding.

           “Requirement of Law”: as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Property or to which such Person
or any of its Property is subject.

           “Reserves for Capital Expenditures”: with respect to any Subject
Property for any period, an amount equal to (a) the aggregate leaseable square
footage of all completed space of such Property multiplied by (b) the
Applicable Reserve Amount multiplied by (c) the number of days actually
elapsed during such period divided by (d) 365.

           “Responsible Officer”: the chief executive officer, president or
chief financial officer of the general partner of the Borrower, but in any
event, with respect to financial matters, the chief financial officer of the
general partner of the Borrower.

           “Restricted Payments”: as defined in Section 8.6.

           “Restructuring”: as defined in the recitals.

           “SEC”: the Securities and Exchange Commission (or successors
thereto or an analogous Governmental Authority).

           “Secured Parties”: as defined in the Guarantee and Collateral
Agreement.

           “Security Documents”: the collective reference to the Guarantee
and Collateral Agreement, the Mortgages and all other security documents
hereafter delivered to the Administrative Agent granting a Lien in favor of the
Administrative Agent for the benefit of the
Secured Parties on any Property of any Person to secure the obligations
and liabilities of any Loan Party under any Loan Document.

           “Single Employer Plan”: any Plan that is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.

           “Solvent”: with respect to any Person, as of any date of
determination, (a) the amount of the “present fair saleable value” of the
assets of such Person will, as of such date, exceed the amount of all
“liabilities of such Person, contingent or otherwise”, as of such date, as such
quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present
fair saleable value of the assets of such Person will, as of such date, be
greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (c) such Person

22

 

will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business, and (d) such Person will be able to pay its
debts as they mature. For purposes of this definition, (i) “debt” means
liability on a “claim”, and (ii) “claim” means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured or unmatured, disputed, undisputed, secured or unsecured.

           “Specified Hedge Agreement”: any Hedge Agreement entered into by
the Borrower or any Subsidiary Guarantor and any Qualified Counterparty.

           “Storage Property”: a self-storage facility owned and operated by
the Borrower or any of its Subsidiaries.

           “Subject Property”: any Storage Property or Business Park
Property.

           “Subsidiary”: as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening of
a contingency) to elect a majority of the board of directors or other managers
of such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower.

           “Subsidiary Guarantor”: each Subsidiary of the Borrower that is a
party to the Guarantee and Collateral Agreement.

           “Syndication Agent”: as defined in the preamble hereto.

           “Tangible Net Worth”: for any Person on any date of determination,
such Person’s total stockholder’s equity, plus accumulated depreciation
and amortization, minus (to the extent reflected in determining
stockholders’ equity of such Person): (a)
the amount of any write-up in the book value of any assets reflected in
any balance sheet resulting from revaluation thereof or any write-up in excess
of the cost of such assets acquired, and (b) the aggregate of all amounts
appearing on the asset side of any such balance sheet for patents, patent
applications, copyrights, trademarks, trade names, goodwill and other like
assets which would be classified as intangible assets under GAAP.

           “Termination Date”: October 27, 2007, as it may be extended
pursuant to Section 2.19.

           “Tie-In Jurisdiction”: a jurisdiction in which a “tie-in”
endorsement may be obtained for a title insurance policy covering real property
located in such jurisdiction, which endorsement effectively ties coverage to
other title insurance policies covering real property located in other
jurisdictions.

23

 

           “Total Commitments”: at any time, the aggregate amount of the
Commitments then in effect.

           “Total Extensions of Credit”: at any time, the aggregate amount of
the Extensions of Credit of the Lenders outstanding at such time.

           “Transactions”: a collective reference to the Restructuring, the
financing thereof pursuant to this Agreement, the CMBS Financing and the IPO.

           “Transferee”: as defined in Section 11.15.

           “Type”: as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.

           “Wholly Owned Subsidiary”: as to any Person, any other Person all
of the Capital Stock of which (other than directors’ qualifying shares required
by law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.

           “Wholly Owned Subsidiary Guarantor”: any Subsidiary Guarantor that
is a Wholly Owned Subsidiary of the Borrower.

           1.2 Other Definitional Provisions. Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.

           (b) As used herein and in the other Loan Documents, and any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
relating to the REIT, the Borrower and its Subsidiaries not defined in Section
1.1 and accounting terms partly defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.

           (c) The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.

           (d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.

           (e) All calculations of financial ratios set forth in Section 8.1 and the
calculation of the ratio of Consolidated Total Debt to Consolidated Total Asset
Value for purposes of determining the Applicable Margin shall be calculated to
the same number of decimal places as the relevant ratios are expressed in and
shall be rounded upward if the number in the decimal place immediately
following the last calculated decimal place is five or greater. For example,
if the relevant ratio is to be calculated to the hundredth decimal place and
the calculation of the ratio is 5.126, the ratio will be rounded up to 5.13.

24

 

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

           2.1 Commitments. Subject to the terms and conditions hereof, the
Lenders severally agree to make revolving credit loans (“Loans”) to the
Borrower from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding (i) for each Lender which, when
added to such Lender’s Commitment Percentage of the L/C Obligations then
outstanding, does not exceed the amount of such Lender’s Commitment and (ii)
for all Lenders, does not exceed the Borrowing Base at such time. During the
Commitment Period the Borrower may use the Commitments by borrowing, prepaying
the Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof. The Loans may from time to time be Eurodollar
Loans or Base Rate Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 2.8, provided
that no Loan shall be made as a Eurodollar Loan after the day that is one month
prior to the Termination Date.

           (b) The Borrower shall repay all outstanding Loans on the Termination
Date.

           2.2 Procedure for Borrowing. The Borrower may borrow under the
Commitments on any Business Day during the Commitment Period, provided
that the Borrower shall deliver to the Administrative Agent a Borrowing Notice
(which Borrowing Notice must be received by the Administrative Agent prior to
12:00 Noon, New York City time, (a) three Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Loans, or (b) one Business Day prior
to the requested Borrowing Date, in the case of Base Rate Loans). Any Loans
made on the Closing Date shall initially be Base Rate Loans, and no Loan may be
made as, converted into or continued as a Eurodollar Loan having an Interest
Period in excess of one month prior to the date which is the earlier of (i) 60
days after the Closing Date and (ii) the date on which the Arrangers notify the
Borrower that the primary syndication of the Facility is complete. Each
borrowing of Loans under the Commitments shall be in an amount equal to (x) in
the case of Base Rate Loans,
$1,000,000 or a whole multiple in excess of $100,000 thereof (or, if the
then aggregate Available Commitments are less than $1,000,000, such lesser
amount) and (y) in the case of Eurodollar Loans, $2,000,000 or a whole multiple
of $100,000 in excess thereof. Upon receipt of any such Borrowing Notice from
the Borrower, the Administrative Agent shall promptly notify each Lender
thereof. Each Lender will make its Commitment Percentage of the amount of each
borrowing of Loans available to the Administrative Agent for the account of the
Borrower at the Funding Office prior to 12:00 Noon, New York City time, on the
Borrowing Date requested by the Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent in like funds as received by the
Administrative Agent.

           2.3 Repayment of Loans; Evidence of Debt. The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate Lender, the then unpaid principal amount of each Loan of such
Lender on the Termination Date (or on such earlier date on which the Loans
become due and payable pursuant to Section 9). The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from the date hereof until payment in full thereof at the
rates per annum, and on the dates, set forth in Section 2.10.

25

 

           (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.

           (c) The Administrative Agent, on behalf of the Borrower, shall maintain
the Register pursuant to Section 11.6(d), and a subaccount therein for each
Lender, in which shall be recorded (i) the amount of each Loan made hereunder
and any Note evidencing such Loan, the Type of such Loan and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender’s share thereof.

           (d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.3(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided,
however, that the failure of any Lender or the Administrative Agent to
maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Borrower to repay (with applicable
interest) the Loans made to the Borrower by such Lender in accordance with the
terms of this Agreement.

           (e) The Borrower agrees that, upon the request to the Administrative Agent
by any Lender, the Borrower will promptly execute and deliver to such Lender a
promissory note of the Borrower evidencing any Loans of such Lender,
substantially in the form of Exhibit G (a “Note”), with appropriate
insertions as to date and principal amount; provided, that delivery of
Notes shall not be a condition precedent to the occurrence of the Closing Date
or the making of the Loans or issuance of Letters of Credit on the Closing
Date.

           2.4 Commitment Fees, etc. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee for the
period from and including the Closing Date to the last day of the Commitment
Period, computed at the Commitment Fee Rate on the average daily amount of the
Available Commitment of such Lender during the period for which payment is
made, payable quarterly in arrears on the last day of each March, June,
September and December and on the Termination Date, commencing on the first of
such dates to occur after the date hereof.

           (b) The Borrower agrees to pay to the Administrative Agent the fees in the
amounts and on the dates from time to time agreed to in writing by the Borrower
and the Administrative Agent.

           2.5 Termination or Reduction of Commitments. The Borrower shall
have the right, upon not less than three Business Days’ notice to the
Administrative Agent (which shall be distributed to the Lenders), to terminate
the Commitments or, from time to time, to reduce the aggregate amount of the
Commitments; provided that no such termination or reduction of
Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the Total
Extensions of Credit would exceed the Total Commitments. Any such reduction
shall be in an amount equal to $10,000,000, or a whole

26

 

multiple of $5,000,000
in excess thereof, and shall reduce permanently the Commitments then in effect.

           2.6 Optional Prepayments. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty
(except as otherwise provided herein), upon irrevocable notice delivered to the
Administrative Agent no later than 11:00 A.M., New York City time, three
Business Days prior thereto in the case of Eurodollar Loans and no later than
11:00 A.M., New York City time, one Business Day prior thereto in the case of
Base Rate Loans, which notice shall specify the date and amount of such
prepayment and whether such prepayment is of Eurodollar Loans or Base Rate
Loans; provided, that if a Eurodollar Loan is prepaid on any day other
than the last day of the Interest Period applicable thereto, the Borrower shall
also pay any amounts owing pursuant to Section 2.16. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with (except
in the case of Base Rate Loans) accrued interest to such date on the amount
prepaid. Partial prepayments of Loans shall be in an aggregate principal
amount of $1,000,000 or a whole multiple thereof.

           2.7 Mandatory Prepayments. If, on any date the Total Extensions of
Credit exceeds the Borrowing Base in effect on such date, the Borrower shall
repay the Total Extensions of Credit outstanding on such date to the extent of
such excess (without resulting in a permanent reduction of the Commitments),
provided that if the aggregate principal amount of Loans then
outstanding is less than the amount of the Total Extensions of Credit
outstanding on such date
(because L/C Obligations constitute a portion thereof), the Borrower
shall, to the extent of the balance of such excess, replace outstanding Letters
of Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the Secured
Parties on terms and conditions satisfactory to the Administrative Agent.

           2.8 Conversion and Continuation Options. The Borrower may elect
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent at least two Business Days’ prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may
be made only on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert Base Rate Loans to Eurodollar
Loans by giving the Administrative Agent at least three Business Days’ prior
irrevocable notice of such election (which notice shall specify the length of
the initial Interest Period therefor), provided that no Base Rate Loan
may be converted into a Eurodollar Loan (i) when any Event of Default has
occurred and is continuing and the Administrative Agent has, or the Required
Lenders have, determined in its or their sole discretion not to permit such
conversions or (ii) after the date that is one month prior to the Termination
Date. Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof.

           (b) The Borrower may elect to continue any Eurodollar Loan as such upon
the expiration of the then current Interest Period with respect thereto by
giving irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term “Interest Period” set forth in Section 1.1,
of the length of the next Interest Period to be applicable to such Loan,
provided that no Eurodollar Loan may be continued as such (i) when any
Event of Default has occurred and is continuing and the Administrative Agent
has, or the Required Lenders have,

27

 

determined in its or their sole discretion
not to permit such continuations or (ii) after the date that is one month prior
to the Termination Date, and provided, further, that if the
Borrower shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the preceding
proviso, such Loans shall be converted automatically to Base Rate Loans on the
last day of such then expiring Interest Period. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof.

           2.9 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans and all
selections of Interest Periods shall be in such amounts and be made pursuant to
such elections so that, (a) after giving effect thereto, the aggregate
principal amount of the Eurodollar Loans comprising each Eurodollar Tranche
shall be equal to $2,000,000 or a whole multiple of $100,000 in excess thereof
and (b) no more than ten Eurodollar Tranches shall be outstanding at any one
time.

           2.10 Interest Rates and Payment Dates. Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin in
effect for such day.

           (b) Each Base Rate Loan shall bear interest for each day on which it is
outstanding at a rate per annum equal to the Base Rate in effect for such day
plus the Applicable Margin in effect for such day.

           (c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) (to the extent legally
permitted) shall bear interest at a rate per annum that is equal to (x) in the
case of the Loans, the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this Section plus 2% or (y) in the case
of Reimbursement Obligations, the rate applicable to Base Rate Loans
plus 2%, and (ii) if all or a portion of any interest payable on any
Loan or Reimbursement Obligation or any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate then applicable to Base Rate Loans plus 2%,
in each case, with respect to clauses (i) and (ii) above, from the date of such
non-payment until such amount is paid in full (after as well as before
judgment).

           (d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this
Section shall be payable from time to time on demand.

           2.11 Computation of Interest and Fees. Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base
Rate Loans on which interest is calculated on the basis of the Prime Rate, the
interest thereon shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrower and the Lenders of each
determination of a Eurodollar Rate.

28

 

Any change in the interest rate on a Loan
resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.

           (b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.10(a).

           2.12 Inability to Determine Interest Rate. If prior to the first day of any Interest Period:

     (a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or

     (b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost
to the Lenders (as conclusively certified by the Lenders) of making or
maintaining their affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the Lenders as soon as practicable thereafter. If such notice
is given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Loans that were to
have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar
Loans shall be converted, on the last day of the then current Interest Period
with respect thereto, to Base Rate Loans. Until such notice has been withdrawn
by the Administrative Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower have the right to convert Loans to
Eurodollar Loans.

           2.13 Pro Rata Treatment and Payments. Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee or Letter of Credit fee, and any reduction of the
Commitments of the Lenders, shall be made pro rata according to
the Commitment Percentages of the Lenders. Each payment of interest in respect
of the Loans and each payment in respect of fees payable hereunder shall be
applied to the amounts of such obligations owing to the Lenders pro
rata according to the respective amounts then due and owing to the
Lenders.

           (b) Each payment (including each prepayment) by the Borrower on account of
principal of the Loans shall be made pro rata according to the
respective outstanding principal amounts of the Loans then held by the Lenders.
Each payment in respect of Reimbursement

29

 

Obligations in respect of any Letter
of Credit shall be made to the Issuing Lender that issued such Letter of
Credit.

           (c) The application of any payment of Loans (including optional and
mandatory prepayments) shall be made, first, to Base Rate Loans and,
second, to Eurodollar Loans. Each payment of the Loans (except in the
case of Base Rate Loans) shall be accompanied by accrued interest to the date
of such payment on the amount paid.

           (d) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for
the account of the Lenders, at the Payment Office, in Dollars and in
immediately available funds. Any payment made by the Borrower after 12:00
Noon, New York City time, on any Business Day shall be deemed to have been
on the next following Business Day. If any payment hereunder (other than
payments on the Eurodollar Loans) becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding Business
Day. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day. In the case of any extension
of any payment of principal pursuant to the preceding two sentences, interest
thereon shall be payable at the then applicable rate during such extension.

           (e) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor and
the Administrative Agent has made such amount available to the Borrower, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the greater of (i) the Federal Funds
Effective Rate and (ii) a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation, for the
period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent submitted to
any Lender with respect to any amounts owing under this paragraph shall be
conclusive in the absence of manifest error. If such Lender’s share of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days after such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to Base Rate Loans, on demand, from the Borrower. No
Lender shall be responsible for the failure of another Lender to make its
required advance.

           (f) Unless the Administrative Agent shall have been notified in writing by
the Borrower prior to the date of any payment due to be made by the Borrower
hereunder that the Borrower will not make such payment to the Administrative
Agent, the Administrative Agent

30

 

may assume that the Borrower is making such
payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective
pro rata shares of a corresponding amount. If such payment is
not made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.

           (g) Upon receipt by the Administrative Agent of payments on behalf of
Lenders, the Administrative Agent shall promptly distribute such payments to
the Lender or Lenders entitled thereto, in like funds as received by the
Administrative Agent.

           2.14 Requirements of Law. If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:

     (i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any
Application or any Eurodollar Loan made by it, or change the basis
of taxation of payments to such Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 2.15 and changes in the
rate of tax on the overall net income of such Lender);

     (ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or

     (iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes
entitled to claim any additional amounts pursuant to this Section, it shall
promptly notify the Borrower (with a copy to the Administrative Agent) of the
event by reason of which it has become so entitled.

           (b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation
or application thereof or compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the

31

 

rate of return on such Lender’s or such corporation’s capital as a
consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender’s or such corporation’s policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower (with a copy to
the Administrative Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such corporation for such reduction.

           (c) A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error.
The obligations of the Borrower pursuant to this
Section shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.

           2.15 Taxes. All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on any Agent or any Lender as a result of a present
or former connection between such Agent or such Lender and the jurisdiction of
the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from such Agent’s or such Lender’s having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded
Taxes”) or any Other Taxes are required to be withheld from any amounts
payable to any Agent or any Lender hereunder, the amounts so payable to such
Agent or such Lender shall be increased to the extent necessary to yield to
such Agent or such Lender (after payment of all Non-Excluded Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement; provided, however, that
the Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes (i) that are attributable to such
Lender’s failure to comply with the requirements of paragraph (d) or (e) of
this Section or (ii) that are United States withholding taxes imposed on
amounts payable to such Lender at the time such Lender becomes a party to this
Agreement, except to the extent that such Lender’s assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph
(a).

           (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

           (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing

32

 

authority
or fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agents and the
Lenders for any incremental taxes, interest or penalties that may become
payable by any Agent or any Lender as a result of any such failure. The
agreements in this Section shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.

           (d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in
Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to
the Borrower and the Administrative Agent (or, in the case of a Participant, to
the Lender from which the
related participation shall have been purchased) two copies of either U.S.
Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a
Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio
interest” a statement substantially in the form of Exhibit H and a Form W-8BEN,
or any subsequent versions thereof or successors thereto properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify the Borrower at any time it determines that it is no
longer in a position to provide any previously delivered certificate to the
Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this paragraph that such Non-U.S. Lender is not legally able to deliver.

           (e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided
that such Lender is legally entitled to complete, execute and deliver such
documentation and in such Lender’s reasonable judgment such completion,
execution or submission would not materially prejudice the legal position of
such Lender.

           2.16 Indemnity. The Borrower agrees to indemnify each Lender for,
and to hold each Lender harmless from, any loss or expense that such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment or conversion of
Eurodollar Loans on a day that is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount equal to the
excess, if any, of (i) the amount of interest that would have

33

 

accrued on the
amount so prepaid, or not so borrowed, converted or continued, for the period
from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced
on the date of such failure) in each case at the applicable rate of interest
for such Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank Eurodollar market.
A certificate as to any amounts payable pursuant to this Section submitted to
the Borrower by any Lender shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.

           2.17 Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be canceled and (b) such Lender’s Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to Section
2.16.

           2.18 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.14, 2.15(a)
or 2.17 with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in
this Section shall affect or postpone any of the obligations of any Borrower or
the rights of any Lender pursuant to Section 2.14, 2.15(a) or 2.17.

           2.19 Extension of Termination Date. Not earlier than 90 days
prior to, nor later than 60 days prior to the Original Termination Date (as
defined below), the Borrower may request by written notice to Administrative
Agent (who shall promptly notify Lenders) a one-time, one year extension of the
Termination Date. Such request shall include a certificate signed by a
Responsible Officer stating that (i) the representations and warranties
contained in Section 5 are true and correct on and as of the date of such
certificate and (ii) no Default or Event of Default exists.

           (b) The Termination Date shall be extended to the same date in the
following calendar year, effective as of a date to be determined by
Administrative Agent and the Borrower (the “Extension Effective Date”),
and Administrative Agent shall promptly notify Lenders thereof. On or prior to
the Extension Effective Date, the Borrower shall deliver to

34

 

Administrative
Agent, in form and substance satisfactory to Administrative Agent: (x)
corporate resolutions and incumbency certificates of the Borrower dated as of
the Extension Effective Date approving such extension, (y) new or amended
Notes, if requested by any new or affected
Lender, evidencing such new or extended Commitments and (z) an
acknowledgment and consent from each Guarantor affirming the effectiveness of
the Guarantee and Collateral Agreement and any Security Document to which it is
a party after giving effect to the Termination Date, as extended hereunder.

           (c) Only one extension of the Termination Date may be made, and the
Termination Date shall not, in any event, be extended beyond October 27, 2008.

           (d) The Borrower shall pay to Administrative Agent, for the ratable
benefit of the Lenders, an extension fee (the “Extension Fee”) equal to
0.375% of the aggregate Commitments in effect on the Termination Date (without
giving effect to any extension thereof pursuant to this Section 2.19, the
“Original Termination Date”). The Extension Fee shall be payable on the
Original Termination Date and such extension fees are fully earned on the date
paid. The extension fee paid to each Lender is solely for its own account and
is nonrefundable.

           (e) Upon the satisfaction of the conditions by the Borrower referred to in
this Section 2.19, the extension of the Termination Date pursuant to this
Section 2.19 shall not require the consent of any Lender.

           2.20 Commitment Increases. In the event that the Borrower wishes
to increase the Commitments at any time during the Increase Option Period,
subject to the approval of the Administrative Agent, it shall notify the
Administrative Agent in writing of the amount (the “Offered Increase
Amount”) of such proposed increase (such notice, a “Commitment Increase
Notice”) in a minimum amount equal to at least $10,000,000; provided
that, no Default or Event of Default shall have occurred and be continuing
immediately prior to and after giving effect to any such increase. The
Borrower may, at its election, (i) offer one or more of the Lenders the
opportunity to provide all or a portion of any Offered Increase Amount pursuant
to paragraph (c) below and/or (ii) with the consent of each Issuing Lender and
the Administrative Agent (which consent shall not be unreasonably withheld),
offer one or more additional banks, financial institutions or other entities
the opportunity to provide all or a portion of such Offered Increase Amount
pursuant to paragraph (b) below. Each Commitment Increase Notice shall specify
which Lenders and/or banks, financial institutions or other entities the
Borrower desires to provide such Offered Increase Amount. The Borrower or, if
requested by the Borrower, the Administrative Agent will notify such Lenders,
and/or banks, financial institutions or other entities of such offer.

           (b) Any additional bank, financial institution or other entity which the
Borrower selects to offer participation in any Offered Increase Amount and
which elects to become a party to this Agreement and provide a Commitment in an
amount so offered and accepted by it pursuant to clause (ii) of Section 2.20(a)
shall execute a New Lender Supplement with the Borrower and the Administrative
Agent, substantially in the form of Exhibit K-1, whereupon such bank, financial
institution or other entity (herein called a “New Lender”) shall become
a Lender for all purposes and to the same extent as if originally a party
hereto and shall

35

 

be bound by and entitled to the benefits of this Agreement,
provided that, the Commitment of any such New Lender shall be in an
amount not less than $5,000,000.

           (c) Any Lender which accepts an offer to it by the Borrower to increase
its Commitment pursuant to clause (i) of Section 2.20(a) shall, in each case,
execute a Commitment Increase Supplement with the Borrower, the Issuing Banks
and the Administrative Agent, substantially in the form of Exhibit K-2,
whereupon such Lender shall be bound by and entitled to the benefits of this
Agreement with respect to the full amount of its Commitment as so increased.

           (d) On any Increase Effective Date, (i) each bank, financial institution
or other entity that is a New Lender pursuant to Section 2.20(b) or any Lender
which has increased its Commitment pursuant to Section 2.20(c) shall make
available to the Administrative Agent such amounts in immediately available
funds as the Administrative Agent shall determine, for the benefit of the other
relevant Lenders, as being required in order to cause, after giving effect to
such increase and the use of such amounts to make payments to such other
relevant Lenders, each Lender’s portion of the outstanding Loans of all the
Lenders to equal its Commitment Percentage of such outstanding Loans and (ii)
the Borrower shall be deemed to have repaid and reborrowed all outstanding
Loans as of the date of any increase in the Commitments (with such reborrowing
to consist of the Types of Loans, with related Interest Periods if applicable,
specified in a notice delivered by the Borrower in accordance with the
requirements of Section 2.2). The deemed payments made pursuant to clause (ii)
of the immediately preceding sentence in respect of each Eurodollar Loan shall
be subject to indemnification by the Borrower pursuant to the provisions of
Section 2.16 if the deemed payment occurs other than on the last day of the
related Interest Periods.

           (e) Notwithstanding anything to the contrary in this Section 2.20, (i) in
no event shall any transaction effected pursuant to this Section 2.20 cause the
sum of Total Commitments to exceed $200,000,000, (ii) in no event may the
Borrower deliver more than two Commitment Increase Notices, (iii) in no event
shall there be more than two Increase Effective Dates and (iv) no Lender shall
have any obligation to increase its Commitment unless it agrees to do so in its
sole discretion. Any increase pursuant to this Section 2.20 shall not require
the consent of the Lenders, other than the Lenders, if any, providing
Commitments pursuant to Section 2.20(c).

           (f) The Administrative Agent shall have received on or prior to each
Increase Effective Date, for the benefit of the Lenders, (i) a legal opinion of
counsel to the Borrower covering such matters as are customary for transactions
of this type and such other matters as may be reasonably requested by the
Administrative Agent, (ii) certified copies of resolutions of the Borrower
authorizing such Offered Increase Amount and (iii) an acknowledgment and
consent from each Guarantor affirming the effectiveness of the Guarantee and
Collateral Agreement and any Security Document to which it is a party, after
giving effect to the related increase.

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SECTION 3. LETTERS OF CREDIT

           3.1
L/C Commitment.  (a) Subject to the terms and conditions hereof, each Issuing Lender, in
reliance on the agreements of the other Lenders set forth in Section 3.4(a),
agrees to issue letters of credit (the “Letters of Credit”) for the
account of the Borrower on any Business Day during the Commitment Period in
such form as may be approved from time to time by such Issuing Lender;
provided, that no Issuing Lender shall have any obligation to issue any
Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment, (ii) the aggregate amount of the
Available Commitments would be less than zero or (iii) the Total Extensions of
Credit would exceed the Borrowing Base. Each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the
first anniversary of its date of issuance and (y) the date which is five
Business Days prior to the Termination Date; provided that any Letter of
Credit with a one-year term may provide for the renewal thereof for additional
one-year periods (which shall in no event extend beyond the date referred to in
clause (y) above).

           (b) No Issuing Lender shall at any time be obligated to issue any Letter
of Credit hereunder if such issuance would conflict with, or cause such Issuing
Lender or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.

           3.2 Procedure for Issuance of Letter of Credit. The Borrower may
from time to time request that an Issuing Lender issue a Letter of Credit by
delivering to such Issuing Lender at its address for notices specified herein
an Application therefor, completed to the satisfaction of such Issuing Lender,
and such other certificates, documents and other papers and information as such
Issuing Lender may request. Concurrently with the delivery of an Application
to an Issuing Lender, the Borrower shall deliver a copy thereof to the
Administrative Agent. Upon receipt of any Application, an Issuing Lender will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby by issuing the original of such Letter of Credit to the beneficiary
thereof or as otherwise may be agreed to by such Issuing Lender and the
Borrower (but in no event shall any Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other
papers and information relating thereto). Promptly after issuance by an
Issuing Lender of a Letter of Credit, such Issuing Lender shall furnish a copy
of such Letter of Credit to the Borrower. Each Issuing Lender shall promptly
give notice to the Administrative Agent of the issuance of each Letter of
Credit issued by such Issuing Lender (including the face amount thereof), and
shall provide a copy of such Letter of Credit to the Administrative Agent as
soon as possible after the date of issuance.

           3.3
Fees and Other Charges. (a) The Borrower will pay a fee on the
aggregate drawable amount of all outstanding Letters of Credit at a per annum
rate equal to the Applicable Margin then in effect with respect to Eurodollar
Loans, shared ratably among the Lenders in accordance with their respective
Commitment Percentages and payable quarterly in arrears on each L/C Fee Payment
Date after the issuance date. In addition, the Borrower shall pay to the
relevant Issuing Lender for its own account a fronting fee on the aggregate
drawable amount of all outstanding Letters of
Credit issued by it at a rate per annum agreed between the

37

 

Borrower and
such Issuing Lender, payable quarterly in arrears on each L/C Fee Payment Date
after the issuance date.

           (b) In addition to the foregoing fees, the Borrower shall pay or reimburse
each Issuing Lender for such normal and customary costs and expenses as are
incurred or charged by such Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.

           3.4
L/C Participations. (a) Each Issuing Lender irrevocably agrees
to grant and hereby grants to each L/C Participant, and, to induce each Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from each
Issuing Lender, on the terms and conditions hereinafter stated, for such L/C
Participant’s own account and risk, an undivided interest equal to such L/C
Participant’s Commitment Percentage in each Issuing Lender’s obligations and
rights under each Letter of Credit issued by such Issuing Lender hereunder and
the amount of each draft paid by such Issuing Lender thereunder. Each L/C
Participant unconditionally and irrevocably agrees with each Issuing Lender
that, if a draft is paid under any Letter of Credit issued by such Issuing
Lender for which such Issuing Lender is not reimbursed in full by the Borrower
in accordance with the terms of this Agreement, such L/C Participant shall pay
to the Administrative Agent for the account of such Issuing Lender upon demand
at such Issuing Lender’s address for notices specified herein (and thereafter
the Administrative Agent shall promptly pay to such Issuing Lender) an amount
equal to such L/C Participant’s Commitment Percentage of the amount of such
draft, or any part thereof, that is not so reimbursed. Each L/C Participant’s
obligation to pay such amount shall be absolute and unconditional and shall not
be affected by any circumstance, including (i) any setoff, counterclaim,
recoupment, defense or other right that such L/C Participant may have against
the Issuing Lender, the Borrower or any other Person for any reason whatsoever,
(ii) the occurrence or continuance of a Default or an Event of Default or the
failure to satisfy any of the other conditions specified in Section 5, (iii)
any adverse change in the condition (financial or otherwise) of the Borrower,
(iv) any breach of this Agreement or any other Loan Document by the Borrower,
any other Loan Party or any other L/C Participant or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.

           (b) If any amount (a “Participation Amount”) required to be paid by
any L/C Participant to an Issuing Lender pursuant to Section 3.4(a) in respect
of any unreimbursed portion of any payment made by such Issuing Lender under
any Letter of Credit is paid to such Issuing Lender within three Business Days
after the date such payment is due, such Issuing Lender shall so notify the
Administrative Agent, which shall promptly notify the L/C Participants, and
each L/C Participant shall pay to the Administrative Agent, for the account of
such Issuing Lender, on demand (and thereafter the Administrative Agent shall
promptly pay to such Issuing Lender) an amount equal to the product of (i) such
Participation Amount, times (ii) the daily average Federal Funds
Effective Rate during the period from and including the date such payment is
required to the date on which such payment is immediately available to such
Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any
Participation Amount required to be paid by any L/C Participant pursuant
to Section 3.4(a) is not made available to the Administrative Agent for the
account of the relevant Issuing Lender by such L/C Participant

38

 

within three
Business Days after the date such payment is due, the Administrative Agent on
behalf of such Issuing Lender shall be entitled to recover from such L/C
Participant, on demand, such Participation Amount with interest thereon
calculated from such due date at the rate per annum applicable to Base Rate
Loans. A certificate of the Administrative Agent submitted on behalf of an
Issuing Lender to any L/C Participant with respect to any amounts owing under
this Section shall be conclusive in the absence of manifest error.

           (c) Whenever, at any time after an Issuing Lender has made payment under
any Letter of Credit and has received from the Administrative Agent any L/C
Participant’s pro rata share of such payment in accordance with Section
3.4(a), such Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, including proceeds of
collateral applied thereto by such Issuing Lender), or any payment of interest
on account thereof, such Issuing Lender will distribute to the Administrative
Agent for the account of such L/C Participant (and thereafter the
Administrative Agent will promptly distribute to such L/C Participant) its pro
rata share thereof; provided, however, that in the event that any
such payment received by such Issuing Lender shall be required to be returned
by such Issuing Lender, such L/C Participant shall return to the Administrative
Agent for the account of such Issuing Lender (and thereafter the Administrative
Agent shall promptly return to such Issuing Lender) the portion thereof
previously distributed by such Issuing Lender.

           3.5 Reimbursement Obligation of the Borrower. The Borrower agrees
to reimburse each Issuing Lender, on each date on which such Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by such Issuing Lender, for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment (the amounts
described in the foregoing clauses (a) and (b) in respect of any drawing,
collectively, the “Payment Amount”). Each such payment shall be made to
such Issuing Lender at its address for notices specified herein in lawful money
of the United States of America and in immediately available funds. Interest
shall be payable on each Payment Amount from the date of the applicable drawing
until payment in full at the rate set forth in (i) until the second Business
Day following the date of the applicable drawing, Section 2.10(b) and (ii)
thereafter, Section 2.10(c). Each drawing under any Letter of Credit shall
(unless an event of the type described in clause (i) or (ii) of Section 9(f)
shall have occurred and be continuing with respect to the Borrower, in which
case the procedures specified in Section 3.4 for funding by L/C Participants
shall apply) constitute a request by the Borrower to the Administrative Agent
for a borrowing pursuant to Section 2.2 of Base Rate Loans in the amount of
such drawing. The Borrowing Date with respect to such borrowing shall be the
first date on which a borrowing of Loans could be made, pursuant to Section
2.2, if the Administrative Agent had received a notice of such borrowing at the
time the Administrative Agent receives notice from the relevant Issuing Lender
of such drawing under such Letter of Credit.

           3.6 Obligations Absolute. The Borrower’s obligations under this Section 3 shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment that the Borrower may have or have had
against any Issuing Lender, any beneficiary of a Letter of Credit or any other
Person. The Borrower also agrees with each Issuing Lender that such Issuing
Lender shall not be responsible for, and the Borrower’s Reimbursement
Obligations under Section 3.5 shall not be affected by, among other

39

 

things, the
validity or genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid, fraudulent or forged,
or any dispute between or among the Borrower and any beneficiary of any Letter
of Credit or any other party to which such Letter of Credit may be transferred
or any claims whatsoever of the Borrower against any beneficiary of such Letter
of Credit or any such transferee. No Issuing Lender shall be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Issuing Lender. The Borrower agrees
that any action taken or omitted by an Issuing Lender under or in connection
with any Letter of Credit issued by it or the related drafts or documents, if
done in the absence of gross negligence or willful misconduct and in accordance
with the standards or care specified in the Uniform Commercial Code of the
State of New York, shall be binding on the Borrower and shall not result in any
liability of such Issuing Lender to the Borrower.

           3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the relevant Issuing Lender shall promptly
notify the Borrower and the Administrative Agent of the date and amount
thereof. The responsibility of the relevant Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit, in
addition to any payment obligation expressly provided for in such Letter of
Credit issued by such Issuing Lender, shall be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment appear on their face to be in conformity with
such Letter of Credit.

           3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.

SECTION 4. BORROWING BASE PROPERTIES

           4.1 Acceptance of Borrowing Base Properties.

     (a) Initial Borrowing Base Properties. As of the Closing
Date, the Administrative Agent and the Lenders have approved for
inclusion in calculations of the Borrowing Base the Subject Properties
identified on Schedule 1.1A and the Borrowing Base Value
attributable to each such Property as of such date (as set forth on
Schedule 1.1A); provided that, on or prior to the Closing
Date, the
Administrative Agent and the Lenders shall have received (in
electronic form, if feasible and acceptable to the Lenders), in form and
substance reasonably satisfactory to the Administrative Agent, all of the
documents required to be provided under Section 6.3 with respect to such
Properties.

     (b) Additional Borrowing Base Properties. After the Closing
Date, the Borrower may request that the Lenders include any additional
Subject Property in calculations of the Borrowing Base, by written notice
to the Administrative Agent and the Lenders and compliance with the
provisions of the immediately following clause (i) or (ii) as applicable.

40

 

     (i) Limited Review Properties. If (A) the initial
Borrowing Base Value of such Subject Property is less than
$10,000,000 and (B) such Subject Property satisfies the limited
review criteria set forth on Schedule 4.1(b), then upon
delivery of all of the following documents to the Administrative
Agent and the Lenders (in electronic form, if feasible and
acceptable to the Lenders), in form and substance satisfactory to
the Administrative Agent, such Subject Property shall become a
Borrowing Base Property:

     (1) a certificate of the chief financial officer of the
general partner of the Borrower substantially in the form of
Exhibit M setting forth, among other things, a description of
such Property and certifying that the conditions set forth in
(A) and (B) above have been satisfied with respect to such
Property;

     (2) a true and correct copy of all materials relating to
such Property submitted by the general partner of the
Borrower to the Investment Committee of its board of
directors for their approval of such Property;

     (3) all of the documents required to be provided under
Section 6.3 and, if the Recordation Date has occurred,
Section 4.5(b), with respect to such Property, if not
previously delivered to the Administrative Agent;

     (4) if there exists any deferred maintenance with
respect to such Property, an engineering report prepared by
Borrower or one of its Affiliates with respect to such
Property setting forth in reasonable detail such deferred
maintenance and the estimated cost thereof; and

     (5) such other items or documents as may be appropriate
under the circumstances as reasonably requested by the
Administrative Agent.

     (ii)
Other Properties. (A) If such Subject Property does
not otherwise satisfy any of the conditions set forth in the
immediately preceding clause (i), such Property will not be
included in the calculation of the Borrowing Base until it has been
approved for inclusion by the Required Lenders. To seek such
approval of the Required Lenders, the Borrower shall deliver to the
Administrative Agent and the Lenders (in electronic form, if
feasible and acceptable to the Lenders) the following documents, in
form and substance satisfactory to the Administrative Agent:

     (1) a description of such Property, including the
location, size and Occupancy Rate of such Property;

     (2) a copy of the materials relating to such Property
submitted by the general partner of the Borrower to the
Investment Committee of its board of directors for their
approval of such Property;

41

 

     (3) a detailed operating statement for such Property for
the current fiscal year through the fiscal quarter most
recently ending, certified by the chief financial officer of
the general partner of the Borrower to the best of such
Officer’s knowledge as being true and correct in all material
respects;

     (4) an operating budget for such Property with respect
to the current fiscal year;

     (5) pro-forma financial statements with respect to such
Property for the next succeeding two fiscal years;

     (6) copies of all property condition assessment reports
and mechanical, structural and maintenance studies performed
with respect to such Property not more than 12 months old;

     (7) copies of (I) the applicable Property Management
Agreement and all other material contracts, if any, which
will relate to the use, occupancy, operation, maintenance,
enjoyment or ownership of such Property, and (II) if such
Property is not yet owned by a Loan Party, the purchase
agreement pursuant to which a Loan Party is to acquire such
Property;

     (8) (A) if available, detailed historical Capital
Expenditures for the two fiscal years most recently ending
and (B) projected Capital Expenditures for the immediately
succeeding three full fiscal years for such Property;

     (9) if such Property was acquired by a Loan Party within
the previous six months, the closing statement for the
acquisition of such Property;

     (10) if there exists any deferred maintenance with
respect to such Property, to the extent not otherwise
provided pursuant to item (6) above, an engineering report
prepared by Borrower or one of its Affiliates with respect to
such Property setting forth in reasonable detail such
deferred maintenance and the estimated cost thereof;

     (11) if the relevant Loan Party has a leasehold interest
in such Property, a copy of the current lease for such
Property (which lease shall be a ground lease) and all
documentation related to such lease; and

     (12) such other information the Administrative Agent or
Lenders may reasonably request in order to evaluate such
Property.

     Each Lender shall notify the Administrative Agent in writing
whether it conditionally approves of the designation of such
Property as a Borrowing Base Property within ten Business Days
after receipt of all such documents and

42

 

information. If a Lender
shall fail to so notify the Administrative Agent, then such Lender
shall be deemed to have not conditionally approved of such
Property.

     (B) Upon the conditional approval of such Property as a
Borrowing Base Property by the Required Lenders, if the Recordation
Date has occurred, the Administrative Agent will (I) obtain an
Appraisal of such Property, (II) determine the Appraised Value
thereof and (III) deliver such Appraisal and the Appraised Value to
the Lenders. Each Lender shall notify the Administrative Agent in
writing whether, after review of such assessments and Appraisal, if
applicable, it approves of the designation of such Property as a
Borrowing Base Property within five Business Days (or if the
Recordation Date has occurred, ten Business Days) after receipt of
all such documents and information. If a Lender shall fail to so
notify the Administrative Agent, then such Lender shall be deemed
to have not approved of such Property. Upon approval of such
Property by the Required Lenders, and upon execution and delivery
of all of the following documents in form and substance
satisfactory to the Administrative Agent, such Property shall
become a Borrowing Base Property:

     (1) all of the documents required to be provided under
Section 6.3 and, if the Recordation Date has occurred,
Section 4.5(b), with respect to such Property, to the extent
not previously delivered to the Administrative Agent; and

     (2) such other items or documents as may be appropriate
under the circumstances as reasonably requested by the
Administrative Agent.

           4.2 Release of Borrowing Base Properties. The Borrower may
request, upon not less than 30 days’ prior written notice to the Administrative
Agent (which shall be distributed to the Lenders), that a Borrowing Base
Property and any related Collateral no longer be included in calculations of
the Borrowing Base and that such Property be released from the Liens created by
the applicable Security Documents, which release (the “Property
Release”) shall be effected by the Administrative Agent if the
Administrative Agent determines all of the following conditions are satisfied
as of the date of such Property Release:

     (a) the Borrower shall have delivered to the Administrative Agent a
certificate of a Responsible Officer certifying that no Default or Event
of Default has occurred and
is then continuing or will occur after giving effect to such
Property Release and the reduction in the Borrowing Base by reason of the
release of such Borrowing Base Property;

     (b) the Borrower shall have delivered to the Administrative Agent a
Borrowing Base Report reflecting the Borrowing Base for the most recent
fiscal quarter for which financial statements are available assuming such
Property Release occurred on the first day of such period;

     (c) the Borrower shall have delivered to the Administrative Agent
all documents and instruments reasonably requested by the Administrative
Agent in

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connection with such Property Release including, without
limitation, the following as applicable:

     (i) any instrument to be used to effect such Property Release;
and

     (ii) an appropriate endorsement to the mortgagee title
insurance policy, if any, in effect with respect to the affected
Borrowing Base Property (and appropriate corrective endorsements
with respect to any other mortgagee policies of title insurance on
Borrowing Base Properties which have tie-in clauses which are
affected by the release); and

     (d) the Administrative Agent shall have determined that the Total
Extensions of Credit will not exceed the Borrowing Base after giving
effect to such Property Release and any prepayment to be made and/or the
acceptance of any replacement Subject Property pursuant to Section 4.1,
which is to be given concurrently with such Property Release as an
additional or replacement Borrowing Base Property.

           4.3 Frequency of Calculations of Borrowing Base. On the Closing
Date, the Borrowing Base shall be the amount set forth as such in the Borrowing
Base Report delivered under Section 6.1(s). Thereafter, the Borrowing Base
shall be the amount set forth as such in the Borrowing Base Certificate most
recently delivered under Section 4.2(b), Section 6.3(h) and Section 7.2(f).
Any increase in the Borrowing Base Value of a Borrowing Base Property shall
become effective as of the date on which the next Borrowing Base Report is
delivered pursuant to Section 6.3(h) or Section 7.2(f), provided that,
prior to such date of determination (a) the applicable Borrowing Base Report
substantiates such increase and if such increase is the result of an increase
in the Appraised Value of such Property, the Required Lenders shall have given
their written approval of such increase, and (b) if the Recordation Date has
occurred, the Borrower delivers to the Administrative Agent the following: (i)
if the Property is not located in a Tie-In Jurisdiction, an endorsement to the
title insurance policy in favor of the Administrative Agent for the benefit of
the Secured Parties with respect to such Property increasing the coverage
amount thereof as related to such Property to not less than 100% of the
Borrowing Base Value of such Property and (ii) if the Property is located in a
Tie-In Jurisdiction, an endorsement to the title insurance policy in favor of
the Administrative Agent for the benefit of the Secured Parties with respect to
such Property increasing the coverage amount thereof as related to such
Property to not less than the
Borrowing Base Value of such Property, as well as endorsements to all
other existing title insurance policies issued to the Administrative Agent with
respect to all other Properties located in Tie-In Jurisdictions reflecting an
increase in the aggregate insured amount under the “tie-in” endorsements to an
amount equal to the aggregate amount of the Borrowing Base Values of all such
Properties (including the Property which experienced the increase in Borrowing
Base Value) but in no event in an amount in excess of the aggregate amount of
the Commitments.

           4.4 Appraisals Required by Governmental Authorities. If under
FIRREA or required by any other Governmental Authority, a Lender is required to
obtain an Appraisal of any Borrowing Base Property, whether or not subject to a
Mortgage and whether or not in addition to any other Appraisal previously
obtained with respect to such Property pursuant to this Agreement, the
Administrative Agent shall have the right to cause such an Appraisal to be

44

 

prepared at the Borrower’s cost and expense. The Borrowing Base Value of such
Property shall only be redetermined as a result of delivery of any such new
Appraisal if any Governmental Authority requires such redetermination, in which
case such Borrowing Base Value shall be redetermined in the manner required by
such Governmental Authority.

           4.5 Recording of Mortgages.

           (a) Generally. Any Security Document, except a Mortgage (or other
document customarily recorded in the applicable land records), delivered
pursuant to Section 6.3, the Escrow Agreement or otherwise, may be recorded by
the Administrative Agent upon its delivery to the Administrative Agent. No
Mortgage delivered pursuant to Section 6.3, the Escrow Agreement or otherwise
shall be recorded prior to the Recordation Date. On and after the Recordation
Date, the Administrative Agent shall cause all Mortgages to be recorded upon
the delivery of such Mortgages pursuant to Section 6.3, the Escrow Agreement or
otherwise.

           (b) Required Deliveries. If the Mortgages may be recorded as
provided in Section 4.5(a), the Borrower shall, at its sole cost and expense,
deliver to the Administrative Agent no later than 90 days following (x) in the
event that the Recordation Date occurs due to an increase in the Borrowing Base
Leverage Ratio, the date the Borrowing Base Leverage Ratio first equals or
exceeds 0.55 to 1.00 or (y) in the event that the Recordation Date occurs due
to an Event of Default, the date such Event of Default occurred, as the case
may be, each of the following documents with respect to each Subject Property
subject to a Mortgage, all in form and substance satisfactory to the
Administrative Agent:

     (i) an ALTA 1992 Form mortgagee’s Policy of Title Insurance
(with deletion of the creditor’s rights exclusion and deletion of
the mandatory arbitration provision) or other form acceptable to
the Administrative Agent in favor of the Administrative Agent for
the benefit of the Secured Parties with respect to such Property,
including endorsements with respect to such items of coverage as
the Administrative Agent may request (and which endorsements are
available in the
applicable state), in a coverage amount equal to no less than
100% of the Borrowing Base Value of such Property (excluding the
value of any personal property located at such Property), issued by
a title insurance company acceptable to the Administrative Agent
and with coinsurance or reinsurance (with direct access agreements)
with title insurance companies acceptable to the Administrative
Agent, showing the fee simple title to (or a valid leasehold
interest in) the land and improvements described in the applicable
Mortgage as vested in the applicable Loan Party, and insuring that
the Lien granted by such Mortgage is a valid first priority Lien
against such Property, subject only to Liens permitted by Sections
8.3(b) through (e);

     (ii) copies of all documents of record reflected in Schedule B
of such Policy of Title Insurance;

     (iii) a current or currently certified survey dated within 12
months of the date of the filing of such Mortgage, certified by a
surveyor licensed in the jurisdiction where such Property is
located to have been prepared in accordance

45

 

with the then effective
Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys, and if not adequately covered by the survey certification,
a certificate from a licensed engineer or other professional
satisfactory to the Administrative Agent that such Property is not
located in a Special Flood Hazard Area as defined by the Federal
Insurance Administration; provided, with respect to any
survey dated more than 30 days prior to the date of the filing of
such Mortgage, such survey shall be accompanied by an affidavit
from the Borrower stating that there has been no changes to the
Property or improvements thereto since the date of such survey;
provided, further, in any case such survey shall be
such that title insurance issued described in clause (i) with
respect to such Property does not contain an exception for a
current and accurate survey;

     (iv) UCC, tax, judgment and lien search reports with respect
to the applicable Loan Party and such Property subject to a
Mortgage in all necessary or appropriate jurisdictions and under
all legal and appropriate trade names indicating that there are no
Liens of record on such Property or any of the Collateral relating
thereto other than Liens permitted by Section 8.3;

     (v) an opinion of counsel admitted to practice law in the
jurisdiction in which such Property is located and acceptable to
the Administrative Agent, addressed to the Administrative Agent and
each Lender covering such legal matters relating to the
transactions contemplated hereby as the Administrative Agent may
reasonably request;

     (vi) an opinion or counsel admitted to practice law in the
jurisdiction in which the applicable Loan Party is formed and
acceptable to the Administrative Agent, addressed to the
Administrative Agent and each Lender covering such legal matters
relating to the formation and existence and power of the Person
executing documents, and the due authorization, execution and
delivery of the
Security Documents and other documents for consummating the
transactions contemplated hereby as the Administrative Agent may
reasonably request;

     (vii) a “Phase I” environmental assessment of such Property
not more than 12 months old prepared by an environmental
engineering firm acceptable to the Administrative Agent, and any
additional environmental studies or assessments recommended by such
assessment (including any “Phase II” assessment) or otherwise
available to the Borrower performed with respect to such Property;

     (viii) an Appraisal with respect to such Property; and

     (ix) such other due diligence materials, instruments,
documents, agreements, financing statements, certificates and
opinions as the Administrative Agent may reasonably request.

           (c) Mortgage Filing Tax. If the Mortgages may be recorded pursuant
to Section 4.5(a), the Borrower shall pay to the Administrative Agent an amount
equal to any

46

 

mortgage, recording or documentary filing or similar tax required
to be paid in connection with delivery or filing of such Mortgages within two
Business Days after demand therefor.

           (d) No Borrowings, Etc. If the Mortgages may be recorded as a
result of Borrowing Base Leverage Ratio equaling or exceeding 0.55 to 1.00, the
Borrower may not request any Loans or Letters of Credit until such time as all
of the Mortgages have been recorded and all of the items required to be
delivered pursuant to Section 4.5(b) shall have been delivered.

           (e) Subsequent Release. Once a Mortgage has been recorded, the
Collateral thereunder shall be released only in accordance with the terms
otherwise provided herein and therein, without regard to the Borrowing Base
Leverage Ratio.

           4.6 Status of Escrowed Documents. Notwithstanding anything to the
contrary in this agreement or any other Loan Document, each party hereto
acknowledges and agrees that the Mortgages relating to the Borrowing Base
Properties located in the State of Florida are subject to the Escrow Agreement
and accordingly, shall not be deemed delivered to the Administrative Agent
except as provided therein.

SECTION 5. REPRESENTATIONS AND WARRANTIES

           To induce the Agents and the Lenders to enter into this Agreement and to
make the Loans and issue or participate in the Letters of Credit, the REIT and
the Borrower hereby jointly and severally represent and warrant to each Agent
and each Lender that:

           5.1
Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of the REIT and its consolidated Subsidiaries as at
September 30, 2004 (including the notes thereto) (the “Pro Forma Balance
Sheet”), copies of which have heretofore been furnished to each Lender, has
been prepared giving effect (as if such events had occurred on such date) to
(i) the consummation of the Transactions, (ii) the Loans to be made on the
Closing Date and the use of proceeds thereof and (iii) the payment of fees and
expenses in connection with the foregoing. The Pro Forma Balance Sheet has
been prepared based on the best information available to the REIT as of the
date of delivery thereof, and presents fairly on a pro forma
basis the estimated financial position of the REIT and its consolidated
Subsidiaries as at September 30, 2004, assuming that the events specified in
the preceding sentence had actually occurred at such date.

           (b) The audited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at December 31, 2001, December 31, 2002 and
December 31, 2003, and the related consolidated statements of income and of
cash flows for the fiscal years ended on such dates, reported on by and
accompanied by an unqualified report from Deloitte & Touche LLP, copies of
which have heretofore been furnished to each Lender, present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of its operations
and its consolidated cash flows for the respective fiscal years then ended.
The unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at June 30, 2004, and the related unaudited consolidated
statements of income and cash flows for the six-month period ended on such
date, copies of which have heretofore been furnished to each Lender, present
fairly the consolidated financial

47

 

condition of the REIT and its consolidated
Subsidiaries as at such date, and the consolidated results of its operations
and its consolidated cash flows for the nine-month period then ended (subject
to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the aforementioned firm of accountants and disclosed
therein). The REIT, the Borrower and its Subsidiaries do not have any material
Guarantee Obligations, contingent liabilities and liabilities for taxes, or any
long-term leases or unusual forward or long-term commitments, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives, that are not
reflected in the most recent financial statements referred to in this
paragraph. During the period from December 31, 2003 to and including the date
hereof there has been no Disposition by the REIT or any of its Subsidiaries of
any material part of its business or Property.

           5.2 No Change. Since December 31, 2003 there has been no development or event that has
had or could reasonably be expected to have a Material Adverse Effect.

           5.3 Corporate Existence; Compliance with Law. Each of the REIT,
the Borrower and its Subsidiaries (a) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, (b)
has the corporate power and authority, and the legal right, to own and operate
its Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation or other organization and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of Property or the conduct
of its business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

           5.4 Corporate Power; Authorization; Enforceable Obligations. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party, to consummate
the Transactions and, in the case of the Borrower, to borrow hereunder. Each
Loan Party has taken all necessary corporate or other action to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party, to consummate the Transactions and, in the case of the Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the consummation of the Transactions, the borrowings hereunder
or the execution, delivery, performance, validity or enforceability of this
Agreement or any of the other Loan Documents, except (i) consents,
authorizations, filings and notices described in Schedule 5.4, which
consents, authorizations, filings and notices have been obtained or made and
are in full force and effect and (ii) the filings referred to in Section 5.19.
Each Loan Document (other than the Mortgages subject to the Escrow Agreement)
has been duly executed and delivered on behalf of each Loan Party that is a
party thereto. This Agreement constitutes, and each other Loan Document (other
than the Mortgages subject to the Escrow Agreement) upon execution will
constitute, a legal, valid and binding obligation of each Loan Party that is a
party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium

48

 

or similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law). Each of
the Mortgages subject to the Escrow Agreement has been duly executed on behalf
of each Loan Party that is a party thereto, and upon the delivery of such
Mortgage in accordance with the terms of the Escrow Agreement, will constitute
a legal, valid and binding obligation of each Loan Party that is party thereto,
enforceable against each such Loan Party in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principals (whether
enforcement is sought by proceedings in equity or at law).

           5.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other
Loan Documents, the consummation of the Transactions, the issuance of Letters
of Credit, the borrowings hereunder and the use of the proceeds thereof will
not violate any Requirement of Law or any Contractual Obligation of the REIT,
the Borrower or any of its Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such Contractual Obligation
(other than the Liens created by the Security Documents). No Requirement of
Law or Contractual Obligation applicable to the Borrower or any of its
Subsidiaries could reasonably be expected to have a Material Adverse Effect.

           5.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the REIT or the Borrower, threatened by or against the
REIT, the Borrower or any of its Subsidiaries or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) that could
reasonably be expected to have a Material Adverse Effect.

           5.7 No Default. Neither the REIT, the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.

           5.8 Ownership of Property; Liens. Each of the REIT, the Borrower
and its Subsidiaries has title in fee simple to, or a valid leasehold interest
in, all its real property, and good title to, or a valid leasehold interest in,
all its other Property, and none of such Property is subject to any Lien except
as permitted by Section 8.3.

           5.9 Intellectual Property. The REIT, the Borrower and each of its
Subsidiaries owns, or is licensed to use, all Intellectual Property necessary
for the conduct of its business as currently conducted. No material claim has
been asserted and is pending by any Person challenging or questioning the use
of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does the REIT or the Borrower know of any valid
basis for any such claim. The use of Intellectual Property by the REIT, the
Borrower and its Subsidiaries does not infringe on the rights of any Person in
any material respect.

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           5.10 Taxes. Each of the REIT, the Borrower and each of its
Subsidiaries has filed or caused to be filed all Federal, state and other
material tax returns that are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it
or any of its Property and all other taxes, fees or other charges imposed
on it or any of its Property by any Governmental Authority (other than any the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the REIT, the Borrower or its
Subsidiaries, as the case may be); and no tax Lien has been filed, and, to the
knowledge of the REIT and the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge.

           5.11 Federal Regulations. No part of the proceeds of any Loans,
and no other extensions of credit hereunder, will be used for “purchasing” or
“carrying” any “margin stock” within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in
effect or for any purpose that violates the provisions of the Regulations of
the Board. If requested by any Lender or the Administrative Agent, the
Borrower will furnish to the Administrative Agent and each Lender a statement
to the foregoing effect in conformity with the requirements of FR Form G-3 or
FR Form U-1 referred to in Regulation U.

           5.12 Labor Matters. There are no strikes or other labor disputes
against the REIT, the Borrower or any of its Subsidiaries pending or, to the
knowledge of the REIT or the Borrower, threatened that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect.
Hours worked by and payment made to employees of the REIT, the Borrower and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Requirement of Law dealing with such matters that
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect. All payments due from the REIT, the Borrower or any
of its Subsidiaries on account of employee health and welfare insurance that
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect if not paid have been paid or accrued as a liability on
the books of the REIT, the Borrower or the relevant Subsidiary.

           5.13 ERISA. Neither a Reportable Event nor an “accumulated funding
deficiency” (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan
(based on those assumptions used to fund such Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits by a material amount. Neither the Borrower nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither the Borrower nor any Commonly
Controlled Entity would become subject to any
material liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as
of the valuation date most closely

50

 

preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.

           5.14 Investment Company Act; Other Regulations. No Loan Party is
an “investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.

           5.15 Subsidiaries. The Subsidiaries listed on Schedule
5.15 constitute all the Subsidiaries of the Borrower at the date hereof.
Schedule 5.15 sets forth as of the Closing Date the name and
jurisdiction of incorporation of each Subsidiary and, as to each Subsidiary,
the percentage of each class of Capital Stock owned by each Loan Party and
whether such subsidiary is a Material Subsidiary.

           (b) There are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than stock options granted to
employees or directors and directors’ qualifying shares) of any nature relating
to any Capital Stock of the REIT, the Borrower or any Subsidiary.

           5.16 Use of Proceeds. The proceeds of the Loans and the Letters of
Credit shall be used (i) to make acquisitions permitted by Section 8.7 and (ii)
for general corporate purposes.

           5.17 Environmental Matters. Other than exceptions to any of the
following that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect:

     (a) The Borrower and its Subsidiaries: (i) are, and within the
period of all applicable statutes of limitation have been, in compliance
with all applicable Environmental Laws; (ii) hold all Environmental
Permits (each of which is in full force and effect) required for any of
their current or intended operations or for any property owned, leased,
or otherwise operated by any of them; (iii) are, and within the period of
all applicable statutes of limitation have been, in compliance with all
of their Environmental Permits; and (iv) reasonably believe that: each
of their Environmental Permits will be timely renewed and complied with,
without material expense; any additional Environmental Permits that may
be required of any of them will be timely obtained and complied with,
without material expense; and compliance with any Environmental Law that
is or is expected to become applicable to any of them will be timely
attained and maintained, without material expense.

     (b) Materials of Environmental Concern are not present at, on,
under, in, or about any real property now or formerly owned, leased or
operated by the Borrower or any of its Subsidiaries, or at any other
location (including, without limitation, any location to which Materials
of Environmental Concern have been sent for re-use or recycling or for
treatment, storage, or disposal) which could reasonably be expected to
(i) give rise to liability of the Borrower or any of its Subsidiaries
under any applicable

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Environmental Law or otherwise result in costs to
the Borrower or any of its Subsidiaries, or (ii) interfere with the
Borrower’s or any of its Subsidiaries’ continued operations, or (iii)
impair the fair saleable value of any real property owned or leased by
the Borrower or any of its Subsidiaries.

     (c) There is no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or
relating to any Environmental Law to which the Borrower or any of its
Subsidiaries is, or to the knowledge of the Borrower or any of its
Subsidiaries will be, named as a party that is pending or, to the
knowledge of the Borrower or any of its Subsidiaries, threatened.

     (d) Neither the Borrower nor any of its Subsidiaries has received
any written request for information, or been notified that it is a
potentially responsible party under or relating to the federal
Comprehensive Environmental Response, Compensation, and Liability Act or
any similar Environmental Law, or with respect to any Materials of
Environmental Concern.

     (e) Neither the Borrower nor any of its Subsidiaries has entered
into or agreed to any consent decree, order, or settlement or other
agreement, or is subject to any judgment, decree, or order or other
agreement, in any judicial, administrative, arbitral, or other forum for
dispute resolution, relating to compliance with or liability under any
Environmental Law.

     (f) Neither the Borrower nor any of its Subsidiaries has assumed or
retained, by contract or operation of law, any liabilities of any kind,
fixed or contingent, known or unknown, under any Environmental Law or
with respect to any Material of Environmental Concern.

           5.18 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement
furnished to the Administrative Agent or the Lenders or any of them, by or on
behalf of any Loan Party for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished (or,
in the case of the Confidential Information Memorandum, as of the date of this
Agreement), any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed
as fact and that actual results during the period or periods covered by such
financial information may differ from the projected results set forth therein
by a material amount. There is no fact known to any Loan Party that could
reasonably be expected to have a Material Adverse Effect that has not been
expressly disclosed herein, in the other Loan Documents, in the Confidential
Information Memorandum or in any other documents, certificates and statements
furnished to the Agents and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.

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           5.19
Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral described therein and proceeds thereof. In the case of the Pledged
Stock described in the Guarantee and Collateral Agreement, when any stock
certificates representing such Pledged Stock are delivered to the
Administrative Agent, and in the case of the other Collateral described in the
Guarantee and Collateral Agreement, when financing statements in appropriate
form are filed in the offices specified on Schedule 5.19(a)-1 (which
financing statements have been duly completed and delivered to the
Administrative Agent) and such other filings as are specified on Schedule 3 to
the Guarantee and Collateral Agreement have been completed (all of which
filings have been duly completed), the Guarantee and Collateral Agreement shall
constitute a fully perfected Lien in favor of the Administrative Agent (for the
benefit of the Secured Parties) on, and security interest in, all right, title
and interest of the Loan Parties in such Collateral and the proceeds thereof,
as security for the Obligations (as defined in the Guarantee and Collateral
Agreement), in each case prior and superior in right to any other Person
(except, in the case of Collateral other than Pledged Stock, Liens permitted by
Section 8.3). Schedule 5.19(a)-2 lists each UCC Financing Statement
that (i) names any Loan Party as debtor and (ii) will remain on file after the
Closing Date. Schedule 5.19(a)-3 lists each UCC Financing Statement
that (i) names any Loan Party as debtor and (ii) will be terminated on or prior
to the Closing Date; and on or prior to the Closing Date, the Borrower will
have delivered to the Administrative Agent, or caused to be filed, duly
completed UCC termination statements in respect of each UCC Financing Statement
listed in Schedule 5.19(a)-3.

           (b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a legal, valid
and enforceable Lien on the Borrowing Base Properties described therein and
proceeds thereof; and when the Mortgages are filed in the offices specified on
Schedule 5.19(b) (in the case of the Mortgages to be executed and
delivered to the Administrative Agent or to be subject to the Escrow Agreement
on the Closing Date) or in the recording office designated by the Borrower (in
the case of any Mortgage to be executed and delivered to the Administrative
Agent pursuant to Section 6.3 or to be subject to the Escrow Agreement), each
Mortgage shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Borrowing Base
Properties described therein and the proceeds thereof, as security for the
Obligations (as defined in the relevant Mortgage), in each case prior and
superior in right to any other Person (other than Persons holding Liens or
other encumbrances or rights permitted by the relevant Mortgage). Schedule
1.1B lists, as of the Closing Date, each parcel of owned real property and
each
leasehold interest in real property located in the United States and held
by the Borrower or any of its Subsidiaries.

           5.20 Solvency. Each Loan Party is, and after giving effect to the
Transactions and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.

           5.21 REIT Status; Borrower Tax Status; Listing. The REIT has been
organized and will be operated in a manner that will allow it to qualify for
REIT Status commencing with the year ending December 31, 2004 and has
maintained and will maintain REIT Status on a continuous basis since such date.
The Borrower is not an association taxable as a corporation

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under the Code.
The shares of common stock of the REIT are listed on the New York Stock
Exchange.

           5.22 Regulation H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of
Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968 (except any Mortgaged Properties as to which such flood
insurance as required by Regulation H has been obtained and is in full force
and effect as required by this Agreement).

SECTION 6. CONDITIONS PRECEDENT

           6.1 Conditions to Initial Extension of Credit. The agreement of
each Lender to make the initial extension of credit requested to be made by it
hereunder is subject to the satisfaction, prior to or concurrently with the
making of such extension of credit on the Closing Date, of the following
conditions precedent:

     (a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly authorized
officer of the REIT and the Borrower, (ii) the Guarantee and Collateral
Agreement, executed and delivered by a duly authorized officer of the
REIT, the Borrower and each Material Subsidiary, (iii) the Escrow
Agreement, executed and delivered by a duly authorized officer of the
REIT, the Borrower, the Subsidiary Guarantors and the Escrow Agent and
(iv) a Lender Addendum executed and delivered by each Lender and accepted
by the Borrower.

     (b) The Transactions.

     (i) The Restructuring. The Restructuring shall have
been consummated pursuant to documentation reasonably satisfactory
to the Administrative Agent.

     (ii) IPO. The REIT shall have received gross proceeds
of at least $400,000,000 from the IPO and shall have contributed
such proceeds in cash as common equity to the Borrower.

     (iii) CMBS Financing. The Borrower and its
Subsidiaries shall have received gross proceeds of at least
$270,000,000 from the CMBS Financing pursuant to documentation
reasonably satisfactory to the Administrative Agent.

     (iv) Capital Structure. The capital structure of each
Loan Party after the giving effect to the Transactions shall be
satisfactory in all respects.

     (c) Termination of Existing Indebtedness. The
Administrative Agent shall have received evidence satisfactory to the
Administrative Agent that the existing Indebtedness described on
Schedule 6.1(c) shall be simultaneously terminated, all amounts
thereunder shall be simultaneously paid in full and arrangements
satisfactory to the Administrative Agent shall have been made for the
termination of Liens and security interests granted in connection
therewith.

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     (d) Pro Forma Balance Sheet; Financial Statements. The
Lenders shall have received (i) the Pro Forma Balance Sheet, (ii) audited
consolidated financial statements of the Borrower and its Subsidiaries
for the 2001, 2002 and 2003 fiscal years, (iii) unaudited interim
consolidated financial statements of the Borrower and its Subsidiaries
for each fiscal quarterly period ended subsequent to the date of the
latest applicable financial statements delivered pursuant to clause (ii)
of this paragraph as to which such financial statements are available and
(iv) monthly management reports of the Borrower and its Subsidiaries for
July 2004, August 2004 and September 2004; and such financial statements
and reports shall not, in the reasonable judgment of the Lenders, reflect
any material adverse change in the consolidated financial condition of
the Borrower and its Subsidiaries, as reflected in the financial
statements or projections contained in the Confidential Information
Memorandum.

     (e) Approvals. All governmental and third party approvals
(including landlords’ and other consents) necessary in connection with
the Transactions, the continuing operations of the REIT, the Borrower and
its Subsidiaries and the transactions contemplated hereby shall have been
obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened
by any competent authority that would restrain, prevent or otherwise
impose adverse conditions on the Transactions or the financing
contemplated hereby.

     (f) Related Agreements. The Administrative Agent shall have
received (in a form reasonably satisfactory to the Administrative Agent),
true and correct copies, certified as to authenticity by the Borrower, of
(i) all documentation related to the Restructuring and the CMBS Financing
and (ii) such other documents or instruments as may be reasonably
requested by the Administrative Agent, including, without limitation, a
copy of any debt instrument, security agreement or other material
contract to which the Loan Parties may be a party.

     (g) Fees. The Lenders, the Administrative Agent and the
Arrangers shall have received all fees required to be paid, and all
expenses for which invoices have been presented (including reasonable
fees, disbursements and other charges of counsel to the Agents), on or
before the Closing Date. All such amounts will be paid with proceeds of
Loans made on the Closing Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or
before the Closing Date.

     (h) Solvency Analysis. The Lenders shall have received a
reasonably satisfactory solvency analysis certified by the chief
financial officer of the Borrower which shall document the solvency of
the Borrower and its Subsidiaries considered as a whole after giving
effect to the transactions contemplated hereby.

     (i) Budget. The Lenders shall have received a budget for the
Borrower and its Subsidiaries for the 2005 fiscal year.

     (j) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search in each of the jurisdictions
in which Uniform Commercial Code financing statement or other filings or
recordations should be made to evidence or perfect

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     security interests in
all assets of the Loan Parties, and such search shall reveal no liens on
any of the assets of the Loan Party, except for Liens permitted by
Section 8.3.

     (k) Environmental Matters. The Administrative Agent shall
have received, with a copy for each Lender, a written environmental audit
regarding the real property of the Borrower and its Subsidiaries included
in the Borrowing Base on the Closing Date, prepared by an environmental
consultant acceptable to the Administrative Agent, in form, scope, and
substance satisfactory to the Administrative Agent, together with a
letter from the environmental consultant permitting the Agents and the
Lenders to rely on the environmental audit as if addressed to and
prepared for each of them.

     (l) Expenses. The Administrative Agent shall have received
satisfactory evidence that the fees and expenses to be incurred in
connection with the Restructuring, the IPO and the financing thereof
shall not exceed $45,000,000.

     (m) Closing Certificate. The Administrative Agent shall have
received a certificate of each Loan Party, dated the Closing Date,
substantially in the form of Exhibit C, with appropriate insertions and
attachments.

     (n) Legal Opinion. The Administrative Agent shall have
received the executed legal opinion of Hogan & Hartson L.L.P., counsel to
the REIT, the Borrower and its Subsidiaries, substantially in the form of
Exhibit F. Such legal opinion shall cover such other matters incident to
the transactions contemplated by this Agreement as the Administrative
Agent may reasonably require and shall be addressed to the Administrative
Agent and the Lenders.

     (o) Pledged Stock; Stock Powers; Acknowledgment and Consent;
Pledged Notes. The Administrative Agent shall have received (i) the
certificates representing the shares of Capital Stock pledged pursuant to
the Guarantee and Collateral Agreement, together with an undated stock
power for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof, (ii) an Acknowledgment and Consent,
substantially in the form of Annex II to the Guarantee and Collateral
Agreement, duly executed by any issuer of Capital Stock pledged pursuant
to the Guarantee and Collateral Agreement that is not itself a party to
the Guarantee and Collateral Agreement and (iii) each promissory note
pledged pursuant to the Guarantee and Collateral Agreement endorsed
(without recourse) in blank (or accompanied by an executed transfer form
in blank satisfactory to the Administrative Agent) by the pledgor
thereof.

     (p) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing
statement) required by the Security Documents or under law or reasonably
requested by the Administrative Agent to be filed, registered or recorded
in order to create in favor of the Administrative Agent, for the benefit
of the Secured Parties, a perfected Lien on the
Collateral described therein, prior and superior in right to any
other Person (other than with respect to Liens expressly permitted by
Section 8.3), shall have been filed, registered or recorded or shall have
been delivered to the Administrative Agent be in proper form for filing,
registration or recordation.

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     (q) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.3 of the
Guarantee and Collateral Agreement.

     (r) PATRIOT Act. The Lenders shall have received,
sufficiently in advance of the Closing Date, all documentation and other
information required by bank regulatory authorities under applicable “know
your customer” and anti-money laundering rules and regulations, including
without limitation the United States PATRIOT Act.

     (s) Borrowing Base. The Borrowing Base availability shall not
be less than $100,000,000 on the Closing Date, and the Administrative
Agent shall have received a satisfactory pro forma Borrowing
Base Report for the period of two fiscal quarters ending immediately prior
to the Closing Date for which financial statements are available after
giving effect to the Transactions.

     (t) Senior Managers. The Lenders shall be satisfied that
senior managers acceptable to them shall be available to manage the
Borrower and its Subsidiaries.

     (u) Liquidity. The Lenders shall be satisfied with the
sufficiency of amounts available under the Facility to meet the ongoing
working capital needs of the Borrower and its Subsidiaries following the
Transactions and the consummation of the other transactions contemplated
hereby.

               6.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it hereunder on
any date (including, without limitation, its initial extension of credit) is
subject to the satisfaction of the following conditions precedent:

     (a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to
the Loan Documents shall be true and correct in all material respects on
and as of such date as if made on and as of such date.

     (b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.

     (c) Borrowing Base. Subject to Section 4.5(e), the then
Total Extensions of Credit, when added to the amount requested for such
borrowing, shall not exceed the Borrowing Base set forth in the most
recent Borrowing Base Report delivered pursuant to Sections 4.2(b),
6.1(s), 6.3(h) or 7.2(f), as the case may be.

               Each borrowing by and issuance of a Letter of Credit on behalf of the
Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions
contained in this Section 6.2 and in Section 6.3 have been satisfied.

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               6.3 Conditions to Borrowing Base Properties. The agreement of each
Lender to include any Subject Property as a Borrowing Base Property is subject
to the satisfaction of the following conditions precedent:

     (a) Compliance with Section 4.1. (i) The Administrative
Agent shall have received all documents and instruments required to be
delivered pursuant to Section 4.1 and (ii) the Required Lenders shall
have approved of such Property as provided in, and to the extent required
by, Section 4.1.

     (b) Mortgage. The Administrative Agent shall have received a
Mortgage covering such Property, executed and delivered by a duly
authorized officer of the applicable Loan Party, with such modifications
as appropriate to conform to the laws of the jurisdiction in which such
Property is located and, if such Subject Property is to be included in
the Borrowing Base on and after the Recordation Date, an amount equal to
any mortgage filing tax required to be paid in connection with the filing
of such Mortgage.

     (c) Environmental Indemnity Agreement. The Administrative
Agent shall have received an Environmental Indemnity Agreement covering
such Property, executed and delivered by a duly authorized officer of the
applicable Loan Party.

     (d) Collateral Assignment of Contracts. To the extent
requested by the Administrative Agent, the Administrative Agent shall
have received collateral assignments of all material contracts and any
other rights or benefits of such Property, relating to the use,
occupancy, operation, maintenance, enjoyment or ownership of such
Property.

     (e) Subordination of Property Management Agreement. To the
extent requested by the Administrative Agent, the Administrative Agent
shall have received a subordination agreement with respect to any
Property Management Agreement to which such Property is subject, executed
by the applicable property manager.

     (f) Lien Searches. The Administrative Agent shall have
received satisfactory UCC, tax, judgment and lien search reports with
respect to the applicable Loan Party and such Property in all necessary
or appropriate jurisdictions and under all legal and appropriate trade
names indicating that there are no Liens of record on such Property or
any of the Collateral relating thereto other than Liens permitted by
Section 8.3(b) through (e).

     (g) Environmental Reports. The Administrative Agent shall
have received a satisfactory “Phase I” environmental assessment of such
Property not more than 12 months old (or such earlier date approved by
the Administrative Agents)
prepared by an environmental engineering firm acceptable to the
Administrative Agent, and any additional environmental studies or
assessments recommended by such assessment (including any “Phase II”
assessment) or otherwise available to the Borrower performed with respect
to such Property.

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     (h) Borrowing Base Report. The Administrative Agent shall
have received a Borrowing Base Report calculated giving effect to the
inclusion of such Property as a Borrowing Base Property as of the end of
the most recent fiscal quarter for which financial statements are
available.

     (i) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions:

     (i) an opinion of counsel admitted to practice law in the
jurisdiction in which such Property is located and acceptable to
the Administrative Agent, addressed to the Administrative Agent and
each Lender covering such legal matters relating to the
transactions contemplated hereby as the Administrative Agent may
reasonably request, in form and substance reasonably satisfactory
to the Administrative Agent; and

     (ii) an opinion of counsel admitted to practice law in the
jurisdiction in which the applicable Loan Party is formed and
acceptable to the Administrative Agent, addressed to the
Administrative Agent and each Lender covering such legal matters
relating to the formation and existence and power of the Person
executing documents, and the due authorization, execution and
delivery of the Security Documents and other documents for
consummating the transactions contemplated hereby as the
Administrative Agent may reasonably request, in form and substance
reasonably satisfactory to the Administrative Agent.

     (j) Insurance. The Administrative Agent shall have received
satisfactory evidence that the insurance required for such Property
pursuant to Section 5.3 of the Guarantee and Collateral Agreement is then
in effect.

     (k) Certificates of Occupancy. The Administrative Agent
shall have received final certificates of occupancy relating to such
Property, if in the possession of the Borrower.

     (l) Title Insurance; Surveys. The Administrative Agent shall
have received and be satisfied with:

     (i) if such Subject Property is to be added as a new Borrowing
Base Property prior to the Recordation Date, each of the following:

     (A) a copy of the most recent ALTA Owner’s Policy of
Title Insurance (or if such policy has not been issued, a
binding commitment to issue such policy) relating to such
Property available to the Borrower showing the fee simple
title to (or a valid leasehold interest in) such Property as
vested in the applicable Loan Party, subject only to such
restrictions, encumbrances, easements and reservations
as are acceptable to the Agent, together with copies of all
documents of record reflected in Schedule B of such Policy of
Title Insurance; and

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     (B) the most current survey of such Property then
available to the Borrower, certified by a surveyor licensed
in the jurisdiction where such Property is located to have
been prepared in accordance with the then effective Minimum
Standard Detail Requirements for ALTA/ACSM Land Title
Surveys, and if not adequately covered by the survey
certification, a certificate from a licensed engineer or
other professional satisfactory to the Agent that such
Property is not located in a Special Flood Hazard Area as
defined by the Federal Insurance Administration; and

     (ii) if such Subject Property is to be added as a new
Borrowing Base Property after the Recordation Date, each of the
following:

     (A) an ALTA 1992 Form mortgagee’s Policy of Title
Insurance (with deletion of the creditor’s rights exclusion
and deletion of the mandatory arbitration provision) or other
form acceptable to the Administrative Agent in favor of the
Administrative Agent for the benefit of the Secured Parties
with respect to such Property, including endorsements with
respect to such items of coverage as the Administrative Agent
may request (and which endorsements are available in the
applicable state), in a coverage amount equal to no less than
100% of the Borrowing Base Value of such Property (excluding
the value of any personal property located at such Property),
issued by a title insurance company acceptable to the
Administrative Agent and with coinsurance or reinsurance
(with direct access agreements) with title insurance
companies acceptable to the Administrative Agent, showing the
fee simple title to (or a valid leasehold interest in) the
land and improvements described in the applicable Mortgage as
vested in the Borrower or a Subsidiary, and insuring that the
Lien granted by such Mortgage is a valid first priority Lien
against such Property, subject only to Liens permitted by
Sections 8.3(b) through (e);

     (B) copies of all documents of record reflected in
Schedule B of such Policy of Title Insurance;

     (C) a current or currently certified survey of such
Property certified to the Administrative Agent and the Lender
by a surveyor licensed in the jurisdiction where such
Property is located to have been prepared in accordance with
the then effective Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys, and if not adequately covered
by the survey certification, a certificate from a licensed
engineer or other professional satisfactory to the
Administrative Agent that such Property is not located in a
Special Flood Hazard Area as defined by the Federal Insurance
Administration; and

     (D) if such Property is located in a
Tie-In-Jurisdiction, endorsements to all other existing title
insurance policies issued to the Administrative Agent with
respect to all other Properties located in Tie-In

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Jurisdictions reflecting an increase in the aggregate insured
amount under the “tie-in” endorsements to an amount equal to
the aggregate amount of the Borrowing Base Values of all such
Properties (including the Property to be included as a
Borrowing Base Property) but in no event in an amount in
excess of the aggregate amount of the Commitments.

          (m) Zoning. After the Recordation Date, the Administrative Agent
shall have received satisfactory evidence that such Property complies with
applicable zoning and land use laws.

          (n) Other Information. The Administrative Agent have received such
other due diligence materials, instruments, documents, agreements, financing
statements, certificates, opinions and other Security Documents as the
Administrative Agent may reasonably request, in form and substance reasonably
satisfactory to the Administrative Agent.

SECTION 7. AFFIRMATIVE COVENANTS

          The REIT and the Borrower hereby jointly and severally agree that, so long
as the Commitments remain in effect, any Letter of Credit remains outstanding
or any Loan or other amount is owing to any Lender or any Agent hereunder, each
of the REIT and the Borrower shall and shall cause each of its Subsidiaries to:

               7.1 Financial Statements. Furnish to the Administrative Agent and
each Lender:

     (a) as soon as available, but in any event within 90 days (or such
earlier date specified for annual reports under Section 13 of the
Exchange Act) after the end of each fiscal year of the REIT, a copy of
the audited consolidated balance sheet of the REIT and its consolidated
Subsidiaries as at the end of such year and the related audited
consolidated statements of income and of cash flows for such year,
setting forth in each case in comparative form the figures as of the end
of and for the previous year, reported on without a “going concern” or
like qualification or exception, or qualification arising out of the
scope of the audit, by Deloitte & Touche LLP or other independent
certified public accountants of nationally recognized standing; and

     (b) as soon as available, but in any event not later than 45 days
(or such earlier date specified for quarterly reports under Section 13 of
the Exchange Act) after the end of each of the first three quarterly
periods of each fiscal year of the REIT, the unaudited consolidated
balance sheet of the REIT and its consolidated Subsidiaries as at the end
of such quarter and the related unaudited consolidated statements of
income and of cash flows for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in each case in
comparative form the figures as of the end of and for the corresponding
period in the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments).

all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the

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periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).

               7.2 Certificates; Other Information. Furnish to each Agent and
each Lender, or, in the case of clause (j), to the relevant Lender:

     (a) concurrently with the delivery of the financial statements
referred to in Section 7.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such certificate
(it being understood that such certificate shall be limited to the items
that independent certified public accountants are permitted to cover in
such certificates pursuant to their professional standards and customs of
the profession);

     (b) concurrently with the delivery of any financial statements
pursuant to Section 7.1, (i) a certificate of a Responsible Officer
stating that, to the best of such Responsible Officer’s knowledge, each
Loan Party during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained
in this Agreement and the other Loan Documents to which it is a party to
be observed, performed or satisfied by it, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) in the case of quarterly
or annual financial statements, (x) a Compliance Certificate containing
all information and calculations necessary for determining compliance by
the REIT, the Borrower and its Subsidiaries with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter or
fiscal year of the Borrower, as the case may be, and (y) any UCC
financing statements or other filings specified in such Compliance
Certificate as being required to be delivered therewith;

     (c) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of the Borrower, a detailed
consolidated budget for the following fiscal year (including a projected
consolidated balance sheet of the Borrower and its Subsidiaries as of the
end of the following fiscal year, and the related consolidated statements
of projected cash flow, projected changes in financial position and
projected income and a description of the underlying assumptions
applicable thereto), and, as soon as available, significant revisions, if
any, of such budget and projections with respect to such fiscal year
(collectively, the “Projections”), which Projections shall in each
case be accompanied by a certificate of a Responsible Officer stating
that such Projections are based on reasonable estimates, information and
assumptions and that such Responsible Officer has no reason to believe
that such Projections are incorrect or misleading in any material
respect;

     (d) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of
the Borrower and its Subsidiaries for such fiscal quarter and for
the period from the beginning of the then current fiscal year to the end
of such fiscal quarter, as compared to the portion of the Projections
covering such periods and to the comparable periods of the previous year;

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     (e) within five days after the same are sent, copies of all
financial statements and reports that the REIT or the Borrower sends to
the holders of any class of its debt securities or public equity
securities and, within five days after the same are filed, copies of all
financial statements and reports that the REIT or the Borrower may make
to, or file with, the SEC;

     (f) no later than the 45th day of each fiscal quarter, a Borrowing
Base Report, as of the last day of the immediately preceding fiscal
quarter, provided that, with respect to the fourth quarter of each
fiscal year of the Borrower, concurrently with the delivery of the
financial statements referred to in Section 7.1(a), the Borrower shall
deliver to the Administrative Agent an updated Borrowing Base Report as
of the last day of such fiscal quarter, together with calculations
demonstrating differences, if any, from the Borrowing Base Report
previously delivered for such quarter with supporting detail reasonably
satisfactory to the Administrative Agent;

     (g) concurrently with the delivery of each Borrowing Base Report, a
compliance certificate duly executed by the chief financial officer or
treasurer of the general partner of the Borrower containing all
information and calculations necessary for determining the Borrowing Base
Leverage Ratio;

     (h) promptly after the occurrence thereof, notice of the failure of
the REIT to maintain REIT Status or of any existing Subsidiary of the
REIT to maintain its status as a qualified REIT subsidiary under the
Code, if and to the extent required by applicable law;

     (i) promptly (x) after any Borrowing Base Property shall be damaged
or destroyed and the reasonably estimated cost of repair or replacement
thereof would exceed $500,000, notice of such damage or destruction and
the reasonably estimated cost of repair or replacement thereof and (y)
upon obtaining knowledge of the institution of any proceedings for the
condemnation of any Borrowing Base Property, or any material portion
thereof, notice of such proceedings with a copy of all documentation
received by the Borrower or any of its Subsidiaries in connection
therewith and the reasonably estimated proceeds of such proceedings; and

     (j) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.

               7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all
its material obligations of whatever nature (including without limitation,
taxes), except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect
thereto have been provided on the books of the REIT, the Borrower or its
Subsidiaries, as the case may be.

               7.4 Conduct of Business and Maintenance of Existence; Compliance.
(a)(i) Preserve, renew and keep in full force and effect its organizational
existence and (ii) take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, except, in each case, as otherwise permitted by Section 8.4 and

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except, in the case of clause (ii) above, to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (b)
comply with all Contractual Obligations and Requirements of Law, except to the
extent that failure to comply therewith could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.

               7.5 Maintenance of Property; Insurance. (a) Keep all Property and
systems useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its Property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business, including any insurance required by any Mortgage subject to
the Escrow Agreement or any other Security Mortgage.

               7.6 Inspection of Property; Books and Records; Discussions. (a)
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities and
(b) permit representatives of any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired during normal
business hours and to discuss the business, operations, properties and
financial and other condition of the REIT, the Borrower and its Subsidiaries
with officers and employees of the REIT, the Borrower and its Subsidiaries and
with its independent certified public accountants, provided that, so
long as no Event of Default has occurred and is continuing, the Borrower shall
only be required to pay the expenses of the Administrative Agent and any Lender
with respect to one such visit and inspection per calendar year.

               7.7 Notices. Promptly give notice to the Administrative Agent and
each Lender of:

     (a) the occurrence of any Default or Event of Default;

     (b) any (i) default or event of default under any Contractual
Obligation of the REIT, the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the REIT, the Borrower or any of its Subsidiaries and any
Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;

     (c) any litigation or proceeding affecting the REIT, the Borrower or
any of its Subsidiaries (i) in which the amount involved is $250,000 or
more and not covered by insurance, (ii) in which injunctive or similar
relief is sought or (iii) which relates to any Loan Document;

     (d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to

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a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan;

     (e) as soon as possible and in any event within 30 days of obtaining
knowledge thereof: (i) any development, event, or condition that,
individually or in the aggregate with other developments, events or
conditions, could reasonably be expected to result in the payment by the
Borrower and its Subsidiaries, in the aggregate, of a Material
Environmental Amount; and (ii) any notice that any governmental authority
may deny any application for an Environmental Permit sought by, or revoke
or refuse to renew any Environmental Permit held by, the Borrower; and

     (f) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the REIT, the Borrower or the relevant Subsidiary
proposes to take with respect thereto.

               7.8 Environmental Laws. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants,
if any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.

               (b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.

               7.9 Interest Rate Protection. In the case of the Borrower, within 30 days after the Closing Date,
enter into, and thereafter maintain for a period of not less than three years,
Hedge Agreements to the extent necessary to provide that at least 50% of the
aggregate principal amount of Consolidated Total Debt is subject to either a
fixed interest rate or interest rate protection for a period of not less than
three years, which Hedge Agreements shall have terms and conditions reasonably
satisfactory to the Administrative Agent.

               7.10 Additional Collateral, etc. (a) With respect to any Property
acquired after the Closing Date by the REIT, the Borrower or any Material
Subsidiary (other than (x) any real property, (y) any Property subject to a
Lien expressly permitted by Section 8.3(g) and (z) the Capital Stock of any
Excluded Foreign Subsidiary) as to which the Administrative Agent, for the
benefit of the Secured Parties, does not have a perfected Lien, promptly (i)
execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement or such other documents as the
Administrative Agent deems necessary or advisable to grant to the

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Administrative Agent, for the benefit of the Secured Parties, a security
interest in such Property and (ii) take all actions necessary or advisable to
grant to the Administrative Agent, for the benefit of the Secured Parties, a
perfected first priority security interest in such Property, including without
limitation, the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or
by law or as may be requested by the Administrative Agent.

               (b) With respect to any new Material Subsidiary created or acquired after
the Closing Date (which, for the purposes of this paragraph, may include any
existing Subsidiary that ceases to be an Excluded Foreign Subsidiary or an
Excluded Financing Subsidiary), by the REIT, the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative
Agent deems necessary or advisable to grant to the Administrative Agent, for
the benefit of the Secured Parties, a perfected first priority security
interest in the Capital Stock of such new Subsidiary that is owned by the REIT,
the Borrower or, to the extent not prohibited by the terms of Indebtedness
permitted by Section 8.2, any of its Subsidiaries, (ii) deliver to the
Administrative Agent (for the benefit of the Secured Parties) the certificates
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the REIT, the Borrower
or such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to
become a party to the Guarantee and Collateral Agreement and (B) to take such
actions necessary or advisable to grant to the Administrative Agent for the
benefit of the Secured Parties a perfected first priority security interest in
the Collateral described in the Guarantee and Collateral Agreement with respect
to such new Subsidiary, including, without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required
by the Guarantee and Collateral Agreement or by law or as may be requested by
the Administrative Agent, and (iv) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.

               (c) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by the REIT, the Borrower or any Material
Subsidiary, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or such other documents as
the Administrative Agent deems necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in the Capital Stock of such new Subsidiary that is
owned by the REIT, the Borrower or any Material Subsidiary (other than any
Excluded Foreign Subsidiaries), (provided that in no event shall more
than 65% of the total outstanding Capital Stock of any such new Excluded
Foreign Subsidiary be required to be so pledged), (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the REIT, the Borrower or such Subsidiary, as the case
may be, and take such other action as may be necessary or, in the opinion of
the Administrative Agent, desirable to perfect the Lien of the Administrative
Agent thereon, and (iii) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.

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               7.11 Further Assurances. From time to time execute and deliver, or
cause to be executed and delivered, such additional instruments, certificates
or documents, and take such actions, as the Administrative Agent may reasonably
request for the purposes of implementing or effectuating the provisions of this
Agreement and the other Loan Documents, or of more fully perfecting or renewing
the rights of the Administrative Agent and the Lenders with respect to the
Collateral (or with respect to any additions thereto or replacements or
proceeds thereof or with respect to any other property or assets hereafter
acquired by the Borrower or any Subsidiary which may be deemed to be part of
the Collateral) pursuant hereto or thereto. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Loan Documents which requires any
consent, approval, recording, qualification or authorization of any
Governmental Authority, the Borrower will execute and deliver, or will cause
the execution and delivery of, all applications, certifications, instruments
and other documents and papers that the Administrative Agent or such Lender may
be required to obtain from the Borrower or any of its Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.

               7.12 Maintenance of Occupancy Rate. Maintain at all times an
average Occupancy Rate at least 75% for all Borrowing Base Properties (other
than Borrowing Base Properties with a Borrowing Base Value of $0 and Lease-Up
Properties).

               7.13 Acquiport/Amsdell V, LLC and Acquiport/Amsdell VI, LLC. No
later than 15 days after the Closing Date, cause each of Acquiport/Amsdell V,
LLC and Acquiport/Amsdell VI, LLC to be dissolved.

SECTION 8. NEGATIVE COVENANTS

               The REIT and the Borrower hereby jointly and severally agree that, so long
as the Commitments remain in effect, any Letter of Credit remains outstanding
or any Loan or other amount is owing to any Lender or any Agent hereunder, each
of the REIT and the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:

               8.1 Financial Condition Covenants.

               (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio on any date to exceed 65%.

               (b) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of two consecutive fiscal quarters of
the REIT to be less than 2.00 to 1.00.

               (c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of two consecutive
fiscal quarters of the REIT to be less than 1.70 to 1.00.

               (d) Minimum Tangible Net Worth. Permit the Tangible Net Worth of
the REIT and its Subsidiaries determined on a consolidated basis in accordance
with GAAP on any date to be less than an amount equal to (x) $400,000,000
plus (y) 85% of the Net Proceeds of any

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issuance of Capital Stock
consummated by the REIT or any of its Subsidiaries at any time after the
Closing Date.

               (e) Minimum Borrowing Base Value. Permit the Borrowing Base to be
less than $100,000,000 at any time.

               8.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:

     (a) Indebtedness of any Loan Party pursuant to any Loan Document;

     (b) Indebtedness of the Borrower to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;

     (c) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 8.3(g) in an aggregate
principal amount not to exceed $5,000,000 at any one time outstanding;

     (d) Indebtedness outstanding on the date hereof and listed on
Schedule 8.2(d);

     (e) Guarantee Obligations made in the ordinary course of business by
the Borrower or any of its Subsidiaries of obligations of the Borrower or
any Subsidiary Guarantor; and

     (f) Indebtedness in respect of the Borrower and its Subsidiaries
secured by fee-owned or leasehold real property of the Borrower and its
Subsidiaries which is not subject to a Mortgage or owned by a Loan Party
(excluding any Recourse Indebtedness), including the CMBS Financing and
any extensions or renewals or restructurings (including any restructuring
that may be required by the lender thereunder) thereof and of the
Indebtedness permitted by Section 8.2(d), provided that, with
respect to any such Indebtedness (other than Indebtedness permitted by
Section 8.2(d) and the CMBS Financing, in each case, as in effect on the
date hereof) (x) such Indebtedness shall not mature prior to April 27,
2009, (y) none of the REIT, the Borrower or any of its Subsidiaries
provides credit support of any kind (including any undertaking, agreement
or instrument that would constitute Indebtedness) or is directly or
indirectly liable (as guarantor or otherwise), other than as primary
obligor or, in the case of the Borrower as guarantor on terms no less
favorable than those set forth on Schedule 8.2(f), and (z) as to
which the lenders thereunder will not have any recourse to the Capital
Stock or assets of the Borrower, the Borrower or any of its Subsidiaries
other than the asset financed by such Indebtedness, additions, accessions
and improvements thereto and proceeds thereof and, in the case of the
Borrower, recourse on terms no less favorable than those set forth on
Schedule 8.2(f).

               8.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its Property, whether now owned or hereafter acquired,
except for:

     (a) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings, provided that adequate reserves
with respect thereto are

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maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;

     (b) carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other like Liens arising in the ordinary course of
business that are not overdue for a period of more than 30 days or that
are being contested in good faith by appropriate proceedings;

     (c) pledges or deposits in connection with workers’ compensation,
unemployment insurance and other social security legislation;

     (d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;

     (e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;

     (f) Liens in existence on the date hereof listed on Schedule
8.3(f), securing Indebtedness permitted by Section 8.2(d),
provided that no such Lien is
spread to cover any additional Property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;

     (g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 8.2(c) to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be
created substantially simultaneously with the acquisition of such fixed
or capital assets, (ii) such Liens do not at any time encumber any
Property other than the Property financed by such Indebtedness, (iii) the
amount of Indebtedness secured thereby is not increased and (iv) the
amount of Indebtedness initially secured thereby is not less than 80%, or
more than 100% of the purchase price of such fixed or capital asset;

     (h) Liens created pursuant to the Security Documents;

     (i) Liens on fee-owned property of the Borrower and its Subsidiaries
not subject to a Mortgage securing Indebtedness permitted by Section
8.2(f); and

     (j) any interest or title of a lessor under any lease entered into
by the Borrower or any other Subsidiary in the ordinary course of its
business and covering only the assets so leased.

               8.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:

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     (a) any Subsidiary of the Borrower may be merged or consolidated
with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Wholly Owned
Subsidiary Guarantor (provided that (i) the Wholly Owned
Subsidiary Guarantor shall be the continuing or surviving corporation or
(ii) simultaneously with such transaction, the continuing or surviving
corporation shall become a Wholly Owned Subsidiary Guarantor and the
Borrower shall comply with Section 7.10 in connection therewith);

     (b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary Guarantor; and

     (c) the dissolution of Acquiport/Amsdell V, LLC and Acquiport/Amsdell
VII, LLC in accordance with Section 7.13.

               8.5 Limitation on Disposition of Property. Dispose of any of its
Property (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary’s Capital Stock to any Person,
except:

     (a) the Disposition of obsolete or worn out property in the ordinary
course of business;

     (b) Dispositions permitted by Section 8.4(b);

     (c) the sale or issuance of any Subsidiary’s Capital Stock to the
Borrower or any Subsidiary Guarantor; and

     (d) the Disposition in any fiscal year of the Borrower of other
assets having an aggregate book value not to exceed an amount equal to
10% of Consolidated Total Asset Value as of the end of the immediately
preceding fiscal year, provided that, immediately prior to and
after giving effect to any such Disposition, no Default or Event of
Default shall have occurred and be continuing.

               8.6 Limitation on Restricted Payments. Declare or pay any dividend
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any Capital Stock of the REIT, the Borrower or any
Subsidiary, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the REIT, the Borrower or any Subsidiary, or
enter into any derivatives or other transaction with any financial institution,
commodities or stock exchange or clearinghouse (a “Derivatives
Counterparty”) obligating the REIT, the Borrower or any Subsidiary to make
payments to such Derivatives Counterparty as a result of any change in market
value of any such Capital Stock (collectively, “Restricted Payments”),
except that:

     (a) any Subsidiary may make Restricted Payments to the Borrower or
any Subsidiary Guarantor;

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     (b) the REIT may make Restricted Payments in the form of common
stock of the REIT;

     (c) the Borrower may pay dividends to the REIT to permit the REIT to
pay corporate overhead expenses incurred in the ordinary course of
business not to exceed $12,000,000 in any fiscal year; and

     (d) the Borrowers and all such Subsidiaries may make Restricted
Payments to the REIT, and the REIT may make Restricted Payments, during
any period specified below in an aggregate amount equal to the greater
of:

                    (i) (A)for the quarter ending December 31, 2004, $11,200,000;

                    (B) for the quarter ending on March 31, 2005, 110% of
Funds From Operations for such period;

                    (C) for the two quarter period ending on June 30, 2005,
107% of Funds From Operations for such period;

                    (D) for the three quarter period ending on September 30,
2005, 105% of Funds From Operations for such period;

                    (E) for the four quarter period ending on December 31,
2005, 100% of Funds From Operations for such period; and

                    (F) for any four quarter period ending on or after March
31, 2006, 95% of Funds From Operations for such period;

                    (ii) such amount as may be necessary to maintain REIT Status,

provided that, in each case, immediately prior to, and after
giving effect to, any such Restricted Payment, no Default or Event of
Default shall have occurred and be continuing.

               8.7 Limitation on Investments. Make any advance, loan, extension
of credit (by way of guaranty or otherwise) or capital contribution to, or
purchase any Capital Stock, bonds, notes, debentures or other debt securities
of, or any assets constituting an ongoing business from, or make any other
investment in, any other Person (all of the foregoing, “Investments”),
except:

     (a) extensions of trade credit in the ordinary course of business;

     (b) Investments in Cash Equivalents;

     (c) Investments arising in connection with the incurrence of
Indebtedness permitted by Section 8.2(b), (e) and (f);

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     (d) Investments (other than those relating to the incurrence of
Indebtedness permitted by Section 8.7(c)) by the REIT, the Borrower or
any of its Subsidiaries in the Borrower or any Person that, prior to such
Investment, is a Subsidiary Guarantor;

     (e) Investments in partnerships, joint ventures and other Persons
which are not corporations and which Investments are accounted for on an
equity basis in accordance with GAAP with an aggregate book value for any
fiscal quarter of the Borrower not exceeding an amount equal to 12.5% of
Consolidated Total Asset Value for the fiscal quarter most recently ended
for which financial statements are available;

     (f) Investments permitted by Section 8.15; and

     (g) Investments to acquire the Capital Stock of a Subsidiary or any
other Person who, after giving effect to such acquisition would be a
Subsidiary, so long as in each case, (i) immediately prior to such
Investment, and after giving effect thereto, no Default or Event of
Default is or would be in existence, (ii) such Person is in similar line
of business as those businesses in which the Borrower and its
Subsidiaries are engaged on as of the date hereof and (iii) to the extent
not previously satisfied, the terms and
conditions of Section 7.10 have been satisfied substantially
contemporaneously with such acquisition.

               8.8 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the REIT,
the Borrower or any Subsidiary Guarantor) unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary course of
business of the REIT, the Borrower or such Subsidiary, as the case may be, and
(c) upon fair and reasonable terms no less favorable to the REIT, the Borrower
or such Subsidiary, as the case may be, than it would obtain in a comparable
arm’s length transaction with a Person that is not an Affiliate.

               8.9 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by the REIT, the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the REIT, the Borrower or such Subsidiary to such Person or to
any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of the REIT, the
Borrower or such Subsidiary.

               8.10 Limitation on Changes in Fiscal Periods. Permit the fiscal
year of the Borrower to end on a day other than December 31 or change the
Borrower’s method of determining fiscal quarters.

               8.11 Limitation on Negative Pledge Clauses. Enter into or suffer
to exist or become effective any agreement that prohibits or limits the ability
of the REIT, the Borrower or any Material Subsidiary to create, incur, assume
or suffer to exist any Lien upon any of its Property or revenues, whether now
owned or hereafter acquired, to secure the Obligations or, in the case of any
guarantor, its obligations under the Guarantee and Collateral Agreement, other
than (a) this Agreement and the other Loan Documents, (b) any agreements
governing any

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purchase money Liens, Capital Lease Obligations otherwise
permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby) and (c) with respect to
limitations on the pledge of the Capital Stock of (x) any Excluded Financing
Subsidiary and any direct or indirect parent of such Excluded Financing
Subsidiary, any agreements governing Indebtedness permitted by Sections 8.2(d)
and 8.2(f).

               8.12 Limitation on Restrictions on Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any
Indebtedness owed to, the Borrower or any other Subsidiary, (b) make
Investments in the Borrower or any other Subsidiary or (c) transfer any of its
assets to the Borrower or any other Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing
under the Loan Documents and (ii) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement that has been entered into in connection with
the Disposition of all or substantially all of the Capital Stock or assets of
such Subsidiary.

               8.13 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement or
that are reasonably related thereto.

               8.14 Limitation on Subject Property and Ground Leases. Make any
Investment in real property, or own or otherwise become liable in respect of:

     (a) unimproved real estate with an aggregate book value exceeding an
amount equal to 5% of Consolidated Total Asset Value for the fiscal
quarter most recently ended;

     (b) real property under construction, including, without limitation,
real property to be acquired by the Borrower or any of its Subsidiaries
upon the completion of construction pursuant to a contract in which the
seller of such real property is required to complete construction prior
to, and as a condition precedent to, such acquisition, such that the
Construction Budget for all such real property at any time exceeds an
amount equal to 10% of Consolidated Total Asset Value for the fiscal
quarter most recently ended; and

     (c) real property leased by the Borrower or any of its Subsidiaries
pursuant to a ground lease, such that the total revenues with respect to
all such real property at any time exceeds an amount equal to 5% of the
total revenues of the Borrower on a consolidated basis for the fiscal
quarter most recently ended;

provided that, the aggregate value of all the Investments referred to in
Section 8.7(e) and this Section 8.14 shall not at any time exceed 20% of
Consolidated Total Asset Value for the fiscal quarter most recently ended for
which financial statements are available.

               8.15 Special Covenants Relating to the REIT. With respect to the
REIT:

     (a) make any disposition of or encumber, pledge or hypothecate,
whether directly or indirectly, all or any portion of its interest in the
Borrower or any Subsidiary at

73

 

any time or any rights to distributions or
dividends therefrom other than to the Borrower or a Wholly-Owned
Subsidiary, other than any pledges of equity interests pursuant to the
Security Documents in connection with this Agreement;

     (b) fail for any reason whatsoever, whether voluntarily or
involuntarily, either directly or through one or more Wholly-Owned
Subsidiaries of the REIT, to be the sole general partner of the Borrower
at any time;

     (c) cease to have its common stock listed on the New York Stock
Exchange, the American Stock Exchange, or the Nasdaq Stock Exchange; or

     (d) cease to have REIT Status or fail to comply with the
requirements of the Code relating to qualified REIT subsidiaries in
respect of its ownership of any Subsidiary of the REIT to the extent
required under the Code and applicable law.

               8.16 Taxation of the Borrower. In the case of the Borrower, become
an association taxable as a corporation and not be taxed as a partnership under
the Code.

               8.17 Limitation on Hedge Agreements. Enter into any Hedge
Agreement other than Hedge Agreements entered into in the ordinary course of
business, and not for speculative purposes, to protect against changes in
interest rates or foreign exchange rates.

SECTION 9. EVENTS OF DEFAULT

     If any of the following events shall occur and be continuing:

     (a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount
becomes due in accordance with the terms hereof or thereof; or

     (b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other
Loan Document shall prove to have been inaccurate in any material respect
on or as of the date made or deemed made or furnished; or

     (c) any Loan Party shall default in the observance or performance of
any agreement contained in clause (i) or (ii) of Section 7.4(a) (with
respect to the REIT and the Borrower only), Section 7.7(a) or Section 8,
or in Section 5 of the Guarantee and Collateral Agreement; or

     (d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (c) of this
Section), and such default shall continue unremedied for a period of 30
days; or

74

 

     (e) the REIT, the Borrower or any of its Subsidiaries shall (i)
default in making any payment of any principal of any Indebtedness
(including, without limitation, any Guarantee Obligation, but excluding
the Loans and Reimbursement Obligations) on the scheduled or original due
date with respect thereto; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder
or beneficiary of such Indebtedness (or a trustee or agent on behalf of
such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
to become subject to a mandatory offer to purchase by the obligor
thereunder or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable; provided, that a default,
event or condition described in clause (i), (ii) or (iii) of this
paragraph (e) shall not at any time constitute an Event of Default
unless, at such time, one or more defaults, events or conditions of the
type described in clauses (i), (ii) and (iii) of this paragraph (e) shall
have occurred and be continuing with respect to Indebtedness the
outstanding principal amount of which exceeds in the aggregate
$10,000,000; or

     (f) (i) the REIT, the Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its
assets, or the REIT, the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall
be commenced against the REIT, the Borrower or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in clause
(i) above that (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged
or unbonded for a period of 60 days; or (iii) there shall be commenced
against the REIT, the Borrower or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets that results in the entry of an order for any such
relief that shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the REIT,
the Borrower or any of its Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) the REIT, the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or

     (g) (i) any Person shall engage in any “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (ii) any

75

 

“accumulated funding deficiency” (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan, or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(v) the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders shall be likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case
in clauses (i) through (vi) above, such event or condition, together with
all other such events or conditions, if any, could, in the sole judgment
of the Required Lenders, reasonably be expected to have a Material
Adverse Effect; or

     (h) one or more judgments or decrees shall be entered against the
REIT, the Borrower or any of its Subsidiaries involving for the REIT, the
Borrower and its Subsidiaries taken as a whole a liability (not paid or
fully covered by insurance as to which the relevant insurance company has
acknowledged coverage) of $5,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof; or

     (i) any of the Security Documents shall cease, for any reason (other
than by reason of the express release thereof pursuant to Section 11.15),
to be in full force and effect, or any Loan Party or any Affiliate of any
Loan Party shall so assert, or any Lien created by any of the Security
Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or

     (j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason (other than by reason of
the express release thereof pursuant to Section 11.15), to be in full
force and effect or any Loan Party or any Affiliate of any Loan Party
shall so assert; or

     (k) any Change of Control shall occur;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith,

76

 

whereupon the Commitments shall immediately terminate; and (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable forthwith,
whereupon the same shall immediately become due and payable. In the case of
all Letters of Credit with respect to which presentment for honor shall not
have occurred at the time of an acceleration pursuant to this paragraph, the
Borrower shall at such time deposit in a cash collateral account opened by the
Administrative Agent (and maintained for the benefit of the Lenders) an amount
equal to the aggregate then undrawn and unexpired face amount of such Letters
of Credit. Amounts held in such cash collateral account shall be applied by
the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents.
After all such Letters of Credit shall have expired or been fully drawn upon,
all Reimbursement Obligations shall have been satisfied and all other
obligations of the Borrower hereunder and under the other Loan Documents shall
have been paid in full, the balance, if any, in such cash collateral account
shall be returned to the Borrower (or such other Person as may be lawfully
entitled thereto).

SECTION 10. THE AGENTS

               10.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes each Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.

               10.2 Delegation of Duties. Each Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

               10.3 Exculpatory Provisions. Neither any Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except to the extent
that any of the foregoing are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from its or such Person’s own
gross negligence or willful misconduct) or (ii) responsible in any

77

 

manner to
any of the Lenders for any recitals, statements, representations or warranties
made by any Loan Party or any officer thereof contained in this Agreement or
any other Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agents under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Loan Party to
perform its obligations hereunder or thereunder. The Agents shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.

     
     10.4 Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Loan Parties), independent accountants and
other experts selected by such Agent. The Agents may deem and treat the payee
of any Note as the owner thereof for all purposes unless such Note shall have
been transferred in accordance with Section 11.6 and all actions required by
such Section in connection with such transfer shall have been taken. Each
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders (or, if so specified by this
Agreement, all Lenders or any other instructing group of Lenders specified by
this Agreement) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Loan Documents in accordance
with a request of the Required Lenders (or, if so specified by this Agreement,
all Lenders or any other instructing group of Lenders specified by this
Agreement), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.

          10.5 Notice of Default. No Agent shall be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
such Agent shall have received notice from a Lender, the REIT or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”. In the event that the
Administrative Agent shall receive such a notice, the Administrative Agent
shall give notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders or any other instructing group of Lenders specified by this Agreement);
provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.

          10.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither any of the Agents nor any of their
respective officers, directors,

78

 

employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of a Loan Party
or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender. Each Lender represents
to the Agents that it has, independently and without reliance upon any Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.

          10.7 Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by the REIT or the Borrower
and without limiting the obligation of the REIT or the Borrower to do so),
ratably according to their respective Aggregate Exposure Percentages in effect
on the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), for,
and to save each Agent harmless from and against, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever that may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against such Agent in any way relating
to or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the
transactions contemplated hereby or thereby or any action taken or omitted
by such Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements that are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from such Agent’s gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.

          10.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent.
With respect to its Loans made or renewed by it and with respect to any Letter
of Credit issued or participated in by it, each Agent shall have the

79

 

same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
“Lender” and “Lenders” shall include each Agent in its individual capacity.

          10.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon ten days’ notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 9(a) or Section
9(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
“Administrative Agent” shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent’s rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that is ten
days following a retiring Administrative Agent’s notice of resignation, the
retiring Administrative Agent’s resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. The Syndication Agent may, at
any time, by notice to the Lenders and the Administrative Agent, resign as
Syndication Agent hereunder, whereupon the duties, rights, obligations and
responsibilities of the Syndication Agent hereunder shall automatically be
assumed by, and inure to the benefit of, the Administrative Agent, without any
further act by the Syndication Agent, the Administrative Agent or any Lender.
After any retiring Agent’s resignation as Agent, the provisions of this Section
10 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement and the other Loan Documents.

          10.10 Authorization to Release Liens and Guarantees. The Administrative Agent is hereby irrevocably authorized by each of
the Lenders to effect any release of Liens or guarantee obligations
contemplated by Section 11.15.

          10.11 The Arrangers; the Syndication Agent; the Co-Documentation
Agents. None of the Arrangers, the Syndication Agent or the
Co-Documentation Agents, in their respective capacities as such, shall have any
duties or responsibilities, nor shall any such Person incur any liability,
under this Agreement and the other Loan Documents.

SECTION 11. MISCELLANEOUS

          11.1 Amendments and Waivers. Neither this Agreement or any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 11.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or (with the written consent of the Required Lenders) the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto

80

 

and to
the other Loan Documents (including amendments and restatements hereof or
thereof) for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as may be specified in the instrument of waiver, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall:

          (i) forgive the principal amount or extend the final scheduled
date of maturity of any Loan or Reimbursement Obligation, reduce
the stated rate of any interest or fee payable under this Agreement
(except (x) in connection with the waiver of applicability of any
post-default increase in interest rates (which waiver shall be
effective with the consent of the Required Lenders) and (y) that
any amendment or modification of defined terms used in the
financial covenants in this Agreement shall not constitute a
reduction in the rate of interest or fees for purposes of this
clause (i)) or extend the scheduled date of any payment thereof, or
increase the amount or extend the expiration date of any Commitment
of any Lender, in each case without the consent of each Lender
directly affected thereby;

          (ii) amend, modify or waive any provision of this Section or
reduce any percentage specified in the definition of Required
Lenders, consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement and the
other Loan Documents or release all or substantially all of the
Subsidiary Guarantors from their guarantee obligations under the
Guarantee and Collateral Agreement, in each case without the
consent of all the Lenders;

          (iii) subject to Section 4.2 and Section 8.2(e), release all
or substantially all of the Collateral;

          (iv) amend, modify or waive any provision of Section 10, or
any other provision affecting the rights, duties or obligations of
any Agent, without the consent of any Agent directly affected
thereby;

          (v) amend, modify or waive any provision of Section 2.13
without the consent of each Lender directly affected thereby;

          (vi) amend, modify or waive any provision of Section 3 without
the consent of each Issuing Lender affected thereby; or

          (vii) impose restrictions on assignments and participations
that are more restrictive than, or additional to, those set forth
in Section 11.6.

Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Agents and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of

81

 

Default, or impair any right consequent thereon. Any such waiver,
amendment, supplement or modification shall be effected by a written instrument
signed by the parties required to sign pursuant to the foregoing provisions of
this Section; provided, that delivery of an executed signature page of
any such instrument by facsimile transmission shall be effective as delivery of
a manually executed counterpart thereof.

               For the avoidance of doubt, this Agreement and any other Loan Document may
be amended (or amended and restated) with the written consent of the Required
Lenders, the Administrative Agent and each Loan Party to each relevant Loan
Document (x) to add one or more additional credit facilities to this Agreement
and to permit the extensions of credit from time to time outstanding thereunder
and the accrued interest and fees in respect thereof (collectively, the
“Additional Extensions of Credit”) to share ratably in the benefits of
this Agreement and the other Loan Documents with the Extensions of Credit and
the accrued interest and fees in respect thereof and (y) to include
appropriately the Lenders holding such credit facilities in any determination
of the Required Lenders.

               11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed (a) in the case of the REIT, the Borrower and the
Agents, as follows and (b) in the case of the Lenders, as set forth in an
administrative questionnaire delivered to the Administrative Agent or on
Schedule I to the Lender Addendum to which such Lender is a party or, in the
case of a Lender which becomes a party to this Agreement pursuant to an
Assignment and Acceptance, in such Assignment and Acceptance or (c) in the case
of any party, to such other address as such party may hereafter notify to the
other parties hereto:

	 	 	 	 	 
	The REIT:

	 	 	 	U-Store-It Trust
	

	 	 	 	6745 Engle Road, Suite 300
	

	 	 	 	Cleveland, Ohio 44310
	

	 	 	 	Attention: Steve Osgood, President and Chief
	

	 	 	 	Financial Officer
	

	 	 	 	Telecopy: (440) 234-8776
	

	 	 	 	Telephone: (440) 260-2223
	 
	 	 	 	 
	with a copy to:

	 	 	 	Hogan & Hartson, L.L.P.
	

	 	 	 	8300 Greensboro Drive
	

	 	 	 	Suite 1100
	

	 	 	 	McLean, Virginia 22102
	

	 	 	 	Attention: Lee E. Berner, Esq.
	

	 	 	 	Telecopy: (703) 610-6200
	

	 	 	 	Telephone: (703) 610-6100

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	The Borrower:

	 	 	 	U-Store-It, L.P.
	

	 	 	 	6745 Engle Road, Suite 300
	

	 	 	 	Cleveland, Ohio 44310
	

	 	 	 	Attention: Steve Osgood, President and Chief
	

	 	 	 	Financial Officer
	

	 	 	 	Telecopy: (440) 234-8776
	

	 	 	 	Telephone: (440) 260-2223
	 
	 	 	 	 
	with a copy to:

	 	 	 	Hogan & Hartson, L.L.P.
	

	 	 	 	8300 Greensboro Drive
	

	 	 	 	Suite 1100
	

	 	 	 	McLean, Virginia 22102
	

	 	 	 	Attention: Lee E. Berner, Esq.
	

	 	 	 	Telecopy: (703) 610-6200
	

	 	 	 	Telephone: (703) 610-6100
	 
	 	 	 	 
	The Syndication Agent:

	 	 	 	Wachovia Capital Markets, LLC
	

	 	 	 	One Wachovia Center
	

	 	 	 	301 South College Street
	

	 	 	 	Charlotte, North Carolina 28288
	

	 	 	 	Attention: Rex E. Rudy
	

	 	 	 	Telecopy: (704) 383-6205
	

	 	 	 	Telephone: (704) 383-6506
	 
	 	 	 	 
	The Administ rative Agent:

	 	 	Lehman Commercial Paper Inc.
	

	 	 	 	745 Seventh Avenue
	

	 	 	 	16th Floor
	

	 	 	 	New York, New York 10019-6801
	

	 	 	 	Attention: Diane Albanese
	

	 	 	 	Telecopy: (646) 758-5130
	

	 	 	 	Telephone: (212) 526-4979
	 
	 	 	 	 
	

	 	 	 	and
	 
	 	 	 	 
	

	 	 	 	Attention: Tom Buffa
	

	 	 	 	Telecopy: (646) 758-4672
	

	 	 	 	Telephone: (212) 526-5153
	 
	 	 	 	 
	with a copy to:

	 	 	 	Trimont Real Estate Advisors
	

	 	 	 	Monarch Tower
	

	 	 	 	3424 Peachtree Road, N.E.
	

	 	 	 	Suite 2200
	

	 	 	 	Atlanta, GA 30326
	

	 	 	 	Attention: Eric Minton
	

	 	 	 	Telecopy: (404) 582-8928
	

	 	 	 	Telephone: (404) 954-5326

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	     Issuing Lender:

	 	 	 	As notified by such Issuing Lender to the
	

	 	 	 	Administrative Agent and the Borrower

provided that any notice, request or demand to or upon the any Agent,
any Issuing Lender or any Lender shall not be effective until received.

               Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by
the Administrative Agent; provided that the foregoing shall not apply to
notices pursuant to Section 2 unless otherwise agreed by the Administrative
Agent and the applicable Lender. The Administrative Agent or the Borrower may,
in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular
notices or communications.

               11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.

               11.4 Survival of Representations and Warranties. All
representations and warranties made herein, in the other Loan Documents and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.

               11.5 Payment of Expenses. The Borrower agrees (a) to pay or
reimburse the Agents for all their reasonable out-of-pocket costs and expenses
incurred in connection with the syndication of the Facility (other than fees
payable to syndicate members) and the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements and other charges of counsel to the Administrative Agent
and the charges of Intralinks, (b) to pay or reimburse each Lender and the
Agents for all costs and expenses incurred in connection with the evaluation
and review of proposed Borrowing Base Properties pursuant to Section 4.1 (other
than the allocated cost of in-house review), regardless of whether the related
Subject Property is accepted as a Borrowing Base Property as a result of such
review, (c) to pay or reimburse each Lender and the Agents for all their costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any other documents
prepared in connection herewith or therewith, including, without limitation,
the fees and disbursements of counsel (including the allocated fees and
disbursements and other charges of in-house counsel) to each Lender and of
counsel to the Agents, (d) to pay, indemnify, or reimburse each Lender and the
Agents for, and hold each Lender and the Agents harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if

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any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (e) to pay, indemnify or reimburse
each Lender, each Agent, their respective affiliates, and their respective
officers, directors, trustees, employees, advisors, agents and controlling
persons (each, an “Indemnitee”) for, and hold each Indemnitee harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever incurred by an Indemnitee or asserted against any
Indemnitee by any third party or by the Borrower or any other Loan Party
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties
hereto or thereto of their respective obligations hereunder or thereunder or
the consummation of the transactions contemplated hereby or thereby, (ii) any
Loan or Letter of Credit or the use or proposed use of the proceeds thereof
(including any refusal by any Issuing Bank to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Materials of Environmental Concern on or from
any property owned, occupied or operated by the Borrower
or any of its Subsidiaries, or any actual or alleged violation of, or
liability or other obligation under, any Environmental Law related in any way
to the Borrower or any of its Subsidiaries or any or their respective
properties, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory, whether brought by any third party or by the Borrower or
any other Loan Party, and regardless of whether any Indemnitee is a party
thereto (all the foregoing in this clause (e), collectively, the
“Indemnified Liabilities”), provided, that the Borrower shall
have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnitee. No
Indemnitee shall be liable for any damages arising from the use by unauthorized
persons of Information or other materials sent through electronic,
telecommunications or other information transmission systems that are
intercepted by such persons or for any special, indirect, consequential or
punitive damages in connection with the Facility. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives
and agrees to cause its Subsidiaries so to waive, all rights for contribution
or any other rights of recovery with respect to all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind
or nature, under or related to Environmental Laws, that any of them might have
by statute or otherwise against any Indemnitee, other than any such claims,
demands, penalties, fines, liabilities, settlements, damages, costs or expenses
which are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of such Indemnitee. All amounts due under this Section shall be payable not
later than
30 days after written demand therefor. Statements payable by the
Borrower pursuant to this Section shall be submitted to Steve Osgood, President
and Chief Financial Officer (Telephone No. (440) 260-2223) (Fax No. (440)
234-8776), at the address of the Borrower set forth in Section 11.2, or to such
other Person or address as may be hereafter designated by the Borrower in a
notice to the

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Administrative Agent. The agreements in this Section shall
survive repayment of the Loans and all other amounts payable hereunder.

               11.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the REIT, the
Borrower, the Lenders, the Agents, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agents and each Lender.

               (b) Any Lender may, without the consent of the Borrower, in accordance
with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a “Participant”) participating
interests in any Loan owing to such Lender, any Commitment of such Lender or
any other interest of such Lender hereunder and under the other Loan Documents.
In the event of any such sale by a Lender of a participating interest to a
Participant, such Lender’s obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other
Loan Documents, and the Borrower and the Agents shall
continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement and the other Loan
Documents. In no event shall any Participant under any such participation have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom, except
to the extent that such amendment, waiver or consent would require the consent
of all Lenders pursuant to Section 11.1. The Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 11.7(a) as
fully as if such Participant were a Lender hereunder. The Borrower also agrees
that each Participant shall be entitled to the benefits of Sections 2.14, 2.15
and 2.16 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if such Participant were a Lender;
provided that, in the case of Section 2.15, such Participant shall have
complied with the requirements of said Section, and provided,
further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred
by such transferor Lender to such Participant had no such transfer occurred.

               (c) Any Lender (an “Assignor”) may, in accordance with applicable
law and upon written notice to the Administrative Agent, at any time and from
time to time assign to any Lender or any affiliate, Related Fund or Control
Investment Affiliate thereof or, with the consent of the Borrower, the
Administrative Agent and the Issuing Lender (which, in each case, shall not be
unreasonably withheld or delayed) (provided that no such consent need be
obtained by any Lehman Entity), to an additional bank, financial institution or
other entity (an “Assignee”) all or any part of its rights and
obligations under this Agreement pursuant to an Assignment and

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Acceptance,
substantially in the form of Exhibit E, executed by such Assignee and such
Assignor (and, where the consent of the Borrower, the Administrative Agent and
the Issuing Lender is required pursuant to the foregoing provisions, by the
Borrower and such other Persons) and delivered to the Administrative Agent for
its acceptance and recording in the Register; provided that no such
assignment to an Assignee (other than any Lender or any affiliate thereof)
shall be in an aggregate principal amount of less than $1,000,000 (other than
in the case of an assignment of all of a Lender’s interests under this
Agreement) and, the applicable Assignor (if it shall retain any Commitment or
Loans) shall have a Commitment (or in the case the Commitments have been
terminated, Loans) of at least $1,000,000, unless otherwise agreed by the
Borrower and the Administrative Agent. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with Commitments and/or Loans as
set forth therein, and (y) the Assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of an Assignor’s rights and obligations under this Agreement, such
Assignor shall cease to be a party hereto, except as to Section 2.14, 2.15
and 11.5 in respect of the period prior to such effective date).
Notwithstanding any provision of this Section, the consent of the Borrower
shall not be required for any assignment that occurs at any time when any Event
of Default shall have occurred and be continuing. For purposes of the minimum
assignment amounts set forth in this paragraph, multiple assignments by two or
more Related Funds shall be aggregated.

               (d) The Administrative Agent shall, on behalf of the Borrower, maintain at
its address referred to in Section 11.2 a copy of each Assignment and
Acceptance delivered to it and a register (the “Register”) for the
recordation of the names and addresses of the Lenders and the Commitment of,
and principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each Agent and the Lenders shall treat each Person whose name
is recorded in the Register as the owner of the Loans and any Notes evidencing
such Loans recorded therein for all purposes of this Agreement. Any assignment
of any Loan, whether or not evidenced by a Note, shall be effective only upon
appropriate entries with respect thereto being made in the Register (and each
Note shall expressly so provide). Any assignment or transfer of all or part of
a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing
such Loan, accompanied by a duly executed Assignment and Acceptance; thereupon
one or more new Notes in the same aggregate principal amount shall be issued to
the designated Assignee, and the old Notes shall be returned by the
Administrative Agent to the Borrower marked “canceled”. The Register shall be
available for inspection by the Borrower or any Lender (with respect to any
entry relating to such Lender’s Loans) at any reasonable time and from time to
time upon reasonable prior notice.

               (e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor and an Assignee (and, in any case where the consent of any other
Person is required by Section 11.6(c), by each such other Person) together with
payment to the Administrative Agent of a registration and processing fee of
$3,500 (treating multiple, simultaneous assignments by or to two or more
Related Funds as a single assignment) (except that no such registration and
processing fee shall be payable (y) in connection with an assignment by or to a
Lehman Entity or

87

 

(z) in the case of an Assignee which is already a Lender or is
an affiliate or Related Fund of a Lender or a Person under common management
with a Lender), the Administrative Agent shall (i) promptly accept such
Assignment and Acceptance and (ii) on the effective date determined pursuant
thereto record the information contained therein in the Register and give
notice of such acceptance and recordation to the Borrower. On or prior to such
effective date, the Borrower, at its own expense, upon request, shall execute
and deliver to the Administrative Agent (in exchange for the Notes of the
assigning Lender) a new Note to the order of such Assignee in an amount equal
to the Commitment assumed or acquired by it pursuant to such Assignment and
Acceptance and, if the Assignor has retained a Commitment, upon request, a new
Note to the order of the Assignor in an amount equal to the Commitment retained
by it hereunder. Such new Note or Notes shall be dated the Closing Date and
shall otherwise be in the form of the Note or Notes replaced thereby.

               (f) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this Section concerning assignments of Loans and Notes relate
only to absolute assignments and that such provisions do not prohibit
assignments creating security interests in
Loans and Notes, including, without limitation, any pledge or assignment
by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with
applicable law.

               (g) Notwithstanding anything to the contrary contained herein, any Lender
(a “Granting Lender”) may grant to a special purpose funding vehicle (an
“SPC”), identified as such in writing from time to time by the Granting
Lender to the Administrative Agent and the Borrower, the option to provide to
the Borrower all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to the Borrower pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof. The making
of a Loan by an SPC hereunder shall utilize the Commitment of the Granting
Lender to the same extent, and as if, such Loan were made by such Granting
Lender. Each party hereto hereby agrees that no SPC shall be liable for any
indemnity or similar payment obligation under this Agreement (all liability for
which shall remain with the Granting Lender). In furtherance of the foregoing,
each party hereto hereby agrees (which agreement shall survive the termination
of this Agreement) that, prior to the date that is one year and one day after
the payment in full of all outstanding commercial paper or other indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or
any state thereof. In addition, notwithstanding anything to the contrary in
this Section 11.6(g), any SPC may (A) with notice to, but without the prior
written consent of, the Borrower and the Administrative Agent and without
paying any processing fee therefor, assign all or a portion of its interests in
any Loans to the Granting Lender, or with the prior written consent of the
Borrower and the Administrative Agent (which consent shall not be unreasonably
withheld) to any financial institutions providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans, and (B) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC;
provided that non-public information with respect to the Borrower may be
disclosed only with the Borrower’s consent which will not be unreasonably
withheld. This

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paragraph (g) may not be amended without the written consent of
any SPC with Loans outstanding at the time of such proposed amendment.

               11.7
Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to a particular Lender or to
the Lenders under a particular Facility, if any Lender (a “Benefitted
Lender”) shall at any time receive any payment of all or part of the
Obligations owing to it, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 9(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender’s Obligations, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender’s Obligations, or shall provide such other
Lenders with the benefits of any such collateral, as shall be necessary to
cause such Benefitted Lender to share the excess payment or benefits of such
collateral ratably with each of the Lenders;
provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.

               (b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the REIT or the
Borrower, any such notice being expressly waived by the REIT and the Borrower
to the extent permitted by applicable law, upon any amount becoming due and
payable by the REIT or the Borrower hereunder (whether at the stated maturity,
by acceleration or otherwise), to set off and appropriate and apply against
such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the REIT or
the Borrower, as the case may be. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application
made by such Lender, provided that the failure to give such notice shall
not affect the validity of such setoff and application.

               11.8 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts, and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. Delivery of an executed signature page of this Agreement
or of a Lender Addendum by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof. A set of the copies of
this Agreement signed by all the parties shall be lodged with the Borrower and
the Administrative Agent.

               11.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

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               11.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the REIT, the Borrower, the Agents, the
Arranger and the Lenders with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by the
Arranger, any Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.

               11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

               11.12 Submission To Jurisdiction; Waivers. Each of the REIT and
the Borrower hereby irrevocably and unconditionally:

     (a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;

     (b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;

     (c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the REIT
or the Borrower, as the case may be, at its address set forth in Section
11.2 or at such other address of which the Administrative Agent shall
have been notified pursuant thereto;

     (d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and

     (e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.

               11.13 Acknowledgments. Each of the REIT and the Borrower hereby
acknowledges that:

     (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;

     (b) neither the Arranger, any Agent nor any Lender has any fiduciary
relationship with or duty to the REIT or the Borrower arising out of or
in connection with this Agreement or any of the other Loan Documents, and
the relationship between the

90

 

Arranger, the Agents and the Lenders, on one
hand, and the REIT and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

     (c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Arranger, the Agents and the Lenders or among the REIT,
the Borrower and the Lenders.

               11.14 Confidentiality. Each of the Agents and the Lenders agrees
to keep confidential all non-public information provided to it by any Loan
Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or
any Lender from disclosing any such information (a) to the Arranger, any Agent,
any other Lender or any affiliate of any thereof, (b) to any Participant or
Assignee (each, a “Transferee”) or prospective Transferee that agrees to
comply with the provisions of this Section or substantially equivalent
provisions, (c) to any of its employees, directors, agents, attorneys,
accountants and other professional advisors, (d) to any financial institution
that is a direct or indirect contractual counterparty in swap agreements or
such contractual counterparty’s professional advisor (so long as such
contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section), (e) upon
the request or demand of any Governmental Authority having jurisdiction over
it, (f) in response to any order of any court or other Governmental Authority
or as may otherwise be required pursuant to any Requirement of Law, (g) in
connection with any litigation or similar proceeding, (h) that has been
publicly disclosed other than in breach of this Section, (i) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender’s investment portfolio in connection with ratings issued with respect to
such Lender or (j) in connection with the exercise of any remedy hereunder or
under any other Loan Document.

               11.15 Release of Collateral and Guarantee Obligations. 

     (a) Notwithstanding anything to the contrary contained herein or in
any other Loan Document, upon request of the Borrower in connection with
any Disposition of Property permitted by the Loan Documents, the
Administrative Agent shall (without notice to, or vote or consent of, any
Lender, or any affiliate of any Lender that is a party to any Specified
Hedge Agreement) take such actions as shall be required to release its
security interest in any Collateral being Disposed of in such
Disposition, and to release any guarantee obligations under any Loan
Document of any Person being Disposed of in such Disposition, to the
extent necessary to permit consummation of such Disposition in accordance
with the Loan Documents.

     (b) Notwithstanding anything to the contrary contained herein or any
other Loan Document, when all Obligations (other than obligations in
respect of any Specified Hedge Agreement) have been paid in full, all
Commitments have terminated or expired and no Letter of Credit shall be
outstanding, upon request of the Borrower, the Administrative Agent shall
(without notice to, or vote or consent of, any Lender, or any affiliate
of any Lender that is a party to any Specified Hedge Agreement) take such
actions as shall be required to release its security interest in all
Collateral, and to release

91

 

all guarantee obligations under any Loan
Document, whether or not on the date of such release there may be
outstanding Obligations in respect of Specified Hedge Agreements.
Any such release of guarantee obligations shall be deemed subject to
the provision that such guarantee obligations shall be reinstated if
after such release any portion of any payment in respect of the
Obligations guaranteed thereby shall be rescinded or must otherwise be
restored or returned upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or any Guarantor, or upon
or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as
though such payment had not been made.

               11.16 Accounting Changes. In the event that any “Accounting
Change” (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Change with the desired result that the
criteria for evaluating the Borrower’s financial condition shall be the same
after such Accounting Change as if such Accounting Change had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Change had not occurred.
“Accounting Change” refers to any change in accounting principles required by
the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of Certified
Public Accountants or, if applicable, the SEC.

               11.17 Delivery of Lender Addenda. Each initial Lender and New
Lender shall become a party to this Agreement by delivering to the
Administrative Agent a Lender Addendum duly executed by such Lender, the
Borrower and the Administrative Agent.

               11.18 WAIVERS OF JURY TRIAL. THE REIT, THE BORROWER, THE AGENTS
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

92

 

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

	 	 	 	 	 
	 

	 	U-STORE-IT TRUST
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven G. Osgood
	

	 	 	 	
 
	

	 	 	 	 Name: Steven G. Osgood
	

	 	 	 	 Title: President
	 
	 	 	 	 
	

	 	U-STORE-IT, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	U-STORE-IT TRUST, its general
	

	 	 	 	partner
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven G. Osgood
	

	 	 	 	
 
	

	 	 	 	 Name: Steven G. Osgood
	

	 	 	 	 Title: President
	 
	 	 	 	 
	

	 	LEHMAN BROTHERS INC.,
	

	 	as an Arranger
	 
	 	 	 	 
	

	 	By:
	 	/s/ Francis X. Gilhool
	

	 	 	 	
 
	

	 	 	 	 Name: Francis X Gilhool
	

	 	 	 	 Title: Authorized Signatory
	 
	 	 	 	 
	

	 	WACHOVIA CAPITAL MARKETS, LLC,
	

	 	as an Arranger and as Syndication Agent
	 
	 	 	 	 
	

	 	By:
	 	/s/ Rex E. Rudy
	

	 	 	 	
 
	

	 	 	 	 Name: Rex E. Rudy
	

	 	 	 	 Title: Managing Director
	 
	 	 	 	 
	

	 	SUNTRUST BANK,
	

	 	as Co-Documentation Agent
	 
	 	 	 	 
	

	 	By:
	 	/s/ Nancy B. Richards
	

	 	 	 	
 
	

	 	 	 	 Name: Nancy B. Richards
	

	 	 	 	 Title: Vice President

 

 

	 	 	 	 	 
	

	 	LASALLE BANK NATIONAL ASSOCIATION,
	

	 	as Co-Documentation Agent
	 
	 	 	 	 
	

	 	By:
	 	/s/ Luke D. Elsass
	

	 	 	 	
 
	

	 	 	 	 Name: Luke D. Elsass
	

	 	 	 	 Title: Assistant Vice President
	 
	 	 	 	 
	

	 	LEHMAN COMMERCIAL PAPER INC.,
	

	 	as Administrative Agent
	 
	 	 	 	 
	

	 	By:
	 	/s/ Francis X. Gilhool
	

	 	 	 	
 
	

	 	 	 	 Name: Francis X Gilhool
	

	 	 	 	 Title: Authorized Signatory

 

 

Annex A

PRICING GRID FOR LOANS AND COMMITMENT FEES

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ratio of Consolidated	 	 	 	 	 	 
	Total Debt to	 	 	 	 	 	 
	Consolidated Total	 	Applicable Margin	 	Applicable Margin	 	 
	Asset Value
	 	for Eurodollar Loans
	 	for Base Rate Loans
	 	Commitment Fee Rate

	< 30%
	 	 	1.500	%	 	 	0.500	%	 	 	0.25	%
	> 30% but < 50%
	 	 	1.750	%	 	 	0.750	%	 	 	0.25	%
	> 50% but < 60%
	 	 	2.125	%	 	 	1.125	%	 	 	0.30	%
	> 60%
	 	 	2.500	%	 	 	1.500	%	 	 	0.30	%

Changes in the Applicable Margin with respect to Loans or in the Commitment Fee
Rate resulting from changes in the ratio of Consolidated Total Debt to
Consolidated Total Asset Value shall become effective on the date (the “Adjustment Date”) on which financial statements are delivered to the Lenders pursuant to
Section 7.1 (but in any event not later than the 45th day after the end of each
of the first three quarterly periods of each fiscal year or the 90th day after
the end of each fiscal year, as the case may be) and shall remain in effect
until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time
periods specified above, then, until such financial statements are delivered,
the ratio of Consolidated Total Debt to Consolidated Total Asset Value as at
the end of the fiscal period that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 50%. In addition, at
all times while an Event of Default shall have occurred and be continuing, the
ratio of Consolidated Total Debt to Consolidated Total Asset Value shall for
the purposes of this Pricing Grid be deemed to be greater than 50%. Each
determination of the ratio of Consolidated Total Debt to Consolidated Total
Asset Value pursuant to this Pricing Grid shall be made for the periods and in
the manner contemplated by Section 8.1(a)

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