BRIDGE LOAN AGREEMENT

 

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                                                                    Exhibit 10.1

 

                              BRIDGE LOAN AGREEMENT

 

                          Dated as of December 6, 2005

 

                                      among

 

                         WINDROSE MEDICAL PROPERTIES, L.P.

 

                                  as Borrower,

 

                       WINDROSE MEDICAL PROPERTIES TRUST,

 

                                 as a Guarantor,

 

                          KEYBANK NATIONAL ASSOCIATION,

 

                                   as a Bank,

 

           THE OTHER BANKS WHICH MAY BECOME PARTIES TO THIS AGREEMENT,

 

                          KEYBANK NATIONAL ASSOCIATION,

 

                                    as Agent

 

                                       with

 

                            KEYBANC CAPITAL MARKETS,

 

                        as Sole Lead Manager and Arranger

 

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                              BRIDGE LOAN AGREEMENT

 

     This BRIDGE LOAN AGREEMENT is made as of the 6th day of December, 2005, by

and among WINDROSE MEDICAL PROPERTIES, L.P., a Virginia limited partnership (the

"Borrower"), WINDROSE MEDICAL PROPERTIES TRUST, a Maryland real estate

investment trust (the "Guarantor"), KEYBANK NATIONAL ASSOCIATION, and the other

lending institutions which may become parties hereto pursuant to Section 18 (the

"Banks"), and KEYBANK NATIONAL ASSOCIATION, a national banking association, as

Administrative Agent for the Banks (the "Agent").

 

                                    RECITALS

 

     WHEREAS, Borrower has requested that the Banks provide a bridge loan to

Borrower; and

 

     WHEREAS, Agent and the Banks are willing to provide such facility to the

Borrower on the terms and conditions set forth herein.

 

     NOW, THEREFORE, in consideration of the terms and conditions herein, and of

any loans, advances, or extensions of credit now or hereafter made to or for the

benefit of the Borrower by the Banks, the parties hereto hereby covenant and

agree as follows:

 

Section 1. DEFINITIONS AND RULES OF INTERPRETATION.

 

     Section 1.1 DEFINITIONS. The following terms shall have the meanings set

forth in this Section 1 or elsewhere in the provisions of this Agreement

referred to below:

 

     Acquisition Portfolio. Collectively, the Fee Properties and the Equity

Interest Properties.

 

     Adjusted EBITDA. As of the end of any fiscal quarter, the sum of (a) (i)

the aggregate EBITDA attributable to Medical Properties (which are not also

Construction-in-Process) for such quarter calculated for this purpose without

including any lease termination fees or insurance or condemnation proceeds

otherwise includable therein for such periods in accordance with the definition

of EBITDA, multiplied by (ii) four (4), minus (b) the Capital Expenditure

Reserve Amount.

 

     Affiliate. An Affiliate, as applied to any Person, shall mean any other

Person directly or indirectly controlling, controlled by, or under common

control with, that Person. For purposes of this definition, "control"

(including, with correlative meanings, the terms "controlling", "controlled by"

and "under common control with"), as applied to any Person, means (a) the

possession, directly or indirectly, of the power to vote ten percent (10%) or

more of the stock, shares, voting trust certificates, beneficial interests,

partnership interests, member interests or other interests having voting power

for the election of directors of such Person or otherwise to direct or cause the

direction of the management and policies of that Person, whether through the

ownership of voting securities or by contract or otherwise, or (b) the ownership

of (i) a general partnership interest, (ii) a managing member's interest in a

limited liability company or (iii) a limited partnership interest or preferred

stock (or other ownership interest) representing ten percent (10%) or more of

the outstanding limited or general partnership interests, preferred stock or

other ownership interests of such Person.

 

     Agent. KeyBank, acting as Administrative Agent for the Banks, its

successors and assigns.

 

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     Agent's Head Office. The Agent's head office located at 127 Public Square,

Cleveland, Ohio 44114-1306, or at such other location as the Agent may designate

from time to time by notice to the Borrower and the Banks.

 

     Agent's Special Counsel. McKenna Long & Aldridge LLP or such other counsel

as may be approved by the Agent.

 

     Agreement. This Bridge Loan Agreement, including the Schedules and Exhibits

hereto.

 

     Balance Sheet Date. September 30, 2005.

 

     Banks. KeyBank and any other Person who becomes an assignee of any rights

of a Bank pursuant to Section 18.

 

     Base Rate. The greater of (a) the variable per annum rate of interest

announced from time to time by Agent at Agent's Head Office as its "prime rate"

or (b) one-half of one percent (0.5%) above the Federal Funds Effective Rate

(rounded upwards, if necessary, to the next one-eighth of one percent). The Base

Rate is a reference rate and does not necessarily represent the lowest or best

rate being charged to any customer. Any change in the rate of interest payable

hereunder resulting from a change in the Base Rate shall become effective as of

the opening of business on the day on which such change in the Base Rate becomes

effective, without notice or demand of any kind.

 

     Base Rate Loans. Those Loans bearing interest calculated by reference to

the Base Rate.

 

     Borrower. As defined in the preamble hereto.

 

     Business Day. Any day on which banking institutions located in Cleveland,

Ohio are open for the transaction of banking business and, in the case of LIBOR

Rate Loans, which also is a LIBOR Business Day.

 

     Capital Expenditure Reserve Amount. With respect to any Real Estate now or

hereafter owned by the Guarantor or any of its Subsidiaries, a reserve for

replacements and capital expenditures equal to $0.15 per square foot of gross

rentable space located on such Real Estate.

 

     Capitalized Lease. A lease under which a Person is the lessee or obligor,

the discounted future rental payment obligations under which are required to be

capitalized on the balance sheet of the lessee or obligor in accordance with

generally accepted accounting principles.

 

     CERCLA. See Section 6.18.

 

     Change of Control. A Change of Control shall exist upon the occurrence of

any of the following:

 

     (a) any Person (including a Person's Affiliates and associates) or group

(as that term is understood under Section 13(d) of the Securities Exchange Act

of 1934, as amended (the "Exchange Act") and the rules and regulations

thereunder) shall have acquired beneficial ownership (within the meaning of Rule

13d-3 under the Exchange Act) of a percentage (based on voting power, in the

event different classes of stock shall have different voting powers) of the

voting stock of the Guarantor equal to at least twenty percent (20%);

 

     (b) as of any date a majority of the Board of Directors or Trustees of the

Guarantor (the "Board") consists of individuals who were not either (i)

directors or trustees of the Guarantor as of the

 

 

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corresponding date of the previous year, (ii) selected or nominated to become

directors or trustees by the Board of which a majority consisted of individuals

described in clause (b)(i) above, or (iii) selected or nominated to become

directors by the Board of which a majority consisted of individuals described in

clause (b)(i) above and individuals described in clause (b)(ii), above;

 

     (c) the Guarantor shall fail to be the sole general partner of Borrower,

shall fail to own such general partnership interest in Borrower free of any lien

or encumbrance on such general partnership interest, or shall fail to control

the management and policies of Borrower; or

 

     (d) the Guarantor fails to own, directly or indirectly, free of any lien,

encumbrance or other adverse claim, at least fifty-one percent (51%) of the

partnership interests of Borrower.

 

     Closing Date. The first date on which all of the conditions set forth

in Section 10 and Section 11 have been satisfied.

 

     Code. The Internal Revenue Code of 1986, as amended.

 

     Commitment. With respect to each Bank, the amount set forth on Schedule 1

hereto as the amount of such Bank's Commitment to make or maintain Loans to the

Borrower for the account of the Borrower, as the same may be changed from time

to time in accordance with the terms of this Agreement.

 

     Commitment Percentage. With respect to each Bank, the percentage set forth

on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of

all of the Banks, as the same may be changed from time to time in accordance

with the terms of this Agreement.

 

     Completed Property. Any Medical Property that constituted

Construction-in-Process until six (6) months following completion of such

Medical Property as evidenced by the issuance of a temporary or permanent

certificate of occupancy (whichever occurs first) for such Medical Property.

 

     Compliance Certificate. See Section 7.4(d).

 

     Consolidated or combined. With reference to any term defined herein, that

term as applied to the accounts of a Person and its Subsidiaries, consolidated

or combined in accordance with generally accepted accounting principles.

 

     Consolidated Tangible Net Worth. As of any date of determination, the

amount by which Consolidated Total Assets exceeds Consolidated Total

Liabilities, and less the sum of:

 

     (a) the total book value of all assets of a Person and its Subsidiaries

properly classified as of such date as intangible assets under generally

accepted accounting principles, including such items as goodwill, the purchase

price of acquired assets in excess of the fair market value thereof, trademarks,

trade names, service marks, brand names, copyrights, patents and licenses, and

rights with respect to the foregoing (provided that the value of any portion of

an acquired lease classified as an intangible asset pursuant to FASB 141 shall

not be deducted from Consolidated Total Assets); plus

 

     (b) all amounts representing any write-up in the book value of any assets

(other than marketable securities) of such Person or its Subsidiaries as of such

date resulting from a revaluation thereof subsequent to the Balance Sheet Date;

plus

 

     (c) all amounts representing minority interests as of such date which are

applicable to third parties.

 

 

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     Consolidated Total Assets. As of any date of determination, all assets of

the Guarantor and its Subsidiaries determined on a consolidated basis in

accordance with generally accepted accounting principles. All real estate assets

shall be valued on a gross book value basis (that is, an undepreciated cost

basis). The Guarantor shall account for its investments which are not

consolidated in accordance with the equity method of accounting.

 

     Consolidated Total Liabilities. As of any date of determination, all

liabilities of the Guarantor and its Subsidiaries determined on a consolidated

basis in accordance with generally accepted accounting principles and all

Indebtedness of such Person and its Subsidiaries, whether or not so classified.

Consolidated Total Liabilities shall include the Guarantor's pro rata share of

such liabilities and Indebtedness of other Persons in which the Guarantor

directly or indirectly has an interest which are not consolidated with the

Guarantor.

 

     Construction-in-Process. At any time on a consolidated basis for the

Guarantor and its Subsidiaries, the sum of all cash expenditures for land and

improvements (including indirect costs internally allocated and development

costs) on all properties to be used as Medical Properties that are under

construction.

 

     Conversion Request. A notice given by the Borrower to the Agent of its

election to convert or continue a Loan in accordance with Section 4.1.

 

     Debt Offering. The issuance and sale by the Borrower or the Guarantor of

any debt securities of the Borrower or Guarantor.

 

     Debt Service. For any period, the sum of all Interest Expense and mandatory

principal payments due and payable during such period (including any payments

due under any Capitalized Leases) excluding any balloon payments due upon

maturity of any Indebtedness. As to the Guarantor, Debt Service shall include

the Guarantor's share of Debt Service of its Unconsolidated Affiliates for such

period.

 

     Default. See Section 12.1. In addition, any "Default" (as defined in the

Revolving Credit Agreement) shall also be a Default hereunder.

 

     Delinquent Bank. See Section 14.5(c).

 

     Distribution. With respect to any Person, the declaration or payment of any

cash, cash flow, dividend or distribution on or in respect of any shares of any

class of capital stock, partnership interest, membership interest or other

beneficial interest of such Person other than dividends or distributions payable

solely in equity securities of such Person; the purchase, redemption, exchange

or other retirement of any shares of any class of capital stock, partnership

interest, membership interest or other beneficial interest of such Person,

directly or indirectly through a Subsidiary of such Person or otherwise; the

return of capital by such Person to its shareholders, partners, members or other

owners as such; or any other distribution on or in respect of any shares of any

class of capital stock or other beneficial interest of such Person.

 

     Dollars or $. Dollars in lawful currency of the United States of America.

 

     Domestic Lending Office. Initially, the office of each Bank designated as

such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,

located within the United States that will be making or maintaining Base Rate

Loans.

 

 

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     Drawdown Date. The date on which any Loan is made or is to be made, and the

date on which any Loan which is made prior to the Maturity Date is converted or

combined in accordance with Section 4.1.

 

     EBITDA. With respect to any Person for any period, an amount equal to the

sum of (a) the Net Income of such Person for such period, plus (b) depreciation

and amortization, interest expense and income taxes deducted in calculating such

Net Income for such period, plus (c) any extraordinary or non-recurring losses

deducted in calculating Net Income, minus (d) any extraordinary or other

non-recurring gains included in calculating such Net Income.

 

     Employee Benefit Plan. Any employee benefit plan within the meaning of

Section 3(3) of ERISA maintained or contributed to by the Borrower, the

Guarantor or any ERISA Affiliate, other than a Multiemployer Plan.

 

     Environmental Laws. See Section 6.18(a).

 

     Equity Interest Properties. The properties to be acquired by Borrower or

Wholly Owned Subsidiaries of Borrower pursuant to that certain Interest Purchase

and Sale Agreement dated as of October 24, 2005, among various Wholly Owned

Subsidiaries of Borrower, the sellers listed therein and the other parties

thereto, such properties being more particularly described on Schedule 2.1

hereto.

 

     Equity Offering. The issuance and sale by the Borrower or the Guarantor of

any equity securities of the Borrower or the Guarantor.

 

     ERISA. The Employee Retirement Income Security Act of 1974, as amended and

in effect from time to time.

 

     ERISA Affiliate. Any Person which is treated as a single employer with the

Borrower or a Guarantor under Section 414 of the Code.

 

     ERISA Reportable Event. A reportable event with respect to a Guaranteed

Pension Plan within the meaning of Section 4043 of ERISA and the regulations

promulgated thereunder as to which the requirement of notice has not been

waived.

 

     Event of Default. See Section 12.1.

 

     Extension Request. See Section 2.8.

 

     Federal Funds Effective Rate. For any day, the rate per annum (rounded to

the nearest one hundredth of one percent (1/100 of 1%)) announced by the Federal

Reserve Bank of Cleveland on such day as being the weighted average of the rates

on overnight federal funds transactions arranged by federal funds brokers on the

previous trading day, as computed and announced by such Federal Reserve Bank in

substantially the same manner as such Federal Reserve Bank computes and

announces the weighted average it refers to as the "Federal Funds Effective

Rate", or, if such rate is not so published for any day that is a Business Day,

the average of the quotations for such day on such transactions received by the

Agent from three (3) Federal funds brokers of recognized standing selected by

the Agent.

 

     Fee Properties. The properties to be acquired by Borrower or Wholly Owned

Subsidiaries of Borrower pursuant to that certain Purchase and Sale Agreement

dated as of October 24, 2005, among various Wholly Owned Subsidiaries of

Borrower, the sellers listed therein, and the other parties thereto, and that

certain Purchase and Sale Agreement dated as of October 24, 2005, among Windrose

Tempe

 

 

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Properties, L.P., as buyer, AZ-Tempe Luke Limited Partnership, as seller, and

the other parties thereto, such properties being more particularly described on

Schedule 2.2 hereto.

 

     Fixed Charges. With respect to the Guarantor and its Subsidiaries for any

fiscal period, an amount equal to the sum of (a) the Debt Service of the

Guarantor and its Subsidiaries, plus (b) the Preferred Distributions of the

Guarantor and its Subsidiaries, all determined on a consolidated basis in

accordance with generally accepted accounting principles.

 

     Funding Deadline. See Section 2.5.

 

     Funds from Operations. With respect to any Person for any fiscal period,

the Net Income (or Deficit) of such Person computed in accordance with generally

accepted accounting principles, excluding gains (or losses) from sales of

property, plus depreciation and amortization, and after adjustments for

unconsolidated partnerships and joint ventures. Adjustments for unconsolidated

partnerships and joint ventures will be calculated to reflect funds from

operations on the same basis.

 

     Generally accepted accounting principles. Principles that are (a)

consistent with the principles promulgated or adopted by the Financial

Accounting Standards Board and its predecessors, as in effect from time to time

and (b) consistently applied with past financial statements of the Person

adopting the same principles; provided that a certified public accountant would,

insofar as the use of such accounting principles is pertinent, be in a position

to deliver an unqualified opinion (other than a qualification regarding changes

in generally accepted accounting principles) as to financial statements in which

such principles have been properly applied.

 

     Gross Asset Value. As of any date of determination the sum of the following

(but without duplication):

 

     (a) the gross acquisition cost to the Guarantor and its Subsidiaries of all

Medical Properties of the Guarantor and its Subsidiaries that have not been

owned by the Guarantor and its Subsidiaries for a period of at least one (1)

full fiscal quarter (provided that the Acquisition Portfolio shall be valued at

gross acquisition cost until such assets have been owned by the Guarantor or its

Subsidiaries for a period for at least four (4) full fiscal quarters); plus

 

     (b) (i) the sum of (A) Adjusted EBITDA of the Guarantor and its

Subsidiaries attributable to Medical Properties plus (B) corporate general and

administrative expenses attributable to Medical Properties divided by (ii) 0.09

(the capitalization rate); plus

 

     (c) the Guarantor's beneficial share of unrestricted Cash and Short Term

Investments (i.e., Cash and Short Term Investments that are not pledged or

encumbered or the use of which is not restricted by the terms of any document or

agreement) of the Guarantor and its Subsidiaries, as of the end of such quarter;

plus

 

     (d) the aggregate book value (on a cost basis) of the

Construction-in-Process of the Guarantor and its Subsidiaries that are not

Completed Properties.

 

     Guaranteed Pension Plan. Any employee pension benefit plan within the

meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower, a

Guarantor or any ERISA Affiliate the benefits of which are guaranteed on

termination in full or in part by the PBGC pursuant to Title IV of ERISA, other

than a Multiemployer Plan.

 

     Guarantor. As defined in the preamble.

 

 

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     Guaranty. The Unconditional Guaranty of Payment and Performance dated of

even date herewith made by the Guarantor in favor of the Agent and the Banks, as

the same may be modified or amended, such Guaranty to be in form and substance

satisfactory to the Agent.

 

     Hazardous Substances. See Section 6.18(b).

 

     Indebtedness. With respect to a Person, at the time of computation thereof,

all of the following (without duplication): (a) all obligations of such Person

in respect of money borrowed or the deferred purchase price of property or

services (other than trade payables incurred in the ordinary course of business

and not past due for more than sixty (60) days past the date on which such trade

payable was due, unless subject to a good faith dispute by such Person); (b) all

obligations of such Person, whether or not for money borrowed, (i) represented

by notes payable or drafts accepted, (ii) evidenced by bonds, debentures, loan

agreements, notes or similar instruments, or (iii) with respect to any purchase

money, conditional sale, title retention or other similar instrument; (c) all

obligations of such Person to purchase, redeem, retire, defease or otherwise

make any payment in respect of any mandatorily redeemable stock or other equity

interest issued by such Person or any other Person which is payable prior to the

Maturity Date, valued at the greater of its voluntary or involuntary liquidation

preference plus accrued and unpaid dividends, (d) all liabilities secured by any

mortgage, pledge, security interest, lien, charge or other encumbrance existing

on property owned or acquired subject thereto, whether or not the liability

secured thereby shall have been assumed or recourse is limited; (e) all

guarantees, endorsements and other contingent obligations, whether direct or

indirect, in respect of indebtedness or other obligations payable or performable

by others (not including obligations under Non-Recourse Carveout Guaranties

until a claim is made with respect thereto), including liability as a general

partner in respect of liabilities of a partnership in which it is a general

partner which would constitute "Indebtedness" hereunder, any obligation to

supply funds to or in any manner to invest directly or indirectly in a Person,

to maintain working capital or equity capital of a Person or otherwise to

maintain net worth, solvency or other financial condition of a Person, to

purchase indebtedness, or to assure the owner of indebtedness against loss,

including, without limitation, through an agreement to purchase property,

securities, goods, supplies or services for the purpose of enabling the debtor

to make payment of the indebtedness held by such owner or otherwise; (f) the

obligation to reimburse the issuer in respect of any letter of credit or

obligations under acceptance facilities or similar instruments, and obligations

under interest rate swaps and similar agreements; (g) any obligation as a lessee

or obligor under a Capitalized Lease; (h) all subordinated debt; and (i) all

obligations of a Person in respect of any equity or equity index swap, forward

equity transaction, equity or equity index option or any other similar

transaction; provided that the amount of any obligation under clause (e) shall

for the purposes hereof be deemed to be the stated or determinable amount of the

related primary obligation, or portion thereof, in respect of which such

guaranty or contingent liability is made or, if not stated or determinable at

the time of determination, the maximum reasonably anticipated liability in

respect thereof as determined by the guaranteeing Person in good faith.

 

     Interest Expense. For any period, without duplication, the sum of (a) total

interest expense of the Guarantor and its Subsidiaries, excluding capitalized

interest funded under a construction loan but including all other capitalized

interest, determined on a consolidated basis in accordance with generally

accepted accounting principles for such period, plus (b) the portion of rent

under a Capitalized Lease that should be treated as interest in accordance with

generally accepted accounting principles, plus (c) the Guarantor's and its

Subsidiaries' share of Interest Expense of their Unconsolidated Affiliates for

such period.

 

     Interest Payment Date. As to each Base Rate Loan, the first day of each

calendar month during the term of such Base Rate Loan, and as to each LIBOR Rate

Loan, the first day of each calendar month during the term of such LIBOR Rate

Loan and the last day of the Interest Period relating thereto.

 

 

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     Interest Period. With respect to each LIBOR Rate Loan (a) initially, the

period commencing on the Drawdown Date of such Loan and ending one, two or three

months thereafter and (b) thereafter, each period commencing on the day

following the last day of the next preceding Interest Period applicable to such

Loan and ending on the last day of one of the periods set forth above, as

selected by the Borrower in a Conversion Request; provided that all of the

foregoing provisions relating to Interest Periods are subject to the following:

 

     (i) if any Interest Period with respect to a LIBOR Rate Loan would

otherwise end on a day that is not a LIBOR Business Day, that Interest Period

shall end and the next Interest Period shall commence on the next preceding or

succeeding LIBOR Business Day as determined conclusively by the Agent in

accordance with the then current bank practice in the London Interbank Market;

 

     (ii) if the Borrower shall fail to give notice as provided in Section 4.1,

the Borrower shall be deemed to have requested a conversion of the affected

LIBOR Rate Loan to a Base Rate Loan on the last day of the then current Interest

Period with respect thereto; and

 

     (iii) no Interest Period relating to any LIBOR Rate Loan shall extend

beyond the Maturity Date.

 

     Investments. With respect to any Person, all shares of capital stock,

evidences of Indebtedness and other securities issued by any other Person, all

loans, advances, or extensions of credit to, or contributions to the capital of,

any other Person, all purchases of the securities or business or integral part

of the business of any other Person and commitments and options to make such

purchases, all interests in real property, and all other investments; provided,

however, that the term "Investment" shall not include (i) equipment, inventory

and other tangible personal property acquired in the ordinary course of

business, or (ii) current trade and customer accounts receivable for services

rendered in the ordinary course of business and payable in accordance with

customary trade terms. In determining the aggregate amount of Investments

outstanding at any particular time: (a) the amount of any Investment represented

as a guaranty shall be taken at not less than the principal amount of the

obligations guaranteed and still outstanding; (b) there shall be included as an

Investment all interest accrued with respect to Indebtedness constituting an

Investment unless and until such interest is paid; (c) there shall be deducted

in respect of each such Investment any amount received as a return of capital

(but only by repurchase, redemption, retirement, repayment, liquidating dividend

or liquidating distribution); (d) there shall not be deducted in respect of any

Investment any amounts received as earnings on such Investment, whether as

dividends, interest or otherwise, except that accrued interest included as

provided in the foregoing clause (b) may be deducted when paid; and (e) there

shall not be deducted from the aggregate amount of Investments any decrease in

the value thereof.

 

     KeyBank. KeyBank National Association, a national banking association, and

its successors by merger.

 

     Lead Arranger. KeyBanc Capital Markets.

 

     LIBOR Business Day. Any day on which commercial banks are open for

international business (including dealings in Dollar deposits) in London.

 

     LIBOR Lending Office. Initially, the office of each Bank designated as such

in Schedule 1 hereto; thereafter, such other office of such Bank, if any, that

shall be making or maintaining LIBOR Rate Loans.

 

 

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     LIBOR Rate. For any LIBOR Rate Loan for any Interest Period, the average

rate (rounded to the nearest 1/100th) as shown in Dow Jones Markets (formerly

Telerate) (Page 3750) at which deposits in U.S. dollars are offered by first

class banks in the London Interbank Market at approximately 11:00 a.m. (London

time) on the day that is two (2) LIBOR Business Days prior to the first day of

such Interest Period with a maturity approximately equal to such Interest Period

and in an amount approximately equal to the amount to which such Interest Period

relates, adjusted for reserves and taxes if required by future regulations. If

Dow Jones Markets no longer reports such rate or Agent determines in good faith

that the rate so reported no longer accurately reflects the rate available to

Agent in the London Interbank Market, Agent may select a replacement index. For

any period during which a Reserve Percentage shall apply, the LIBOR Rate with

respect to LIBOR Rate Loans shall be equal to the amount determined above

divided by an amount equal to 1 minus the Reserve Percentage.

 

     LIBOR Rate Loans. Loans bearing interest calculated by reference to a LIBOR

Rate.

 

     Loan Documents. This Agreement, the Notes, the Guaranty and all other

documents, instruments or agreements now or hereafter executed or delivered by

or on behalf of the Borrower or the Guarantor in connection with the Loans.

 

     Loan Request. See Section 2.5.

 

     Loans. See Section 2.1.

 

     Majority Banks. As of any date, any Bank or collection of Banks whose

aggregate Commitment Percentage is more than fifty percent (50%); provided,

that, in determining said percentage at any given time, all then existing

Delinquent Banks will be disregarded and excluded and the Commitment Percentages

of the Banks shall be redetermined for voting purposes only, to exclude the

Commitment Percentages of such Delinquent Banks.

 

     Material Adverse Effect. A materially adverse change in or effect on (i)

the business, assets, liabilities, condition (financial or otherwise), prospects

or results of operations of the Borrower and the Guarantor taken as a whole,

(ii) the business, assets, liabilities, financial condition or results of

operations of the Guarantor, (iii) the ability of the Borrower or the Guarantor

to perform its obligations under any Loan Document to which it is a party, (iv)

the validity or enforceability of any of the Loan Documents, or (v) any rights

and remedies of the Banks and the Agent under any of the Loan Documents.

 

     Maturity Date. June 6, 2006, as the same may be extended as provided in

Section 2.8, or such earlier date on which the Loans shall become due and

payable pursuant to the terms hereof.

 

     Medical Properties. Specialty medical office properties of a type, size and

use consistent with those owned by Borrower and its Subsidiaries as of the date

of this Agreement.

 

     Multiemployer Plan. Any multiemployer plan within the meaning of Section

3(37) of ERISA maintained or contributed to by the Borrower, the Guarantor or

any ERISA Affiliate.

 

     Net Income (or Deficit). With respect to any Person for any fiscal period,

the net income (or deficit) of such Person, after deduction of all expenses,

taxes and other proper charges, determined in accordance with generally accepted

accounting principles.

 

     Non-Recourse Carveout Guaranty. With respect to any Non-Recourse

Indebtedness, a guaranty for customary exceptions to non-recourse liability for

fraud, misapplication of funds, environmental

 

 

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indemnities and other similar exceptions to recourse liability for which

liability is limited solely to the loss arising from such act.

 

      Non-Recourse Indebtedness. Indebtedness of the Guarantor or a Subsidiary of

the Guarantor which is secured by one or more parcels of Real Estate and related

personal property or interests therein and is not a general obligation of the

Guarantor or any such Subsidiary, the holder of such Indebtedness having

recourse solely to the parcels of Real Estate securing such Indebtedness, the

improvements and leases thereon and the rents and profits thereof.

 

     Notes. See Section 2.3.

 

     Notice. See Section 19.

 

     Obligations. All indebtedness, obligations and liabilities of the Borrower

and the Guarantor to any of the Banks and the Agent, individually or

collectively, under this Agreement or any of the other Loan Documents or in

respect of any of the Loans or the Notes, or other instruments at any time

evidencing any of the foregoing, whether existing on the date of this Agreement

or arising or incurred hereafter, direct or indirect, joint or several, absolute

or contingent, matured or unmatured, liquidated or unliquidated, secured or

unsecured, arising by contract, operation of law or otherwise.

 

     OFAC. Office of Foreign Asset Control of the Department of the Treasury of

the United States of America.

 

     Outstanding. With respect to the Loans, the aggregate unpaid principal

thereof as of any date of determination.

 

     Patriot Act. The Uniting and Strengthening America by Providing Appropriate

Tools Required to Intercept and Obstruct Terrorism Act of 2001, as the same may

be amended from time to time, and corresponding provisions of future laws.

 

     PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of

ERISA and any successor entity or entities having similar responsibilities.

 

     Permitted Liens. Liens permitted by Section 8.2.

 

     Person. Any individual, corporation, partnership, limited liability

company, trust, unincorporated association, business, or other legal entity, and

any government or any governmental agency or political subdivision thereof.

 

     Preferred Distributions. For any period, the amount of any and all

Distributions paid, declared but not yet paid or otherwise currently due and

payable to the holders of any form of preferred stock or partnership interest

(whether perpetual, convertible or otherwise) or other ownership or beneficial

interest in the Guarantor or any Subsidiary of the Guarantor that entitles the

holders thereof to preferential payment or distribution priority with respect to

dividends, distributions, assets or other payments over the holders of any other

stock, partnership interest or other ownership or beneficial interest in such

Person.

 

     Real Estate. All real property at any time owned or leased (as lessee or

sublessee) by the Guarantor, Borrower or any of their respective Subsidiaries.

 

 

                                       10

 

<PAGE>

 

     Record. The grid attached to any Note, or the continuation of such grid, or

any other similar record, including computer records, maintained by Agent with

respect to any Loan referred to in such Note.

 

     Recourse Indebtedness. As of any date any Indebtedness (whether secured or

unsecured) that is recourse to Borrower or the Guarantor.

 

     Register. See Section 18.2.

 

     REIT Status. With respect to the Guarantor, its status as a real estate

investment trust as defined in Section 856(a) of the Code.

 

     Reserve Percentage. For any day with respect to a LIBOR Rate Loan, the

maximum rate (expressed as a decimal) at which any lender subject thereto would

be required to maintain reserves (including, without limitation, all base,

supplemental, marginal and other reserves) under Regulation D of the Board of

Governors of the Federal Reserve System (or any successor or similar regulations

relating to such reserve requirements) against "Eurocurrency Liabilities" (as

that term is used in Regulation D or any successor or similar regulation), if

such liabilities were outstanding. The Reserve Percentage shall be adjusted

automatically on and as of the effective date of any change in the Reserve

Percentage.

 

     Revolving Credit Agreement. The Second Amended and Restated Secured

Revolving Credit Agreement dated as of September 30, 2005, among Borrower,

Huntington National Bank, individually and as agent, and the other banks that

from time to time thereto, and the other parties thereto, as amended from time

to time.

 

     SEC. The federal Securities and Exchange Commission.

 

     Secured Indebtedness. Indebtedness of a Person that is pursuant to a

Capitalized Lease or is directly or indirectly secured by a Lien.

 

     Short-term Investments. Investments described in subsections (a) through

(g), inclusive, of Section 8.3.

 

     State. A state of the United States of America.

 

     Subsidiary. Any corporation, association, partnership, trust, or other

business entity of which the designated parent shall at any time own directly or

indirectly through a Subsidiary or Subsidiaries at least a majority (by number

of votes or controlling interests) of the outstanding Voting Interests.

 

     Total Commitment. The sum of the Commitments of the Banks, as in effect

from time to time. As of the date of this Agreement, the Total Commitment is

Twenty Million and No/100 Dollars ($20,000,000.00).

 

     Transfer. See Section 8.7.

 

     Type. As to any Loan, its nature as a Base Rate Loan or a LIBOR Rate Loan.

 

     Unconsolidated Affiliate. As to any Person, any other Person in which it

owns an interest which is not a Subsidiary.

 

     Unsecured Indebtedness. Indebtedness of the Guarantor and its Subsidiaries

outstanding at any time which is not secured by a Lien.

 

 

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     Variable Rate Debt. Indebtedness that is payable by reference to a rate of

interest that may vary, float or change during the term of such Indebtedness

(that is, a rate of interest that is not fixed for the entire term of such

Indebtedness).

 

     Voting Interests. Stock or similar ownership interests, of any class or

classes (however designated), the holders of which are at the time entitled, as

such holders, (a) to vote for the election of a majority of the directors (or

persons performing similar functions) of the corporation, association,

partnership, trust or other business entity involved, or (b) to control, manage,

or conduct the business of the corporation, partnership, association, trust or

other business entity involved.

 

     Wholly Owned Subsidiary. Any Subsidiary of Borrower or the Guarantor in

which all of the equity interests (other than in the case of a corporation,

director's qualifying shares) are at the time directly or indirectly owned by

Borrower or the Guarantor.

 

     Section 1.2 RULES OF INTERPRETATION.

 

          (a) A reference to any document or agreement shall include such

document or agreement as amended, modified or supplemented from time to time in

accordance with its terms and the terms of this Agreement.

 

          (b) The singular includes the plural and the plural includes the

singular.

 

          (c) A reference to any law includes any amendment or modification to

such law.

 

           (d) A reference to any Person includes its permitted successors and

permitted assigns.

 

          (e) Accounting terms not otherwise defined herein have the meanings

assigned to them by generally accepted accounting principles applied on a

consistent basis by the accounting entity to which they refer.

 

          (f) The words "include", "includes" and "including" are not limiting.

 

          (g) The words "approval" and "approved", as the context so determines,

means an approval in writing given to the party seeking approval after full and

fair disclosure to the party giving approval of all material facts necessary in

order to determine whether approval should be granted.

 

          (h) All terms not specifically defined herein or by generally accepted

accounting principles, which terms are defined in the Uniform Commercial Code as

in effect in the State of Georgia, have the meanings assigned to them therein.

 

          (i) Reference to a particular " Section ", refers to that section of

this Agreement unless otherwise indicated.

 

          (j) The words "herein", "hereof", "hereunder" and words of like import

shall refer to this Agreement as a whole and not to any particular section or

subdivision of this Agreement.

 

Section 2. AGREEMENT TO MAKE ADVANCES; LIMITATIONS.

 

     Section 2.1 AGREEMENT TO MAKE ADVANCES. Subject to the terms and conditions

set forth in this Agreement, each of the Banks severally agrees to lend to the

Borrower (the "Loans"), and the Borrower

 

 

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may borrow, on or before the Funding Deadline upon submission by the Borrower to

the Agent of a Loan Request given in accordance with Section 2.5, up to a

maximum aggregate principal amount equal to such Bank's Commitment Percentage of

such Loan to fund up to 100% of Borrower's equity in connection with the closing

of the purchase of the Acquisition Portfolio (or subject to the terms hereof,

individual Fee Properties or Equity Interest Properties), to pay closing costs

in connection with the Loan or for working capital purposes; provided, that, in

all events no Default or Event of Default shall have occurred and be continuing;

and provided, further that the Outstanding Loans (after giving effect to all

amounts requested) shall not at any time exceed the Total Commitment. The Loans

shall be made pro rata in accordance with each Bank's Commitment Percentage.

Each Loan Request hereunder shall constitute a representation and warranty by

the Borrower that all of the conditions set forth in Section 10 and Section 11,

in the case of the initial Loan, and Section 11, in the case of all other Loans,

have been satisfied on the date of such request. Once repaid, sums hereunder may

not be reborrowed. There be no more than three (3) advances of the Loan.

 

     Section 2.2 [INTENTIONALLY OMITTED.]

 

     Section 2.3 NOTES. The Loans shall be evidenced by separate promissory

notes of the Borrower in substantially the form of Exhibit A hereto

(collectively, the "Notes"), dated of even date as this Agreement and completed

with appropriate insertions. One Note shall be payable to the order of each Bank

in the principal amount equal to such Bank's Commitment or, if less, the

outstanding amount of all Loans made by such Bank, plus interest accrued thereon

as set forth below. The Borrower irrevocably authorizes Agent to make or cause

to be made, at or about the time of the Drawdown Date of any Loan or at the time

of receipt of any payment of principal thereof, an appropriate notation on

Agent's Record reflecting the making of such Loan or (as the case may be) the

receipt of such payment. The outstanding amount of the Loans set forth on

Agent's Record shall be prima facie evidence of the principal amount thereof

owing and unpaid to each Bank, but the failure to record, or any error in so

recording, any such amount on Agent's Record shall not limit or otherwise affect

the obligations of the Borrower hereunder or under any Note to make payments of

principal of or interest on any Note when due.

 

     Section 2.4 INTEREST ON LOANS.

 

          (a) Each Base Rate Loan shall bear interest for the period commencing

with the Drawdown Date thereof and ending on the date on which such Base Rate

Loan is repaid or is converted to a LIBOR Rate Loan at the per annum rate equal

to the sum of the Base Rate plus one and three-fourths percent (1.75%).

 

          (b) Each LIBOR Rate Loan shall bear interest for the period commencing

with the Drawdown Date thereof and ending on the last day of the Interest Period

with respect thereto at the rate per annum equal to the sum of the LIBOR Rate

determined for such Interest Period plus three percent (3.0%).

 

          (c) The Borrower promises to pay interest on each Loan to it in

arrears on each Interest Payment Date with respect thereto, or on any earlier

date on which the Commitments shall terminate.

 

          (d) Base Rate Loans and LIBOR Rate Loans may be converted to Loans of

the other Type as provided in Section 4.1.

 

     Section 2.5 REQUESTS FOR LOANS. The Borrower (i) shall notify the Agent of

a potential request for a Loan as soon as possible prior to the Borrower's

proposed Drawdown Date, and (ii) shall give to the Agent written notice in the

form of Exhibit B hereto (or telephonic notice confirmed in writing in the

 

 

                                        13

 

<PAGE>

 

form of Exhibit B hereto) of each Loan requested hereunder (a "Loan Request") no

less than two (2) Business Days prior to the proposed Drawdown Date. Each such

notice shall specify with respect to the requested Loan the proposed principal

amount, Drawdown Date, Interest Period (if applicable) and Type, the properties

within the Acquisition Portfolio being acquired, if any, the Indebtedness

secured directly or indirectly by such properties and the acquisition cost

thereof, if applicable. Each such notice shall also contain (i) a certification

by the chief financial officer of the Guarantor that the Guarantor and its

Subsidiaries are and will be in compliance with all covenants under the Loan

Documents after giving effect to the making of such Loan, and (ii) a pro forma

Compliance Certificate with such supporting information as the Agent may require

adjusted in the best good faith estimate of the Borrower to give effect to the

proposed advance of the Loan and any advance to be made under the Revolving

Credit Agreement and demonstrating compliance with the covenants described

therein after giving effect to the incurrence of such Indebtedness. Promptly

upon receipt of any such notice, the Agent shall notify each of the Banks

thereof. Except as provided in this Section 2.5, each such Loan Request shall be

irrevocable and binding on the Borrower and shall obligate the Borrower to

accept the Loan requested from the Banks on the proposed Drawdown Date. Each

Loan Request shall be (a) for a Base Rate Loan in the minimum aggregate amount

of $250,000 or an integral multiple of $1,000,000 in excess thereof, or (b) for

a LIBOR Rate Loan in a minimum aggregate amount of $2,000,000 or an integral

multiple of $100,000 in excess thereof; provided, however, that there shall be

no more than three (3) LIBOR Rate Loans outstanding at any one time. In the

event that Borrower shall fail to request, or shall otherwise fail to satisfy

the conditions to obtaining, the disbursement of the Total Commitment on or

before 1:00 p.m. (Cleveland time) on January 30, 2006 (the "Funding Deadline"),

the obligation of the Banks to advance any undisbursed amount of the Total

Commitment to Borrower shall automatically terminate.

 

     Section 2.6 FUNDS FOR LOANS.

 

          (a) Not later than 11:00 a.m. (Cleveland time) on the proposed

Drawdown Date of any Loans, each of the Banks will make available to the Agent,

at the Agent's Head Office, in immediately available funds, the amount of such

Bank's Commitment Percentage of the amount of the requested Loans which may be

disbursed pursuant to Section 2.1. Upon receipt from each Bank of such amount,

and upon receipt of the documents required by Section 10 and Section 11 and the

satisfaction of the other conditions set forth therein, to the extent

applicable, the Agent will make available to the Borrower the aggregate amount

of such Loans made available to the Agent by the Banks by crediting such amount

to the account of the Borrower maintained at the Agent's Head Office. The

failure or refusal of any Bank to make available to the Agent at the aforesaid

time and place on any Drawdown Date the amount of its Commitment Percentage of

the requested Loans shall not relieve any other Bank from its several obligation

hereunder to make available to the Agent the amount of such other Bank's

Commitment Percentage of any requested Loans, including any additional Loans

that may be requested subject to the terms and conditions hereof to provide

funds to replace those not advanced by the Bank so failing or refusing.

 

          (b) Unless the Agent shall have been notified by any Bank prior to the

applicable Drawdown Date that such Bank will not make available to the Agent

such Bank's pro rata share of a proposed Loan, the Agent may in its discretion

assume that such Bank has made such share of the proposed Loan available to

Agent in accordance with the provisions of this Agreement and the Agent may, if

it chooses, in reliance upon such assumption make such Loan available to

Borrower, and such Bank shall be liable to the Agent for the amount of such

advance. If such Bank does not pay such corresponding amount upon the Agent's

demand therefor, the Agent will promptly notify the Borrower, and the Borrower

shall promptly pay such corresponding amount to the Agent. The Agent shall also

be entitled to recover from the Bank or the Borrower, as the case may be,

interest on such corresponding amount in respect of each day from the date such

corresponding amount was made available by the Agent to the Borrower to the date

such corresponding amount is recovered by the Agent at a per annum rate

 

 

                                       14

 

<PAGE>

 

equal to (i) from the Borrower at the applicable rate for such Loan or (ii) from

a Bank at the Federal Funds Effective Rate.

 

      Section 2.7 ADVANCES DO NOT CONSTITUTE A WAIVER. No Loan made by the Banks

shall constitute a waiver of any of the conditions to the Banks' obligation to

make further Loans nor, in the event the Borrower fails to satisfy any such

condition, shall any such Loan have the effect of precluding the Banks from

thereafter declaring such failure to satisfy a condition to be an Event of

Default.

 

     Section 2.8 EXTENSION OF MATURITY DATE.

 

          (a) Provided that no Default or Event of Default shall have occurred

and be continuing, the Borrower shall have the option, to be exercised by giving

written notice to the Agent not more than sixty (60) days and not less than five

(5) days prior to the initial scheduled Maturity Date (an "Extension Request"),

subject to the terms and conditions set forth in this Agreement, to extend the

Maturity Date by three (3) months to September 6, 2006.

 

          (b) The obligations of the Agent and the Banks to extend the Maturity

Date as provided in Section 2.8(a) shall be subject to the satisfaction of the

following conditions precedent on the then effective Maturity Date (without

regard to such extension request):

 

               (i) No Default. On the date the Extension Request is given there

shall exist no Event of Default, and on the Maturity Date (determined without

regard to such extension) there shall exist no Default or Event of Default and

no Default or Event of Default (including, without limitation, a Default under

Section 9.1) shall arise as a result thereof.

 

                (ii) Representations and Warranties. The representations and

warranties made by the Borrower and the Guarantor in the Loan Documents or

otherwise made by or on behalf of the Borrower and the Guarantor or any of their

respective Subsidiaries in connection therewith or after the date thereof shall

have been true and correct in all material respects when made and shall also be

true and correct in all material respects on the Maturity Date (as determined

without regard to such extension), except to the extent of changes resulting

from transactions contemplated or permitted by this Agreement and the other Loan

Documents and changes occurring in the ordinary course of business that singly

or in the aggregate are not materially adverse, except to the extent that such

representations and warranties relate expressly to an earlier date.

 

Section 3. REPAYMENT OF THE LOANS.

 

     Section 3.1 STATED MATURITY. The Borrower promises to pay on the Maturity

Date and there shall become absolutely due and payable on the Maturity Date all

of the Loans outstanding on such date, together with any and all accrued and

unpaid interest thereon.

 

     Section 3.2 MANDATORY PREPAYMENTS. If at any time the aggregate of the

Outstanding Loans exceeds the Total Commitment, then the Borrower shall

immediately pay the amount of such excess to the Agent for the respective

accounts of the Banks for application to the Loans.

 

     Section 3.3 OPTIONAL PREPAYMENTS. The Borrower shall have the right, at its

election, to prepay the outstanding amount of the applicable Loans, as a whole

or in part, at any time without penalty or premium; provided, that if any full

or partial prepayment of the outstanding amount of any LIBOR Rate Loans is made

other than on the last day of the Interest Period relating thereto, such

prepayment shall be accompanied by the payment of any amounts due pursuant to

Section 4.8. The Borrower shall give the Agent, no later than 10:00 a.m.,

Cleveland time, at least one (1) Business Day's prior written notice of any

 

 

                                        15

 

<PAGE>

 

prepayment pursuant to this Section 3.3, in each case specifying the proposed

date of payment of Loans and the principal amount to be paid.

 

     Section 3.4 PARTIAL PREPAYMENTS. Each partial prepayment of the Loans under

Section 3.2 and Section 3.3 shall be accompanied by the payment of accrued

interest on the principal prepaid to the date of payment and, after payment of

such interest, shall be applied, in the absence of instruction by the Borrower,

first to the principal of Base Rate Loans and then to the principal of LIBOR

Rate Loans.

 

     Section 3.5 EFFECT OF PREPAYMENTS. Amounts of the Loans hereunder may not

be reborrowed. Except as otherwise expressly provided herein, all payments shall

first be applied to accrued but unpaid interest and then to principal as

provided above.

 

Section 4. CERTAIN GENERAL PROVISIONS.

 

     Section 4.1 CONVERSION OPTIONS.

 

          (a) The Borrower may elect from time to time to convert any of its

outstanding Loans to a Loan of another Type and such Loan shall thereafter bear

interest as a Base Rate Loan or a LIBOR Rate Loan, as applicable; provided that

(i) with respect to any such conversion of a LIBOR Rate Loan to a Base Rate

Loan, the Borrower shall give the Agent at least one (1) Business Days' prior

written notice of such election, and such conversion shall only be made on the

last day of the Interest Period with respect to such LIBOR Rate Loan; (ii) with

respect to any such conversion of a Base Rate Loan to a LIBOR Rate Loan the

Borrower shall give the Agent at least three (3) LIBOR Business Days' prior

written notice of such election and the Interest Period requested for such Loan,

the principal amount of the Loan so converted shall be in a minimum aggregate

amount of $1,000,000 or an integral multiple of $100,000 in excess thereof and,

after giving effect to the making of such Loan there shall be no more than three

(3) LIBOR Rate Loans outstanding at any one time; and (iii) no Loan may be

converted into a LIBOR Rate Loan when any Default or Event of Default has

occurred and is continuing. All or any part of the outstanding Loans of any Type

may be converted as provided herein, provided that no partial conversion shall

result in a Base Rate Loan in an aggregate principal amount of less than

$1,000,000 or a LIBOR Rate Loan in an aggregate principal amount of less than

$1,000,000 and that the aggregate principal amount of each Loan shall be in an

integral multiple of $100,000. On the date on which such conversion is being

made, each Bank shall take such action as is necessary to transfer its

Commitment Percentage of such Loans to its Domestic Lending Office or its LIBOR

Lending Office, as the case may be. Each Conversion Request relating to the

conversion of a Base Rate Loan to a LIBOR Rate Loan shall be irrevocable by the

Borrower.

 

          (b) Any Loan may be continued as such Type upon the expiration of an

Interest Period with respect thereto by compliance by the Borrower with the

terms of Section 4.1(a); provided that no LIBOR Rate Loan may be continued as

such when any Default or Event of Default has occurred and is continuing, but

shall be automatically converted to a Base Rate Loan on the last day of the

Interest Period relating thereto ending during the continuance of any Default or

Event of Default.

 

          (c) In the event that the Borrower does not notify the Agent of its

election hereunder with respect to any Loan to it, such Loan shall be

automatically converted to a Base Rate Loan at the end of the applicable

Interest Period.

 

     Section 4.2 CLOSING FEE. The Borrower shall pay to KeyBank certain fees for

services rendered or to be rendered in connection with the Loan as provided

pursuant to the Agreement Regarding Fees dated of even date herewith between the

Borrower and KeyBank.

 

 

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     Section 4.3 [INTENTIONALLY OMITTED.]

 

     Section 4.4 FUNDS FOR PAYMENTS.

 

          (a) All payments of principal, interest, unused facility fees, closing

fees and any other amounts due hereunder or under any of the other Loan

Documents shall be made to the Agent, for the respective accounts of the Banks

and the Agent, as the case may be, at the Agent's Head Office, not later than

1:00 p.m. (Cleveland time) on the day when due, in each case in lawful money of

the United States in immediately available funds. The Agent is hereby authorized

to charge the accounts of the Borrower with KeyBank designated by the Borrower,

on the dates when the amount thereof shall become due and payable, with the

amounts of the principal of and interest on the Loans and all fees, charges,

expenses and other amounts owing to the Agent and/or the Banks under the Loan

Documents.

 

          (b) All payments by the Borrower hereunder and under any of the other

Loan Documents shall be made without setoff or counterclaim and free and clear

of and without deduction for any taxes, levies, imposts, duties, charges, fees,

deductions, withholdings, compulsory loans, restrictions or conditions of any

nature now or hereafter imposed or levied by any jurisdiction or any political

subdivision thereof or taxing or other authority therein unless the Borrower is

compelled by law to make such deduction or withholding. If any such obligation

is imposed upon the Borrower with respect to any amount payable by them

hereunder or under any of the other Loan Documents, the Borrower will pay to the

Agent, for the account of the Banks or (as the case may be) the Agent, on the

date on which such amount is due and payable hereunder or under such other Loan

Document, such additional amount in Dollars as shall be necessary to enable the

Banks or the Agent to receive the same net amount which the Banks or the Agent

would have received on such due date had no such obligation been imposed upon

the Borrower. The Borrower will deliver promptly to the Agent certificates or

other valid vouchers for all taxes or other charges deducted from or paid with

respect to payments made by the Borrower hereunder or under such other Loan

Document.

 

      Section 4.5 COMPUTATIONS. All computations of interest on the Loans and of

other fees to the extent applicable shall be based on a 360-day year and paid

for the actual number of days elapsed. Except as otherwise provided in the

definition of the term "Interest Period" with respect to LIBOR Rate Loans,

whenever a payment hereunder or under any of the other Loan Documents becomes

due on a day that is not a Business Day, the due date for such payment shall be

extended to the next succeeding Business Day, and interest shall accrue during

such extension. The outstanding amount of the Loans as reflected on the records

of the Agent from time to time shall be considered prima facie evidence of such

amount.

 

     Section 4.6 SUSPENSION OF LIBOR RATE LOANS. In the event that, prior to the

commencement of any Interest Period relating to any LIBOR Rate Loan, the Agent

shall reasonably determine that adequate and reasonable methods do not exist for

ascertaining the LIBOR Rate for such Interest Period, or the Agent shall

reasonably determine that the LIBOR Rate will not adequately and fairly reflect

the cost to the Banks of making or maintaining LIBOR Rate Loans for such

Interest Period, the Agent shall forthwith give notice of such determination

(which shall be conclusive and binding on the Borrower and the Banks) to the

Borrower and the Banks. In such event (a) any Loan Request with respect to LIBOR

Rate Loans shall be automatically withdrawn and shall be deemed a request for

Base Rate Loans and (b) each LIBOR Rate Loan will automatically, on the last day

of the then current Interest Period thereof, become a Base Rate Loan, and the

obligations of the Banks to make LIBOR Rate Loans shall be suspended until the

Agent determines that the circumstances giving rise to such suspension no longer

exist, whereupon the Agent shall so notify the Borrower and the Banks.

 

     Section 4.7 ILLEGALITY. Notwithstanding any other provisions herein, if any

present or future law, regulation, treaty or directive or the interpretation or

application thereof shall make it unlawful, or any

 

 

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central bank or other governmental authority having jurisdiction over a Bank or

its LIBOR Lending Office shall assert that it is unlawful, for any Bank to make

or maintain LIBOR Rate Loans, such Bank shall forthwith give notice of such

circumstances to the Agent and the Borrower and thereupon (a) the commitment of

the Banks to make LIBOR Rate Loans or convert Loans of another type to LIBOR

Rate Loans shall forthwith be suspended and (b) the LIBOR Rate Loans then

outstanding shall be converted automatically to Base Rate Loans on the last day

of each Interest Period applicable to such LIBOR Rate Loans or within such

earlier period as may be required by law; provided that the affected Bank agrees

to designate a different LIBOR Lending Office if such designation will permit

such Bank to make or maintain LIBOR Rate Loans and will not, in the good faith

of such Bank, otherwise be materially disadvantageous to such Bank.

 

     Section 4.8 ADDITIONAL INTEREST. If any LIBOR Rate Loan or any portion

thereof is repaid, or is converted to a Base Rate Loan for any reason on a date

which is prior to the last day of the Interest Period applicable to such LIBOR

Rate Loan, or if repayment of the Loans has been accelerated as provided in

Section 12.1, the Borrower will pay to the Agent upon demand for the account of

the Banks in accordance with their respective Commitment Percentages, in

addition to any amounts of interest otherwise payable hereunder, any amounts

required to compensate the Banks for any losses, costs or expenses which may

reasonably be incurred as a result of such payment or conversion.

 

     Section 4.9 ADDITIONAL COSTS, ETC. Notwithstanding anything herein to the

contrary, if any present or future applicable law, or any amendment or

modification of present applicable law, which expression, as used herein,

includes statutes, rules and regulations thereunder and legally binding

interpretations thereof by any competent court or by any governmental or other

regulatory body or official with appropriate jurisdiction charged with the

administration or the interpretation thereof and requests, directives,

instructions and notices at any time or from time to time hereafter made upon or

otherwise issued to any Bank or the Agent by any central bank or other fiscal,

monetary or other authority (whether or not having the force of law), shall:

 

          (a) subject any Bank or the Agent to any tax, levy, impost, duty,

charge, fee, deduction or withholding of any nature with respect to this

Agreement, the other Loan Documents, such Bank's Commitment, or the Loans (other

than taxes based upon or measured by the income or profits of such Bank or the

Agent), or

 

          (b) materially change the basis of taxation (except for changes in

taxes on income or profits) of payments to any Bank of the principal of or the

interest on any Loans or any other amounts payable to any Bank under this

Agreement or the other Loan Documents, or

 

           (c) impose or increase or render applicable any special deposit,

reserve, assessment, liquidity, capital adequacy or other similar requirements

(whether or not having the force of law) against assets held by, or deposits in

or for the account of, or loans by, or commitments of an office of any Bank, or

 

          (d) impose on any Bank or the Agent any other conditions or

requirements with respect to this Agreement, the other Loan Documents, the

Loans, such Bank's Commitment, or any class of loans or commitments of which any

of the Loans or such Bank's Commitment forms a part; and the result of any of

the foregoing is

 

               (i) to increase the cost to any Bank of making, funding, issuing,

renewing, extending or maintaining any of the Loans, or such Bank's Commitment,

or

 

 

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               (ii) to reduce the amount of principal, interest or other amount

payable to such Bank or the Agent hereunder on account of such Bank's Commitment

or any of the Loans, or

 

               (iii) to require such Bank or the Agent to make any payment or to

forego any interest or other sum payable hereunder, the amount of which payment

or foregone interest or other sum is calculated by reference to the gross amount

of any sum receivable or deemed received by such Bank or the Agent from the

Borrower hereunder,

 

then, and in each such case, the Borrower will within fifteen (15) days after

demand made by such Bank or (as the case may be) the Agent at any time and from

time to time and as often as the occasion therefor may arise, pay to such Bank

or the Agent such additional amounts as such Bank or the Agent shall determine

in good faith to be sufficient to compensate such Bank or the Agent for such

additional cost, reduction, payment or foregone interest or other sum. Each Bank

and the Agent in determining such amounts may use any reasonable averaging and

attribution methods, generally applied by such Bank or the Agent.

 

     Section 4.10 CAPITAL ADEQUACY. If after the date hereof any Bank determines

that (a) the adoption of or change in any law, rule, regulation or guideline

regarding capital requirements for banks or bank holding companies or any change

in the interpretation or application thereof by any governmental authority

charged with the administration thereof, or (b) compliance by such Bank or its

parent bank holding company with any guideline, request or directive of any such

entity regarding capital adequacy (whether or not having the force of law), has

the effect of reducing the return on such Bank's or such holding company's

capital as a consequence of such Bank's commitment to make Loans hereunder to a

level below that which such Bank or holding company could have achieved but for

such adoption, change or compliance (taking into consideration such Bank's or

such holding company's then existing policies with respect to capital adequacy

and assuming the full utilization of such entity's capital) by any amount deemed

by such Bank to be material, then such Bank may notify the Borrower thereof. The

Borrower agrees to pay to such Bank the amount of such reduction in the return

on capital as and when such reduction is determined, upon presentation by such

Bank of a statement of the amount and setting forth such Bank's calculation

thereof. In determining such amount, such Bank may use any reasonable averaging

and attribution methods.

 

     Section 4.11 INDEMNITY OF BORROWER. The Borrower agrees to indemnify each

Bank and to hold each Bank harmless from and against any loss, cost or expense

that such Bank may sustain or incur as a consequence of (a) default by the

Borrower in payment of the principal amount of or any interest on any LIBOR Rate

Loans as and when due and payable, including any such loss or expense arising

from interest or fees payable by such Bank to lenders of funds obtained by it in

order to maintain its LIBOR Rate Loans, or (b) default by the Borrower in making

a borrowing or conversion after the Borrower has given (or is deemed to have

given) a Loan Request or a Conversion Request.

 

     Section 4.12 INTEREST ON OVERDUE AMOUNTS; LATE CHARGE. Following the

occurrence and during the continuance of an Event of Default and regardless of

whether or not the Agent or the Banks shall have accelerated the maturity of the

Loans, all Loans shall bear interest payable on demand at a rate per annum equal

to two percent (2.0%) above the rate that would otherwise be applicable at such

times until such amount shall be paid in full (after as well as before

judgment). In addition, the Borrower shall pay a late charge equal to four

percent (4.0%) of any amount of interest and/or principal payable on the Loans

or any other amounts payable hereunder or under the Loan Documents, which is not

paid by the Borrower within ten (10) days after the same shall become due and

payable.

 

 

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     Section 4.13 CERTIFICATE. A certificate setting forth any amounts payable

pursuant to Section 4.8, Section 4.9, Section 4.10, Section 4.11 or Section 4.12

and a brief explanation of such amounts which are due, submitted by any Bank or

the Agent to the Borrower, shall be conclusive in the absence of manifest error.

 

     Section 4.14 LIMITATION ON INTEREST. Notwithstanding anything in this

Agreement to the contrary, all agreements between the Borrower and the Banks and

the Agent, whether now existing or hereafter arising and whether written or

oral, are hereby limited so that in no contingency, whether by reason of

acceleration of the maturity of any of the Obligations or otherwise, shall the

interest contracted for, charged or received by the Banks exceed the maximum

amount permissible under applicable law. If, from any circumstance whatsoever,

interest would otherwise be payable to the Banks in excess of the maximum lawful

amount, the interest payable to the Banks shall be reduced to the maximum amount

permitted under applicable law; and if from any circumstance the Banks shall

ever receive anything of value deemed interest by applicable law in excess of

the maximum lawful amount, an amount equal to any excessive interest shall be

applied to the reduction of the principal balance of the Obligations of the

Borrower and to the payment of interest or, if such excessive interest exceeds

the unpaid balance of principal of the Obligations of the Borrower, such excess

shall be refunded to the Borrower. All interest paid or agreed to be paid to the

Banks shall, to the extent permitted by applicable law, be amortized, prorated,

allocated and spread throughout the full period until payment in full of the

principal of the Obligations of the Borrower (including the period of any

renewal or extension thereof) so that the interest thereon for such full period

shall not exceed the maximum amount permitted by applicable law. This section

shall control all agreements between the Borrower and the Banks and the Agent.

 

     Section 4.15 AGREEMENT REGARDING INTEREST AND CHARGES. The parties hereto

hereby agree and stipulate that the only charge imposed upon the Borrower for

the use of money in connection with this Agreement is and shall be the interest

specifically described in Section 2.4. Notwithstanding the foregoing, the

parties hereto further agree and stipulate that all arrangement fees, commitment

fees, amendment fees, up front fees, commitment fees, facility fees, closing

fees, letter of credit fees, underwriting fees, default charges, late charges,

funding or "breakage" charges, increased cost charges, attorneys' fees and

reimbursement for costs and expenses paid by the Banks or the Agent to third

parties or for damages incurred by the Banks or the Agent, or any other similar

amounts are charges made to compensate the Banks or the Agent for underwriting

or administrative services and costs or losses performed or incurred, and to be

performed or incurred, by the Banks or the Agent in connection with this

Agreement and shall under no circumstances be deemed to be charges for the use

of money. Borrower hereby acknowledges and agrees that the Banks and the Agent

have imposed no minimum borrowing requirements, reserve or escrow balances or

compensating balances related in any way to the Obligations. Any use by Borrower

of certificates of deposit issued by any Bank or other accounts maintained with

any Bank has been and shall be voluntary on the part of Borrower. All charges

other than charges for the use of money shall be fully earned and nonrefundable

when due.

 

Section 5. UNSECURED OBLIGATIONS; GUARANTY.

 

     Section 5.1 UNSECURED OBLIGATIONS. The Banks have agreed to make the Loans

to the Borrower on an unsecured basis. Notwithstanding the foregoing, the

Obligations shall be guaranteed by Guarantor pursuant to the Guaranty.

 

Section 6. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR AND THE BORROWER.

 

     The Borrower and Guarantor hereby, jointly and severally, represent and

warrant to the Agent and the Banks as follows.

 

 

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     Section 6.1 CORPORATE AUTHORITY, ETC.

 

          (a) Incorporation; Good Standing. The Borrower is a Virginia limited

partnership duly organized pursuant to its limited partnership agreement, and a

Certificate of Limited Partnership and amendments thereto filed with the

Secretary of the Commonwealth of Virginia and is validly existing and in good

standing under the laws of the Commonwealth of Virginia. The Guarantor is a

Maryland real estate investment trust duly organized pursuant to its trust

declaration, as amended and supplemented, and a Certificate of Trust filed with

the Secretary of the State of Maryland and is validly existing and in good

standing under the laws of the State of Maryland. Each of the Borrower and the

Guarantor (i) has all requisite power to own its respective properties and

interests and conduct its respective business as now conducted and as presently

contemplated, and (ii) is in good standing as a foreign entity and is duly

authorized to do business in each other jurisdiction where a failure to be so

qualified in such other jurisdiction could have a Material Adverse Effect. The

Guarantor is a real estate investment trust in full compliance with and entitled

to the benefits of Section 856 of the Code, and has elected to be treated as a

real estate investment trust pursuant to the Code.

 

          (b) Subsidiaries. Each of the Subsidiaries of the Borrower and the

Guarantor (i) is a corporation, limited partnership, limited liability company

or trust duly organized under the laws of its State of organization and is

validly existing and in good standing under the laws thereof, (ii) has all

requisite power to own its property and interests and conduct its business as

now conducted and as presently contemplated and (iii) is in good standing and is

duly authorized to do business in each jurisdiction where assets held by it are

located and in each other jurisdiction where a failure to be so qualified could

have a Material Adverse Effect.

 

          (c) Authorization. The execution, delivery and performance of this

Agreement and the other Loan Documents to which the Borrower and the Guarantor

is or is to become a party and the transactions contemplated hereby and thereby

(i) are within the authority of such Person, (ii) have been duly authorized by

all necessary proceedings on the part of such Person, (iii) do not and will not

conflict with or result in any breach or contravention of any provision of law,

statute, rule or regulation to which such Person is subject or any judgment,

order, writ, injunction, license or permit applicable to such Person, (iv) do

not and will not conflict with or constitute a default (whether with the passage

of time or the giving of notice, or both) under any provision of the articles of

incorporation, partnership agreement, declaration of trust or other charter

documents or bylaws of, or any agreement or other instrument binding upon, such

Person or any of its properties, and (v) do not and will not result in or

require the imposition of any lien or other encumbrance on any of the

properties, assets or rights of such Person.

 

          (d) Enforceability. The execution and delivery of this Agreement and

the other Loan Documents to which the Borrower or the Guarantor is or is to

become a party are valid and legally binding obligations of such Person

enforceable in accordance with the respective terms and provisions hereof and

thereof, except as enforceability is limited by bankruptcy, insolvency,

reorganization, moratorium or other laws relating to or affecting generally the

enforcement of creditors' rights and except to the extent that availability of

the remedy of specific performance or injunctive relief is subject to the

discretion of the court before which any proceeding therefor may be brought.

 

     Section 6.2 GOVERNMENTAL APPROVALS. The execution, delivery and performance

of this Agreement and the other Loan Documents to which the Borrower and the

Guarantor is or is to become a party and the transactions contemplated hereby

and thereby do not require the approval or consent of, or filing with, any

governmental agency or authority other than those already obtained.

 

      Section 6.3 TITLE TO PROPERTIES; LEASE. The Borrower, the Guarantor and

their Subsidiaries own all of the assets reflected in the consolidated balance

sheet of the Guarantor as of the Balance Sheet Date or

 

 

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acquired since that date (except property and assets sold or otherwise disposed

of in the ordinary course of business since that date), subject to no rights of

others, including any mortgages, leases, conditional sales agreements, title

retention agreements, liens or other encumbrances except Permitted Liens.

 

     Section 6.4 FINANCIAL STATEMENTS. The Borrower has delivered to each of the

Banks: (a) the unaudited consolidated balance sheet of the Guarantor and its

Subsidiaries as of the Balance Sheet Date, (b) the audited consolidated balance

sheet for the Guarantor and its Subsidiaries for the fiscal year ending December

31, 2004, and (c) certain other financial information relating to the Borrower,

the Guarantor, their Subsidiaries and the Real Estate. Such balance sheet and

statements have been prepared in accordance with generally accepted accounting

principles (subject, in the case of such unaudited statements, to the absence of

footnotes and normal year-end adjustments) and fairly present the financial

condition of the Guarantor and its Subsidiaries as of such dates. There are no

liabilities, contingent or otherwise, of the Borrower, the Guarantor or any of

their respective Subsidiaries involving material amounts not disclosed in said

financial statements and the related notes thereto.

 

     Section 6.5 NO MATERIAL CHANGES. Since the Balance Sheet Date, there has

occurred no materially adverse change in the financial condition or business of

the Borrower, the Guarantor, and their respective Subsidiaries taken as a whole

as shown on or reflected in the consolidated balance sheet of the Borrower and

the Guarantor as of the Balance Sheet Date, or its consolidated statement of

income or cash flows for the fiscal year then ended, other than changes in the

ordinary course of business that have not had and could not reasonably be

expected to have any Material Adverse Effect.

 

     Section 6.6 FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower, the

Guarantor and their respective Subsidiaries possess all franchises, patents,

copyrights, trademarks, trade names, servicemarks, licenses and permits, and

rights in respect of the foregoing, adequate for the conduct of their business

substantially as now conducted without known conflict with any rights of others.

 

      Section 6.7 LITIGATION. Except as stated on Schedule 6.7 there are no

actions, suits, proceedings or investigations of any kind pending or to the

knowledge of such person threatened against the Borrower, the Guarantor or any

of their respective Subsidiaries before any court, tribunal, arbitrator,

mediator or administrative agency or board that, if adversely determined, either

in any case or in, the aggregate, could reasonably be expected to have a

Material Adverse Effect, or which question the validity of this Agreement or any

of the other Loan Documents, any action taken or to be taken pursuant hereto or

thereto. Except as set forth on Schedule 6.7, as of the date of this Agreement,

there are no judgments outstanding against or affecting any of the Borrower, the

Guarantor or any of their respective Subsidiaries.

 

     Section 6.8 NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Borrower, the

Guarantor or any of their respective Subsidiaries is subject to any charter,

corporate or other legal restriction, or any judgment, decree, order, rule or

regulation that has or is expected in the future to have a Material Adverse

Effect. None of the Borrower, the Guarantor, nor any of their respective

Subsidiaries is a party to any contract or agreement that has or is expected, in

the judgment of the partners or officers of such Person, to have any Materially

Adverse Effect.

 

     Section 6.9 COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the

Borrower, the Guarantor or any of their respective Subsidiaries is in violation

of any provision of its charter or other organizational documents, bylaws, or

any agreement or instrument to which it may be subject or by which it or any of

its properties may be bound or any decree, order, judgment, statute, license,

rule or regulation, in any of the foregoing cases in a manner that could result

in the imposition of substantial penalties or has had or could reasonably be

expected to have a Material Adverse Effect.

 

 

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     Section 6.10 TAX STATUS. The Borrower, the Guarantor and each of their

respective Subsidiaries (a) has made or filed all federal and state income and

all other tax returns, reports and declarations required by any jurisdiction to

which it is subject, (b) has paid all taxes and other governmental assessments

and charges shown or determined to be due on such returns, reports and

declarations, except those being contested in good faith and by appropriate

proceedings and (c) has set aside on its books provisions reasonably adequate

for the payment of all taxes for periods subsequent to the periods to which such

returns, reports or declarations apply. There are no unpaid taxes in any

material amount claimed to be due by the taxing authority of any jurisdiction,

and the partners or officers of such Person know of no basis for any such claim.

 

     Section 6.11 NO EVENT OF DEFAULT. No Default or Event of Default has

occurred and is continuing.

 

     Section 6.12 HOLDING COMPANY AND INVESTMENT COMPANY ACTS. None of the

Borrower, the Guarantor, or any of their respective Subsidiaries is or after

giving effect to any Loan will be, subject to regulation under the Public

Utility Holding Company Act of 1935, the Federal Power Act or the Investment

Company Act of 1940 or to any federal or state statute or regulation limiting

its ability to incur indebtedness for borrowed money.

 

     Section 6.13 ABSENCE OF UCC FINANCING STATEMENTS, ETC. Except with respect

to Permitted Liens, there is no financing statement, security agreement, chattel

mortgage, real estate mortgage or other document fil