AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT

 

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                                                                   EXHIBIT 10.24

 

             AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT

 

      THIS AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT, dated as of

this 30th day of December, 2003 by and among WINDROSE MEDICAL PROPERTIES, L.P.,

a Virginia limited partnership (the "Borrower"), THE HUNTINGTON NATIONAL BANK, a

national banking association ("Huntington"), and each of the lenders listed on

the signature pages hereof (individually, a "Lender" and collectively, the

"Lenders"), and each of their respective successors and assigns;

 

                                   WITNESSETH:

 

      The parties hereto, in consideration of their mutual covenants hereinafter

set forth and intending to be legally bound hereby, agree as follows:

 

                                   ARTICLE I

                                  DEFINITIONS

 

      1.01. Certain Definitions. The following words and terms shall have the

following meanings, respectively, unless the context hereof clearly otherwise

requires:

 

            "Acquisition Price" shall mean the total costs (including, but not

      limited to the purchase price, due diligence costs, legal fees, accounting

      fees, loan assumption costs and expenses, closing costs and other

      customary costs and expenses of closing) paid by Borrower or a Special

      Purpose Entity to acquire a Real Estate Asset.

 

            "Adjusted EBITDA" shall mean EBITDA, plus Loss on Interest Rate Swap

      plus corporate general and administrative expenses.

 

            "Affiliate" of any Person means any other Person directly or

      indirectly controlling, controlled by or under common control with such

      Person. A Person shall be deemed to control another Person if such Person

      owns 10% or more of any class of voting securities (or other ownership

      interests) of the controlled Person or possesses, directly or indirectly,

      the power to direct or cause the direction of the management or policies

      of the controlled Person, whether through ownership of stock, by contract

      or otherwise.

 

            "Agent" shall mean The Huntington National Bank and any successor

      Agent appointed hereunder.

 

            "Adjusted LIBOR Interest Rate" shall mean a rate per annum equal to

      the quotient obtained (rounded upwards, if necessary, to the nearest

      1/100th of 1%) by dividing (i) the applicable LIBOR Interest Rate by (ii)

      1.00 minus the Reserve Percentage.

 

            "Advance" shall mean an advance to the Borrower on the account of

      Loan.

 

            "Agreement" shall mean this Amended and Restated Secured Revolving

      Credit Agreement, as the same may be supplemented, modified or amended

      from time to time.

 

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            "Appraised Value" shall mean, with respect to a Mortgaged Property,

      the fair market value of such Mortgaged Property, as determined by the

      appraisal or any update thereof for such Mortgaged Property, as provided

      in Section 4.02 (l) hereof.

 

            "Assignment and Acceptance" shall mean an Assignment and Acceptance

      Agreement in the form attached hereto as Exhibit A.

 

            "Assignment of Rents" shall mean an Assignment of Rents and Leases

      in the form attached hereto as Exhibit B, with blanks completed

      appropriately, given by the Borrower or a Special Purpose Entity, as

      applicable, to the Lenders with respect to a Mortgaged Property as

      security for the Borrower's obligations under the Loan, subject to such

      changes as may be required to comply with the requirements of the law of

      the state in which such Mortgaged Property is located, as the same may be

      supplemented, modified or amended from time to time.

 

            "Borrower's Affidavit" shall mean a Borrower's Closing Affidavit in

      the form of Exhibit C attached hereto, with blanks completed

      appropriately, given by the Borrower or a Special Purpose Entity to the

      Lenders with respect to a Mortgaged Property.

 

            "Borrowing Base" shall mean sixty-five percent (65%) of the

      aggregate Appraised Value of the Mortgaged Properties, subject to the

      provisions of Section 2.01 hereof.

 

            "Borrowing Base Certificate" shall mean a certificate in the form of

      Exhibit D attached hereto executed by the Chief Executive Officer or Chief

      Financial Officer of the Borrower.

 

            "Business Day" shall mean each day excluding Saturdays, Sundays and

      any other day on which Agent is closed for business to the public.

 

            "Capital Expenditure Reserve" shall mean an amount equal to the

      product of (i) $0.15 multiplied by (ii) the gross rentable square footage

      of the Real Estate Assets as determined from time to time by the

      Compliance Certificate and identified as item E thereon.

 

            "Capital Expenditure Reserve Factor" shall mean $0.15 per rentable

      square foot.

 

            "Closing" shall mean the execution and delivery by the Borrower to

      the Lenders of this Agreement, the Notes and the other Loan Documents.

 

            "Closing Date" shall mean the date of the Closing.

 

            "Collateral Assignment of Mortgaged Property Sale Agreement" shall

      mean a Collateral Assignment of Mortgaged Property Sale Agreement in the

      form attached hereto as Exhibit E, with blanks completed appropriately,

      given by the Borrower or a Special Purpose Entity, as applicable, to the

      Lenders with respect to a Mortgaged

 

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      Property as security for the Borrower's obligations under the Loan, as the

      same may be supplemented, modified or amended from time to time.

 

            "Commitment" shall mean the maximum amount each Lender has agreed to

      lend to Borrower as part of the Loan, as set forth below the signature

      line of each Lender, subject to modification by each Assignment and

      Acceptance.

 

            "Commitment Fee" shall mean an amount equal to One-Half of One

      Percent (1/2 of 1%) of each Lender's Commitment under the Loan.

 

            "Compliance Certificate" shall mean a certificate in the form of

      Exhibit F annexed hereto, executed by the chief executive officer or chief

      financial officer of Borrower.

 

            "Conditional Default" shall mean any condition, event, act or

      omission which, with the giving of notice or passage of time or both,

      would constitute an Event of Default.

 

            "Consolidated Group" shall mean Guarantor, Borrower and all

      Subsidiaries of Guarantor or Borrower which are consolidated with

      Guarantor and/or Borrower for financial reporting purposes under GAAP.

      Consolidated Group shall not include an Investment Affiliate or any other

       Affiliate which is not owned 50% or more by the Borrower, Guarantor, or

      their respective Subsidiaries.

 

            "Construction Loans" shall mean financing obtained by Borrower,

      Guarantor or a Special Purpose Entity to finance the costs set forth in

      the Real Estate Asset Budget Amount for the construction of a Real Estate

      Asset.

 

            "Current Asset Value of Existing Real Estate Asset" shall mean, for

      any calendar quarter, the current asset value of Real Estate Assets, other

      than Real Estate Assets acquired during such calendar quarter, determined

      from time to time by the Compliance Certificate and identified as item H

      thereon.

 

            "Debt Service Coverage Ratio" shall mean the ratio of EBITDA plus

      Loss on Interest Rate Swap during the then-ending calendar quarter

      determined as of the last day of such calendar quarter, annualized

      (multiplied by 4), to the aggregate sum of all Interest payments and

      principal payments (excluding principal payments upon maturity of a loan

      or voluntary prepayments of principal) on Indebtedness of the Consolidated

      Group, and the Consolidated Group's pro rata share of any Indebtedness of

      any Investment Affiliate due and payable during such then-ending calendar

      quarter determined as of the last day of such calendar quarter, annualized

      (multiplied by 4). The first test shall be conducted for the quarter ended

      December 31, 2003, and tested at each quarter end thereafter.

 

            "Default Rate" shall mean a rate of interest from time to time which

      is Two Percent (2%) per annum above the applicable Interest Rates

      otherwise then in effect.

 

            "Defaulting Lender" shall have the meaning set forth in Section

      11.5(b).

 

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            "Deposit" shall mean an earnest money deposit made by a buyer under

      a Mortgaged Property Sale Agreement and held by a Title Company or by the

      Borrower or Special Purpose Entity, as applicable.

 

            "Disbursement Request" shall mean a statement of the Borrower

      setting forth the amount of an Advance being requested and containing such

      other information as is required by Paragraph (a) of Section 5.01 hereof.

 

            "EBITDA" shall mean for any period, with respect to the Consolidated

      Group on a consolidated basis, determined in accordance with GAAP, the sum

      of the net income (or net loss) for the then-ending calendar quarter,

      including the Consolidated Group's pro rata share of net income (or net

      loss) in any Investment Affiliate, plus the sum of all expenses determined

      in accordance with GAAP for the then-ending calendar quarter for (a)

      Interest, including interest on the Mezzanine Debt upon achievement of

      Stabilized Occupancy of the Real Estate Asset for which the Mezzanine Debt

      has been incurred, (b) depreciation, (c) amortization, (d) all accrued or

      paid taxes on or measured by income to the extent included in the

      determination of such net income (or net loss), and (e) amounts

      attributable to the minority interest of members of Special Purpose

      Entities and other minority members or partners of Borrower, Special

      Purpose Entities or Guarantor). Net income (or net loss) shall be computed

      without giving effect to extraordinary losses or gains.

 

            "Environmental Indemnity Agreement" shall mean an Environmental

      Indemnity Agreement in the form attached hereto as Exhibit G, with blanks

      completed appropriately, to be executed and delivered with respect to a

      Mortgaged Property by a Special Purpose Entity, the Borrower and the

      Guarantor to the Lenders, as the same may be supplemented, modified or

      amended from time to time.

 

            "ERISA" shall mean the Employee Retirement Income Security Act of

      1974, as amended.

 

            "ERISA Affiliate" shall mean any trade or business, whether or not

      incorporated, which together with the Borrower would be treated as a

      single employer under ERISA.

 

            "Event of Default" shall mean any of the events of default described

      in Section 8.01 hereof.

 

            "FEMA" shall mean the Federal Emergency Management Agency, or any

      successor entity.

 

            "Fixtures" shall mean all personal property now or hereafter owned

      by the Borrower or a Special Purpose Entity and now or hereafter affixed

      to, incorporated into or to be incorporated into, or used or useful in

      connection with, a Mortgaged Property or any part thereof, all

      replacements thereof, additions thereto and substitutions therefor.

 

            "GAAP" shall mean generally accepted accounting principles in the

       United States of America in effect from time to time as promulgated by the

      Financial Accounting

 

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      Standards Board and recognized and interpreted by the American Institute

      of Certified Public Accountants as of the end of the first full quarter

      following the promulgation of such standards.

 

            "Governmental Authorities" shall mean the United States of America,

      the state and local jurisdictions in which a Mortgaged Property is located

      and any political subdivision thereof, and any agency, department,

      commission, board, bureau or instrumentality of any of them.

 

            "Governmental Requirement" shall mean any law, ordinance, order,

      rule or regulation of any Governmental Authority, including but not

      limited to laws, ordinances, orders, rules or regulations with regard to

      zoning, subdivision, building, safety, fire protection or environmental

      matters applicable to a Mortgaged Property.

 

            "Guarantor" shall mean Windrose Medical Properties Trust, a Maryland

      real estate investment trust.

 

            "Guaranty" shall mean the Amended and Restated Unconditional

      Guaranty executed and delivered by Guarantor to the Lenders of even date

      herewith, pursuant to which the Guarantor guarantees the Borrower's

      obligations under the Loan Documents, as the same may be supplemented,

      modified or amended from time to time.

 

            "Hazardous Constituent" shall have the meaning assigned thereto

      under 40 C.F.R. Section 260.10.

 

            "Hazardous Materials" shall mean, collectively, Hazardous

      Substances, Hazardous Constituent and Solid Wastes.

 

            "Hazardous Materials Laws" shall mean all laws, statutes,

      ordinances, rules, regulations, permits, licenses, judgments, writs,

      injunctions, decrees, orders, determinations, directives and standards

      promulgated by any governmental authority concerning Hazardous Materials

      or concerning the protection of, or regulation of the discharge of

      substances into, the environment or concerning the health or safety of

      persons with respect to environmental hazards, and includes, without

      limitation, the Comprehensive Environmental Response, Compensation and

      Liability Act of 1980, as amended by the Superfund Amendments and

      Reauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq., Solid Waste

      Disposal Act, as amended by the Resource Conservation and Recovery Act of

      1976 and Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. Sections

      6901 et seq., Federal Water Pollution Control Act, as amended by the Clean

      Water Act of 1977, 33 U.S.C. Sections 1251 et seq., Clean Air Act of 1966,

       as amended, 42 U.S.C. Sections 7401 et seq., Toxic Substances Control Act

      of 1976, 15 U.S.C. Sections 2601 et seq., Occupational Safety and Health

      Act of 1970, as amended, 29 U.S.C. Sections 651 et seq., Emergency

      Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001

      et seq., National Environmental Policy of 1975, 42 U.S.C. Sections 4321 et

      seq., Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Section

      300(f) et seq., the Hazardous Materials Transportation Act, 42, U.S.C.

      Section 1801 et seq., the Federal Insecticide, Fungicide, and

 

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      Rodenticide Act, U.S.C. Section 7401 et seq., and any similar or

      implementing law of the state in which a Mortgaged Property is located,

      and all amendments, rules, and regulations promulgated thereunder or

      implementing the same.

 

            "Hazardous Substances" shall mean at any time any substance, waste,

      pollutant, contaminant or material, in solid, liquid or gaseous form,

      which: (i) is a substance regulated or defined or designated as hazardous,

      extremely or imminently hazardous, objectionable, dangerous, or toxic

      pursuant to any law, by any local, state, territorial or federal

      governmental authority; (ii) is a substance with respect to which such a

      governmental authority otherwise requires environmental compliance,

      investigation, monitoring, reporting, or remediation; including but not

      limited to, (A) all substances, wastes, pollutants, contaminants and

      materials regulated, or defined or designated as hazardous, extremely or

      imminently hazardous, dangerous, objectionable or toxic, under any

      Hazardous Materials Law; (B) petroleum and petroleum based products

      including crude oil, used oil and any fractions thereof; (C) natural gas,

      synthetic gas, and any mixtures thereof; (D) radon; (E) radioactive

      substances and materials; (F) asbestos; (G) urea formaldehyde; (H)

      polychlorinated biphenyls; (I) lead; (J) methane; (K) flammable substances

      and materials; and (L) explosives.

 

            "Improvements" shall mean the improvements located upon a Mortgaged

      Property.

 

            "Indebtedness" shall mean all obligations, contingent and otherwise,

      that in accordance with GAAP should be classified upon a Person's balance

      sheet as liabilities, or to which reference should be made by footnotes

      thereto, including, without limitation, all of the following, whether or

      not so classified: (a) all debt and similar monetary obligations, whether

      direct or indirect; (b) all liabilities secured by any mortgage, pledge,

      negative pledge, security interest, lien, negative lien, charge, or other

      encumbrance existing on property owned or acquired subject thereto,

      whether or not the liability secured thereby shall have been assumed; (c)

      all guarantees, endorsements and other contingent obligations whether

      direct or indirect in respect of indebtedness or obligations of others,

      including any liability as the general partner of a partnership, any

      obligation to supply funds to or in any manner to invest in, directly or

      indirectly, any Person, to purchase indebtedness, or to assure the owner

      of indebtedness against loss, through an agreement to purchase goods,

      supplies, or services for the purpose of enabling the debtor to make

      payment of the indebtedness held by such owner or otherwise, and the

      obligations to reimburse the issuer in respect of any letters of credit;

      (d) obligations as a lessee under any "capitalized lease" (as determined

      in accordance with GAAP); (e) all subordinated debt; (f) all obligations

       in respect of deferred purchase prices; (g) all obligations to contribute

      money; (h) all obligations under interest rate swaps and similar

      agreements; and (i) such Person's liabilities, contingent or otherwise of

      the type set forth in (a) through (h) above, under any joint venture,

      limited liability company or partnership agreement. Indebtedness shall not

      include proceeds from the issuance of preferred stock if such proceeds are

      classified as equity under GAAP.

 

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            "Inspecting Architect" shall mean an independent architectural or

      engineering firm employed by the Agent with respect to a Mortgaged

      Property. The Borrower may submit to the Agent a list of suggested

      architectural and engineering firms for consideration by the Agent. The

      Agent shall not, however, be obligated to select or retain an Inspecting

      Architect from such list.

 

            "Interest" shall mean, for any period, the sum of all interest due

      and payable for such period (including amortization of original issue

      discount and debt issuance costs on any Indebtedness and the interest

      portion of any deferred payment obligation, calculated in accordance with

      generally accepted accounting principles), capitalized interest and

      non-cash interest expenses, all commissions, discounts and other fees and

      expenses owed with respect to letters of credit and bankers' acceptance

      financing, the net costs associated with any type of interest rate

      protection agreements (including caps, swaps, options, futures or similar

      agreements or arrangements with respect to interest rates), and all but

      the principal component of rentals in respect of "capitalized leases"

      (determined in accordance with GAAP) paid, accrued or due to be paid or to

      be accrued during such period.

 

            "Interest Rate" shall mean, as to each Advance, a rate per annum

      equal to (i) for Prime Advances, the Prime Interest Rate and (ii) for

      LIBOR Advances, the Adjusted LIBOR Interest Rate.

 

            "Interest Rate Protection Product" shall mean an interest rate

      hedging program through the purchase of an interest rate swap, cap or

       other such interest rate protection product with respect to any

      Indebtedness during the term of the Loan plus one (1) day.

 

            "Investment Affiliate" shall mean any Person in which the

      Consolidated Group, directly or indirectly, has an ownership interest,

      whose financial results are not consolidated under GAAP with the financial

      results of the Consolidated Group.

 

            "Lease" shall mean a lease of all or a portion of a Mortgaged

      Property (excluding any incidental real estate which is contiguous to the

      leased real estate and improvements and which the Borrower or a Special

      Purpose Entity is or was required to purchase as part of the acquisition

      of the leased real estate and improvements) entered into in the ordinary

      course of business by and between the Borrower or a Special Purpose

      Entity, as applicable, as landlord, and a Tenant, as tenant.

 

            "Letter of Credit" shall mean the One Million Dollar ($1,000,000)

      Standby Letter of Credit issued by Agent on behalf of Lenders at the

      request of Borrower and Guarantor in favor of Orix Capital Markets, LLC

      pursuant to Section 2.10 hereof.

 

            "Leverage Ratio" shall mean the ratio of (a) Total Current Value of

      Assets to (b) Total Liabilities as such ratio shall be determined from

      time to time in accordance with this Agreement and calculated in the

      manner set forth in the Compliance Certificate.

 

            "LIBOR" shall mean the average (rounded upward to the nearest 1/16

      of 1%) of the per annum rates at which deposits in immediately available

      funds in U.S. dollars for

 

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      the applicable LIBOR Interest Period and in the amount of the applicable

      LIBOR Advance are offered to the Agent by prime banks in the London

      interbank Eurodollar market, determined as of 11:00 a.m. London time (or

      as soon thereafter as practicable) two (2) London Banking Days prior to

       the beginning of the applicable LIBOR Interest Period.

 

            "LIBOR Advance" shall mean any Advance which is determined with

      reference to the Adjusted LIBOR Interest Rate.

 

            "LIBOR Interest Period" shall mean a period of one (1) month, two

      (2) months, three (3) months, or six (6) months as selected by the

      Borrower.

 

            "LIBOR Interest Rate" shall mean a rate per annum equal to (i) Two

      Percent (2%) above LIBOR at such time as the Leverage Ratio is less than

      Forty Percent (40%), (ii) Two and One-Quarter Percent (2-1/4%) above LIBOR

      at such time as the Leverage Ratio equals or exceeds Forty Percent (40%)

      but is less than Sixty Percent (60%), and (iiii) Two and One-Half Percent

      (2-1/2%) above LIBOR at such time as the Leverage Ratio equals or exceeds

      Sixty Percent (60%) or in the event Borrower fails to provide Agent with

      the Compliance Certificate in accordance with the terms hereof.

 

            "Loan" shall mean the revolving loan under the Loan Documents from

      the Lenders to the Borrower in a principal amount not to exceed Seventy

      Million Dollars ($70,000,000) at any time outstanding.

 

            "Loan Documents" shall mean, this Agreement, the Notes, Mortgages,

      Assignments of Rents, Collateral Assignments of Mortgaged Property Sale

      Agreements, Guaranty, Borrower's Affidavits, Environmental Indemnities,

      the Pledge Agreements and other documents executed and/or delivered by or

      on behalf of the Borrower, the Guarantor or a Special Purpose Entity in

      connection with the Loan or any Advance which are in effect from time to

      time, as the same may be supplemented, modified or amended from time to

      time.

 

            "London Banking Day" shall mean a day on which commercial banks are

      open for business in London, England, and quoting deposit rates for U.S.

      dollar deposits.

 

            "Loss on Interest Rate Swap" shall mean the loss recognized

      currently in earnings pursuant to compliance with Statement of Financial

      Accountings Standard No. 133, "Accounting for Derivative Instruments and

      Hedging Activities."

 

            "Major Lease" shall mean a Lease between Borrower or a Special

      Purpose Entity, as applicable, and a Major Tenant.

 

            "Major Tenant" shall mean any Tenant occupying twenty-five percent

      (25%) or more of a Mortgaged Property.

 

            "Material Adverse Effect" shall mean any fact or circumstance which

      (a) materially and adversely effects the business, operation, property or

      financing

 

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      conditions of the Borrower and Guarantor taken as a whole, or (b) has a

      material adverse effect on the ability of the Borrower, Guarantor or a

      Special Purpose Entity to perform their respective obligations under this

      Agreement, the Notes or the other Loan Documents.

 

            "Maturity Date" shall mean September 30, 2005.

 

            "Mezzanine Debt" shall mean Indebtedness of Borrower to The

      Huntington Real Estate Investment Company or to other financial

      institutions acceptable to Agent not to exceed the sum of Ten Million

      Dollars ($10,000,000) in the aggregate, which Indebtedness is secured by

      equity interests in entities having Indebtedness secured by mortgages and

      which Indebtedness is subordinate to such mortgage debt.

 

            "Monetary Event of Default" shall mean an Event of Default under

      Section 8.01(a) hereof or any other Event of Default which can be cured by

      the payment of money.

 

            "Mortgage" shall mean a Real Estate Mortgage and Security Agreement

      substantially in the form of Exhibit H-1 attached hereto, with blanks

      completed appropriately, or a Deed of Trust and Security Agreement

      substantially in the form of Exhibit H-2 attached hereto, with blanks

      completed appropriately, given by the Borrower or a Special Purpose

      Entity, as applicable, to the Lenders with respect to a Mortgaged Property

      as security for the Borrower's obligations under the Loan, subject to such

      changes as may be required to comply with the requirements of the laws of

      the state in which the Mortgaged Property is located, as the same may be

      supplemented, modified or amended from time to time.

 

            "Mortgage Release Price" shall mean with respect to a Mortgaged

      Property, an amount equal to the principal reduction required to allow

      Borrower to remain in compliance with the Borrowing Base and the Debt

      Service Coverage Ratio as set forth in this Agreement determined in

      accordance with Section 2.07 (b) hereof.

 

            "Mortgaged Property" shall mean all Real Estate Assets securing the

       Loan by virtue of a Mortgage.

 

            "Mortgaged Properties Debt Service" shall mean the sum of all

      Interest payments and principal payments on the outstanding principal

      balance of the Loan due and payable during the then-ending calendar

      quarter, annualized (multiplied by 4), assuming the level amortization of

      the then outstanding principal balance of the Loan over a period of

      twenty-five (25) years, at a per annum interest rate equal to Two Percent

      (2%) above the most recent weekly average yield on United States Treasury

      Securities adjusted to a constant maturity of ten (10) years as measured

      on the first day of each calendar quarter.

 

            "Mortgaged Properties Debt Service Coverage Ratio" shall mean the

      Mortgaged Properties Net Operating Income divide by the Mortgaged Property

      Debt Service.

 

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            "Mortgaged Properties Net Operating Income" shall mean the total

      rental income during the then-ending calendar quarter, annualized

      (multiplied by 4) (including minimum rent, additional rent, common area

      maintenance, real estate tax and insurance reimbursements and other tenant

      reimbursements, including tenant expense reimbursements and tenant

      improvement reimbursements, recurring parking income), received by

      Borrower and each Special Purpose Entity, as applicable, and arising from

      the ownership and operation of the Mortgaged Properties (excluding tenant

      security deposits, rents from tenants that are subject to a voluntary or

      involuntary petition for relief under any federal or state bankruptcy

      codes or insolvency laws, and rents from tenants that are not in

      possession of its demised premises, except rents and other payments from

      tenants under master leases or occupancy agreements approved by Agent),

      less the sum of all actual costs, taxes, expenses and disbursements paid

      or due and payable during such then-ending calendar quarter, annualized

      (multiplied by 4), in connection with the ownership, leasing, management,

      operation, maintenance and repair of the Mortgaged Properties and of the

      personal property, fixtures, machinery, equipment, systems and apparatus

      located therein or used in connection therewith, but excluding (i)

      non-cash expenses, such as depreciation and amortized costs, (ii) state

      and federal income taxes, (iii) the non-current portion of capital

      expenditures, (iv) any expenses paid directly by tenants to third parties,

      (v) any adjustments made for straight lining of rents, (vi) extraordinary

      income or expense, and (vii) debt service payments on all Indebtedness of

      Borrower with respect to the Mortgaged Properties; all determined in

      accordance with GAAP, as measured on the last day of each calendar

      quarter.

 

            "Mortgaged Property Sale Agreement" shall mean with respect to a

      Mortgaged Property, an agreement between the Borrower or a Special Purpose

      Entity, as applicable, and a buyer not affiliated with the Borrower or the

      Guarantor which is approved by the Agent in a form reasonably acceptable

      to the Agent, pursuant to which agreement the Borrower or a Special

      Purpose Entity, as applicable, agrees to sell, and such buyer agrees to

      purchase, a Mortgaged Property. Such sale agreement shall require the

      buyer thereunder to deposit a Deposit with the Borrower or a Special

      Purpose Entity, as applicable, or a Title Company or other escrow agent.

      Such term shall also include the exercise of a right of first refusal or

      purchase option in a lease of a Mortgaged Property held by a Major Tenant.

 

            "Mortgaged Property Site" shall mean the real estate portion of a

      Mortgaged Property.

 

            "Non-Monetary Event of Default" shall mean any Event of Default,

      other than a Monetary Event of Default.

 

            "Non-Use Fee" shall mean an amount equal to 1/5 of 1% on the

      principal amount of undrawn funds then available under the Loan.

 

            "Notes" shall mean those certain Replacement Credit Notes in the

      aggregate original principal amount of Seventy Million Dollars

      ($70,000,000) executed and

 

                                       10

<PAGE>

 

      delivered by Borrower to the Lenders of even date herewith, as the same

      may be renewed, extended, supplemented, replaced, modified or amended from

      time to time.

 

            "PBGC" shall mean the Pension Benefit Guaranty Corporation

      established pursuant to ERISA, or any successor entity.

 

            "Percentage" shall mean, with respect to each Lender, the percentage

      which its Commitment constitutes of the maximum amount of the Loan as set

      forth below the signature line of each Lender as the same may be adjusted

      from time to time.

 

            "Person" shall mean an individual, a partnership, a joint venture, a

      corporation, a limited liability company, a trust, an unincorporated

      organization or a Governmental Authority.

 

            "Personal Property" shall mean all tangible personal property owned

      by the Borrower or a Special Purpose Entity and now or at any time

      hereafter located on or at a Mortgaged Property or used in connection

      therewith or with the improvements forming a part of such Mortgaged

      Property.

 

            "Plan" shall mean an Employee Benefit Plan which is covered by Title

      4 of ERISA or subject to the minimum lending standards under Section 412

      of the Internal Revenue Service as to which the Borrower may have any

      liability.

 

            "Plans and Specifications" shall mean the plans and specifications

      for the construction of the Improvements forming part of an applicable

      Mortgaged Property prepared by the architect therefor approved by

      Borrower.

 

            "Pledge Agreements" shall mean certain Membership Pledge Agreements

      now or hereafter executed by Borrower in favor of Lenders pursuant to

      which Borrower pledges its membership interest in Special Purpose

      Entities.

 

            "Prime Advance" shall mean any Advance which is determined with

      reference to the Prime Rate.

 

            "Prime Interest Rate" shall mean a rate per annum equal to the Prime

      Rate.

 

            "Prime Rate" shall mean the interest rate per annum announced from

      time to time by the Agent as its prime rate. Each interest rate determined

      by reference to the Prime Rate shall change automatically from time to

      time, effective as of the effective date of each change in the Prime Rate.

      The Agent's Prime Rate is not necessarily the lowest rate at which the

      Agent lends its funds. The Prime Rate is only an index rate from which

      interest rates actually charged to the Agent's customers may be measured.

      The use of the Prime Rate does not constitute a commitment by the Agent to

      lend money at a preferred rate.

 

            "Prohibited Transaction" shall have the meaning ascribed thereto by

      ERISA.

 

                                       11

<PAGE>

 

            "Project Agreement" shall mean a Project Agreement in the form of

      Exhibit I attached hereto, with blanks completed appropriately, to be

      entered into by the Agent and the Borrower and a Special Purpose Entity,

      pursuant to which the Required Lenders approve a Mortgaged Property.

 

            "Real Estate Asset" shall mean the real estate and all improvements

       thereon for use as a medical related facility owned by the Consolidated

      Group, together with any incidental real estate which is contiguous to the

      leased real estate and improvements and which Consolidated Group is or was

      required to purchase as part of the acquisition of the leased real estate

      and improvements.

 

            "Real Estate Asset Budget Amount" shall mean the total budgeted cost

      (as such budget shall be updated from time to time) of all projects under

      construction owned by the Consolidated Group plus the Consolidated Group's

      pro rata share of the total budgeted cost (as such budget shall be updated

      from time to time) of all projects under construction owned by any

      Investment Affiliate or by any Subsidiary of the Consolidated Group that

      is not a wholly owned Subsidiary provided, however, that with respect to

      (i) projects owned by any such Investment Affiliate or Subsidiary for

      which the respective financial responsibilities of the other owners of

      such Investment Affiliate or Subsidiary on the one hand and the

      Consolidated Group and its wholly owed Subsidiaries on the other hand are

      not in proportion to the respective ownership interests in the applicable

       Investment Affiliate or Subsidiary, then the portion of budgeted cost of

      such project included in the Real Estate Asset Budget Amount shall be

      adjusted to reflect the Consolidated Group's actual financial

      responsibility related to such project. Such costs shall include, without

      limitation, all land acquisition costs (but may exclude costs of land used

      for expansion projects which was not purchased for the purpose of such

      expansion project), design and permitting costs, construction period real

      estate taxes, leasing costs including brokers' commissions and tenant

      improvements, allowances or reimbursements, construction costs and opening

      costs. With respect to any projects financed with Indebtedness other than

      this Loan, such costs shall also include construction period interest and

      all fees and expenses associated with such Indebtedness.

 

            "Recourse Indebtedness" shall mean any Indebtedness of the Borrower,

      Guarantor or Special Purpose Entity, including the Borrower's, Guarantor's

      or Special Purpose Entity's respective recourse pro rata share of any

      Indebtedness in any Investment Affiliate, for which the lender thereof

      does not agree to look solely to a Real Estate Asset for the payment of

      the indebtedness subject to usual and customary exculpation carve out

      provisions and environmental indemnification agreements.

 

            "Regulation U" shall mean Regulation U of the Board of Governors of

       the Federal Reserve System, as amended from time to time.

 

            "Reportable Event" shall have the meaning ascribed thereto by ERISA.

 

            "Restricted Assets" shall have the meaning set forth in Section 7.07

      hereof.

 

                                        12

<PAGE>

 

            "Required Lenders" shall mean Lenders holding Percentages

      aggregating at least Sixty-Six and Two-Thirds Percent (66-2/3%) or

      greater.

 

            "Reserve Percentage" shall mean for any day that percentage

      (expressed as a decimal) which is in effect on such day, as prescribed by

      the Board of Governors of the Federal Reserve System (or any successor)

      for determining the maximum reserve requirement (including, without

      limitation, all basic, supplemental, marginal and other reserves and

      taking into account any transitional adjustments or other scheduled

      changes in reserve requirements) for a member of the Federal Reserve

      System in Cleveland, Ohio, in respect of "Eurocurrency Liabilities." The

      Adjusted LIBOR Interest Rate shall be adjusted automatically on and as of

      the effective date of any change in the Reserve Percentage.

 

            "Single Mortgaged Property Debt Service" shall mean the total sum of

      all Interest payments and principal payments which would be due and

      payable during the then-ending calendar quarter, annualized (multiplied by

      4), with respect to a single Mortgaged Property assuming the level

      amortization of a principal loan balance equal to Sixty-Five Percent (65%)

      of the Appraised Value of such Mortgaged Property over a period of

      twenty-five (25) years, at a per annum interest rate equal to Two Percent

      (2%) above the most recent weekly average yield on United States Treasury

      Securities adjusted to a constant maturity of ten (10) years as measured

      on the last day of each calendar quarter.

 

            "Single Mortgaged Property Debt Service Coverage Ratio" shall mean

      the Single Mortgaged Property Net Operating Income divided by the Single

      Mortgaged Property Debt Service.

 

            "Single Mortgaged Property Net Operating Income" shall mean the

      total rental income, with respect to a Mortgaged Property during the

      then-ending calendar quarter, annualized (multiplied by 4) (including

      minimum rent, additional rent, common area maintenance, real estate tax

      and insurance reimbursements and other tenant reimbursements, including

      tenant expense reimbursements and tenant improvement reimbursements,

      recurring parking income), received by Borrower and each Special Purpose

      Entity, as applicable, arising from the ownership and operation such

      Mortgaged Property (excluding tenant security deposits, rents from tenants

      that are subject to a voluntary or involuntary petition for relief under

      any federal or state bankruptcy codes or insolvency laws and rents from

      tenants that are not in possession in its demised premises at such

      Mortgaged Property, except rents and other payments from tenants under

      master leases or occupancy agreements approved by Agent), less the sum of

      actual costs, taxes, expenses and disbursements paid or due and payable

      during such then-ending calendar quarter, annualized (multiplied by 4), in

      connection with the ownership, leasing, management, operation, maintenance

      and repair of such Mortgaged Property and of the personal property,

      fixtures, machinery, equipment, systems and apparatus located therein or

      used in connection therewith, but excluding (i) non-cash expenses, such as

      depreciation and amortized costs, (ii) state and federal income taxes,

      (iii) the non-current portion of capital expenditures, (iv) any expenses

      to be paid directly by tenants to third parties, (v) any adjustments made

      for straight lining of rents, (vi) extraordinary income or

 

                                       13

<PAGE>

 

      expense, and (vii) the Single Mortgaged Property Debt Service for such

      Mortgaged Property, all determined in accordance with GAAP, as measured on

      the last day of each calendar quarter.

 

            "Solid Wastes" shall have the meaning assigned thereto in 40 C.F.R.

       Section 261.2.

 

            "Special Purpose Entities" shall mean limited liability companies or

      limited partnerships which own a Mortgaged Property and in which Borrower

      holds a controlling interest.

 

            "Stabilized Occupancy" shall mean, with respect to a Real Estate

      Asset under construction, the time when such Real Estate Asset has

      received a certificate of occupancy (or similar permit or approval).

 

            "Storage Containers" shall mean existing and future containers for

      Hazardous Materials and above ground and underground storage tank systems

      (including underground piping, conduits or sumps).

 

            "Subordination, Non-Disturbance and Attornment Agreement" shall mean

      a Subordination, Non-Disturbance and Attornment Agreement in the form of

      Exhibit J attached hereto, with blanks completed appropriately, entered

      into by the Agent, the Borrower or a Special Purpose Entity, as

      applicable, and a Major Tenant with respect to a Mortgaged Property,

      subject to such changes as may be required to comply with the requirements

      of the law of the state in which the Mortgaged Property is located and

      such other revisions as may be reasonably acceptable to Agent, as the same

       may be supplemented, modified or amended from time to time.

 

            "Subsidiary" shall mean, with respect to any Person, (i) any

      corporation more than 50% of the outstanding securities having ordinary

      voting power of which shall at the time be owned or controlled, directly

      or indirectly, by such Person or by one or more of its Subsidiaries or by

      such Person and one or more of its Subsidiaries, or (ii) any partnership,

      limited liability company, association, joint venture or similar business

      organization more than 50% of the ownership interests having ordinary

      voting power of which shall at the time be so owned or controlled. Unless

      otherwise expressly provided, all references herein to a "Subsidiary"

       shall mean a Subsidiary of the Borrower and/or Guarantor. Subsidiaries of

      a Person shall not include an Investment Affiliate or any other Affiliate

      which is not owned 50% or more directly by a Person.

 

            "Tangible Net Worth" shall mean the sum of capital surplus, earned

      surplus, capital stock, accumulated depreciation and amortization minus

      deferred charges, intangibles (excluding lease intangibles and deferred

      loan fees) and treasury stock, all as determined in accordance with GAAP

      consistently applied.

 

            "Tenant" shall mean any tenant of a Mortgaged Property.

 

                                       14

<PAGE>

 

            "Title Company" shall mean with respect to a Mortgaged Property, any

      other title insurer designated by the Borrower and approved by the Agent

      which agrees to insure the priority of the lien of the Mortgage on such

      Mortgaged Property.

 

            "Title Policy" shall mean with respect to a Mortgaged Property, the

      policy of title insurance issued by a Title Company to the Lenders

      insuring the priority of the lien of the Mortgage on such Mortgaged

      Property.

 

            "Total Current Value of Assets" shall be the amount determined from

      time to time by the Compliance Certificate and identified as item M

      thereon.

 

            "Total Current Value of Real Estate Assets" shall be the amount

      determined from time to time by the Compliance Certificate and identified

      as item K thereon.

 

            "Total Liabilities" shall mean all liabilities of the Consolidated

      Group, including the pro rata share of any liabilities of the Consolidated

      Group in any Investment Affiliate, all as determined in accordance with

      GAAP.

 

            "Unrestricted Cash and Cash Equivalents" shall mean unencumbered

      cash on hand plus cash reserved for the payment of taxes, tenant

      improvements, capital expenditures, lease commissions or other reserves

      available to offset expenditures generally recognized as property

      operating expenses, or other general and administrative expenses.

 

            "Variable Rate Indebtedness" shall mean Indebtedness which does not

      bear interest at a fixed rate of interest and is not covered by an

      Interest Rate Protection Product.

 

            "Wetlands" shall mean any wetlands area or other area which is

      subject to the regulatory jurisdiction of the United States Environmental

      Protection Agency and/or Army Corps of Engineers and/or any other

      Governmental Authority, under any Governmental Requirement, including,

      without limitation, the Clean Water Act, 33 U.S.C.   Section 1251, et. seq.

 

      Unless the context clearly otherwise requires, the foregoing definitions

shall be equally applicable to both the singular and plural forms.

 

                                   ARTICLE II

                                    THE LOAN

 

      2.01. Loan. Subject to the terms and conditions hereof, and relying upon

the representations and warranties herein set forth, the Lenders agree to make

the Loan to the Borrower. The principal amount of the Loan outstanding at any

time shall not exceed the lesser of: (a) Seventy Million Dollars ($70,000,000),

or (b) the Borrowing Base (as the same may be adjusted as set forth below in

this Section 2.01). Unless otherwise extended by Lenders, the Lenders'

commitment to make Advances shall expire on the Maturity Date. The proceeds of

the Loan will be used solely for the acquisition and development by the

Borrower, as applicable, of

 

                                       15

<PAGE>

 

Real Estate Assets and for working capital purposes as described herein. The

proceeds of the Loan will be advanced to the Borrower in accordance with and

subject to the requirements and limitations set forth herein. Advances of the

Loan will be made to Borrower for working capital purposes provided such

Advances shall not exceed Five Million Dollars ($5,000,000) at any one time. If

prior to the Maturity Date, the Borrower repays any Advance(s), or any portion

thereof, Loan proceeds in an amount equal to the amount of the repayment will

again be made available to the Borrower for Advances, subject to the terms and

conditions hereof.

 

      In the event a Single Mortgaged Property Debt Service Coverage Ratio is

less than 1.25 to 1.00, the Borrowing Base shall be reduced to an amount

sufficient to support a 1.40 to 1.0 Single Mortgaged Property Debt Service

Coverage Ratio with respect to the subject Mortgaged Property until such time as

such Mortgaged Property achieves a 1.40 to 1.0 Single Mortgaged Property Debt

Service Coverage Ratio. By way of illustration, assume a Single Mortgaged

Property has (i) an Appraised Value of $1,000,000; (ii) an initial Borrowing

Base Value of $650,000 (65% of Appraised Value); (iii) an initial Single

Mortgaged Property Debt Service of $50,256 (assuming an interest rate of six

percent (6%) for this example); and (iv) single Mortgaged Property Net Operating

Income of $62,820 (or, 1.25 to 1.0 of the Single Mortgaged Property Debt Service

Ratio). If the Single Mortgaged Property Net Operating Income decreases to

$55,000 (a Single Mortgaged Property Debt Service Ratio below 1.25 to 1.0 using

a Borrowing Base Value of $650,000 and a debt constant of $50,256), then the

required Single Mortgaged Property Debt Service Ratio is adjusted to 1.4 to 1.0

Assuming net operating income to $55,000, then the Borrowing Base value for this

property is reduced to $508,070. At 1.40 to 1.0, net operating income of $55,000

supports a Single Mortgaged Property Debt Service of $39,285, which is a

Borrowing Base Value of $508,070 (at the assumed interest rate). The Single

Mortgaged Property Debt Service Ratio will remain at 1.40 to 1.0 until the

Borrowing Base Value for such property equals $650,000. Thereafter, the

Borrowing Base Value (subject to the 65%) limit) shall be calculated based on

the actual Single Mortgaged Property Debt Service unless and until the Single

Mortgaged Property Debt Service falls below 1.25 to 1.0 at which time the Single

Mortgaged Property Debt Service Ratio shall return to 1.4 to 1.0.

 

      In the event of an occurrence of an event which has a Material Adverse

Effect upon a Special Purpose Entity and the same is not cured within sixty (60)

days after notice by Agent to Borrower, the Borrowing Base will be reduced by

sixty percent (60%) of the Appraised Value of the applicable Mortgaged Property.

 

      2.02. Mortgaged Property Approval. With respect to a proposed Mortgaged

Property, Borrower shall submit the information required by Exhibit K to the

Agent and Agent shall deliver copies of such information to all of the Lenders,

and the Required Lenders shall have approved those materials identified in

Exhibit K attached hereto. In connection with the approval of a Mortgaged

Property, the Required Lenders may impose requirements with respect to the

proposed Mortgaged Property regarding disbursement of any Advance in addition to

those set forth herein. Such additional requirements will be set forth in the

Project Agreement to be executed by the Agent and the Borrower in respect of

such Mortgaged Property, which Project Agreement, when executed, shall be deemed

to be a modification and amendment of this Agreement.

 

                                        16

<PAGE>

 

      Each Lender hereby acknowledges and agrees that the information submitted

by Borrower to the Lenders, including the information identified on Exhibit K is

proprietary and confidential information of Borrower and shall be maintained in

confidence by the Lenders and used solely and exclusively for the purpose of

determining such Lender's consent to the inclusion of such Real Estate Asset as

a Mortgaged Property subject to disclosure to their respective auditors,

regulatory authorities and potential participants in the Loan.

 

      2.03. Notes. The Loan and all Advances thereunder shall be evidenced by

the Borrower's receipts and the Notes.

 

      2.04. Rate of Interest. During the term of the Loan, the unpaid principal

amount thereof shall, subject to the terms and conditions hereinafter set forth,

bear interest on a basis selected by the Borrower from the following interest

rate selections: (a) the Adjusted LIBOR Interest Rate; and (b) the Prime

Interest Rate.

 

      Each Advance shall be made as either a Prime Advance or a LIBOR Advance,

as selected by the Borrower. The Borrower may have Prime Advances and LIBOR

Advances outstanding simultaneously; provided, however, the Borrower may not

have more than five (5) LIBOR Advances in existence at any time and each LIBOR

Advance must be in an amount which is greater than or equal to $1,000,000. The

Borrower may convert any Prime Advances aggregating at least $1,000,000 in

principal amount into a LIBOR Advance on the first day of a calendar month. At

the end of the LIBOR Interest Period applicable to a LIBOR Advance, the Borrower

may renew the LIBOR Advance or may convert the LIBOR Advance to a Prime Advance.

If the Borrower fails to renew any LIBOR Advance or if the Borrower shall

receive any new Advance without designating whether such Advance is a LIBOR

Advance or a Prime Advance, such Advance shall automatically be deemed to be a

Prime Advance. At any time that the Borrower desires a LIBOR Advance or intends

to renew a LIBOR Advance or convert a Prime Advance into a LIBOR Advance, the

Borrower must notify the Agent by a Notice of Pricing Election in the form

attached hereto as Exhibit L at least three (3) London Banking Days prior to the

day on which the Borrower desires such Advance, renewal or conversion to be

effective. The Borrower shall have no right to designate a new Advance as, or

convert an existing Prime Rate Advance to, a LIBOR Advance if an Event of

Default is then continuing. The Borrower shall have no right to select a LIBOR

Interest Period for a LIBOR Advance if such LIBOR Interest Period would extend

beyond the Maturity Date.

 

      While and so long as no Event of Default is continuing, interest shall

accrue at the applicable Interest Rates upon the daily principal balance of the

Loan, based on a three hundred sixty (360) day year, for the actual number of

days elapsed since the date to which interest has been paid.

 

      If a Lender shall determine, after the date hereof, that the adoption of

any applicable law, rule, regulation or guideline regarding capital adequacy, or

any change therein, or any change in the interpretation or administration

thereof by any governmental authority, central bank or comparable agency charged

with the interpretation or administration thereof, or compliance by such Lender

(or such Lender's lending office) with any request or directive regarding

capital adequacy (whether or not having the force of law) of any such authority,

central bank or

 

                                       17

<PAGE>

 

comparable agency, has or would have the effect of reducing the rate of return

on such Lender's capital (or on the capital of a Lender's holding company) as a

consequence of the Loan to a level below that such Lender (or such Lender's

holding company) could have achieved but for such adoption, change or compliance

(taking into consideration such Lender's policies or the policies of such

Lender's holding company with respect to capital adequacy) by an amount deemed

by such Lender to be material, then from time to time, within fifteen (15) days

after demand by such Lender, the Borrower shall either (a) pay to such Lender

such additional amount or amounts as will compensate such Lenders (or such

Lender's holding company) for such reduction, or (b) convert all LIBOR Advances

to a Prime Advance. If the Borrower elects the option provided in the foregoing

subparagraph (b), the Borrower shall not be subject to the requirement hereunder

that the Borrower reimburse such Lender for any loss, cost or expense incurred

by such Lender as a result of the Borrower paying a LIBOR Advance prior to the

end of the applicable LIBOR Interest Period, provided, however, thereafter the

Borrower may not elect for any Advances to be LIBOR Advances. A Lender will

designate a different lending office if such designation will avoid the need

for, or reduce the amount of, such compensation and will not, in the judgment of

such Lender, be otherwise disadvantageous to such Lender. In determining such

amount, a Lender may use any reasonable averaging and attribution methods.

Failure on the part of a Lender to demand compensation for any reduction in

return on capital with respect to any period shall not constitute a waiver of

such Lender's rights to demand compensation for any reduction in return on

capital in such period or in any other period. The protection of this Section

shall be available to the Lenders regardless of any possible contention of the

invalidity of the law, regulation or other condition which shall have been

imposed.

 

      2.05. Principal Payment of Advances. If not sooner paid, all Advances

shall be due and payable on the Maturity Date.

 

      2.06. Interest Payments. The Borrower shall pay interest to the Agent at

the applicable Interest Rates on the outstanding principal balance of the Loan

on the first (1st) day of each calendar month while proceeds of the Loan remain

outstanding, commencing on the first (1st) day of the first (1st) calendar month

following the first Advance.

 

      2.07. Principal Payments. Except as set forth herein, all payments of

principal shall be first applied to the reduction of Advances for working

capital purposes or as otherwise directed by Borrower. Upon the sale of a

Mortgaged Property, the Borrower shall pay to the Agent an amount equal to the

Mortgage Release Price payable in respect thereof, and such Mortgage Release

Price payment when received by the Agent, shall be applied in reduction of the

principal balance of the Loan. Notwithstanding the foregoing provisions, during

the continuance of an Event of Default, any Mortgage Release Price payment

received by the Agent may be applied, in the discretion of the Lenders, in

reduction of any accrued and unpaid interest on the Loan or any outstanding

Advance made pursuant to Section 5.01(c) hereof, so long as the Agent provides

to Borrower all documents necessary to release the Mortgaged Property being

sold.

 

      At the request of the Agent, the Borrower will furnish to the Agent copies

of any closing statement, purchase agreement and similar documents relating to

the sale of a Mortgaged Property prior to the release by the Agent of the

security with respect to such Mortgaged Property.

 

                                       18

<PAGE>

 

      During the term of the Loan, upon the Agent's receipt of the Mortgage

Release Price with respect to a Mortgaged Property, the Agent will release the

applicable Mortgaged Property and all other security of the Lenders encumbering

such Mortgaged Property by the prompt delivery of appropriate documents duly

authorized and executed and in accordance with the law of the State in which the

Mortgaged Property is located to fully and completely release any security

interest of Lenders encumbering such Mortgaged Property.

 

      Notwithstanding anything contained herein to the contrary, as a condition

to any release Borrower shall have satisfied the following conditions prior to

the Agent's release of a Mortgaged Property:

 

            a. No Conditional Default or Event of Default shall exist;

 

            b. Borrower shall have provided to Agent a proforma Borrowing Base

      Certificate as of the end of the previous calendar month and a proforma

      Compliance Certificate as of the end of the previous calendar quarter,

      demonstrating Borrower's compliance with the terms of this Agreement after

      giving effect to the release of such Mortgaged Property;

 

            c. Borrower shall pay all costs and expenses reasonably incurred by

      Agent in connection with the release of such Mortgaged Property.

 

      2.08. Loan Prepayments. The Borrower may prepay the principal amount of

any Prime Advance in whole or in part from time to time without any prepayment

penalty. The Borrower may not prepay any LIBOR Advance before the expiration of

the LIBOR Interest Period applicable to such LIBOR Advance, except upon the

payment of the amount provided for below.

 

      If any LIBOR Advance becomes due and payable or is prepaid prior to the

last day of the applicable LIBOR Interest Period (including any prepayment

resulting from the acceleration of the Loan by the Lenders as a consequence of

an Event of Default), the Borrower also promises to reimburse the Lenders on

demand for any resulting loss, cost, or expense incurred by the Lenders as a

result thereof including, without limitation, any loss incurred in obtaining,

liquidating, or employing deposits from third parties, but excluding the

Lenders' loss of margin for the period after any such payment. If, because of

the introduction of or any change in, or because of any judicial,

administrative, or other governmental interpretation of, any law or regulation,

there shall be any increase in the cost to the Lenders of making, funding,

maintaining, or allocating capital to LIBOR Advances, then from time to time,

within fifteen (15) days after demand by the Agent, the Borrower shall either

(a) pay to the Lenders additional amounts sufficient to compensate the Lenders

for such increased cost; or (b) convert all LIBOR Advances to a Prime Advance.

If the Borrower elects the option provided in the foregoing subparagraph (b),

the Borrower shall not be subject to the requirement hereunder that the Borrower

reimburse the Lenders for any loss, cost or expense incurred by the Lenders as a

result of the Borrower paying a LIBOR Advance prior to the end of the applicable

LIBOR Interest Period; provided, however, thereafter the Borrower may not elect

for any Advances to be LIBOR Advances. If, because of the introduction of or any

change in, or because of any judicial, administrative, or other governmental

interpretation of, any law or regulation, it becomes unlawful for the Lenders to

make, fund, or maintain any LIBOR

 

                                       19

<PAGE>

 

Advance, then the Lenders' obligation to make, fund, or maintain any LIBOR

Advance shall terminate.

 

      2.09. Late Fee. If any sum of principal or interest in respect of the Loan

is not paid within five (5) days after the date when due, then, in addition to

and not in lieu of any other rights or remedies available to the Lenders, the

Borrower shall pay to the Lenders, on demand, a late fee in an amount equal to

the greater of five percent (5%) of such sum or Twenty-Five Dollars ($25.00),

but not to exceed Two Thousand Dollars ($2,000.00). In no event, however, shall

a late fee be payable under this Section 2.09 in respect of an Advance and the

interest thereon if the Borrower fails to pay such Advance and interest on the

Advance Maturity Date therefor or on the date on which such Advance and interest

are payable as a result of the acceleration of the Loan pursuant to the terms of

this Agreement.

 

      2.10. Letter of Credit. Subject to the terms, provisions and conditions

hereof, up to One Million Dollars ($1,000,000) of the Loan shall be made

available to Borrower for the issuance of the Letter of Credit. The Letter of

Credit shall be irrevocable and shall have an expiration date not later than May

15, 2004. The amount of the Loan available to Borrower hereunder at any time

shall be reduced by the amount of the Letter of Credit issued under the Loan and

outstanding at such time. Any draw upon the Letter of Credit issued under the

Loan shall be evidenced by the Notes, shall bear interest at the Prime Rate,

shall be due and payable on demand and shall be secured by the Mortgage and

other Loan Documents. Borrower shall cause the Title Company to (i) issue a

Letter of Credit Endorsement to the Lenders' title policy referencing such

Letter of Credit, and (ii) amend the pending disbursement endorsement to include

the face amount of such Letter of Credit.

 

       Borrower shall pay to Agent for the benefit of the Lenders a fee for

issuance of the Letter of Credit equal to 135 basis points per annum (computed

on the basis of a year of 360-days and the actual number of days of the stated

term of the Letter of Credit) of the aggregate stated amount of the Letter of

Credit. Such fee shall be payable in advance on the date of issuance of the

Letter of Credit. Borrower shall also pay to Agent when due all usual and

customary administrative fees associated with the issuance of the Letter of

Credit.

 

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

 

      The Borrower represents and warrants to the Lenders that as of the Closing

Date:

 

      3.01. Organization and Qualification. The Borrower is a duly formed and

validly existing limited partnership under the laws of the Commonwealth of

Virginia. The Guarantor is a duly formed and validly existing real estate

investment trust under the laws of the State of Maryland.

 

       3.02. Right and Power; Corporate Authority. The Borrower has full right,

power and authority to execute and deliver this Agreement and the other Loan

Documents and to perform its obligations thereunder. The Borrower has taken the

necessary corporate action to authorize

 

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the execution and delivery of the Agreement and the other Loan Documents and the

borrowings thereunder.

 

      3.03. Conflict With Other Instruments. The execution and delivery of this

Agreement and the other Loan Documents, the consummation of the transactions

contemplated thereby, and the compliance with the terms, conditions and

provisions thereof will not conflict with or result in a breach of any of the

terms, conditions or provisions of the partnership agreement of the Borrower,

or, to the Borrower's actual knowledge, any law or any regulation, order, writ,

injunction or decree of any court or Governmental Authority or any agreement or

instrument to which the Borrower is a party or by which the Borrower or its

properties or assets are subject to or bound, or constitute a default thereunder

or result in the creation or imposition of any lien, charge, security interest

or encumbrance of any nature whatsoever upon any of the property of the Borrower

pursuant to the terms of any such agreement or instrument, except as created by

the Loan Documents.

 

      3.04. Authority, Validity and Binding Effect. The execution and delivery

of this Agreement and the other Loan Documents, and the making of the borrowings

contemplated by the provisions hereof and thereof, have been duly authorized by

all necessary action on the part of the Borrower, and no authorization, approval

or consent by, or filing with, any Governmental Authority or public regulatory

authority is necessary therefor except for disclosures as required with the

Securities and Exchange Commission. This Agreement and the other Loan Documents

have been duly and validly executed and delivered by the Borrower and constitute

a legal, valid and binding obligation of the Borrower, enforceable in accordance

with their terms, except as the enforceability thereof may be limited by

bankruptcy, insolvency or other laws of general application affecting the

enforcement of creditors' rights generally and by principles of equity.

 

      3.05. Financial Condition. The financial statements of the Borrower and

the Guarantor furnished to the Lenders are complete and correct in all material

respects. Such financial statements were prepared in accordance with GAAP

consistently applied. The financial statements of the Borrower and the Guarantor

fairly present their respective financial condition at the respective dates

indicated therein. Since the dates of such financial statements, there has been

no material adverse change in the assets, liabilities or financial condition of

the Borrower and the Guarantor from that reflected thereon.

 

      3.06. Litigation. There are no actions, suits or proceedings pending or,

to the Borrower's actual knowledge, threatened, against or affecting the

Borrower, a Special Purpose Entity or the Guarantor before any court or

Governmental Authority which might have a Material Adverse Effect.

 

      3.07. ERISA. The Borrower and each ERISA Affiliate is in compliance in all

material respects with all applicable provisions of ERISA, and neither the

Borrower nor any ERISA Affiliate has incurred any liability to the PBGC. Neither

a Reportable Event nor a Prohibited Transaction, has occurred under, nor has

there occurred any complete or partial withdrawal from, nor has there occurred

any other event which would constitute grounds for termination of or the

appointment of a trustee to administer any "employee benefit plan" (including

any "multi-

 

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employer plan") maintained for employees of Borrower or any ERISA Affiliate, all

within the meanings ascribed by ERISA.

 

      3.08. Regulation U. The Borrower is not engaged in the business of

extending credit for the purpose of purchasing or carrying margin stock (within

the meaning of Regulation U) and the Borrower does not hold any margin stock (as

defined in Regulation U).

 

      3.09. Investment Company Act. Neither the Borrower nor the Guarantor is an

"investment company" or a company "controlled" by an "investment company,"

within the meaning of the Investment Company Act of 1940, as amended.

 

      3.10. Public Utility Holding Company. Neither the Borrower nor the

Guarantor is a "holding company" or a "subsidiary company" of a "holding

company," or an "affiliate" of a "holding company" or of a "subsidiary company"

of a "holding company," within the meaning of the Public Utility Holding Company

Act of 1935, as amended.

 

      3.11. Insolvency. Neither the Borrower, a Special Purpose Entity nor the

Guarantor is "insolvent" within the meaning of that term as defined in the

Federal Bankruptcy Code and the Borrower and the Guarantor are each able to pay

their debts as they mature.

 

      3.12. Organization and Qualification. To the extent required by

Governmental Requirement, the Borrower and each Special Purpose Entity is duly

qualified to conduct business in the state in which the Mortgaged Property is

located.

 

      3.13. Right and Power; Corporate Authority. The Borrower and each Special

Purpose Entity has full right, power and authority to execute and deliver the

Loan Documents contemplated by the provisions hereof for such Advance and to

perform its obligation thereunder. The Borrower has taken the necessary

corporate action to authorize the execution and deliver of such Loan Documents.

 

      3.14. Conflict With Other Instruments. The execution and delivery of the

Loan Documents contemplated by the provisions hereof for such Advance, the

consummation of the transactions contemplated thereby, and the compliance with

the terms, conditions and provisions thereof will not conflict with or result in

a breach of any of the terms, conditions or provisions of the limited

partnership agreement of the Borrower and the operating agreement of each

Special Purpose Entity, or, to the Borrower's actual knowledge, any law or any

regulation, order, writ, injunction or decree of any court or Governmental

Authority or any agreement or instrument (except to the extent required under

ground leases applicable to future Mortgaged Properties) to which the Borrower

and each Special Purpose Entity is a party or by which the Borrower and each

Special Purpose Entity or their properties or assets are subject to or bound, or

constitute a default thereunder or result in the creation or imposition of any

lien, charge, security interest or encumbrance of any nature whatsoever upon the

Mortgaged Properties or any other property of the Borrower and each Special

Purpose Entity pursuant to the terms of any such agreement or instrument, except

as created by the Loan Documents.

 

      The execution and delivery of the Guaranty, the Guarantor's guarantee

contemplated thereby, and the compliance with the terms, conditions and

provisions thereof will not conflict

 

                                        22

<PAGE>

 

with or result in a breach of any of the terms, conditions or provisions of the

trust agreement of the Guarantor, or, to the Guarantor's actual knowledge, any

law or any regulation, order, writ, injunction or decree of any court or

Governmental Authority or any agreement or instrument to which the Guarantor is

a party or by which the Guarantor or its properties or assets are subject to or

bound.

 

      3.15. Authority, Validity and Binding Effect. The execution and delivery

of the Loan Documents contemplated by the provisions hereof for such Advance,

have been duly authorized by all necessary action on the part of the Borrower

and each Special Purpose Entity, and no authorization, approval or consent by,

or filing with, any Governmental Authority or public regulatory authority is

necessary therefor. Such Loan Documents have been duly and validly executed and

delivered by the Borrower and each Special Purpose Entity and constitute legal,

valid and binding obligations of the Borrower and each Special Purpose Entity,

enforceable in accordance with their terms, except as the enforceability thereof

may be limited by bankruptcy, insolvency or other laws of general application

affecting the enforcement of creditors' rights generally and by principles of

equity.

 

      3.16. Litigation. There are no actions, suits or proceedings pending or,

to the Borrower's actual knowledge, threatened, against or affecting the

Mortgaged Properties before any court or Governmental Authority which might have

a Material Adverse Effect.

 

      3.17. Compliance With Governmental Requirements. To Borrower's knowledge,

the intended use of the Mortgaged Properties complies in all material respects

with all applicable Governmental Requirements, as the same may be modified by

any applicable variances and exceptions, to Borrower's knowledge, and all

material provisions of any applicable restrictive covenants, and to Borrower's

knowledge, the Borrower has obtained all material required permits with respect

to the operation and use of such Mortgaged Properties.

 

      3.18. Utility Services. To Borrower's knowledge, all utility services

necessary for the use and operation of the Mortgaged Property for such Mortgaged

Property are available at the boundaries of the Mortgaged Property and are

located within a public right of way adjacent to the Mortgaged Property or

within an easement benefiting the Mortgaged Property, which easement is

contiguous to the Mortgaged Property and a public right of way, and, to the

actual knowledge of Borrower, such utilities have sufficient capacity to serve

such Mortgaged Property.

 

      3.19. Hazardous Materials; Storage Containers; Wetlands. The Borrower and

each Special Purpose Entity have not used Hazardous Materials on, from or

affecting the Mortgaged Property in any manner which violates any Governmental

Requirements or Hazardous Materials Laws, and, to the best of the Borrower's

knowledge, except as disclosed in any written reports and data provided to the

Lenders, no prior owner of such Mortgaged Property or prior occupant thereof,

has used Hazardous Materials on, from or affecting the Mortgaged Property in any

manner which violates any Governmental Requirements or Hazardous Materials Laws.

The Borrower further represents to the Lenders that, except as disclosed in any

written reports and data provided to the Lenders, the Borrower and each Special

Purpose Entity have not received any notice of any violations of Governmental

Requirements or Hazardous Materials Laws governing the use, storage, treatment,

transportation, manufacture, refinement, handling,

 

                                       23

<PAGE>

 

production or disposal of Hazardous Materials at such Mortgaged Property and, to

the best of the Borrower's knowledge, there have been no actions commenced or

threatened by any party for non-compliance with any such laws or regulations at

such Mortgaged Property. The Borrower further represents that, except as

disclosed in any written reports and data provided to the Lenders, no Storage

Containers are located on or under such Mortgaged Property, except in compliance

with all applicable Hazardous Materials Laws, and such Mortgaged Property does

not contain any Wetlands.

 

      3.20. Covenants and Restrictions. Except as disclosed in writing to Agent

or in any Title Policy delivered to Agent hereunder, there are no covenants,

conditions or restrictions of record or of which the Borrower has knowledge that

prohibit the Mortgaged Property from being used and operated as contemplated by

the Lease for such Mortgaged Property.

 

      3.21. Flood Hazard. To Borrower's knowledge, except as may be disclosed in

any survey or flood hazard certificate provided to Agent, no part of the

Improvements forming a part of the Mortgaged Property are located in or on an

"area having special flood hazards" ("Special Flood Hazard Area"), as that term

is defined in the Flood Disaster Protection Act of 1973, as amended by the 1994

National Flood Insurance Reform Act, and as otherwise amended. If such

Improvements (or any portion thereof) are located in a Special Flood Hazard

Area, to Borrower's knowledge, the building floor elevations of such

Improvements are located at the height prescribed (if any) by Governmental

Requirements above the designated flood plain elevation for the Special Flood

Hazard Area, as determined by FEMA. For purposes of this Paragraph 3.21, the

defined term Improvements shall include only walled and roofed buildings.

 

      The representations and warranties contained above and in the other Loan

Documents shall be true on and as of the date of each Advance with the same

effect as though such representations and warranties had been made on and as of

each such date.

 

                                   ARTICLE IV

                              CONDITIONS OF LENDING

 

       The Borrower agrees that the obligation of the Lenders to make an Advance

is subject to the accuracy in all material respects, as of the date hereof and

the date of such Advance of the representations and warranties contained herein

and under the other Loan Document, to performance by the Borrower of its

agreements to be performed hereunder and under the other Loan Document on or

before the date of such Advance, and to the satisfaction of the following

further conditions:

 

      4.01. Initial Advance. Prior to the initial Advance by the Lenders:

 

            a. Organizational Documents. There shall have been furnished to the

      Agent by the Borrower:

 

                  i. A copy of the certificate of limited partnership of the

            Borrower, together with any and all amendments thereto, filed with

            the appropriate Governmental Authorities of the Commonwealth of

            Virginia;

 

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<PAGE>

 

                  ii. A copy of the limited partnership agreement of the

            Borrower, together with any and all amendments thereto certified by

            the Guarantor, as the general partner of Borrower;

 

                  iii. An original or a copy of a Certificate of Existence for

            the Borrower issued by the appropriate Governmental Authorities of

            the Commonwealth of Virginia bearing a recent date;

 

                  iv. A copy of the resolutions of the Borrower authorizing the

            Loan and the execution of this Agreement and the Loan Documents

            certified by the Guarantor, as the general partner of Borrower;

 

                  v. A copy of the articles of organization of each Special

            Purpose Entity, together with any and all amendments thereto, filed

            with the appropriate Governmental Authorities of the state in which

            the Special Purpose Entity is organized;

 

                  vi. A copy of the operating agreement of each Special Purpose

            Entity, together with any and all amendments thereto, certified by

            the Borrower;

 

                  vii. An original or copy of a Certificate of Existence for

            each Special Purpose Entity issued by the appropriate Governmental

            Authorities for the state in which the Special Purpose Entity is

            organized;

 

                  viii. A copy of the trust agreement for the Guarantor,

            together with any and all amendments thereto, certified by the

            Secretary thereof;

 

                   ix. A copy of the resolutions of the Guarantor authorizing the

            Guaranty, certified by the Secretary of Guarantor; and

 

                  x. An original or a copy of a Certificate of Existence for the

            Guarantor issued by the appropriate Governmental Authorities of the

            State of Maryland.

 

            b. Borrower's Counsel Opinion. The Borrower shall furnish to the

      Lenders an opinion of counsel for the Borrower, the Guarantor and the

      Special Purpose Entities in form and substance reasonably acceptable to

      the Lenders.

 

            c. Notes/Loan Documents. The Borrower shall have executed and

      delivered to the Lenders the Notes and the applicable Loan Documents with

      blanks appropriately completed.

 

            d. Guaranty. The Guarantor shall have executed and delivered to the

      Agent the Guaranty.

 

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<PAGE>

 

            e. Commitment Fee. The Borrower shall have paid to the Agent, for

      the benefit of the Lenders in accordance with their respective

      Commitments, the Commitment Fee. The Commitment Fee shall be paid on

      December 31, 2003.

 

      4.02. Mortgaged Properties. With respect to each of the Mortgaged

Properties, the Borrower shall have satisfied each of the following conditions:

 

            a. Organizational Documents. There shall have been furnished to the

      Agent by the Borrower:

 

                  i. A certificate of the Borrower, certifying that no

            amendments or modifications have been made to the limited

            partnership agreement of the Borrower furnished to the Agent

            pursuant to Section 4.01(a) hereof, other than such amendments or

            modifications as have been furnished to the Agent pursuant to

            Section 6.12 hereof.

 

                  ii. An original or copy of a Certificate of Existence for the

            Borrower and each Special Purpose Entity issued by the Secretary of

            State of Virginia or the state in which a Special Purpose Entity is

            organized, as applicable, bearing a recent date;

 

                  iii. To the extent required by Governmental Requirement, an

            original or copy of a Certificate of Authority for the Borrower, if

            applicable, and each Special Purpose Entity as a foreign limited

            liability company doing business in the state in which the Mortgaged

            Property is located;

 

                  iv. A copy of the resolutions of Borrower authorizing the

            Advance and the execution of the Loan Documents contemplated b